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Group 6C
Hariharan D | Saradha Nandhini | Vandana Murali | Aarthi Viswanathan | Nishit Goel
RB S&D
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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
Dandaiya
Daliganj
Aminabad
Moti nagar
Rajendra nagar Rajajipuram
Temple road
Alambagh
Hind nagar
Hazratganj
Natghara
Talibagh
Charbagh
Narahi
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
www.themegallery.com
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*
<500
business
per
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
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
Evaluation
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
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