Minor Project Report

On

A study on Distribution Practices of ITC, Britannia & Parle Industries Ltd. in

Noida Region

By

Sandeep Sindhu- A0102212131

Pankaj Pant- A0102212156

Tushar Upadhyay- A0102212230

Anshuman Bhardwaj- A0102212237

MBA – M&S Class of 2014

Under the Supervision of

Ms. Swati Bhatnagar

Department of Marketing & Sales

In Partial Fulfillment of the Requirements for the Degree of

Master of Business Administration – Marketing & Sales

At

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY UTTAR PRADESH

SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA

2013

i

DECLARATION

Title of Project Report-

A study on Distribution Practices of ITC, Britannia & Parle Industries Ltd. in Noida Region.

I declare

(a)That the work presented for assessment in this Minor Project Report is my own, that it has not

previously been presented for another assessment and that my debts (for words, data, arguments

and ideas) have been appropriately acknowledged.

(b)That the work conforms to the guidelines for presentation and style set out in the relevant

documentation.

Date: …………… Sandeep Sindhu

Pankaj Pant

Tushar Upadhyay

Anshuman Bhardwaj

MBA – M&S Class of 2014

ii

CERTIFICATE

I hereby certify that Pankaj Pant, Tushar Upadhyay, Anshuman Bhardwaj, Sandeep

Sindhu, students of Masters of Business Administration – M&S at Amity Business School,

Amity University Uttar Pradesh has completed the Minor Project Report on ―

A study on Distribution Practices of ITC, Britannia & Parle Industries Ltd. in Noida Region.

Ms. Swati Bhatnagar

Assistant Professor

Department of Marketing & Sales

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ACKNOWLEDGEMENT

Perseverance, inspiration and motivation have played a great role in the success of any venture.

It would be incomplete to submit this report without acknowledging the people behind this

endeavor and without whose support we wouldn’t have able to achieve this. It gives us immense

pleasure to express my gratitude to everyone who shared with us their precious time and effort

during the project.

First of all, we thank Amity Business School, Noida for granting us the permission to work for

the research work. We are also thankful to:

Dr. SanjeevBansal, Director, Amity Business School, Noida for his patience and guidance,

encouragement and for sharing his expertise in writing this feasibility study.

Then to Ms. Swati Bhatnagar our faculty guide for giving his valuable time and precious

knowledge for guidance of this project.

Finally to Dr. PradeepNarwal whose guidance really proved helpful.

AnshumanBhardawaj

Pankaj Pant

SandeepSindhu

TusharUpadhyay

Amity Business School

Noida – UP

iv

TABLE OF CONTENTS

Chapter 1: Introduction……………………………………………………………………………1

1.1 Biscuits Industry in India…………………………………………………………..4

1.2 About Companies………………………………………………………………….6

1.3 Product Range……………………………………………………………………..8

1.4 Market Share…………………………..………………………………………….10

1.5 SWOT Analysis of FMCG Sector………………………………………………..11

Chapter 2: Review of the Literature……………………………………………………………...12

2.1 Review of researchers…………………………………………………………….13

2.2 Mechanism of Distribution Channels in FMCG………………………………….16

2.2.1 Distribution Channel of ITC……………………………………………..17

2.2.2 Distribution Channel of Parle……………...…………………………….20

2.2.3 Distribution Channel of Britannia………………………………………..21

Chapter 3: Research Methodology……………………………………………………………….27

3.1 Research Objectives……………………………………………………………....28

3.2 Type of Research……………….………………………………………………...28

3.3 Methods of Data Collection……………………………………………………....28

3.4 Sample Design…………………………………………………………………....29

3.5 Instruments Used………………………………………………………………....29

3.6 Limitations………………………………………………………………………..30

Chapter 4: Data Analysis and Interpretation…………………………………...………………...31

4.1 Analysis ……………………..…………………………………………….….......32

4.2 Findings…………………………………………………………………………..41

Chapter 5: Suggestions and Conclusion…………………………….…………………………..44

5.1 Recommendations…….…………………………………………………………..45

5.2 Suggestions……………………………………………………………………….45

5.3 Conclusion……………………………………………………………………......47

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Bibliography…………………………………………………………………………………….50

Annexure………………………………………………………………………………………..52

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ABSTRACT

With increasing foray into various categories of the Foods business, ITC needs to determine the

best way to service the “Grocery” outlets and build equally strong distribution systems that

match the long term growth plans of the company in the FMCG (non-cigarette) business.

ITC has over the last 98 years established a very close business relationship with the farming

community in India and is currently in the process of enhancing the Indian farmer's ability to link

to global markets, through the initiative, and produce the quality demanded by its customers.

This long-standing relationship is being utilized in sourcing best quality agricultural produce for

ITC's Foods business.

The Foods business is today represented in 4 categories in the market. These are:

1. Ready To Eat Foods

2. Staples

3. Confectionery

4. Snack Foods

In order to assure consumers of the highest standards of food safety and hygiene, ITC is engaged

in assisting outsourced manufacturers in implementing world-class hygiene standards through

HACCP certification. The unwavering commitment to internationally benchmarked quality

standards enabled ITC to rapidly gain market standing in all its 5 brands:

1. Kitchens of india

2. aashirvaad

3. sunfeast

4. mint-o fresh

5. Bingo

This report provides a comparative study of distribution practices of Itc vis a vis Britannia &

Parle Industries Limited. The scope of the study is restricted to some selected areas of Delhi

NCR city. The analysis is based on retailer feedback on basis of retailer questionnaire and

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secondary survey done with the help of internet. Various parameters such as credit terms, quality

of service, delivery systems, knowledge of salesman etc have been studied.

The results bring out Parle Industries Limited as the preferred company, primarily on account of

high consumer demand & various other factors. The report concludes with recommendations to

improve the working of ITC WDs.

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CHAPTER 1

INTRODUCTION

2

INTRODUCTION

FMCG is an acronym for Fast Moving Consumer Goods, which refer to things that we buy

from local supermarkets on daily basis, the things that have high turnover and are relatively

cheaper.

A major portion of the monthly budget of each household is reserved for FMCG products.

The volume of money circulated in the economy against FMCG products is very high, as the

number of products the consumer use is very high.

Various FMCG Products and Categories are as follows:

Competition in the FMCG sector is very high resulting in high pressure on margins.

FMCG companies maintain intense distribution network. Companies spend a large portion of

their budget on maintaining distribution networks. New entrants who wish to bring their

products in the national level need to invest huge sums of money on promoting brands.

Manufacturing can be outsourced. A recent phenomenon in the sector was entry of

multinationals and cheaper imports. Also the market is more pressurized with presence of

local players in rural areas and state brands.

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FMCG in INDIA

The Fast Moving Consumer Goods (FMCG) sector in India has been growing at a healthy

CAGR of 11 % over the last decade Riding on the back of increasing demand and changing

consumer preferences, thanks to higher disposable incomes and the retail revolution, the

sector has been posting double Digit growth over the past couple of years

The Industry is volume driven and is characterized by low margins. The Products are branded

and backed by skilled marketing, heavy advertising, slick packaging and strong distribution

networks

Also, Raw material prices play an important role in determining the pricing of the final

product Modern Retail formats too have contributed in major way in pushing the growth in

the FMCG Sector. With Rising income levels and the spread of modern retail, the FMCG

industry’s future prospects look bright which is expected to further boost sales. Growth In the

sector is led by higher urban and rural demand Going Forward The government’s growing

support to agriculture will drive long term growth in consumption from the rural sector In

Our view, amongst all the FMCG segments, the food segment will outperform over the

coming years.

Scope of the Sector

The Indian FMCG sector with a market size of US$13.1 billion is the fourth largest sector in

the economy. A well-established distribution network, intense competition between the

organized and unorganized segments characterizes the sector. FMCG Sector is expected to

grow by over 60% by 2015. That will translate into an annual growth of 10% over a 5-year

period. Hair care, household care, male grooming, female hygiene, and the chocolates and

confectionery categories are estimated to be the fastest growing segments, says an HSBC

report. Though the sector witnessed a slower growth in 2002-2004, it has been able to make a

fine recovery since then.

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1.1 Biscuit Industry in India

The total production of biscuits in India is estimated to be around 30 lakh MT, the

organized sector accounts for 65% and the unorganized sector accounts for 35% of

the total industry volume.

The organized sector is valued at above Rs 8000 crores.

The biscuit industry is estimated to grow over 15-17% in the next few years.

The per capita consumption of biscuits in India is 2.0 kg.

India is ranked 3rd after US and China amongst the global biscuits producers.

The imports are not significant amount as compared to the total consumption.

The penetration of biscuits in urban and rural market is 85% and 55% respectively.

The Biscuit industry employs almost 3.5 lakh people directly and 30 lakh people

indirectly.

Annual Growth

The biscuit industry in India witnessed annual growth as below:-

2004-05 - 14%

2005-06 - 14%

2006-07 - 13%

2007-08 - 14%

2008-09 - 16%

2009-10 - 14%

2010-11 - 11%

2011-12 - 11%

2012-13 - 09% (April-September 2012)

While the growth rate has been stagnating during last 4 years, it picked up momentum during

the 2008-09 mainly on account of exemption from Central Excise Duty on biscuits with MRP

up to Rs.100/per kg, as per Union Budget for 2007-08. However growth further declined

from 2009-10 to 2011-12 and the first half of 2012-13.

Annual Production:

The organized biscuit manufacturing industry‘s annual production figures are given below:

(In Lakh Metric Tonnes)

2004-05 - 12.55

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2005-06 - 14.29

2006-07 - 16.14

2007-08 - 16.85

2008-09 - 17.50

2009-10 - 18.50

2010-11 - 19.00

2011-12 - 20.50

2012-13 - 10.50(April to September 2012)

Segments:

The organized and unorganized sector of the biscuit industry is in the proportion of

70%:30% ratio.

Exports of Biscuit was 14% of the annual production during the year 2010-11 which

declined to around 12.5% in 2011-12.

Imports of biscuits into India (mainly high end products) has not shown any significant

growth during the last five years and has not affected production/sales by the Indian Biscuit

industry.

Rural-urban penetration of Biscuit:

• Urban Market : 75% to 85%

• Rural Market : 50% to 65%

Marketing:

Wholesale and Retail marketing in the Biscuit industry is carried out with a network of C & F

Agencies (for States and specific Districts), Dealers / Wholesalers and Retail shops.

Consumption:

PER CAPITA CONSUMPTION of Biscuits in the country is only 1.8 kg, as compared to 2.5

kg to 5.5 kg in South East Asian countries and European countries, and 7.5 kg USA

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Pattern of Biscuit Consumption (On Zonal basis) in the country are as below:

Consumption of biscuits is even across the regions

Northern Zone - 25%

Western Zone - 23%

Southern Zone - 24%

East and North

East Zone - 28% (Including N.East)

1.2 About Companies

ITC

ITC was established on August 24, 1910 as the Imperial Tobacco Company of India

Limited in Kolkata. Initially, the company was involved in the trading of imported cigarettes.

In 1925, in a backward integration move, the company started a packaging and printing

business.

The name of the company was changed to India Tobacco Company Limited (I.T.C. Ltd.) in

1974.

In 1975, I.T.C. Ltd., through ITC-Welcome group, tied up with the US-based Sheraton

Corporation to enter the hospitality industry. It acquired its first hotel in Madras (later

renamed Chennai) in Tamil Nadu and called it the Welcome group Chola Sheraton.

7

I.T.C. Ltd established ITC Bhadrachalam Paperboards Ltd. (IBPL) in 1975. The company

started production at its integrated pulp and paper/board manufacturing facility at

Bhadrachalam, Andhra Pradesh, in 1979.

In 1990, I.T.C. Ltd. set up an International Business Division (IBD) for export of agri

commodities.

I.T.C. started a greeting cards business under the brand name Expressions in the year 2000.

In the same year, I.T.C. also entered the fashion retailing business by extending its well

known cigarette brand Wills. The retail outlets were called Wills Lifestyle and offered

premium leisure wear for men and women under the Wills Sport brand.

In September 2001, the company was renamed ITC Ltd (without full stops, and with no

meaning attributed to the alphabets).

In 2001, ITC made an entry into the foods business.

In 2003, ITC launched Sunfeast biscuits in India.

Parle

Parle Products has been India's largest manufacturer of biscuits for almost 80 years.

Makers of the world's largest selling biscuit, Parle-G, and a host of other very popular brands,

the Parle name symbolizes quality, nutrition and great taste. With a reach spanning even the

remotest villages of India, the company has definitely come a very long way since its

inception.

Parle biscuits are linked with factors of power and wisdom providing nutrition and strength.

Parle biscuits are indeed much more than a tea- time snack, they are considered by many to

be an important part of their daily food. Parle provides one and all with a basket of biscuits

which is not only satisfying but are also of good and reliable quality. Parle biscuits cater to all

tastes from kids to senior citizens. They have found their way into the Indian hearts and

homes.

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Britannia

Britannia Industries Limited is an Indian food-products corporation based in Kolkata,

India. It sells its Britannia and Tiger brands of biscuit throughout India. Britannia has an

estimated 38% market share. It was started in 1892, Kolkata with a Net sales of 31,122

Million Rs. It has strategy to setup new contract manufacturing units at least at 35 locations

in the country. The present manufacturing units are located in Kolkata, Uttaranchal , Delhi,

Chennai. The total contract manufacturing units are 40. The company was established in

1892, with an investment of Rs.295. Initially biscuits were manufactured in a small house in

central Kolkata. Later, the enterprise was acquired by the Gupta brothers mainly Nalin

Chandra Gupta, a renowned attorney, and operated under the name of "V.S. Brothers." In

1918, C.H. Holmes, an English businessman in Kolkata, was taken on as a partner and The

Britannia Biscuit Company Limited (BBCo) was launched. The Mumbai factory was set up

in 1924 and Peek Freans UK, acquired a controlling interest in BBCo. Biscuits were in big

demand during World War II, which gave a boost to the company’s sales. The company

name finally was changed to the current "Britannia Industries Limited" in 1979. In 1982 the

American company Nabisco Brands, Inc. became a major foreign shareholder.

1.3 Product Range

Britannia ITC Ltd Parle

Tiger

Nutrichoice Junior

Good Day,

50 50,

Treat

Pure Magic,

Milk Bikis

Good Morning.

Sunfeast

Marie

Dream cream

Milky Magic

Fit kit

Choco Nut

Butter Nut

Parle-g

Krack-Jack

Monaco

Kreams

Hide and Seek

Milk Shakti

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1.4 Market Share

Indian Biscuits Industry seems to be the largest among all the food industries and has a

turnover of around Rs.3000 crores. Indian subcontinent is known to be the second largest

manufacturer of biscuits, the first being USA. The industry is classified under two sectors:

organized and unorganized.

ORGANISED

SECTOR

UNORGANISED

SECTOR

70% 30%

Fig: Market share sector wise

Parle, whose dominance of the glucose category was under threat from Sunfeast and

Tiger, is now regaining market share. While Britannia’s market share in the glucose category

(value terms) has fallen to 9 per cent in the year 2012 from 11.6 per cent two years ago, ITC

has seen its market share drop in the glucose segment to 8.6 per cent in 2012 from 9.4 per

cent in 2010. As glucose segment has been growing significantly lower than biscuit market

growth rates in the last couple of years. Consumers are upgrading to better options - superior

in sensorial delivery or superior in nutrition delivery to the ordinary glucose biscuit. Growth

rates for the glucose segment are around a third of the biscuit market growth rates.

Meanwhile, Parle Products has seen an increase of market share in glucose category to 78 per

cent in 2012 from 74.7 per cent in 2010.

10

Fig: Percentage of market share in revenues of 2011-12

Britannia enjoys four times relative market share of its next competitor in health-

focused biscuits (Nutrichoice) and is neck to neck with ITC in the premium cream segment.

In volume terms in glucose segment, Britannia has seen a drop in market share to 8.6 per cent

in the year 2012 from 12 per cent in 2010. Similarly, ITC has seen a dip in share to eight per

cent in 2012 from 9.2 per cent in 2010. Parle Products has increased in market share (volume)

to 79.3 per cent from 75 per cent in 2010.

In value terms, glucose category has increased by 7.5 per cent in 2012, cream and

cookies have increased by 39 per cent and 15.5 per cent respectively. While glucose category

has declined 1.5 per cent in 2012 (in volume term), cream and cookies categories have

increased by 21.8 per cent and 5.5 per cent, respectively.

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1.5 SWOT ANALYSIS OF FMCG SECTOR

Strengths:

1. Low operational costs

2. Presence of established distribution

networks in both urban and rural areas

3. Presence of well-known brands in

FMCG sector

Weaknesses:

1. Lower scope of investing in technology and

achieving economies of scale, especially in small

sectors

2. Low exports levels

3. "Me-too" products, which illegally mimic the

labels of the established brands. These products

narrow the scope of FMCG products in rural and

semi-urban market.

Opportunities:

1. Untapped rural market

2. Rising income levels, i.e. increase in

purchasing power of consumers

3. Large domestic market- a population

of over one billion.

4. Export potential

5. High consumer goods spending

Threats:

1. Removal of import restrictions resulting in

replacing of domestic brands

2. Slowdown in rural demand

3. Tax and regulatory structure

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CHAPTER 2

THEORETICAL FRAMEWORK

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2.1 Review of Researchers:

Titus R., Sengupta D. (2013) conducted a research work to get an understanding of the

distribution process of ITC and also that of its competitors. The distribution process, although

being quite similar, differs in the schemes and offers provided to the retail outlets. The tough

competition in the FMCG sector makes it important to constantly revise the schemes as per

the market conditions. Understanding the taste and preference of the consumers provide the

useful insight into the market conditions and helps companies devise their schemes

accordingly.

The taste of the consumers change constantly and they need a change or newness in the

products that they use. They also look for value for their money and want the companies to

provide them with the best deals possible. Little differences in the products make the

consumer choose one product over the other and so the companies need to provide their

consumers with the best deals so that they increase their customer loyalty towards their

product and get more and more consumers to choose their product.

In the biscuit segment the major players are Britannia, Parle, Cadbury and ITC. Britannia and

Parle have the advantage of time as they have been in this sector for a very long time and

people relate to their brand due to this. ITC is a fairly new company to enter this sector but

their products have gained popularity and continue to do so.

The major findings based on information collected from the distributors, projects that

Britannia has a good hold on the market in terms of distribution strategies and also that

Britannia has managed to get a good market share in the biscuits category. People also

perceive Britannia as a very reliable brand. They provide the retail outlets with better offers

and also they have popular biscuits in the healthy snack section. When it comes to a

comparison with competition, the distribution process of Britannia, Parle and Cadbury is

pretty much the same as that of ITC. Orders are taken daily and the delivery is done the next

day. Daily remittances are paid to the company. The credit period allowed to the outlets is

also roughly a week. The distributors give training to the salesmen for their better

performance. The salesmen are taught how to talk to the outlet owners and how to convince

them on buying larger quantities of goods. There are a few stores that get more profit for the

14

companies as compared to the others and they are paid more attention to. Britannia takes

order twice a week for them and gives special discounts. Cadbury is focusing on only one

biscuit variant i.e. Oreo. It is mainly targeting the kids. Whereas Britannia and Parle have a

lot of variants, targeting people of all ages, and they also have ‘Nutri Choice’ and ‘Actifit’

which is more of a healthy snack made out of ingredients like Wheat and Ragi. Britannia and

Parle also have milk cream biscuits whereas the competitors like ITC and Cadbury do not

have milk cream biscuits. The brand ‘Britannia’ is very popular and the consumers already

have a positive perception about it. It is the most popular biscuit brand at present.

Jain M. (2012) in his research paper aims to study the Brand preferences and the factors

affecting Brand preferences of the age group 07-14 years. Findings of this research paper will

help marketers of FMCG industry in understanding behavior of the age group 07-14 years as

consumers and to design suitable marketing strategies.

Based on research most preferred brands among following product categories i.e. Toothpaste

– pepsodent, Biscuits – sunfeast, Health drinks – bournvita, Chips – lays. Prominent factors

driving brand choices in different product categories are advertisements, packaging, taste,

flavour and brand image. Kids today are exposed to plenty of brands through peer pressure,

kid’s empowerment (parents providing them enough pocket money to spend), and

advertisements whose objectives are: building brand preference, encouraging switching to

your brand & changing customer perceptions of product attributes.

Dala M. (2013) in his article, ”ITC Foods expanding distribution network in small towns &

villages” describes the various opportunities exist in the rural India. ITC Foods, the fastest

growing business of cigarette maker ITC Ltd, is aggressively expanding distribution in small

towns and villages, where it trails rivals such as Britannia Industries Ltd and Parle Products

Ltd. It makes Sunfeast biscuits and Bingo chips, expects increased distribution in rural areas

and new product launches in biscuits and snacks to help it grow sales by 28-30% this year.

According to Chitaranjan Dar, chief executive ITC Foods, “We’re going to make products

available in small towns and rural areas, which were earlier confined only to cities. For

example, if we had 1,000 stocking points in a region, we’ll now have 3,000 stocking points”.

We’re appointing new wholesalers, stockiest. Our strategy is to intensely market our products

in rural areas. ITC Foods gets about 30-35% of its business from the villages. The number

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would increase to 35-40% in two years. It’s not that growth in urban is saturated, it’s just that

the opportunity in rural areas is immense and consumers there are premium zing (trading up).

He also added, the increasing distribution in rural areas is important for ITC Foods, which

likely accounted for over 11% of ITC’s sales last year, to keep up its strong growth rate as

Parle and Good Day maker Britannia are aggressively promoting their brands. ITC is India’s

third-largest biscuits maker after Parle and Britannia. For distribution clout, ITC Foods can

also tap into its parent company’s e-Choupal network, which involves working directly with

farmers on obtaining materials and delivering products.

Apart from Sunfeast and Bingo, ITC Foods’ brands include Kitchens of India packaged food,

Aashirvaad flour, minto and candyman sweets and Sunfeast Noodles. These brands likely

brought in sales of over Rs.4,700 crore in the year ended March.

Dar said the unit will launch this year new brand variants under Sunfeast biscuits, its largest

business. It will also launch new products in chips and confectionary.The whole idea behind

launching new products in biscuits is to strengthen the Sunfeast brand at the premium level.

They are also looking at getting into the dairy business, which will be launched in a year from

now.

Bhushan R. (2010) in his article on “Parle surges ahead of Britannia to become leader in the

Indian biscuit market” describes Parle stronger distribution and ability to reach consumers

faster at lower distribution costs than Britannia.

Indians spend more on biscuits than on toothpastes, skin-care products, shampoos and instant

noodles put together, and Parle Products has surged ahead of Britannia Industries to become a

clear leader in the Rs 11,000-crore-plus market, say Nielsen data. The country spent Rs

11,295 crore on biscuits in the 12 months ended March 2010 compared with Rs 2,300 crore

on toothpastes, Rs 3,500 crore on skin-care products, Rs 2,400 crore on shampoos and Rs

1,300 crore on instant noodles. And in the first half of the current financial year, it has

already spent Rs 6,320 crore on biscuits, according to The Nielsen Company, the country's

largest market researcher.

Parle Products has played a better volumes game, backed by stronger distribution, especially

in rural markets, and more competitive pricing. Parle has had stronger distribution and has the

16

ability to reach consumers faster at lower distribution costs. They have also converted single

pack size consumption into snacking options. The Rs 11,000 crore-plus and growing Indian

biscuit market is set for increased competition with an assortment of brands entering the

category, from established players such as Parle, Britannia and ITC, to new entrants such as

GlaxoSmithKline and United Biscuits, the world's third-largest biscuit maker. Companies

have been targeting volumes and aggressively pushing biscuits priced at Rs 5 and Rs 10 to

counter inflationary pressures and prevent consumers from switching to cheaper brands.

A low-margin business, price hikes in the category are rare because even a marginal increase

negatively impacts consumer off take. Glucose is the largest-selling biscuit segment,

followed by cookies and cream.

2.2 Distribution Channel Mechanism in FMCG

The FMCG sector is witnessing demand growth again, driven by improving reach, organized

retail and innovative channels, higher usage – driven by affordability and rising incomes

driving aspiration levels.

The supply chain of products in the FMCG market in India is one of the longest supply

chains an industry could really have. There are as many as 5 levels of intermediaries involved

in the entire supply chain through which a product passes before reaching the end consumer.

What has been observed is that even though these FMCG companies are big multinationals

and Indian but face a major challenge of making their products available in the market in the

right quantities and in the right time. This is simply because these companies don’t really

have a wide network of sales agents and other force which is required and is ideal for catering

their products to the markets. This aspect is taken over by distributors, wholesalers and

retailer whose margins on these products actually double the price of these products when a

final consumer buys it.

The margins kept by these intermediaries range from 2% to 5%. The products in this industry

are transported from manufacturing units via c & f agencies or warehouse to distributors who

further sell the same to wholesalers or stockiest who finally sell it to the retailers in the

market. These products are transported either via roadways or railways within the domestic

markets and normally don’t take more than a week to reach the retailers.

17

FMCG products are normally a high volume ball game and products have to essentially be

available in the market at all given points of time and at all given points of purchase and

therefore the distribution activities are highly volatile and dynamic.

Since it’s a volume game, manufacturers make all possible efforts to boost sales and promote

their distributors to earn more and more orders from the retailers and wholesalers.A close

check is maintained on the flow of the products on a daily, weekly, fortnightly and monthly

basis to determine the trend in the business and flow of products and consumption. This

activity also helps to find out drawbacks of the distribution system, if any, and rectify them

within time.

2.2.1 Distribution Channel : ITC

ITC provides products and services of superior quality and value by sourcing its technologies,

equipment and inputs from reputed international and Indian manufacturers and suppliers.

Common values, relating to human rights performance, are shared across the entire supply

chain because ITC is committed to the importance of a socially responsible and accountable

supply chain.

As a large and multi-product enterprise whose products are benchmarked nationally and

internationally, ITC's main supply chains can be grouped as follows:

1. For all its operations, technology, machinery and equipment are sourced from reputed

and globally benchmarked suppliers/vendors who are expected to follow

internationally accepted norms and standards on human rights.

2. ITC's major businesses are vertically integrated across several Divisions. A

substantial part of the supply chain is therefore internal through strategic backward

linkages. Common values relating to human rights performance are shared across this

supply chain.

3. Being a major agri-based company, the agriculture sector is a major supplier of inputs

for its operations. The bulk of agricultural commodities are procured from state

controlled trading platforms and the open market. A very small proportion of ITC's

business consists of supply chains comprising local vendors and suppliers. The policy

framework for such entities is enunciated separately in 'Policy to Ensure Respect for

Human Rights across the Supply Chain'.

18

DISTRIBUTION CHANNEL OF ITC

19

FLOW DIAGRAM

DISTRIBUTION SYSTEM

ITC uses FIFO method to reduce the wastage of goods due to expiry.

They also keep the good on constant move from low sales area to high sales area.

The company collects all the expired goods four times a year, and destroys them.

Retailers must return expired or damaged products within six months after the date of

expire.

Adjustment for them is done in three months time.

ITC provides their retailers with racks, hangers, etc to display the products.

The benefits received by the retailers depend upon their sales volume and also the

location of their shops.

ITC has hired IMRB to do the market research.

20

2.2.2 Distribution Channel : Parle

The Distribution Channel Network

The Channel Members of the Distribution Network of Parle

The Parle distribution network for biscuits has essentially four levels as enlisted below:

Parle Depots

Wholesalers and Distributers

Carry Forward Agents (if required)

Retailers

Manufacturing Unit of Parle at Various Locations

Parle Depots

Wholesalers and Distributors

Retailers

Procurement: Customers

21

The Channel Members and Logistics

Parle has nearly 1500 wholesalers, catering to 425000 retail outlets directly or indirectly. A

two hundred strong dedicated field force services these wholesalers and retailers.

Additionally, there are 31 depots and C&F agents supplying goods to the wide distribution

network. Parle has level 1, level 2, level 3 distribution channels levels.

Level 1:

Availability of Parle biscuits at all departmental stores across the length and breadth of the

country.

Level 2:

Since it's an FMCG product this channel exists for customers scattered throughout the

country.

Level 3:

Mass consumption and suitable for National and International coverage. For e.g. Parle's

international operations consist of serving markets in the Middle East, Africa, South

America, Sri Lanka, Australia and North America for which the 3 level distribution channel

exists.

2.2.3 Distribution Channel : Britannia

Supply Chain Entities

The Supply Chain entities of Britannia can be shown through the following-

CMU

(Central Manufacturing Unit)

Depot

Distributor

Retailer

Customer

22

The supply chain of Britannia is primarily based on two products. These are:

A) Imported products B) Domestic products. The Imported product Supply chain can be

explained by taking the following example -

Crude Palm oil comes fromIndonesia and Malaysia

Shipped to Kandla Port

Refining of Crude Oil

Traders supply refinedpalm oil to Britannia

The Domestic product Supply Chain can be illustrated by the following example -

Supplier(Wheat)

ProcurementCycle

Replenishementand

manufacturingCycle

Supplier Supplier(Sugar) (Butter)

Company/CP

C N’Fagent

Distributors

Wholesaler

Retailers

CustomerCycle

Customers

23

Distribution Model

The distribution system of Britannia can be well illustrated through the following-

Distribution SystemBritannia Factory

Distributor

(Institutional)

Institutions

Eg. Hospitals

Distributor

(Retailer)

Retailer

Customer

Britannia – An Intensive Distribution Framework

Britannia follows intensive distribution as biscuits and cakes need to reach the consumer at

their nearest locations so this type of distribution channel is issued. This type of distribution

helps customer looks for location convenience.

Britannia two different kinds of distribution networks one is for dairy products and other one

is Bakery products. Here distribution network of bakery products has been discussed. In

Bakery products Britannia applies two kind of distribution system. These are given below:

1) Mass Distribution 2)Selective Distribution

1. Mass Distribution

Britannia use to produce general FMCG products which are in form of packaged food and

which need not to have very special kind of distribution strategy. Like other FMCG

companies Britannia also use mass distribution system. Since all almost all the products of

Britannia are of low price, repeat purchase items, and does not require much of effort from

customer side. So ultimately these products are sold on mass distribution basis.

24

There are four C&F of Britannia in NCR region:

1)Mudka – Bahadurgarh

2)Bakoli

3)Gaziabad

4)Kundali- Sonipat

49 distributors are working under these four C&F.

Distribution Network

The distribution network of Britannia’s products from top to bottom is given below:

First of all stock is sent to these C&F, and then this stock is sent to the various distribution

canters of Britannia. All of these distribution centres do not contain products of any other

brand. Now this supply of stock is based on full e-network. This system has been provided a

particular terminology i.e. “UDAAN PACKAGE”. In this system the accountant who is in

distribution centre submits an online order to the C&F. Then in C&F the order for a particular

distribution centre is automatically generated and further fulfills by C&F.

Britannia has established these C&F at very appropriate locations. As soon as there is a

demand generated in any distribution centre These C&F are able to fulfill the demand within

four to six hours. So it is clear that C&F provides quick delivery to the distribution centre.

But in order to meet this demand the C&F also has to keep some inventory with it.

Now if we talk according to the distribution point of view we will find that Distribution

Centre has to also make some inventory in order to meet any kind of scarcity or instant

demand. Under this distributor five sales men work and they cover the entire area which is

mentioned above. Here the distribution is again divided into two parts -

A). General Shops

Distribution to general shops is done by two sales men. They cover 30 to 40 outlets every

day. Now the number of these outlets is not content, it varies time by time as they are not

very loyal to the company and also does not contribute to very prominent sale.

B). Key Account Outlets (KAT)

These outlets are covered by two sales men and they take order from these outlets biweekly.

These sales men visit twenty to twenty five outlets every day. These outlets are very much

loyal to the company and provide prominent business to the company. So from the sales point

25

of view these outlets are very important. Now the stock is moved from distributor to the

retailers. For selling the stock on the retail outlets there are two processes:

a). Order Booking

There are separate sales teams who perform this task. For example one sales team has to go

for order booking. In this process the salesman first go to shop to shop and book the orders

from there. On the other day or some times on the same day the delivery van goes every

where in order to fulfill the orders. Now due to this method distributor not only gains the

sales as well as looses the sale. Order booking process is done in Britannia on Biweekly or

Weekly basis. Sometimes Order Booking and Ready Stock both the task are performed by the

same sales man.

Benefits of Order Booking

In this process the distributor always remains in better position to forecast the demand. As the

sales man has already an order list. This helps not only to the distributors but also to the C&F

as well as finally to the factory in order to make more realistic demand. Since the sales man

does not have to do more but to book the order, it enables the sales man to search out the new

opportunities in the market. It helps not only to the company but also to the sales man as sales

man gets special rewards from the company side. Since during this process the sales man gets

extra time in which he/she gets enough time to interact with the retailer which is again very

important. Actually the retailer does not want only profit but also a better respect and

courtesy from the salesman. So in such situations if the retailer is getting good time with the

salesman, surely he will be more loyal to the company. Also during this period the sales man

could increase the visibility of its products in the shelves of the shop keeper.

Drawbacks of Order Booking

Along with all these benefits there are some drawbacks also involved in this advance booking

process. Some times sales man takes orders from the shopkeeper and assures him that the

order will be fulfilled on next day. But during this period the sales man of other company

comes and provides the same product at some discounts or with some schemes in this

condition the shopkeeper takes the stock from that sales man.

b). Ready Stock

In this process the sales man carry the team along with him which contain a delivery van, a

driver, and one or two helpers. The sales man takes order from the shops and also places the

26

order at the spot. There are following benefits and drawbacks of this method. Almost thirty to

forty outlets are visited by this way.

Benefits of Ready Stock

The retailer gets stock on the spot without any delay. The sales man does not give a chance to

the retailer to switch any other brand. The defected stock is replaced on the spot.

Drawbacks of Ready Stock

The sales man does not get enough time; he simply dumps the stock and moves from one

store to another store. Even then he does not cover many retailers, as the delivery process

takes a lot of time. What amount of stock should be carried by the sales man is also can not

be predicted. The sales man moves to pre decided path and could not find new shops, so the

market penetration by the sales man is also very rare in this case.

2. Selective Distribution

Selective distribution is done for premium products of Britannia. There are eight SKUs, for

which Britannia uses selective distribution. These brands are:

a) Chochlor Intoxication

b) Almond Addiction

c) Chocolus Addiction

These products are very costly and lie between the prices ranges of Rs. 150 to Rs. 200. Now

these products are not supplied by the distribution centre but directly from C&F. These

distributions are done through the Merchandiser Team.

27

Chapter 3

Research Methodology

28

3.1 Research Objectives

Primary Objective

To study distribution practices of ITC, Britannia and Parle Industries Limited in contrast with

each other.

Secondary Objective(s)

To identify factors influencing retailers’ brand choice for biscuit products

To examine comparative service quality of ITC, Britannia and Parle across retailer

base.

To provide suitable recommendations to enhance distribution practices of ITC,

Britannia and Parle.

To provide suitable suggestions to increase retailer base of ITC, Britannia and Parle.

To know how the distribution strategies of ITC, Parle and Britannia are effective in

comparison to each other.

3.2 Type of Research: Descriptive

A descriptive design was followed. Parameters were derived from the personal interaction

with the retailers. Parameters were also derived from the secondary data analysis of various

research papers. In this the research process was formal and structured set of questions in the

form of questionnaire was there.

3.3 Methods of Data Collection

There are two types of data collection method – Primary and Secondary.

Primary Data

This data is original in nature and is generated from results of personal interaction with

various retailers or respondents (in case of questionnaire).

Secondary Data

Secondary data was acquired through various research publications done in this particular

area.

29

Area Covered

Noida sec-51

Noida sec-44

Atta market

Noida sec-50

3.4 Sample Design

Sampling Unit: -

Departmental Stores

Kirana Stores

Convenience Store

Sample Size: - The sample size is 50.

Sampling Technique: - Normal Convenience sampling technique was followed.

3.5 Instruments Used

Questionnaire :

Nominal scale

Structured questions.

Analysis :

Pie Charts

Bar Graphs

Tables

30

3.6 Limitations

Though this study was taken up with sincere efforts to accomplish the objectives,

there were certain factors which created hurdles in accomplishing the work.

These factors are:-

1. Out of the total respondents surveyed some of them were not cooperative due to

which accurate prediction was not possible

2. The responses given by the respondent are assumed to be true however chance of

getting false and biased information can’t be over look fully

3. Time constrain is the big limitation of the study. A comprehensive study could not be

made due to paucity of time. All the data and information had to be collected within

the limited days.

4. People were hesitant to disclose the true facts.

5. Environmental constraint.

6. Retailers did not cooperate when asked about their policies regarding credit policies

with the direct salesmen.

31

CHAPTER 4

DATA ANALYSIS AND FINDINGS

32

4.1 Analysis

Q1. Which brand of biscuits do you stock in your store?

Inference:

Majority of the retailers stock ITC, Britannia and Parle at their store. Out of 50 retailers that

were visited, 46 of them were stocking all three brands of biscuits. Parle was being stocked in

almost every retail outlet.

Q2. Product Portfolio:

ITC (Sunfeast) BRITANNIA PARLE

Glucose 50-50 Parle-G

Nice Tiger Krack Jack

Mikly Magic Good Day Milk Shakti

Dark Fantasy Treat Hide & Seek

Dream Cream Marie Gold Monaco

Snacky Little Hearts Coconut

Marie Light Nice Time Marie

33

Rate the companies according to your preference which has the best varieties of biscuits?

(1 = Best, 2 = Good, 3 = Average)

Inference:

Out of 50 samples surveyed, 42% retailers consider ITC as best in varieties of biscuits

because of the large variety of biscuits in its product line. While 38% considers it good &

20% considers it average in providing the product variety in biscuits.

Out of 50 samples surveyed, 40% retailers consider Britannia as good in varieties of biscuits.

While 34% considers it best & 16% considers it as average in varieties of biscuits.

Out of 50 samples surveyed, 50% retailers consider Parle as average in varieties of biscuits.

While 30% considers it best & 20% considers it as good in varieties of biscuits.

34

Q3. Are there any other company products being carried by the Distributor

Salesman Delivery Van (Multi-brand Distributor or Exclusive Distributor) ?

Inference:

The DS van for ITC carries the least products of other companies and it is 10% of the total

DS van for ITC visiting the retailers .The DS van of Parle has the maximum of other

company products and it is 20% of the total DS van visiting the retailers for Parle’s

products .And 16% of the total Ds van for Britannia has other company products.

Q4. How often does a Distributor salesman visit you?

35

Inference:

The chart shows that the Distributor salesman of every company visits the Retailers Once a

Week. But on some shops the Distributor salesman of both ITC & Britannia visits once in

Two Weeks. Whereas Distributor salesman of PARLE visits twice a week in some areas,

while distributor salesman of ITC & Britannia visits some retailers on fortnightly basis.

Q5. What is the time gap between order capture and delivery?

Inference: 4% of the retailers surveyed agree that ITC delivers its orders on the same day

and 16%,72% and 12% of the retailers for ITC agree that the order is delivered after one, two

and three days respectively .For Britannia the order delivery after one , two and three days is

agreed by 24 %,52% and 20% respectively of the retailers surveyed for Britannia products .

For Parle the order delivery after one , two and three days is agreed by 12 %,72% and 14%

respectively of the retailers surveyed for Parle products of biscuits. Only 2% of the retailers

surveyed agreed that Parle delivers orders in a time of more than three days.

36

Q6. Are your orders always received OTIF (on time- in full)?

Inference: ITC has 51% of the orders not met in on time in full and 25% of orders in

Britannia and 20% of orders in Parle are not met in on time and in full. It can be seen that

Parle has most orders in OTIF followed by Britannia and then by ITC.

If No, then generally what % of quantity is being delivered?

37

Inference: The percentage of quantity delivered for ITC is the most for the range in (0-20)%

and the least for the range (more than 60)% .Britannia has almost same amount of quantity

delivered for all the ranges and lastly Parle has the most percentage of quantity delivered for

the range (more than 60)% and the least for the range(0-20)%.

Q7. What type of payment terms you get from the company?

Inference: For ITC, 51% of the retailers get payment in terms of cash and 32% of them get

only credit whereas 17% get both in cash and credit. For Britannia , 45% of the retailers get

payment in terms of cash and 30% of them get only credit whereas 25% get both in cash and

credit .Lastly for Parle, 48% of the retailers get payment in terms of cash and 36% of them

get only credit whereas 16% get both in cash and credit.

38

Q8. On the basis of following parameters, rate the companies?

39

Inference: For ITC , the margins, product packaging , promotional activity , return policy ,

easiness in placing order has average ratings of 2.56,3.16,2.16,3.92,4.04 respectively. For

Britannia , the margins, product packaging , promotional activity , return policy , easiness in

placing order has average ratings of 2.26,3.42,2.3,1.82,3.98 respectively. For Parle , the

margins, product packaging , promotional activity , return policy , easiness in placing order

has average ratings of 2.36,3.26,1.94,2.24,3.92 respectively.

Q9. How do the following companies promote their product at your outlet?

Inference: For ITC , the promotion done through posters, standees, contests, extra quantity ,

shelf space is 26%,14%,12%,36%,12% respectively of the retailers covered through the

survey study . For Britannia , the promotion done through posters, standees, contests, extra

40

quantity , shelf space is 36%,4%,22%,8%,28% respectively and for Parle , the promotion is

done through posters and extra quantity which is 6% and 12% respectively of the retailers

surveyed for Parle as the preferred company.

Q10. What kind of problems do you come across?

41

Inference: Stock replacement issues for ITC, Britannia, Parle are 3%,54%,43% respectively

of the total retailers surveyed . Promotional issues for ITC, Britannia, Parle are

22%,35%,43% respectively of the total retailers surveyed . Quality issues for ITC, Britannia,

Parle are 32%,18%,50% respectively of the total retailers surveyed .Delivery issues for ITC,

Britannia, Parle are 0%,25%,75% respectively of the total retailers surveyed . Stock return

issues for ITC, Britannia, Parle are 6%,53%,41% respectively of the total retailers surveyed .

4.2 Findings

Some of the findings from the study are :

1) All the retailers are stocking almost all the three brands of biscuits. Parle-g is the

oldest among the other brand of biscuits so it has a unanimous choice amongst the

retailers covered through the survey study. The markets share of Parle is the

maximum as compared to Britannia and ITC. But ITC has the widest product variety

followed by Britannia and then by Parle.

2) The frequency of visits of the Distributor salesman once in a week is the most for

ITC, followed by Britannia and then by Parle .Although the distributor salesman of

Parle prefers visiting the retailers twice a week. Thus it can be incurred that ITC,

Britannia has more frequency of DS visiting the retailers but the frequency of visits of

the DS for Parle is more than the other two companies.

3) The distributor delivery van for ITC has the least other company biscuit products

followed by Britannia and then by Parle. The DS van for Parle has the maximum

other company brand of biscuits as it is less preferred by the retailers to stock in

.From the survey study it can be incurred ITC performs its distribution practices

through exclusive distributor and Parle has a multi brand distributor pattern for its

distribution practices .

4) From the study it was found out that the average time gap between the order

placement and it’s delivery is 2 days for all three companies. According to the

retailers, after the order is placed, most of the times each company takes 2 days for

delivery. In few cases ITC is able to deliver the order on the same day (although a

42

very less percentage of orders are being delivered ) whereas in other few cases the

time gap for order capture and delivery is more than three days for Parle.

5) Parle has the most number of orders met in on time and in full and then followed by

Britannia and lastly by ITC. As mentioned above the survey study clearly indicates

that ITC is the most preferred company by the retailers to stock in orders and thus the

frequency of problems in stocking orders on time in full is more as compared to

Britannia and Parle. Parle has the least preference amongst the retailers to stock its

products thus it has less on time in full stock issues. Also the quantity of delivered

order for ITC is least and very less percent of the total order is delivered in time .The

order delivery for ITC is majorly done in fractions as the distributor has to cover a

large segment of retailers. Britannia has an average percentage of orders delivered in

time and Parle has the maximum percentage of orders being delivered in time and in

good quantity as a result of distributors visiting the retailers twice a week which is not

followed by DS of Britannia and ITC.

6) The payment terms in cash to the retailers is the most for ITC followed by Parle and

then by Britannia .Payment in Credit is mostly practiced by Parle followed by ITC

and then by Britannia. Both cash and credit terms of payment is given mostly by

Britannia first and then by ITC and lastly by Parle. Thus it can be incurred that ITC

tries to pay the retailer in time which is a result of its increasing brand value and

choice among retailers and the end consumers .Parle on the other hand prefers to give

credit payment so as to have future orders from the retailers trying to keep the

retailers as their potential customers .

7) In terms of margin almost every company is providing similar margins to the retailers

due to competitive reasons. Britannia has the best product packaging followed Parle

and then by ITC. Retailers when asked about the promotional activities provided by

the companies , they revealed that in some cases the distributors do not pass the

promotional benefits to them .However Britannia leads in promotional activities as

they regularly come up with contests for promotion. ITC has the best return policy

amongst the retailers as ITC is quick in returning damaged and expired products

whereas Britannia has maximum stock related problems among the retailers. Through

the conducted survey it was found that easiness in placing the order is almost the

same for all the three companies.

43

8) ITC does major of its promotion through the retailers in the form of providing extra

quantity in the products and through posters, banners. Standees, contests and shelf

space are considerably chosen as a less tool for the promotion activity. ITC being a

growing brand of biscuits tries to amuse the retailers which are basically the kirana

shop retailers and local shopkeepers through posters, banners and hoardings and as

these retailers have scarcity of space in their shops standees, shelf spaces are

neglected by a major set of retailers. Britannia does it promotion activity majorly

through contests like – “Britannia Future Minds Contest”, “ Bourbon Star of the Year

Contest” and through banners and posters. Parle on the other hand follows only a

specific set of promotional tools like posters, banners and providing extra quantity in

the products.

9) ITC has problems with the retailers on promotional support issues as it follows its

promotional activities through all of the tools of promotion so the frequency of issues

arising on promotional means are more. Britannia has problems on stock replacement

and return issues as it is facing fierce competition from the other leading brand of

biscuits thus creating more stock return and replacement issues. Also from the survey

it can be incurred that Parle has problems on both stock return and promotional

support from the retailers.

44

CHAPTER 5

SUGGESTIONS AND CONCLUSIONS

45

5.1 RECOMMENDATIONS:

1) All DS should be provided with the mobile phones so that in case of Stockouts in

retail shops the retailers can contact DS and place their orders. So buying of

substitute products by the retailers can be avoided.

2) ITC needs to improve its working primarily on the service and delivery front. The

company is also suffering as OTIF levels are very low, and this lack of regular

supply is turning retailers against our products.

3) During the visit into the market, it was found that in most of the shops, the

complaints against old stock being delivered by Britannia and Parle were

registered, which constitute a major portion of the Distribution and Delivery

stock. So, to get rid of it, the companies should work upon their logistic system

and stock reach the market soon and will also reduce dissatisfaction level among

the retailers as well as consumers against expired stock.

4) Point of Purchase & Display activities should be on regular basis.

5) It was also found during the market-visit that many retailers complained that they

are not getting the stock what they ordered previous day, so before the market-

visit, it should be strictly checked that DS palm top are fed with proper Stock on

hold.

5.2 SUGGESTIONS

Work Processes

A) A daily attendance record to be maintained for salesman at the WD point for all the

companies. This would help in tracking the time the DS spends at the WD point

before leaving for the market and help to minimize the wastage of time and

inefficiencies while issuing stocks.

B) A daily stock chart should be displayed and fed into the Palm-top carried by DS of the

company that would provide information as regard the SOH for various categories

and the expected arrival time for the next set of deliveries. This would make the DS

aware of SOH of various categories and facilitate accurate order booking. This is

important, as a large number of respondents feel that DS undertake orders without

being aware of supply of stocks and hence have low OTIF levels at retail outlets.

46

C) Delivery chart to be prepared the previous evening and stocks to be sorted

accordingly. This would help to minimize time for loading of stocks into the delivery

vehicle the next morning.

D) DS Incentive should be at the end of the month on basis of Time level stock delivery,

especially for slow moving categories.

E) Distribution and delivery tracking should be undertaken for retail outlets also. This

would help to ascertain outlets where are stocks are not moving and also help to

understand the stock trends for particular routes.

F) Daily Stock Register should be monitored on a weekly basis by the Area Executive.

G) Display space should be purchased in big retail outlets and volume class A & B

outlets. These outlets have a high visibility potential and also have higher off take for

slower mover biscuit products of the company.

Recruitment & Training of DS

Care needs to be taken as regards recruitment of DS and also their training as the salesman is

the face of the company at the retail outlet.

Basic guidelines should be provided for recruitment of new DS. Also the minimum

criteria should be specified for qualification.

Area Executive should play a supervisory role in the recruitment and selection of new

DS.

AE to provide training inputs to new DS on the following aspects :

Range-selling

Merchandising

Time-planning

Objective setting

Target setting

Rapport building with trade

Accurate order capture

47

5.3 Conclusion:

ITC, Britannia and Parle try to increase its retailer base through the distribution

practices it follows. Although the market share of Parle-g, a product of the brand Parle

is comparatively more than the other brands, ITC is able to provide a large set of

product variety to the retailers. Parle being an old brand of biscuit has an extensive

reach throughout the urban and rural market but with the advancing time it has faced

fierce competition from both Britannia and ITC.

The distribution practices for the companies is decided on the basis of distributor

salesman’s frequency of meeting the retailers, the role of distributor salesman as an

intermediary between the retailer and the company , the type of distributor – single-

brand or multi-brand ,easiness in placing orders, on-time in full orders , order capture

and delivery time gap , payment terms of the company , promotion of the company

brand of biscuits through retailers and the fulfillment of the retailer’s grievances

regarding the company’s products.

ITC, Britannia has more frequency of distributor salesman visiting the retailers but the

frequency of visits of the distributor salesman for Parle is more than the other two

companies.ITC has maximum number of distributor salesman visiting the retailers

once in a week whereas Parle has the maximum number of DS visiting the retailers

twice in a week ,although the number of distributor salesman for Parle visiting the

retailer is lesser than the other two companies. So it can be concluded that ITC tries to

keep a frequent contact relationship with its retailers whereas Parle fails in doing so.

Parle on the other hand tries to keep a strengthened bond of relationship with the

retailers only during the time when it gets order from the retailers thus explaining the

act of visiting twice the retailer in a week. The growing competition between

companies has made ITC to follow exclusive single-brand distribution practices when

other companies like Britannia and Parle follow multi-brand distribution.

The frequency of problems for ITC in stocking orders on time in full is more as

compared to Britannia and Parle. With the change in customer’s choice ,in spite of

having the maximum market coverage and share , Parle has the least preference

amongst the retailers to stock its products thus having less on time in full stock issues.

48

The order delivery for ITC is majorly done in fractions as the distributor has to cover

a large segment of retailers. Britannia has an average percentage of orders delivered in

time and Parle has the maximum percentage of orders being delivered in time and in

good quantity as a result of distributors visiting the retailers twice a week which is not

followed by DS of Britannia and ITC. Thus it can be concluded that Parle has the

maximum number of orders on time- in full. ITC follows payment terms with its

retailers in cash , Parle does the same in credit terms of payment whereas Britannia

follows both cash and credit terms of payment to the retailers. Thus it can be

concluded that ITC tries to pay the retailer in time which is a result of its increasing

brand value and choice among retailers and the end consumers . Parle on the other

hand prefers to give credit payment so as to have future orders from the retailers

trying to keep the retailers as their potential customers.

ITC has the least time gap for order delivery but the frequency of order delivery is

very less. On the other hand all the three companies are able to deliver the orders after

a time gap of two days with most of the orders being fulfilled and delivered. Thus it

can be incurred that time gap for large quantity of orders delivered is the same for all

the three companies i.e after two days but for a very less frequency of order delivery

ITC delivers orders on the same day and on the contrary Parle takes more than three

days . ITC does major of its promotion through the retailers in the form of providing

extra quantity in the products and through posters , banners. Standees ,contests and

shelf space are considerably chosen as a less tool for the promotion activity.ITC being

a growing brand of biscuits tries to amuse the retailers which are basically the kirana

shop retailers and local shopkeepers through posters ,banners and hoardings and as

these retailers have scarcity of space in their shops standees, shelf spaces are

neglected by a major set of retailers. Britannia does it promotion activity majorly

through contests like – “Britannia Future Minds Contest”, “ Bourbon Star of the Year

Contest” and through banners and posters. Parle on the other hand follows only a

specific set of promotional tools like posters ,banners and providing extra quantity in

the products.ITC has problems with the retailers on promotional support issues as it

follows its promotional activities through all of the tools of promotion so the

frequency of issues arising on promotional means are more.

49

Britannia has problems on stock replacement and return issues as it is facing fierce

competition from the other leading brand of biscuits thus creating more stock return

and replacement issues and Parle has problems on both stock return and promotional

support from the retailers. In terms of margin almost every company is providing

similar margins to the retailers due to competitive reasons. Britannia has the best

product packaging followed Parle and then by ITC. Retailers when asked about the

promotional activities provided by the companies, they revealed that in some cases

the distributors do not pass the promotional benefits to them .However Britannia leads

in promotional activities as they regularly come up with contests for promotion.ITC

has the best return policy amongst the retailers as ITC is quick in returning damaged

and expired products whereas Britannia has maximum stock related problems among

the retailers. Through the conducted survey it was found that easiness in placing the

order is almost the same for all the three companies.

Thus it can be concluded that to give older brands of biscuits a severe competition in the

market , ITC is far more efficient in providing better distribution practises as compared to

Britannia and Parle but the market share of Parle is maximum as it is the oldest brand and has

an extensive reach in the urban as well as the rural market. In terms of payment to the

retailers, time gap between order capture and delivery and return policies of stock , ITC leads

the other two brands of biscuits making it mass favourite among the retailers. However

Britannia leads in product packaging and in promotional activities through retailers in the

form of contests. Parle on the other hand is majorly favoured for its on time- in full orders.

50

BIBLIOGRAPHY

REFRENCES

BOOKS:

Stern L., Ansari A., Anderson E., Coughla A. (7th

edition 2009) Marketing Channels,

Distribution & Logistics Management, Pearson.

Malhotra Naresh K., Dash S. (6th

edition 2012) Marketing Research, Descriptive Research

Design, Pearson.

Havaldar K., Cavale V. (2nd

edition 2008) Sales & Distribution Management, Channel

Institutions, Tata McGraw Hill.

ARTICLES & CASE STUDY:

Titus, Sengupta (February 2013): Leveraging distribution networks for competitive

advantage: A Case of FMCG Channel Management at ITC Ltd, Asia Pacific Journal of

Marketing & Management Review.

Dala Mihir (April 2013): ITC Foods expanding distribution network in small towns &

villages, Live Mint & Wall Street Journal.

Bhushan Ratna (December 2010): Parle surges ahead of Britannia to become leader in the

Indian biscuit market, ET Bureau.

RESEARCH PAPERS:

Jain Mudit (December 2012): Analysis of Children Preference in Select FMCG Products in

Indore Region, Asia Pacific Journal of Marketing & Management Review.

51

WEBSITES:

http://www.itcportal.com/businesses/fmcg/foods.aspx

http://www.britannia.co.in/

http://www.parleproducts.com

http://www.livemint.com/Consumer/xlrm1t7W5MSenJsxCMXqJJ/ITC-Foods-

expanding-distribution-network-in-small-towns-vil.html

economictimes.indiatimes.com/.../ITC...biscuit.../4493619.cms

www.financialexpress.com/.../itc...biscuits.../328459/ - Angola

www.flex-news-food.com/.../ITC/itc-foods-plans -own-facility-biscuits.html

http://im.rediff.com/money/2006/jun/28spec.htm

52

ANNEXURE 1

Retailer questionnaire

Outlet Name: _______________ Location: ________

1. Which brand of biscuits do you stock in your store?(Multiple choice)

A) ITC B) Britannia C) Parle D) All of them

2. Product Portfolio:

ITC (Sunfeast) BRITANNIA PARLE

Glucose 50-50 Parle-G

Nice Tiger Krack Jack

Mikly Magic Good Day Milk Shakti

Dark Fantasy Treat Hide & Seek

Dream Cream Marie Gold Monaco

Snacky Little Hearts Coconut

Marie Light Nice Time Marie

Rate the company according to your preference which has the best varieties of biscuits?

(1 = Best, 2 = Good, 3 = Average)

ITC

Britannia

Parle

3. Are there any other company products being carried by the Distributor Salesman Delivery

Van (Multi-brand Distributor or Exclusive Distributor) ?

A) Yes B) No

53

4. How often does a Distributor salesman visit you?

ONCE A WEEK TWICE A

WEEK

THRICE A WEEK OTHERS

ITC

Britannia

Parle

5. What is the time gap between order capture and delivery?

Same Day 1 Day 2 Day 3 Day More than 3 days

ITC

Britannia

Parle

6. Are your orders always received OTIF (on time- in full)?

Yes No

ITC

Britannia

Parle

If No, then generally what % of quantity is being delivered?

(0-20)% (21-40)% (41-60)% More than 60%

ITC

Britannia

Parle

54

7. What type of payment terms you get from the company?

Only Cash Only Credit Cash + Credit

ITC

Britannia

Parle

8. On the basis of following parameters, rate the companies.

(1- Excellent, 2- Very Good , 3- Good, 4- Average, 5-Poor

Margins Product

Packaging

Promotional

Activities

Return

Policies

ITC

Parle

Britannia

9. How do the following companies promote their product at your outlet?

Poster/Banner Standees Contests Extra

Quantity

Shelf space

ITC

Britannia

Parle

55

10. What kind of problems do you generally come across?

Stock

Replacement

Issues

Stock

Return

Issues

Delivery

Issues

Behavioral

Issues

Quality

Issues

Pricing

Issues

Promotional

Support

Issues

Others

ITC

Britannia

Parle