8/3/2019 Paper Group 5 v6
1/21
Group 5, Sec A
Sales and Distribution Management
Avinash Madhavan, PGP26331
Goutam Yenupuri, PGP26279
Guru Prasad, PGP26280
Ravi Makwana, PGP26226
Radhakrishna Gunde, PGP26297
Santosh Kamble, PGP26308
Mauelle Graff
Group 5, Sec A
Sales and Distribution Management
Avinash Madhavan, PGP26331 Goutam Yenupuri, PGP26279 Guru Prasad, PGP26280 Ravi Makwana, PGP26226 Radhakrishna Gunde, PGP26297 Santosh Kamble, PGP26308
Mayuele Graff IEP12015
PAPER INDUSTRY-A Sales & Distribution Perspective
8/3/2019 Paper Group 5 v6
2/21
The Paper Industry
An industry on gradual decline since the advent of PC
MS Office a potent enemy for writing paper, Internet for newsprint &printing
On the upside growing abolishment of plastics and polymers
as packaging material
Interesting Facts for the industry in India 15th largest market worldwide, per capita consumption low at 9 kg;
compared to Japan (250 kg), S. Korea (170 kg), China (46 kg)
Main raw material is straw bagasse as compared to soft wood
worldwide, 40% of paper is recycled
De-licensed since July97 and foreign equity participation allowed up to100% yet no foreign player of note in the industry except International
Papers acquisition of AP Paper
Ballarpur Industries, one of the key players along with ITC was once one
of the 30 shares comprising BSE Sensex, now almost a penny stock
trading at ~Rs 25
8/3/2019 Paper Group 5 v6
3/21
Product segments
Industry
Paper & Paperboard
Writing
Printing
Packaging
Tissue
Newsprint
Writing &Printing
coated wood-free
uncoatedwood-free
copier paper stationery cream-wove
8/3/2019 Paper Group 5 v6
4/21
Customer segments
Building Wallpaper
Business Copier Paper, Stationery, brochures,letterheads
Domestic Tissues, paper plates & cups, toilet paper
Media Magazines, Newspapers Publishing Books
Educational Exercise Books, Wall charts
Electrical Insulation
Entertainment Cards, board games, kites, etc. Industry Packaging, Filtration, cigarettes
Financial Money, forms, certificates
Covering B2C & not B2B & B2B2C
8/3/2019 Paper Group 5 v6
5/21
Business changing from the traditional production & distribution driven to consumer-centric
business with finished products - Office Supplies and Stationery and also Retail (P3)
Paper Mill
Distributor
Paper ProductsCompany
Wholesaler
Retailer
ProductionCentric ConsumerCentric
PaperMill/Products
Distributor
Wholesaler
Retailer
Modern Trade
Office Planet
Landmark
Big Bazaar
P3 (Print, Paper, Pens)
Navneet
Stationery
Office supplies & stationery
8/3/2019 Paper Group 5 v6
6/21
Segmentation by behaviorProduct
segment
Consumer
Segment
Type of Product Characteristics of consumer behavior
Copierpaper
Price sensitive Convenience Product Low consumer involvement Low brand difference Low risk Low effort Consumers passively receive information
Brand loyal Preference Product Medium to high consumer involvement
Medium to high brand difference Low risk Moderate effort Behaviour passes through the standard cognitive
process of beliefattitudebehaviour formation.
Stationeries Price sensitive Convenience Product Low consumer involvement L
ow brand difference Low risk Low effort
consumers passively receive information
Brand loyal Preference Product Medium to high consumer involvement Medium to high brand difference Low risk Moderate effort
8/3/2019 Paper Group 5 v6
7/21
Key Players
ITC Paperboards & Specialty Paper Division
(Secunderabad, AP)
(Finished Product Brands: Classmate, PaperKraft)
Ballarpur Industries (Gurgaon, Haryana) (Brands: Royal Executive Bond, BILT Matrix, 10on10)
JK Paper (Delhi)
Tamil Nadu Newsprint & Papers (Chennai)
Century Pulp & Paper (Mumbai) (Brands: Century Copier)
AP Paper Mills (Secunderabad, AP)
Bindal Papers Ltd. (Muzzafarnagar, UP) (Brands: Bindal FinePrints)Yash Papers Ltd (Faizabad, UP) Sidharth Papers (Kashipur, Uttarakhand)
8/3/2019 Paper Group 5 v6
8/21
Design of Sales channel PAPER MANUFACTURER
Fixes Quotas based on production capacity and demand
Cash terms with Distributors, wholesalers and retailers Highest bargaining power
Takes order on a real-time basis and fulfills them based on inventory levels andproduction capacity
DISTRIBUTOR Offers a maximum of 60 day credit to retailers/ wholesalers
Deals on a cash basis with the manufacturer Takes orders on a real-time basis from the retailers and can also place orders real-
time. However, order consignment is received on a weekly basis.
Margin: 2%-3%
Uses third-party logistics for transferring goods from godown to company
WHOLESALER
Deals on both cash and credit basis with retailers depending on the size of business Also manufactures notebooks from paper purchased
Margins: 2%-3%
RETAILER Supplies to end consumers ( Xerox shops, SMBs, offices, etc)
Margin: 8-10%
8/3/2019 Paper Group 5 v6
9/21
Kartikeya Distributors (BILT)
Paper Mill
BILT
Distributor (UP)
Karthikeya Distributors
Wholesaler
100+ in UP
Retailer
Far flung areas
Retailer
900+ in UP
Bulk Customers
Xerox Shops
InstitutionalCustomers
Large IT Companies
Company OwnedShowroom
P3
Modern RetailWarehouse
Big Bazaar
Front End
Big Bazaar
Kartikeya Distributors is the exclusive distributor for BILT (factory located near
Gurgaon) for UP. Located in Gwynne Road where most other paper distributors
in Lucknow are located.
Turnover: Rs. 80 Cr Infrastructure: 3 Warehouses in Allahabad, Kanpur and
Lucknow, 5 Retail OutletsEmployees: 52 Distribution: 1000 wholesalers & retailers
Incentives: None Technology:Tally (Licensed) for accounting
BILT produces Grade A Paper - highest quality, lowest margins for dealers. Asthe demand is high it has fixed quotas for its regular buyers and supplies above the
quota on a case to case basis.
8/3/2019 Paper Group 5 v6
10/21
LUCKNOW PAPER Distributors (JK)
Paper Mill
JK paper
Retailer
Bulk Requirements
Distributor(UP)
Karthikeya Distributors
Wholesaler
100+ in UP
Retailer
Far flung areas
Retailer
900+ in UP
BulkCustomers
Xerox Shops
InstitutionalCustomers
Notebook Makers
Modern RetailWarehouse
SPAR
Front End
SPAR
Lucknow Paper Distributors is an exclusive distributor for JK Paper (factory
located in Rajgangpur, Orissa). It is also the distributor for 3 small scale Grade B
& C Manufacturers. It is located in Lalbagh in Lucknow.
Turnover: Rs. 30 Cr Area: Lucknow & Allahabad
Employees: 22 Distribution: 600 wholesalers & retailersInfrastructure: 1 Warehouse Technology:Tally (Licensed) for accounting
JK Paper produces Grade A Paper - highest quality, lowest margins for dealers. Italso does quota based distribution.
8/3/2019 Paper Group 5 v6
11/21
K.K. trading Co. (trident)
Paper MillSuper
StockistSub-Dealer Retailer
K.K. Trading Co. is distributor is an exclusive distributor for Trident (factory
located in Nainital). It manufactures Grade A Paper and is a relatively new entrant.
It is located in Aminabad in Lucknow. The company is also a dealer(non-exclusive) for Orient Paper, Bharat Paper & Abhishek Industries
Turnover: Rs. 50 lakhs Distribution: 15-20 sub-dealer
Employees: 10 Infrastructure: 3 warehouses & 1 SOArea: Eastern UP
Incentive: Quantity discounts (75P to Re. 1) per kg for quantity >150-200 tonnesCash discount for specific products (passed on to retailer/customer)
Trident has 3-4 super-stockists per state
Credit provided by company to distributor in range of 15 days to 3 months
The margin for the distributor is 2-5%Logistics done by 3rd party - GATI
8/3/2019 Paper Group 5 v6
12/21
CHANNEL CONFLICT
Retailer directly purchases from the manufacturer if the order size is significantly large
causing loss of business to the distributor/wholesaler
Bargaining power heavily in favor of large players like BILT who employ take-or-paycontracts. Distributors may want to shift to smaller players given low-differentiation
and as quality improves for smaller players
Small Players try to push sales during off-season by delivering quantity more than thatordered leading to loss of trust
Lack of Availability at the distributor level also frequently leads to retailer switching toanother exclusive distributor.
Price difference for end-consumer in modern retail and traditional chains is causing
conflicts between smaller distributor/retailers and established modern retail channels
Difficult for retailers to make significant growth in revenues as end-consumers likexerox shops may purchase directly from wholesalers
8/3/2019 Paper Group 5 v6
13/21
AREAS OF IMPROVEMENT(Distribution Channel)
The industry has been in transition whereas earlier the supply-demand equation was infavor of manufacturer, now the larger distributors have option of procuring by import(Brazil) as global logistics systems improve
Quota System is an age old strategy to appease dealers given supply-demandmismatch and also to save companies the pain of forecasting. Now with systemsavailable to identify trends and forecast, it may be relooked
There is general deficiency in usage of statistical analysis in this sector. A transactiondata base can be built to do customer and product segmentation and pricing can bedone better
Smaller Players can employ CnF agents to stock surplus in off-season rather thandump on to the stockist
We generally found company sales staff complacent and uncooperative. Trainingprograms may help to forge better relationships with dealers and also to be better ingathering market intelligence
The large players could train the distributors on adding value to paper by processinginto other value-added products like notebooks, envelopes, bags, etc.
8/3/2019 Paper Group 5 v6
14/21
Sales channel design
Territory Design
Recruitment of Sales Force Mainly through referrals and advertisements
Very low attrition rate.
Employee strength is kept optimum
Training No Training. Only reactive corrective action.
Sales Target Average sales target set for Kartikeya byBallarpur for the UP state is around Rs 5 crore monthly Sales Target is set byBallarpur which is divided judiciously among the salesman The target is monitored by Sales head through personal correspondence with the salesmen Kartikeya gives non monetary incentives to Salesmen, BILT gives incentive once a year for
achieving the set target consistenlty
Criteria Example
By Area City, Region or district
By Retailer size Turnover of Rs. 5Cr and above
By Paper type normal paper, hygiene paper, copier paper
8/3/2019 Paper Group 5 v6
15/21
Some salient information
Competitor's information is obtained by sales headthrough market visits which is conducted once inevery month
Retailers are open to divulge competitors product
details as there is no loyalty to any particular dealer Retailers dont have any prejudice to any particular
company as product is very similar; they only seekquality at low price
Relationships are maintained with retailers bydistributors through formal and informal means
Kartikeya Distributors serves 1000 + retailers in UP
8/3/2019 Paper Group 5 v6
16/21
Sales Hierarchy (BILT)
National Sales
Head (VP Sales)
Zonal Sales(GM-Sales)
Regional Sales(DM-Sales)
Area Sales(ASM)
8/3/2019 Paper Group 5 v6
17/21
Sales Hierarchy
The Sales Hierarchy is very simple and formal The salesmen of various citiesdirectly report to the Sales head of Kartikeya (located in Lucknow)
The Sales head directly report to the assistant general manager of Kartikeya
The incentives, motivation and the setting of sales target for the salesmen ishandled by the sales head
AGMKartikeya
Sales Head
Kartikeya
Salesmen
(Lucknow)
Salesmen
(Kanpur)
Salesmen
(Allahbad)
8/3/2019 Paper Group 5 v6
18/21
Sales hierarchy: Trident papers
Country SalesHead
Regional Sales
Manager
Area SalesManager
Sales Officer
Regional Sales
Manager
Area SalesManager
Sales Officer
Regional Sales
Manager
Area SalesManager
Sales Officer
Regional Sales
Manager
Area SalesManager
Sales Officer
8/3/2019 Paper Group 5 v6
19/21
Design of Sales Territories
CompanyL
evel Whole Indian market into four zones viz. east, west, north andsouth
Created sales territories on the basis of balancing salespotential and balancing workloads
Each zone is divided into 4-5 sales areas Each sales area is sub-divided into 8-9 sales territory. (These
could be a town or combination of 2-3 districts)
Macro Level (Distributor) Each super stockist serves a bunch of 4-5 districts called region
Each district or town or district is divided into sales bits
one or two sales executive serve each sales bit depending on thesize of bit and volume generated from the bit
8/3/2019 Paper Group 5 v6
20/21
Selection, Training andEvaluation of Sales Personnel
Selection Process1) Pre Interview Screening2) Preliminary Interview3) Final Interview4) Medical Examination5) Checking References
6) Job Offer7) Induction Programme
Sales TrainingPeriodically trained on new trends in market and effective skills for
sales/marketing of products
Evaluation of Sales Personnel
Evaluated quarterly for their targets Monthly reports from the sales executives are reviewed to monitor
the progress
8/3/2019 Paper Group 5 v6
21/21
Industry contacts
JK Paper
Chief Distributor Details:
Name: Lucknow Paper Distributors
Location: Lalbagh
Owner : Mr. I.D. Goyal
Mob: 9935595472
Regional Sales Manager : Mr. Suman
Mob: 991003369
Location: New Delhi
BILT
Chief Distributor Details:
Name: Kartikeya Paper Distributors
Location: Aminabad
Owner : Mr. Harendra Rai
Mob: 9919501311
Regional Sales Manager : Mr. Bhanu Kapoor
Ph: 011 - 40549234Location: New Delhi
Trident Paper
Chief Distributor Details:
Name: KK Trading Co
Location: AminabadOwner : Mr. Mohit Khanna
Mob: 91612050000
Regional Sales Manager : Mr. Anil
Mob: 9919501314
Location: Barnala
Century Paper
Chief Distributor Details:
Name: Agarwal Paper Distributors
Location: AminabadOwner : Mr. Sudhanshu Agarwal
Mob: 919335904453
Regional Sales Manager : Mr. Kishore Kumar
Mob: 011- 22056450
Location: Nainital