ITC Distribution Channel- Assessment

INDIAN INSTITUTE OF MANAGEMENT CALCUTTA

SALES & DISTRIBUTION MANAGEMENT INDUSTRY PROJECT: ITC Ltd. Akhil Phirani 120/45 Kautilya 155/45 Rohan Mahajan 302/45 Aman Goel 403/15 Piyush Mehta 439/15 Rohit Kwatra 448/15 Saurabh Gupta 451/15 1

Table of Contents ITC Introduction......................................................................................................... - 3 ITC Divisions............................................................................................................. - 5 FMCG................................................................................................................... - 5 Hotels................................................................................................................... - 7 Paperboards & Packaging........................................................................................... - 8 Agri-Business.......................................................................................................... - 9 Information Technology..................................................................................... - 10 Market Representation................................................................................................ - 11 Other FMCG – Convenience channel...........................................................................- 14 Other FMCG – Grocery channel................................................................................. - 15 WD selling and supervision infrastructure........................................................................- 16 Special Outlet Types – Grocery Channel.......................................................................- 19 Outlet Classification strategy (upto TLP).........................................................................- 20 Market coverage for Cigarettes and other FMCG’s.............................................................- 25 MARKET VISITS..................................................................................................... - 27 Market visit : CIGARTTES....................................................................................... - 27 MARKET VISIT - PAMS......................................................................................... - 27 MARKET VISIT- FOODS........................................................................................ - 28 ISSUES IDENTIFIED................................................................................................ - 30 PLAN OF ACTION................................................................................................... - 31 -

ITC Introduction ITC is India's well known private sector company with a market capitalization of nearly US $ 19 billion and a turnover of over US $ 5 billion. ITC employs over 26,000 people at more than 60 locations across India. ITC has a vision of sustaining its position as one of India's most valuable corporations through world class performance and creating growing value for the Indian economy. ITC is a market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports. It is rapidly gaining market share in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.

ITC Businesses ITC has a corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering. ITC's Agri-Business is one of India's largest exporters of agricultural products. ITC is one of the country's biggest foreign exchange earners (US $ 3.2 billion in the last decade). ITC’s e-Choupal initiative has greatly benefitted Indian agriculture by empowering Indian farmers through the power

of the Internet. This strategy is expected to progressively create for ITC a huge rural distribution infrastructure, significantly enhancing the Company's marketing reach. ITC’s strong Network 

74,000 markets in India



1,200,000 Retail outlets



10000+ Dealer sales force



1500+ field marketing & promotion teams



900+ wholesale dealers

ITC’s Future Growth strategy rationale 

Blend multiple competencies residing within the ITC Group to create new avenues of growth



Best fit between internal capabilities and emerging market opportunities



Each segment enhances the depth and width of ITC’s FMCG distribution capability

 Business model retains critical elements of value chains within ITC with other elements outsourced 

Contributing to the competitiveness of SMEs

ITC Divisions The various businesses that ITC is into are as follows:     

FMCG Hotels Paperboards & Packaging Agri-Businesses Information Technology

FMCG  Cigarettes ITC is the market leader in cigarettes in India. It ows its leadership position to it wide variety of brands which seek to address all the segments of Indian consumers. It's portfolio of brands includes Insignia, India Kings, Classic, Gold Flake, Silk Cut, Navy Cut, Scissors, Capstan, Berkeley, Bristol and Flake.ITC has world class facilities in product design, innovation, manufacturing technology, quality, marketing and distribution which give it a long term competitive advantage. This strategic focus on the consumer has paid ITC handsome dividends.ITC has also forayed into overseas markets In the extremely competitive US market, ITC offers high-quality, value-priced cigarettes and Rollyour-own solutions. In West Asia, ITC has become a key player in the GCC markets through growing volumes of its brands. ITC's cigarette factories are located at Bengaluru, Munger, Saharanpur and Kolkata. These factories are known for their high levels of quality, contemporary technology and work environment.



Foods

ITC made its entry into the branded & packaged Foods business in August 2001 with the launch of the Kitchens of India brand followed by brand launches in June 2002 in the Confectionery, Staples and Snack Foods segments. The Foods business carries forward this proud tradition to deliver quality food products to the consumer. All products of ITC's Foods business available in the market today have been crafted based on consumer insights developed through extensive market research. ITC's state-of-the-art Product Development facility located at Bengaluru

contributes to developing new variants and SKUs. ITC’s unmatched capabilities in supply chain management and its market reach has helped this division garner significant market shares in a very short time duration. The Foods business is today represented in 4 categories in the market. These are:  Ready To Eat Foods 

Staples



Confectionery



Snack Foods

The brands owned by this division are:  

Kitchens of India Aashirvaad



Sunfeast



mint-o



Candyman



Bingo!

 Lifestyle Retailing ITC also has a presence in Lifestyle Retailing through its Wills Lifestyle chain of exclusive specialty stores. Wills Lifestyle, the Retail store, offers a tempting choice of Wills Classic work wear, Wills Sport relaxed wear, Wills Clublife evening wear, fashion accessories and Essenza Di Wills – an exclusive range of fine fragrances and bath & body care products and Fiama Di Wills - a range of premium shampoos and shower gels. Wills Lifestyle has also introduced Wills Signature designer wear, designed by the leading designers of the country. To cater to the mass segment John players was launched in December 2002 followed by Miss Players. John Players offers a complete and vibrant wardrobe of Casual wear, Party wear, Work wear, Denims, Outer wear and Suits & Jackets, incorporating the most contemporary trends, an exciting mix of colors, playful styling, trendy textures and comfortable fits. The brand is available across the country through a nation-wide network of over 240 exclusive stores and over 1500 multi-brand outlets. ITC aims to be the number one player in this segment in the coming few years.  Personal Care In line with ITC's aspiration to be India's premier FMCG company ITC forayed into the Personal

Care business in July 2005. ITC has already launched an array of brands, each of which offers a unique and superior value proposition to discerning consumers. This is supported by ITC’s commitment to strong R&D and consumer understanding. The business has quickly garnered major shares in some categories and is poised to contribute substantially to profits in coming years. ITC's Personal Care portfolio under the 'Essenza Di Wills', 'Fiama Di Wills', 'Vivel Di Wills' 'Vivel UltraPro', 'Vivel' and 'Superia' brands has received encouraging consumer response and is being progressively extended nationally. 

Education & Stationary

ITC made its entry into the stationery business in the year 2002 with its premium range of notebooks, followed in the year 2003 with the more popular range to augment its offering. ITC's Education and Stationery Products are marketed under the brands "Classmate" which is targeted at students and young adults and "Paperkraft" which is focused on Office stationary needs. The Classmate range includes Notebooks, Math Instruments, Scholastic Products as well as Writing Instruments.The Paperkraft range includes Paperkraft includes Premium Business Paper, Paper Stationery, Markers & Highlighters.  Safety Matches Based on the logic of complementary products that can be distributed through the same channel, ITC forayed into Safet matches as well.ITC’s range of Safety matches include popular brands like i Kno, Mangaldeep, Aim, Aim Mega and Aim Metro. The Aim brand is the largest selling brand of Safety Matches in India. ITC also exports regular and premium safety matches brands to markets such as Middle East, Africa and the USA.  Agarbattis As part of ITC's business strategy of creating multiple drivers of growth in the FMCG sector, the Company commenced marketing Agarbattis (Incense Sticks) sourced from small-scale and cottage units in 2003. This Business leverages the core strengths of ITC in nation-wide distribution and marketing, brand building, supply chain management, manufacture of high quality paperboards and the creation of innovative packaging solutions to offer Indian consumers high quality Agarbattis. Mangaldeep Agarbattis are available in a wide range of fragrances like Rose, Jasmine, Bouquet, Sandalwood, Madhur, Durbar, Tarangini, Anushri, Ananth and Mogra.

Hotels Launched on October 18, 1975 ITC Welcomegroup has come a long way to become one of India’s finest luxury destinations. Seeking to diversify into other high growth areas, ITC forayed into this business with the opening of its first hotel - Chola Sheraton in Chennai. Since then the ITC-Welcomgroup brand has become synonymous with Indian hospitality with over 100 hotels in more than 80 destinations. The business contributes substantially to ITC’s bottomline. ITC-Welcomgroup's properties are classified under four distinct brands:    

ITC Hotels - Luxury Collection WelcomHotels Fortune Hotels WelcomHeritage

Paperboards & Packaging 

Paperboards & Specialty Papers

ITC's Paperboards and Specialty Papers Division is India's largest, technologically advanced and most eco-friendly, paper and paperboards business. The business caters to a wide spectrum of packaging, graphic, communication, writing, printing and specialty paper requirements through its four world-class manufacturing units, 6 sales offices and a network of more than 50 dealers in India, along with an international trade network of 15 distributors / agents. Having pioneered many specialty applications like cigarette tissues, opaque papers, food grade packaging boards and tele-card boards, ITC's Paperboards and Specialty Papers business enjoys market leadership in the value-added paperboards segment, and also has a significant share of the Indian fine papers market. It is the largest exporter of coated boards from India. 

Packaging

ITC's Packaging & Printing Business is the country's largest convertor of paperboardinto packaging. It converts over 50,000 tonnes of paper and paperboard per annum into a variety of value-added packaging solutions for the food & beverage, personal products, cigarette, liquor, cellular phone and IT packaging industries. It has also entered the Flexibles and Corrugated Cartons business.

The Division, which was set up in 1925 as a strategic backward integration for ITC's Cigarettes business, is today India's most sophisticated packaging house. State-of-the-art technology, worldclass quality and a highly skilled and dedicated team have combined to position ITC as the firstchoice supplier of high value added packaging.

Agri-Business 

Agri Commodities & Rural Services

ITC's Agri Business Division is the country's second largest exporter of agri-products with exports of over Rs. 1000 Crores (Rs. 10 billion). Its domestic sales of agri-products are in excess of Rs. 1500 Crores (Rs. 15 billion). It currently focuses on exports and domestic trading of: • • • • •

Feed Ingredients – Soyameal Food Grains - Rice (Basmati & Non Basmati), Wheat, Pulses Edible Nuts - Sesame Seeds, HPS Groundnuts, Castor oil Marine Products - Shrimps and Prawns Processed Fruits - Fruit Purees/Concentrates, IQF/Frozen Fruits, Organic Fruit Products, Fresh Fruits • Coffee & Spices - Coffee, Black Pepper, Chilly, Turmeric, Ginger, Celery and other Seed Spices



Leaf Tobacco, Spices & Agri Inputs

ITC’s visions to provide decent livelihood to India’s farming community let it to pioneer the cultivation and development of Leaf Tobaccos in India. ITC is the largest buyer, processor and exporter of leaf tobaccos in India. The processes followed are benchmarked against the best in class. Seeking to leverage its capabilities in Leaf Tobacco business and venturing into new areas of high growth ITC's Leaf Tobacco business has successfully ventured into spices and has made inroads into various other streams of business. ITC's foray into the spices business is an endeavour to provide quality differentiation across the value chain from the farmer to the customer. This business aims to help the farmers by providing latest technology and information to help them improve the quality of produce. ITC’s Agri Inputs business focuses on the entire crop cycle with a wide range of products under the following three brands: Wellgro, Wellpro and Wellsto.

Information Technology ITC Infotech, a global IT services company, was envisioned to provide inhouse solutions to ITC for its various divisions. It has come a long way to become one of India’s fastest growing IT company. Based out of Bangalore ITC Infotech now provides cutting edge solutions and IT services to leading global customers. ITC Infotech offers IT services and solutions across five key industry verticals: Banking, Financial Services & Insurance (BFSI), Consumer Packaged Goods (CPG) & Retail, Manufacturing & Engineering Services, Travel, Hospitality & Transportation and Media & Entertainment. ITC Infotech conforms to the highest standards in international process quality, with ISO 27001, ISO 9001, SEI CMM Level 5 and BS 7799 accreditations

Market Representation Market representation is the key to providing sharper focus in servicing and managing the diversities and complexities in the FMCG space. ITC follows it through the following means:   

Wholesale Dealers (WD) WD branches WD Stockists WD

WD branches

WD Stockists

Definition

Firm/Company which purchases stocks in bulk from ITC

Full fledged distribution operation of a WD.

Firm/individual located away from WD market. Purchases from a WD.

Sells to

Retailers, wholesalers, consumers

Retailers, Wholesalers in the town and surrounding village markets

Surrounding areas including rural markets

Market Criterion

All markets up to 50k pop group

All markets up to 50k pop group

All markets between 10k - 50k pop group

Main Objective

Ensure the presence of ITC products across all categories encompassing distribution objectives of freshness, availability and visibility

Optimization of WD profitability

Same as WD along with leveraging local relation with trade for growing business

CIGARETTES These are ITC’s forte and are distributed through the following channels:   

Convenience Super Premium and Light (SP&L) outlet coverage HoReCa Strategy

Cigarettes – Convenience Channel Market Coverage: Markets serviced by WD salesman for active retail/ wholesale or markets serviced by WD stockists. The norms are decided based on the sales on each state, and a few other factors. For example in Kerala all markets above 1k while in Haryana all markets above 2k are classified to be under convenience channels. Besides that markets serviced by competition, present on national/state highways and tourist markets also fall under this. Frequency coverage for retailing varies from once to thrice depending on the market size and location. Outlet Coverage: Aim was to maximize coverage for markets below 20k pop group. For markets above 20k pop group outlets accounting for 80% industry volume or 10packs a day, whichever is higher is to be directly serviced. Availability Norms are also fixed in advance based on the brand, bench mark brand of the competition and the geography. Visibility: Superior cigarette visibility is imperative in driving brand salience and imagery. For the sake of deciding upon the visibility norms the outlets are divided into a matrix with the following dimensions: 1. Volume Classes(6) from 1-6 depending on the packs per day sale 2. Location types (3) from excellent to average depending on whether the outlet is located on a junction, fixed/temporary structure etc. The emphasis in visibility is on:  



Right brand in the Right outlet High quality execution at the outlet level o Within the outlet, the display unit is kept at the hot-spot which is easily visible and does not have any visual obstruction o The packs are arranged from highest price point to the lowest from top to bottom o They are arranged from Regular to Lights from Left to Right in all places except the Western part of India where the consumption patterns are different o Colour coding for shelving and pack placement norms are also followed stringently Tracking and monitoring of the visibility inputs o Wholesale dealer level tracker with photograph to be updated every quarter o Convenience team leader to capture all the details o Trade marketing calls are made once in a week in outlets of volume class 1 and 2, while for volume class 3 it is once in two weeks o Distribution calls are done on all outlets once a month



Quality standards are maintained throughout the input cycle o Convenience team leader responsible for execution and maintenance of inputs and face of display o Cleanliness, pack presence, stock rotation of input packs and overall look are given importance

Cigarettes – Super Premium and Light (SP&L) Outlet Strategy These outlets require a differentiated strategy to provide enhanced focus on Super Premium king size filter (KSFT) and Lights brands. These outlets are of strategic importance for building superior salience and imagery and countering both national and international competition in KSFT and Lights brands. Classification of outlets into Super Premium and Lights outlets is based on the kind of stocks it maintains, the retail price of the brands, selling volume per day and the geographical location. Norms for the frequency and person visiting are decided at the beginning of the year depending on the complete year’s plan. SP&L availability and visibility norms clearly stipulate the kind of brands that should be available and the face of display (FOD) at a particular outlet depending on various parameters. Cigarettes – HORECA Outlet Strategy The universe of Hotels, Restaurants and Clubs (HORECA) is defined on the consumption of bottled beverage. Markets in Delhi, Mumbai, Pune, Bangalore, Kolkata, Hyderabad, Goa and a few other identified cities are covered under this. The broad objective for this domain is:  

ITC’s share on all 3 segments of cigarettes (SP, KSFT, KSFT lights) to be greater here than in the total market and SP&L outlets ITC’s share on all the segments in this domain to be greater than the competition

Outlet Classification:   

Age based – High, Medium, Low depending on number of people above, between or below 30% Traffic profile – High, Medium, Low depending on the percentage of men and women visiting the place Spends – High, Medium, Low depending upon the amount spent on beer and cola

Now, hotels, restaurants and clubs are divided based on the above parameters. The availability norms for these 9 categories are also stipulated so that maximum revenue can be generated with focus on specific outlets. Emotional Connect Program (ECP) Under this scheme the various trades, marketing and distribution officials are supposed to meet up with the owners/bartenders of the outlets under HORECA. This acts as a channel for relationship building and feedback on the performance of cigarette brands. Temporary Local Gatherings: Identification and participation in all temporary large gatherings HoReCas during events like New Years, Valentine day etc through stall operation and sales at MRP. Airport and Snack Food Outlets: All outlets stocking cigarettes inside airports and snacks food sellers are treated as HoReCa outlets.

Other FMCG – Convenience channel Some of the other FMCG in the convenience channel includes Biscuits, Confectionary, Bingo, Shampoos, Matches and Agarbattis. One of the major factors for ITC in this channel is that it has a high competitive advantage as compared to its peers. The company’s convenience DS across the markets ensure that the company’s FMCG products are available amongst convenience category handlers but at the same time, other FMCG is sold only to those category handlers which are not a part of the grocery target sales. Another aspect of the convenience DS is that they carry other FMCG for sale and replenishment basis on two focus days every wek for each of the category set which includes 3 different categories:   

Biscuits and Confectionary Bingo Personal care, Matches and Agarbatti

The accountability for distribution objectives for other FMCG though lies with the Convenience Team Leaders. Convenience Delivery Model (CDM) Whenever a particular route potential is high, i.e. the deliverycost doesn’t exceed 3.5% of other FMCG turnover generated on the route for that day, the carrying capacity of a convenience DS can be enhanced through a delivery vehicle across all markets. However, the focus day concept is

not applicable to convenience DS with CDM. All other FMCG convenience sales are summary billed category wise by convenience DS in the customer information system (CIS). The report from CIS is split accordingly as convenience CDM DS sales by categories and Balance convenience DS sale by categories. Some of the other FMCG sales measures include convenience DS and convenience CDM DS for the WD every month and WD wise total other FMCG sales tracker by category and split between CDM DS sales and balance DS sales to be compiled at branch and communicated to district by 10th of the next month.

Other FMCG – Grocery channel One of the most important aspects here is the focus on availability. The continuous availability of right products, in the right markets and in the right outlets goes a long way in helping the company garner a large portion of the market share. The market coverage includes the markets serviced by WDsalesman for active retail/wholesale or markets serviced by WD stockists.

WD selling and supervision infrastructure Taking into account the wide diaspora of ITC’s FMCG categories and the large number of SKU’s, the infrastructure required to cover the grocery channel is split according to category groups, which helps the company in maintaining a sharper focus and a much better quality of serving. The category groups are as follows: Grocery 1:    

Staples Biscuits Confectionary Ready to eat

Grocery 2:    

Shampoos Soaps Agarbatti Matches

Common:    

All foods (includes Bingo) All personal care Agarbatti Matches

Grocery 3:  Bingo Depending on the pop group, outlets from each category group are serviced by:  

Grocery 1, Grocery 2 and Common DS on an order capture model, i.e. delivery is done next day Grocery 3 DS on a ready stock model, i.e. delivery vehicle accompanies the DS



WD Stockist

The roles for different positions involve different responsibilities, some of which are detailed below: Grocery DS – He has to ensure that the product is continuously available in the right outlets and in the right quantities. He must strive to maximize the range of sell in to an outlet and try to grow business from each different outlet. He should ensure that every call to an outlet is productive while at the same time adhering to the call frequency norms. Also, he must try to maximize customer facing time and maintain trade relationships while creating good credit management at an outlet level. Grocery Delivery Unit – The de livery for any orders taken has to be done on the very next day, something which is absolutely mandatory. It has to ensure that deliveries are done on time in full (OTIF). Minimize the delivery time through efficient zoning and use public transport wherever possible. At the same time, utilization of cost-effective non-merchandised delivery units based on requirement as well as utilization of existing spare capacity both in terms of absolute capacity and spare van days. Grocery Team Leader – He has to ensure proper training, development and motivation of his DS team. He is directly responsible for DS performance and supports the DS in driving category/ range/ focus SKU’s availability. He must try to improves the distribution measures in the channels and provide effective allocation and utilization of visibility and shelving solutions. Finally, he has to manage conflict resolution at an outlet level and try prospecting for new high potential outlets. Outlets Coverage It is very important to identify the right target outlets so as to:     

Service right outlets for relevant categories Maximise weighted numeric distribution Aid in planning of WD infrastructure Estimating the cost of servicing a market Mapping all key competition outlets

However, one thing that has to be taken care of is that each group needs to be serviced by the respective grocery DS/WD stockist. While grocery target outlets need to be covered by grocery DS and convenience target outlets by convenience DS, the common outlets targets for both grocery and convenience are covered both by grocery DS and convenience DS. Visibility:

Again of the most important aspects along with availability, it is absolutely essential to ensure superior visibility through high quality execution and rigorous evaluations systems. Some of the tasks involve identifying key outlets for differentiated merchandising packs, ensuring quality execution and quick changeover of displays. ITC plans to have a dedicated third party merchandising team in 8 metros to begin with, which will be extended across balance markets in a phased manner. Visibility has two aspects: Unpaid visibility and Paid visibility Some guidelines for unpaid visibility include:    

category adjacency: To locate the ITC products next to their relevant category Facings: The products need to have adequate front face visibility The grocery DS should strive to achieve share of facings that is greater than the market share of the concerned ITC product at the particular outlet Aiding the retailer: Retailers are to be provided with shelving solutions to enhance their outlet space and for more effective stacking and visibility

Some guidelines for paid visibility include: 







Right category inputs in right outlets: relevant brand inputs for the outlets should be decided keeping in mind the availability of category, importance of outlet for category and the location type of the outlet High quality execution at the outlet level: This requires that positioning of the products is correct i.e. all paid visibility is in an outlet hot-spot and that overall look of display is of the highest standards and impactful. Also, the stability of the display is very important Quality standards are maintained throughout the input cycle: The grocery team leader is responsible for execution and maintenance of inputs as well paying a visit to all paid visibility outlets fortnightly during the input cycle Rigorous tracking and monitoring of the visibility inputs: The grocery team leader needs to capture the photo with date and time stamp along with other details. The tracker also needs to be updated every quarter at the WD point

Freshness: Freshness is required to ensure that products are made available to the customer in the desired form and frechness. This can be a very important source of competitive advantage for a company. To ensure the desired form of freshness, its important to focus on:

  

Accurate forecasting Stock control Timely stock rotation

Some Freshness guideline:   

Category wise monthly freshness tracker with ITC freshness vs competition stock freshness Weekly update provided to the field team on the ‘Ageing status of stocks’ in their respective WSPs/Hubs Third party audit of D&D at WD level instituted to verify and confirm on value before destruction towards the dual purpose of accuracy and ease of operations.

Special Outlet Types – Grocery Channel Chemist and Cosmetic stores: This set of outlets is strategic in the context of ITC’s personal care portfolio and requires a differentiated servicing approach and superior merchandising solutions. Bakeries: They are key outlets for ITC’s portfolio of Biscuits, Snacks and Confectionary. Here, the Focus is specially on    

Higher customer facing time Availability of entire ITC relevant category portfolio High levels of visibility for all categories Provision of shelving solutions

Consumption centres: A consumption centre is defined as a place for on-premise, out-of-home snack consumption like amusement parks, cinema halls etc. Consumption centres are critical for ITC’s snacks portfolio. Here the focus has to be on:    

All consumption centre outlets to be racked Maximize variant and SKU availability on rack Strive for Hot-spot visibility of rack Maintain cleanliness of stock on rack

Outlet Classification strategy (upto TLP) Classification is necessary for    

Providing differentiated service packs to the top outlets Focused visibility inputs Designing and implementing trade loyalty programs Robust review and action standards basis different clusters

Grocery 1 target outlet classification Union of source Outlet class First club food outlets (A)

Competition loyalty outlets Market

ITC top outlets CIS

C

outlet accounting for 50% of ITC biscuits + confectionery Britannia turnover in a quarter profit club outlet accounting for next 30% of ITC biscuits + confectionery turnover in a quarter outlet accounting for next 20% of ITC biscuits + NA confectionery turnover in a quarter

D

Non productive outlet in 3 month

B

FCF outlets will be prospective Trade loyalty outlets Grocery 2 target outlet classification

Union of source Outlet class Premium grocery and chemist

Industry top outlet New retail census

ITC top outlets CIS

Competition loyalty outlets Market

outlets accounting outlet accounting for top 50% of ITC HUL ~ SVS for top 20% of soap + Shampoo turnover in a quarter and P&G ~

outlets (A)

shampoo turnover

Star sellers

C

outlet accounting for ITC soap + shampoo quarter outlet accounting for ITC soap + shampoo quarter

D

Non productive outlet in 3 month

B NA

next 30% of turnover in a next 20% of NA turnover in a

Outlet universe

First club food outlet

X

Y

Z PG & C outlet

X+Y+Z =prospective trade loyalty outlet

Infrastructure for prospective trade loyalty outlets

Servicing of prospective trade loyalty outlet has begun for mid MAY 2009

region P Q R S T

Definition FCF outlet which are handler of soap and shampoo FCF outlet which are NOT handler of soap and shampoo common FCF and PG&C outlet PG&C outlet which are NOT handler of FOODS PG&C outlet which are handler of FOODS

serviced by exclusive FCF DS

exclusive PG&C DS

T

T

T T F T

F T T T

Infrastructure for FCF outlet    

Al l FCF outlet will be serviced by exclusive FCF DS Also there can be certain PG&C outlet which handlers of ITC relevant foods categories but do not belong to the set of FCF outlet The exclusive FCF DS is expected to service these outlets as well Hence the exclusive FCF DS will service ALL HANDLERS of FOODS categories amongst ALL prospective Trade loyalty outlet

Infrastructure for PG&C outlet    

Al l PG&C outlet will be serviced by exclusive PG&C DS Also there can be certain FCF outlet which handlers of ITC relevant foods categories but do not belong to the set of PG&C outlet The exclusive PG&C DS is expected to service these outlets as well Hence the exclusive PG&C DS will service ALL HANDLERS of soap and shampoo categories amongst ALL prospective Trade loyalty outlet

Selling infrastructure guidelines Prospective trade loyalty outlets     

The best grocery DS will be made into FCF/PG&C DS An FCF/ PG&C DS is expected to cover minimum 18 outlets daily with 85% productivity Predefined minimum range of sell in of relevant club categories to each outlet. 6 FCF / PG&C DS will have an exclusive FCF / PG&C team leader. Frequency of servicing to be once a week

Non - Prospective trade loyalty outlets  

Regular grocery DS in each category is expected to cover at least 40 outlets with a call productivity of minimum 70%. Frequency of servicing to be once a week

Delivery infrastructure Delivery infrastructure to be split between following Prospective trade loyalty outlets 

Dedicated delivery infrastructure for these outlet to deliver the orders captured the previous day



Deliveries for both FCF and PG&C prospective trade outlet to be done through a common service vehicle

Non - Prospective trade loyalty outlets  

Dedicated delivery infrastructure for these outlet to deliver the orders captured the previous day Deliveries for both Grocery 1 and 2 outlet to be done through a common service vehicle

A BINGO outlet classification (HYD PILOT) Classification of Bingo is based on the following Union of ITC top outlets Source CIS Outlet class Golden route outlet outlet accounting for top 60% of Bingo turnover in a (A) quarter outlet accounting for next 20% of Bingo turnover in a B quarter outlet accounting for last 20% of Bingo turnover in a C quarter D Non productive outlet in 3 month

strategic outlet Market bingo outlet

racked

NA

Servicing for golden routes outlets  An exclusive golden routes DS will service these outlets  These outlets will be serviced weekly on a ready stock model  The DS is expected to cover at least 30 outlets daily with 80% productivity Servicing for balance outlets    

Regular grocery 3 DS will service these balance outlet Balance outlets will be serviced weekly basis on ORDER capture model The DS is expected to cover 40-50 outlets daily per day with 60% productivity There will be an exclusive delivery vehicle for delivery of orders taken the previous day

Prospective trade loyalty outlets handling Bingo  There will be a set of prospective trade loyalty outlets(FCF union PG&C) which will also be handlers of Snack food categories but are not part of golden route outlets  These outlets will be serviced by the FCF DS for Bingo on an order capture model

 The delivery of Bingo will take place along with the rest of FCF/ PG&C orders Wholesale Strategy Importance of wholesale channel    

Complements direct retail distribution Enables product availability in lower pop group markets Cost of servicing is optimal for the distribution reach achieved Category imperatives – certain key and carrier SKU’s are driven by this channel like glucose, shampoo sachet’s

Market coverage for Cigarettes and other FMCG’s Market coverage norms are same for wholesaling as it is for retailing. Frequency of coverage for all markets is maintained at once a week. Outlet coverage Exclusive FMCG SWD: a wholesaler who handles some of ITC’s other FMCG categories but not cigarettes Exclusive tobacco SWD: wholesaler who handles ITC’s cigarettes but not any of the ITC’s other FMCG categories

market grp

pop SWD type

serviced for

>500 K

exclusive FMCG + dual exclusive tobacco + dual

all FMCG categories Cigarettes

100 to 500 K

exclusive FMCG + dual exclusive tobacco + dual

respective category grp Cigarettes

50 to 100 K

10 to 50 K