Sales and Distribution in Airtel

Sales and Distribution Network of AIRTEL PART I Section B, Group B8 Harsha Muzumdar Shreyas Parvate Rinshul Pruthi Shantanu Verma Shikohi Agarwal

09P082 09P099 09P110 09P114 09P116

Table of Contents Table of Contents...................................................................................................2 Sales & Distribution Strategies..............................................................................3 Introduction........................................................................................................ 3 Second degree distribution network:..................................................................5 Third degree distribution network:.....................................................................5 Reasons for having two degree and three degree networks:..........................5 Sales Force......................................................................................................... 6 Responsibilities of FOS:...................................................................................6 Urban Distributors:.............................................................................................6 Responsibilities of Urban Distributors:............................................................7 Rural Supers:...................................................................................................... 7 Responsibilities of Rural Supers:.....................................................................7 Rural Distributors:...............................................................................................8 Retailers:............................................................................................................ 8 Responsibilities of retailers:.............................................................................8 Company support and monitoring of sales and distribution networks................9 Responsibilities of CSD....................................................................................9 Margins of Channel Members...........................................................................10 Main issues/ challenges faced by the company................................................10

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Bharti Airtel Ltd. Sales & Distribution Strategies Introduction Airtel is the Market leader in Indian telecom market with a market share of all India mobile subscribers at 23.4%. It is India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Airtel has set-up a multi-regional marketing and sales team that is responsible for building two types of sales channels – 1. Direct sales channels 2. Indirect sales channels The 23 circles have been divided into regions or territories and the Regional organizations are responsible for the designing the sales & marketing strategies for their respective areas. Airtel has a network of personnel who take care of marketing and sales plans of their regions by capitalizing on the opportunities in their geographic region. These teams build both direct customer relationships as well as indirect channels (through handset manufacturer, Network Solutions Provider, etc.)

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The distribution strategy of Airtel includes second and third degree distribution network. As shown below, Airtel makes transactions only with Urban Distributors (UDs) and Rural Supers (RS). These transactions generally are invoices of SIMs, GSM Pay Phones etc.

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Second degree distribution network: The second degree network includes the urban distributors, who collect the above items from Airtel and distribute them to the retailers. These distributors also transfer easy balance through FOS(Field Officer Sales) SIM to the retailer, according to his/ her demand. Since this set up includes only two channel members, it is a Second Degree network and is suitable for catering to the need of urban areas, where reaching the retailers is easier due to well established road and transportation facilities.

Third degree distribution network: This network includes Rural Supers (RS) who distribute the above items to Rural Distributors (RDs). In this case, the RS transfers easy balance into Rural Distributors. Rural Distributors then take the items to the retailers and transfer easy balance through FOS SIM to the retailer, according to his/ her demand, from easy balance of Distributor SIM. This three level distribution is makes it easier for the company to reach the sub urban and rural areas, where retailers are few and widely located.

Reasons for having two degree and three degree networks: •

Second Degree network suits the urban areas well since these areas are usually densely populated, and have very high demands for Airtel’s products and services. It becomes important for the company to supply the products and services as quickly as possible. As the distributor (UD) gets the products directly from Airtel, therefore, the products, services and promotional materials can reach the retailers in shorter span of time.

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Three degree distribution suits the sparsely (or less densely) populated areas, where retailers are spread over large geographical areas. Due to less demand for company’s products and lack of proper infrastructure in rural areas, Airtel has established a three level distribution network

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Sales Force These are the manpower of distributors. They are referred to as Field Officer Sales (FOS). They sell SIM,RCVs, Easy Balance etc. on behalf of the distributor to all retailers assigned to his beat.

Responsibilities of FOS: •

All secondary sales assigned under his beat

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Collection of PEFs, payments against billing by retailer

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Promotion material distribution as instructed by TM.

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Communication regarding schemes, incentives, new offers from the company to the retailers

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Resolving retailer complaints using the FOS helpline

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Escalation of unresolved complaints and claims to the distributor and TM.

Urban Distributors: Known as UD, they distribute products, easy balance, services and promotion material to retailers in their designated (urban) areas of a district. They are responsible for achieving targets of SIM activation and recharge without encroaching on other territories. The retailers’ Lapu SIMs are mapped to the corresponding FOS’ SIM which is mapped to the particular UD SIM. The flow of Easy balance starts at the UD SIM and ends at the Lapu SIMs through the FOS SIMs. The UD gets certain discount on his SIM’s billing and has to pass a certain percentage of this discount to the retailers. They make DD payments to the company for primary sales twice a week.

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Responsibilities of Urban Distributors: •

Distribution of SIM, Easy Recharge, PEF, RCV, GSM Pay Phones, FOS SIM, Lapu SIM according to the retailers’ requirement within its territory only.

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Activation of customer SIMs within its territory after proper checking of POI, POA and error free PEF.

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Collection of PEFs and other documents from retailers and sending them to respective Circle Head Quarter.

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Distribution of promotional materials among the retailers according to the allocation of TM/ZSM, received from company.

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Maintaining distributor health report, secondary details regarding retailers, SIM activation details and stock of RCVs and Easy Recharge for 10 days.

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Proper circulation of communication from the company to retailers.

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Escalation of retailers’ claims and complaints to TM/ZSM.

Rural Supers: These are the rural counterparts of UDs. Their roles and responsibilities are similar to the UDs. However, being part of a third degree distribution channel, they have certain conditions and some added responsibilities. One Rural Super (RS) can have a maximum of 12 Rural Distributors (RD) under him and he may have a maximum turnover of Rs. 1 crore. This is to limit the bargaining power of the RS and to exercise more control over the rural distribution channel.

Responsibilities of Rural Supers: •

All responsibilities of UD

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Collection of money for invoices to RDs and ensuring adequate supply to RDs.

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Have to maintain required stock of RCVs and recharge for 7 days.

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Rural Distributors: They are known as RDs and are located at blocks and towns as compared to the UDs and RSs who are located at District HQ. There has to be an RD for every population block of 5000. Their roles and responsibilities are the same as the UD.

Retailers: Retailers are strategically located shops from where customers can buy products and services e.g. mobile handset shops, phone booths, convenience stores etc. Retailers get a 3% margin by way of discounts on all its sales. This discount is extended by the RD/UDs. Select retailers get Lapu SIMs mapped to their respective FOS for Easy Recharge facilities. Other retailers are provided with RCVs.

Responsibilities of retailers: •

Fill error free PEFs and verification of supporting copy for POI and POA of the customer with originals before activating the SIM.

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Proper utilization and display of promotional materials.

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Proper communication about the schemes, new offers and benefits to customers.

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Selling products and services to customer at right price.

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Serving the customers’ requirements with the available stocks of SIM, RCV and easy balance etc. and

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Not creating artificial shortages.

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Purchasing RCVs, SIMs and Easy Balance from respective distributor’s FOS only.

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Company support and monitoring of sales and distribution networks Reports from RSs and UDs are the basis on which territory managers and ZSMs monitor the sales and distribution networks entrusted to them. There is a customer service division (CSD) which helps in resolving complaints and also provide valuable support in the sales and distribution monitoring.

Responsibilities of CSD •

Resolving general complaints of customers.

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Providing helpline to retailers and FOS.

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Providing helpline to territory managers and helping them resolve escalated retailer issues and FOS issues.

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Communicating all service related messages to retailers, FOS, distributors, TM and ZSM.

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Margins of Channel Members No. of Activations

1-5 5-25

Retailers

Distributors

On Revenues

On Activation

On Recharge

On Activation

Flat 2.25 % on revenues

Rs. 10

Flat 1%

Flat Rs. 8 for every activation

Rs. 20

26-50

Rs. 40

50 above

Rs. 50

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Margin to retailers on activation is dynamic and changes every month. The figure above is for the current month.

Main issues/ challenges faced by the company Mainly two important issues are being faced by the company in their sales and distribution system. These are:  Problem of service gap: Cases have been there where the retailer has run out of its recharging balance and the balance has not been refilled by the distributor timely. This may be caused because of the time lag, or because of the no credit policy of the distributor.  Competition: Due to large number of players, now the retailers have to keep competitors product as well. But they are unwilling to make extra investments.

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