ITC SALES AND DISTRIBUTION

ByV.S.KaladeviB.Srimathi

R.Venkatesh

Discussion Outline

INTRODUCTION

OBSERVATIONS

CHALLENGES OF FOOD DISTRIBUTION

DISTRIBUTION SYSTEM OF SUNFEAST

Introduction to ITC One of the worlds most reputable company

Market capitalization of nearly US $ 18 billion

Turnover of over US $ 5.1 Billion

Post tax profit of US $750 Million

Diversified product portfolio

Direct group employment of 29000

PRODUCT S LINE

CIGARETTESFOODSLIFESTYLE RETAILINGPERSONAL CAREEDUCATION AND

SATATIONARYSAFETY MATCHES AGARBATTIS

Distribution of Food Products

Strict compliance standards, low profit margins, intense competition, high customer-service expectations.

Fast and effective sales ordering processes.

Flexibility

Quick reaction

Important Factors

FOOD

MARGINSCREDIT SYSTEMS

STOCK OUTS

WASTAGES

PROMOTIONS

DISTRIBUTION CHANNELS

Distribution Channel

Flow Diagram

FACTORY

CNF

WHOLESALE DISTRIBUTO

R

WHOLESALE DEALER

BASE

RETAILER

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.

Distribution System

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.

DISTRIBUTION IN RURAL

ITC launched India's first rural mall, 'Chaupal Sagar', which offers products ranging from FMCG to electronics

appliance to automobiles. ITC has 23 stores across India.

Outbound Logistics

Display & Inspection

Auction

Bagging & weighing

Payment

Pricing

Mandi

Inspection & Grading

Inbound Logistics

Inbound Logistics

Weighing & Payment

Hub Logistics

e-Choupal

Operational Process

DISTRIBUTION IN RURAL

• Companies can cater to the needs of rural consumers by making their products available upto feeder towns or mandis.

• Feeder markets or mandis provide excellent scope for distribution of products like consumer durables, clothes, kitchen equipment, agri-inputs and tools.

• The rural consumers visit these towns at regular intervals not only for selling their agricultural produce but also to purchase clothes, jewelry, hardware, radio, and other consumer durable products.

Observations

Food products are normally a high volume ball game.

Products have to essentially be available in the market at all given points of time and at all given points of purchase.

The supply of products takes place virtually on a daily basis in fixed quotas or otherwise, to retailers as per their requisitions and the anticipation of demand and the performance of products in the recent past.

Observations

The skeleton of distribution system is same for all the companies.

Companies try very hard to make a difference at some point to get the competitive advantage.

ITC has a very strong distribution network for their cigarette brands and they are using this network to push their new biscuit brands.

Credit system also depends upon the position of the product in the market.

Observations

Companies with top product are hard to bargain on credits.

Companies also use their premium products to push their non premium products.

PACKAGINGPACKAGING ITC's Packaging & Printing Business is the country's largest

convertor of paperboard into packaging. It converts over 50,000 tonnes of paper and paperboard

per annum into a variety of value-added packaging solutions

ITC is the first-choice supplier of high value added packaging

Its client list includes national and international companies like British American Tobacco, Philip Morris International, Surya Nepal Private Limited, VST Industries, UB Group, Nokia, Flextronics, Foxconn, FMC India Pvt Ltd., Pernod Ricard, Allied Domecq, Whyte & Mackay, Hindustan Lever, Tata Tetley, Nestle and Reckitt Benkiser India Ltd.

It supplies packaging to cover 70 billion cigarettes a year domestically, and supplies packaging for 15 billion cigarette sticks a year for the export market.

It is the largest supplier of liquor mono cartons in the country.

Flip-top boxes Display outers Shells and Slides Soft cup and strap LabelsBundle Wraps Flap boxes Inner Frames Coupon Inserts Folding Cartons Fluted Cartons Shoulder Boxes Pre-printed cork tipping Flexibles Packaging

Product Range

Various marketing strategies Various marketing strategies

“SHARUKH KHAN” “DHONI” & “SURYA” as brand ambassador of SUNFEAST

E-COMMERCE activities for READY-TO-EAT Snack brand KOI Tie-up with leading portals to promote snack range Online advertising & can order snack on toll-free number – 1600

ITC FOOD division rolled out new products in categories –1. Staples2. Ready-to-eat3. Confectionery4. Snack Food ITC Foods has contract manufacturing facility. Panel tastes & approves it before processing takes place.