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Group 6C

Hariharan D | Saradha Nandhini | Vandana Murali | Aarthi Viswanathan | Nishit Goel


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Distributor Operations

Sales Hierarchy and Training Methods Current Issues and proposed solutions

About Reckitt Benckiser Group ď ľ A global leader in household, health and personal care products ď ľ Reckitt Benckiser sells its products in more than 180 countries

RB’s PowerBrands

Distribution Network  Reckitt Benckiser (India) does in-house manufacturing at 7 locations  There are two parallel distributions networks:  Manufacturing plant > CFA >Distributor > Retailer  Manufacturing plant > Regional Mother Godown (RMG) > CFA >Distributor > Retailer  One CFA per state and all the CFAs are handled by local 3PL partners.  The RMG are situated in 4 metros (Mumbai, Bangalore, Kolkata and Delhi) .  Transfer of ownership of products happens at the CFA level.  The existing mode of transport for all the categories is by road.

Sharad Traders - Lucknow  Employs 12 salesmen (DBSR), 2 operators, 1 merchandiser and six delivery people  Turnover of 1.5 crore per month  Overall Market reach (OMR) of Sharad Traders - 1700 GT outlets

Distribution Network Areas covered by the DBSR’s are listed below Nishadganj

Vikas nagar




Moti nagar

Rajendra nagar Rajajipuram

Temple road


Hind nagar






Kursi road

Monthly Targets and Incentives  The sales target for each DBSR (Distributor Sales Representative) depends on the area covered  A DBSR for Aminabad - target of around Rs.25 lakhs – Rs.30 lakhs.  The baseline sales target - Rs. 6 lakhs to ensure a RoI  Fixed salary Rs.5000 - Rs.8000 /month  Incentives for meeting / exceeding overall sales targets, Incentives for meeting/exceeding specific product line sales targets  RB provides incentives upto Rs.3000 per month per employee.  Retailers are given a performance based incentive

Margins and Credit Terms  Margins Differ by products   

Dettol soap (8.5%) Veet Hair Removal Crème is 12% Colin and Harpic are 10%.

 No credit policy  Only Cash, RTGS transfers, or DDs accepted  Retailer is provided a credit period of 1-2 weeks

Technology Used  All DBSRs are equipped with a HTC Desire with “RBZoom” software  The first screen focuses on the beats that are available in the specific distributor areas  Once the beat is chosen, list of all stores which are covered under that beat are populated.  Selection of the store would give the DBSR information on the targets for the store, the amount of sales and the balance that remains with that store.  Three major functionalities can be performed at this stage  Order  Collection  Visibility

Channel Partners

Flow of Control

Channel Partners - Distributors  Classified as 

General  General Trade  Pharmacies  Institutions Modern Trade

 Major Responsibility: Procurement and Supply to other channel partners

Channel Partners - Retailers 

Classified based on RB business done Class of retailer Class A

Overall RB month (Rs.) >10000

Class B

5000 -10000

Class C

500 - 5000

Class D*




Weekly or bi-weekly visits depending on volume of trade

Salesmen have good rapport with retailers

Channel Partners - Retailers 

On Margins  Poor recall of individual product margins due to large number of SKUs  No specific SKU popularity

On Marketing  Increasing involvement in PoP  Paid percentage of sale for PoP like window display  2% for 2 image windows  Poor involvement in PoP

Sales target incentives and POP display payouts based on classification of stores

Channel Partners - Wholesalers  Promotional Offers 

Udaan  Power brand of the month  Incentive: increase margin by 1.5% Lucky Draw

Channel Partners - DBSR  Approx. 12 per merchandiser  Fixed income from the distributor plus an additional incentive for exceeding targets  Weekly beats – easier interaction with retailers  Beats assigned based on the route and store classification

D B S R 1

Class A (Bi-weekly)

D B S R 1

D B S R 2

Class A (Bi-weekly)

Class B (weekly)

D B S R 3

D B S R 2

Class C

Class B (weekly)

(weekly or fortnightly)

Stores on the same area/road

Channel Partners - SO  Daily interaction with merchandisers and DBSRs  Gathers input on credit and other problems faced in the channel  In charge of beat design  Different beats on different days  Issues handled    

`channel partners’ conflict (retailers and wholesalers) credit issues new merchandising plans new incentive program information

Go-to-Market Strategy

Primary Channel

Secondary Channel

Go-to-Market Strategy  Primary Channel 

 

Manufacturing facilities: TN, Uttarakhand, Jammu & Kashmir and Himachal Pradesh Company warehouse to the CFA C/F agent to the various stockists’ warehouses

 Secondary Channel 

 

General trade outlets  Retailer: General Merchants, Medical shops, Paan shops, Cosmetic & Kirana stores  Wholesalers: Modern Trade outlets  Hyper mart malls, mini marts Cash and Carry outlets Other institutions  Armed services Canteens, and  Cooperatives such as Kendriya Bhandar Rural Stores are catered to by Super stockists or urban wholesalers

Key Issues  Beat Design – Class B vs. Class A conflicts  Overlap in Distributor classification  Availability of labor  Sales people expense coverage  No. of Merchandisers  Claims processing speed is lower compared to other companies ( insight from interviewing retailers)  Product Pilferage  Transport losses of brittle items  Difficulty of forecasting demand : especially for central and eastern U.P  Not all areas of Lucknow are covered by RB  Loyalty programs only margin based, not on lead time of credit terms

Suggested Improvements  Online adjusting of claims during future payments and integrating with PDA  Clear marking of channels  Revamp beat design.  Adjust margin structure to avoid product outflows

Organization Sales Structure

Roles & Responsibilities  RM: look over the company operations (direct sales, designing promotions, Marketing)  Zonal Manager: Manages ASMs, In-charge of Sales 

Zone divided into area based on Sales Volume

 ASE: handles rural distribution Network 

Every SO & TSI has to undergo a rural stint to get promoted to ASM

Beat Coverage in a route list Beat 1 Mon, DBSR1

Beat Tues, DBSR1 2

Beat 3 Wed, DBSR1

Beat 4 Thurs, DBSR1

Beat 5 Fri, DBSR1

Beat 6 Sat, DBSR1

Beat 7 Mon, DBSR2

Beat 8 Tues, DBSR3

Beat 9 Wed, DBSR4

Beat 10 Thurs, DBSR5

Beat12 Fri, DBSR6

Beat13 Sat, DBSR7

•Distributor is free to assign his salesmen to locations across a town or city •Beats comprises of similar types of stores

Selection  Majorly through Referrals  Attract Top performers from Other Organizations  Selection Process  

DBSR: Interview (Based on Sales Methods, Ethics, Previous Work Ex) Sales Officer: Interviews by ASMs & ASEs (managerial skills, sales knowledge, knowledge of the company, mathematical skills)


Training (Contd..)  MT   

Training period: 1.5 years Field work from DBSR to ASE level Rural area coverage

 Diploma Graduates/Experienced people   

6-7 months on field Work with DBSRs and distributors Training: basic responsibilities of SO

 DBSRs 

Only field training on beats and routes

 Distributors 

Training by other distributors and SO (functioning of warehouses, usage of technology)

Comments on Training Programme  No organized training structure  The field training - best way to train sales personnel - handled well  Training on distributors & DBSRs does not include evaluation  No structure for awarding promotions so demarcation in training programmes needed to reduce dissatisfaction to work under MTs they had earlier trained them  Due to some poaching – severe competition at various levels for RB  Growth path for a SO (undergraduate) - very slow (increase attrition rate)  Unless there are proper incentives and motivations provided - no motive to exceed their expectations


Target Based (Based on target achievement)

 ASM/ASE  

 SO  

Done by zonal managers bi-annually leadership skills, sales target achievement and special initiatives targets and initiatives also ability to be a team player rewarded monetary incentives if their special initiatives are adopted nation-wide like unique Point of Sale solutions appreciation letters and mails

 DBSRs   

general annual meeting - exceed targets – Rs.4000 no region level or beat level incentives and motivation Last month, ‘Super Sales Star’ - monetary incentive and title for selling the highest amount Total Line Sales in the northern region

 Distributors   

efficient use of infrastructure and achievement of yearly targets monthly, quarterly, annual meetings awarded for achieving 80% of their targets for the continuous period

Comments on Evaluation  SO unhappy because of non-recognition beyond monetary incentives. certificate of appreciation not valued much as it comes by the mail and not personally  The DBSRs have annual monetary incentive and still not Zone wise of beat wise incentives to keep them motivated.  Incentive system - completely dependent on monetary recognition and nothing else. Loyalty???  Rewards - monetary or non-monetary have to be balanced as a whole to engage the DBSRs to perform efficiently

Issues of Concern

UNDERCUTTING - The bane of wholesale trade

Undercutting mechanics

CAUSE Incentives such as Loyalty program payouts and Wholesale schemes

EFFECT Undercutting happens here

Retailer Retailer

What it means to RB

Addressing the issue



SDM PPT term 5

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