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Comparing the Sales and
Distribution Structures of ITC and
PepsiCo
Group 2
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Contents
EXECUTIVE SUMMARY ................................ ................................ ................................ ....................... 3
SALES AND DISTRIBUTION: ITC ................................ ................................ ................................ ........... 4
COMPANY OVERVIEW ................................ ................................ ................................ .................... 4
SALES FORCE STRUCTURE ................................ ................................ ................................ .............. 5
SALES FORCE COMPENSATION AND INCENTIVES ................................ ................................ ............ 6
TRAINING................................ ................................ ................................ ................................ ....... 6
MEASURING SALES FORCE PRODUCTIVITY ................................ ................................ ..................... 8
TARGET SETTING ................................ ................................ ................................ ............................ 9
CHALLENGES IN MANAGING SALES TEAMS ................................ ................................ .................. 10
SALES BUDGETING ................................ ................................ ................................ ....................... 11
TERRITORY ALLOCATION ................................ ................................ ................................ .............. 14
CHANNEL CONFLICTS ................................ ................................ ................................ ................... 15
SALES AND DISTRIBUTION: PEPSICO INDIA HOLDING PVT. LTD. - FRITOLAY DIVISION ....................... 16
COMPANY OVERVIEW ................................ ................................ ................................ .................. 16
SALES FORCE STRUCTURE ................................ ................................ ................................ ............ 17
SALES FORCE COMPENSATION AND INCENTIVES ................................ ................................ .......... 18
TRAINING................................ ................................ ................................ ................................ ..... 18
MEASURING SALES FORCE PRODUCTIVITY ................................ ................................ ................... 20
TARGET SETTING ................................ ................................ ................................ .......................... 20
CHALLENGES IN MANAGING SALES TEAMS ................................ ................................ .................. 20
SALES BUDGETING ................................ ................................ ................................ ....................... 20
TERRITORY ALLOCATION ................................ ................................ ................................ .............. 21
CHANNEL CONFLICTS ................................ ................................ ................................ ................... 21
COMPARISON ITC AND PEPSICO ................................ ................................ ................................ ...... 22
CONCLUSION ................................ ................................ ................................ ................................ ... 23
APPENDIX ................................ ................................ ................................ ................................ ........ 24
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EXECUTIVE SUMMARY
While ITC and PepsiCo are strong competitors of each other, it is seen that the way they
reach their consumers is quite different from each other. Invariably, it is difficult to predict
which of the two companies is better in Sales and Distribution parameters as each have a
significant market to which they cater to. While the organisation structure of ITC is deeper,
PepsiCo has a flatter and unique structure. Each strives to keep their sales force motivated
with lucrative incentive schemes. For ITC, on meeting 95% of the sales target, the DSO gets
the prescribed incentive. On achieving sales greater than 95% up to 120%, the incentive is
scaled up on a pro-rata basis. On achieving sales greater than 120%, no further incentive is
given. However, PepsiCo likes to incentivise their employees even when they achieve 50%
target in 15 days. Both the companies invest in training and training is centrally managed by
the organisation. PepsiCo goes all out in giving freedom to their employees to choose
different training programs. They are given training cards which they can swipe for any such
program after their managers approval. ITC uses different parameters to measure the
productivity of the sales person. PepsiCo uses different tools to do that, information regarding
the tools was deemed confidential and hence not divulged by the ASM. ITC set sales targets
at ~20% over the previous month sales including seasonality factors and offers. This is fed
into their forecasting software which is a part of the SIFY Program which they use. That
gives them the sales forecasts. PepsiCo has the annual forecast divided into CE (CustomerExecutive) targets depending on the territories. Each CE then divides the target into a per
week target. Per week target is divided into per day targets and given to the salesman. While
the territory allocation is more or less the same for both the organisation, the different
channels used to reach the consumers give rise to different channel conflicts which the ASMs
shared with the team.
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SALES AND DISTRIBUTION: ITC
COMPANY OVERVIEWITC is one of India's foremost private sector companies with a market capitalisation of nearly
Rs 97,883.64 cr and a sales turnover of over Rs. 23,247.84 cr. ITC had been known as a
tobacco company for long. It had a strong presence in the cigarette market in India with
brands like Wills, Gold Flake, Bristol and a deep penetration across India. Due to its
excessive dependence on tobacco products, a diversified portfolio was always on the cards
for the management. In 2002 ITC started diversifying into various businesses utilising the
surplus cash flow generated from its core cigarette business. In May 2002, ITC entered into
branded wheat flour market by introducing Aashirwad Atta. In December 2002, ITC
launched John Players as a mass market apparel brand. In 2003, ITC entered the branded
biscuits market with the Sunfeast brand. It also created presence in packaged ready to eat
food segment "Kitchen of India". In July 2005 ITC stepped into exclusive range of body care
products through Essenza Di Wills for both men and women in July 2005. It has launched
Fiama Di Wills, Vivel and Superia brands of personal hygiene products catering to different
SEC and has become a major FMCG player. In spite of all this, cigarettes and tobacco
business still is the main driver of revenues and profits.
From the distribution point of view, ITCs products are categorised into Tobacco Division
(TD), Non-Tobacco Division (NTD) and Foods. Tobacco Division deals with cigarettes,
Non-Tobacco with personal care products and incense sticks (Agarbattis) and foods division
deals with Bingo, Sunfeast, and Aashirvad. The apparel distribution has not been considered
in this case. These divisions are also referred as Cigarettes, Food and Personal Care.
For a better understanding of the distribution process, we met ITC channel partner Mr. Sujit
Behera and Area Executive Mr. Debashis Misra.
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SAL
S F
STRUCTURE
The sales force structure is bei di ided i to t o categories, ITC employees and their
hierarchy and the distributor sales force.
The following is the hierarchy of ITC from Regional Sales Manager (RSM to AreaExecuti e (AE).
At the channel partner level, supervisors and direct sales personals are hired. This hiring is
done by the channel partner. (Indicated in Red)
Under each Area Executive there are 6-7 supervisors who in turn manage the Direct Sales
Officers (DSO). The DSOs are responsible for taking and replenishing the orders to the
retailers. There are separate DSOs for Tobacco and Non-Tobacco Division because the
replenishment is daily for tobacco products whereas weekly for NTD. Also, cigarette sales
happen on cash (no credit) and NTD sales happen on credit.
1 or 2, eachhandles 6-7supervisors
2 in each of the abovecategory
Cigarettes / Food/Personal Care
Cigarettes / Food/Personal Care
Responsible for adistrict(2-3 states, ITC Term) RegionalSales Manager
Branch Manager
Assistant Manager
Area Manager
Area Executive
Supervisor
Daily Sales Officer
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SA ES FORCECOMPENSATIONANDINCENTIVES
The sales force comprising of the Daily Sales Officers (DSOs) are managed by a Supervisor.
Both the DSO and the Supervisor are on the indirect payroll of ITC, i.e., the distributor pays
the salary to the DSO and the supervisor and in turn is reimbursed by ITC. All the other
Managers are on the direct payroll of the company.
The compensation package of a DSO and supervisor mainly comprises of two parts, the fixed
pay and the variable pay. The compensation for different DSOs differs in the variable pay
component only.
For a DSO, the fixed pay is Rs. 2750 per month. The monthly variable pay includes a
payment of Rs. 120 per km travelled by the DSO while making the sales calls, along with
incentives given for the targets achieved.
For the Supervisor, the fixed pay is Rs. 3500-5000 per month. The monthly variable pay
includes travel allowance (their travelling is lesser than that of the DSO), along with
incentives given for the targets achieved.
The overall sales targets are decided based on the number of bills raised per stocking of
SKUs in the different outlets and incentives are accordingly determined.
On meeting 95% of the sales target, the DSO gets the prescribed incentive. On achieving
sales greater than 95% up to 120%, the incentive is scaled up on a pro-rata basis. On
achieving sales greater than 120%, no further incentive is given. A DSO generally earns
around Rs. 1000-1500 as incentives in a month.
TRAINING
Success in sales for any organization is dependent on tremendous knowledge of the products,
the market that is served and precise application of professional selling skills. ITC believes in
the fact that sales professionals are made and not born.
ITC provides extensive training to its sales force, covering all the facets of the training
process. It follows a six step process of selling, on which training is imparted to the sales
force. A training program is conducted for the sales force for 2 days, twice a year by the Area
Executives, wherein the selling process is reiterated and problem solving done. The training
includes the following -
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ITC came up with a training program known as Kamal Ka Funda. The sales force was
encouraged to undergo the training and the concept of Kaun Karega Kamal wasused. ITC
tied incentives and rewards forthe sales force to undergo the training program and excelin it.
This would in the end help ITCin improving its sales.
Initial planningand preparation of the targets of the dayand the strengths and weaknesses of the beat to be visited
How to start the Day?
Includes exchange of friendly greetings with the retailowner,negotiation, pushing for new products, etc.
SellingProcedures
Checking the movement of stock placed earlier, feedbackofcustomer opinions, etc.
Stock Checking
Checkingavailability of the products indifferent SK 's, etc.
Availability
Comparing the visualdisplay to those ofcompetitors andensuring proper placement, placement ofbanners andposters, etc.
Visibility
Solvingany problem facedby the retailer, feedback,replenishment requirements, etc.
Freshness
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MEAS RING SA ES FORCEPRODUCTIVITY
Within ITC, the productivity of the sales force could be measured route wise,
product wise, or customer wise. Generally speaking, an objective way of measurement can
be done in two ways:
i. The lines per call or line productivity (i.e. number of product categories sold in anoutlet)
ii. The number of productive outlets or call productivity (i.e. outlets in which theretailers give order) per route of the salesperson
For example, figuring out answers to questions like How many outlets billed at least once in
a month? or What is the number of SKUs that were billed for a particular outlet? can be
effective in measuring the productivity for every DSO (Daily Sales Officers).
With volumes rising and data to be managed by the sales teams also increasing, ITC has
sought to strengthen the sales process through automation of the sales. The sales process
consists of three major processes collection of order from the retailers, preparation of order
bills, and delivery of order to the retailer. All the three processes have been automated to save
up on time and enhance the selling process further.
The DSOs use Palmtop based applications which are used in place of the order books to
collect the orders. The Palmtops are seamlessly integrated with the Local Distributors
accounting software (which is the SIFY software) which in turn has functionalities such as
order and bill management, receivable management and performance management.
The list of the retailers is loaded to the palmtop and the DSO will go to the given list of
retailers to provide them with service. Order capture can also be done with the help of the
Palm tops. The rates of the products and the SKUs can be loaded in the palmtop along with
the schemes for each product. The DSO need not carry a sheet for the price list. Thus the
whole operation can be made paperless with the data being collected in the palmtop and
transferred to the data server.
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A detailed sales analysis can be carried out based on the output from the SIFY software, in
terms of the different sales per call, the number of products sold for each bill, the number of
order taken etc. The performance of each salesman can thus be tracked from this, on a dailybasis. Hence the advantages of having Sales Force Automation in ITCs distribution are
manifold, and have been very useful in enhancing sales productivity and also being able to
measure the same.
Measuring the sales force productivity also becomes important when it comes to announcing
incentives for the sales personnel. The DSOs being on an indirect payroll with sometimes the
variable pay determined by the number of kilometres travelled and the number of outlets
serviced, the incentives are decided based on the sales reports generated at the distributors
end at the end of each day. Besides, data mining softwares enable stocking and pricing
decisions while also predicting sales trends and responding to them quickly enough.
TARGET SETTING
ITC is a company which as such doesnt set targets. In the Tobacco Division (TD) they do
not set sales targets as such because, it is a primarily saturated market with a mature demand.
The demand variation is minimal at 1-2% every month. The sales are marginally higher in
winter at around 3-4%. The Tobacco Division includes products like Matches (Aim), Candies
(Candyman) and Agarbattis also as they are distributed in the same shops where cigarettes are
available. They set targets with focus on availability in every outlet possible. Hence, they
believe in the philosophy of availability of stock rather than sales volume targets. The same
holds true for its Non Tobacco Division (NTD). However here they set sales targets at ~20%
over the previous month sales including seasonality factors and offers. This is fed into their
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forecasting software which is a part of the SIFY Program which they use. That gives them
the sales forecasts. ITCs foods section or the NTD section has an emerging market with
brands like Sunfeast and Bingo catching up fast in the markets. Therefore forecasting and
proper demand estimation for target setting becomes essential. ITC has target setting which
happen for each district (each state is called a district in ITC lingo). Then the targets are
broken up into targets for circles. That is then divided among the different channel partners to
cover.
ITC follows a 24hrs replenishment cycle limit, i.e. whenever an order is placed by an outlet;
it is replenished within 24 hours. For Modern Trade outlets targets are set centrally and the
replenishment is done centrally by ITC warehouses. Channel Partners are not involved in the
process.
CHA ENGES INMANAGING SA ES TEAMS
The sales teams are given a daily set of goals and quotas; these are always realistic goals and
stress is on an improvement over past performance. For example, the goal could be an
improvement of 20% over the past months sales performance, but inputs and seasonality
are always taken into account before deciding on such targets.
Clarity is maintained when it comes to allocating accounts/territories/products to sales
personnel. ITCs Area Executive, who revealed that he has around Rs 120 crores riding on
him every year (the total market size of ITC in Orissa was more than Rs 330 crores per
annum), said that he always took special care in communicating expectations to the
salespeople and took feedback from them every now and then. This was essential so as to
ensure no clash of priorities among the salespeople and also keep them sufficiently
motivated.
Incentives are always a sure way of keeping them motivated. Rewards and payments are kept
clear and consistent, with commission based on defined results. The expected results were in
turn determined based on the sales force productivity.
Resource provision in terms of giving the right tools and equipment is also taken care of. This
is to enable the sales force to focus on their jobs and keep a track of the targets. The sales
force uses palm-top based applications, the objective of which is to enhance sales
productivity. Other resources like car/travel allowance are also provided.
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Training programs have been designed to respond to the challenge of having to manage an
underperforming team. These training programs are conducted by the Area Executives
themselves. It is imperative that strengths and skills are developed for the sales people, and
constructive feedback is given to them at all times.
Besides keeping a check on their performance, Area Executives and Channel Partners always
try and make sure that they remain supportive of their sales teams and they talk with them
and discuss the reasons if issues crop up. The pressures that the sales personnel face on a
daily basis are understood, and it is kept in mind that these people do have lives outside of
their jobs. In addition, opportunities for growth - different territories, new products, and new
team are offered at regular intervals.
SA
ES BUDGETINGSales budgeting happens in a meeting at the national level yearly and all channel partners of
ITC are invited for the same. Sales budgeting includes fixing of the sales targets, margins of
the channel partners, sales force compensation, Mobile allowance, travel allowances etc. The
sales budgeting is done by the Assistant Manager for a category in a state. The sales
budgeting is done on the basis of tonnage per district per category (state) and is distributed
circle wise. On an average 2.65% mark up margin is given to the channel partners. However
they are also reimbursed for fuel charges, salary for the drivers, loaders, helpers and Daily
Sales Officer. DSOs are reimbursed for travel up to 30 kms per day. The breakup of the same
can be seen for Annapurna Traders (a Channel Partner in BBSR) in the following image.
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Very often in the sales budget gift items and discounts for the distributors/ retailers are also
included as shown in the following image.
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TERRITORYA OCATION
Territory is allocated in a district (A state) in the form of circles (usually one or two cities
depending on size). Each circle is further divided into different zones on the basis of
geography where each zone is catered to by an exclusive channel partner. In Bhubaneswar
Circle, there are 4 exclusive channel partners, each with a distinctly defined geographic area.
Each does around 1.5 - 2 crores of sales on an average per month. This helps in reducing
replenishment time thereby allowing for faster recovery of working capital by the retailers
(who are able to sell the stock on the same day). Zones are defined distinctly to avoid
infiltration (explained in detail under channel conflict) by other distributors.
Inside each zone covered by a channel partner, there are around 6-7 daily salesmen who take
care of collecting orders from different stores. A sample beat plan for DSOs is shown below.
Replenishment is done on the same day. Replenishment for NTD is done by trucks which
operate on beat plans as shown below (Annapurna Traders).
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CHANNE CONF ICTS
One of the major issues that can impede a distribution network is channel conflict. While
admitting that channel conflict is a live issue, Mr. Debasis Mishra (ITC Area Executive) did
however mention that ITC tries to resolve such issues, if and when they arise, across a table
by calling a meeting among the concerned parties. Sometimes these meetings between
channel partners are fairly regular, about 3 to 4 times in a year, and are convened by the
Branch Managers to apprise themselves of the prevailing scenario. These meetings are most
of the time routine affairs, and can act as appraisal time for the channel partners
themselves.
One major reason behind channel conflicts, as mentioned by the AE, was (in his own words)
infiltration. With respective territories having been allocated beforehand, within the strict
purview of which the SOs (Sales Officers) were supposed to operate, there was no scope forany of the channel partners venturing into the others territory. However an instance was
narrated to us where the Sales Officer in refusing to visit a particular outlet (due to
ego - centric issues with the retailer), ended up servicing another outlet located beyond the
territory assigned to him in order to meet his daily target. These situations, albeit very rare,
were to be avoided as they could lead to channel conflicts and are best described as cases of
infiltration. The resolution was invariably sought by the AE, and all issues between aggrieved
Channel Partner settled across a table by adopting a calm and patient approach.
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SALES AND DISTRIBUTION: PEPSICO
INDIA HOLDING PVT. LTD. - FRITOLAY
DIVISION
COMPANYOVERVIEW
Snacks market in India is divided into 2 main divisions:
y Salty Snacks (Potato chips, Kurkure, biscuits etc.)y Traditional (mixture, bhujia, moong dal etc.)
Fritolay deals in both the divisions. PepsiCos foods company, Frito-Lay, is the leader in the
branded salty snack market and all Frito Lay products are free of trans-fat and MSG. It
manufactures:
Lays Potato Chips, Cheetos extruded snacks, Uncle Chipps and traditional snacks under the
Kurkure and Lehar brands. The companys also has a high fibre breakfast cereal, Quaker
Oats.
PepsiCo is the market leader in snacks.
For a better understanding of the distribution process, we met PepsiCo Fritolay Area Sales
Manager for Orissa Mr. Koushal Kumar and Mr. Rajesh K. Padhi, CE, Bhubaneswar.
PepsiCoFritolayOrissa- SalientFeatures
The whole business has four routes to the customer:
1. Traditional Trade2. Modern Trade3. Institutional selling4. NCD (New Channel Development) - e.g. Hospitals, bus stand etc.5. Wholesale Channels
Traditional Trade covers about 22,000 stores all over Orissa. The market is divided into two
types:
y Urbany LTC (Lower Town Class)- Rural and semi-urban
The rivals of Fritolay in Orissa market are
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y ITC snacksy Shivdeep/ Prakash food based out of Indore and other local players
SA ES FORCE STRUCTURE
The sales force structure is being divided into two categories, PepsiCo employees and their
hierarchy and the distributor sales force.
The following is the hierarchy of PepsiCo:
The exclusive salesman are under the Distributor but work on the RSAs instructions during
emergency needs, it is unique to PepsiCo.
Zonal Sales Manage
For 3 s
a
es
Area Sales Manager(Foras
a
e
s
omer Executive
(Sameas S )
Sales Trainee
RSA
(Controls Distri utors)
Exclusive Salesman*
(Owned by Distributors)
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SA ES FORCECOMPENSATIONANDINCENTIVES
The compensation and incentive slab is defined for each level and is decided by the
supervisor in the upper level viz. the ASM decides the salary of a CE and so on and so forth.
The salary consists of a fixed part and a commission part.
The incentives are decided by the target achieved. The incentive is decided as and when the
target is set. For example
y For 100% target achieved in a monthy 50% target achieved in 15 daysy Weekly targets achieved etc.
The compensation is also decided for each of the brand targets; say a certain amount of sales
of Kurkure will lead to earning of bonus. This is decided by the ASM and is mostly used
when certain brand underperforms for a period of time.
One unique feature of this organisation is that incentives are also linked to certain SKUs. This
is decided by the ASM and the RSM for that region.
TRAINING
Success in sales for any organization is dependent on tremendous knowledge of the products,
the market that is served and precise application of professional selling skills. PepsiCo
strongly believes in a continuous training process for all its employees. They have a
Development Centre run by the company. The supervisor sends the subordinate sales force to
the Development Centre in a fixed period interval. In the DC, they conduct different kind of
psychometric and other tests and find the weak areas of the employee.
According to the results of the test a training calendar is prepared for the employee. The
trainings include:
y Skill based trainingy Communication trainingy Leadership trainingy Frontline training etc.
PepsiCo were the first in India to introduce the Training Card, which acts like a credit swipe
cards. The card can be used for payment of Training courses attended at a third party
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organization. The employee informs the Regional Training Officer about the expenses of the
training beforehand and the RTO approves it and credits the training card with that amount.
The training card can also be used in buying books and other skill enhancement materials.
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MEASURING SA ! ES FORCEPRODUCTIVITY
The sales force productivity is measured by weekly review meetings on Fridays. The meeting
includes the paperwork of the work done by the employee over the week. There is no such
automated procedure followed.
TARGET SETTING
The targets in the state level are set by the ASM. The ASM then divides the target among the
CEs according to the market size they control. The CE then divides the target among the RSA
in a weekly basis. The RSA sets per day target among the salesperson. The salesperson tries
to achieve this target daily.
CHA ! ! ENGES INMANAGING SA ! ES TEAMS
The sales teams are given a daily set of goals and quotas; these are always realistic goals and
stress is on an improvement over past performance. The major challenges happen during peak
seasons when PepsiCo comes out with different flavours for a period of 2-3 months, for
example during this puja Kurkure mustard flavour was launched in eastern India market as
people have an appetite for mustard here. But these are limited time schemes and salespeople
find it difficult to predict as to when to stop taking more orders before the scheme closes.
They also face the challenges as faced in a normal FMCG sales force.
SA ! ES BUDGETING
The total sales budgeting is decided by the ASM. The ASM has complete autonomy in the
sales budgeting. He decides everything of the sales budget from fixing of the sales targets,
margins of the channel partners, sales force compensation, Mobile allowance, travel
allowances etc. ASM also decides the schemes and allocates budgets accordingly. The
schemes are mostly rationalized discounts SKU wise. The ASM also comes out with specific
product wise schemes when a certain product registers lower than expected sales.
Rationalization of SKUs is unique to PepsiCo.
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TERRITORYA " " OCATION
The territories are allocated based on the market size and a CE is appointed accordingly. For
major markets like Bhubaneswar and Cuttack, the territory is divided into two parts and each
part is supervised by a CE. A vacancy for a CE is created only when two or more geographies
meet a certain demand. Thus places like Joda, Barbil, Keonjhar and Baripada together have
one CE whereas Cuttack and Bhubaneswar has two CEs each.
CHANNE " CONF " ICTS
The major channel conflict takes place when the distributor for non-traditional trade channel
especially NCD (New Channel Development) push their products to the stores which come
under traditional trade coverage. This occurs because Institutional, modern trade and NCD
get high margin goods, so they find easy to push it to traditional trade route.
To counter this, PepsiCo in collaboration with Neilsen conducts census and the data are
provided to the CEs to keep an eye on the movement of stocks. The disputes are resolved by
the CEs or their superiors and there are cases when distributors are warned not to repeat the
same in the future.
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COMPARISON ITC AND PEPSICO
Parameters ITC PEPSICO
Sales Force
Structure
Extra level of Asst. Manager for
each category
No such designation.
DSO work under Channel
Partner/Distributor only
Exclusive salesman under
Distributor but works on RSA
instruction in emergency
Sales Force
Compensation
and Incentives
Incentive based on distance and
outlets coverred, no of bills made
and sales targets exceeded.
Incentives are also linked to
certain SKUs.
Training Kamal Ka Funda: ITC tied
incentives and rewards for the sales
force to undergo the training
program
First in India to introduce the
Training Card
Measuring Sales
Force
Productivity
1. Line Productivity
2. Call Productivity
3. Use of PalmTops
Weekly review meetings which
takes in account the amount of
Paperworkdone by the employee
over the week
Target Setting
and Sales
Budgeting
Happens at national level with
participation of all state level
managers and channel partners.
In TD no such explicit target
setting.
Set by ASM. Rest processes are
similar
Challenges inManaging Sales
Force
Keeping goals realistic and takinginto account both inputs and
seasonality before deciding on
targets.
Managing sales force becomes anissue during peak seasons when
Pepsico comes up with 2-3 new
flavours.
Territory
Allocation
Based on Geography and Sales
Volume. (District>Circle>Zone)
Based on Market Size.
(State>Circle>City>Zone)
Channel Conflict Infiltration between channel partner
zones.
Infiltration between traditional
and Non Traditional Trade
channels.
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CONCLUSION
We understood the distribution system of both ITC and PepsiCo and one key finding was that
the distributor margin in ITC was based on volume but in case of PepsiCo, the distributor
margin is related to the SKUs also. This was typical to PepsiCo only, as the targets were set
based on the number of SKUs, for instance small pack of Kurkure would have a separate
target and the margins dependent on whether it is achieved or not. Also, ITC reimburses the
expenses incurred by the distributor for the sales process, which includes reimbursement for
fuel and sales person salary and the total reimbursement depends on the annually decided
target per distributor in the company meeting.
In PepsiCo, distributors are allotted a fixed amount per month (amount was not disclosed) but
is spent by the distributor on companys directives.
PepsiCo also has a training card program which allows PepsiCo employee above CE to use it
for any training expenses. Also, it has its own development centre which is used for training
of CEs and ASMs. We didnt get any information on any such specialised training centre in
ITC.
We were also told that most of the ITC distributors keep only ITC products whereas it is a
general phenomenon across distributors to keep multiple brand products. A clear
understanding was that ITC has much better mutual relationship with the channel partners
and it is actually a win-win situation and in FMCG product category, it matters a lot.
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APPENDIX
Image: Route Planning and Scheduling at the Distributor Office
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Image: Project Vajra, enabling the DSOs with Palmtops