ITC-Sales Force Management Under the guidance of Dr. Satish Kumar

Submitted By, Group-5

Ashwin Siddharth Arko Mukherjee Shweta Sumal

Neethu Thomas Muhammed Abdulla NC

COMPANY PROFILE

ITC is one of India's foremost private sector companies with a market capitalisation of US $ 45

billion and a turnover of US $ 7 billion. ITC is rated among the World's Best Big Companies, Asia's

'Fab 50' and the World's Most Reputable Companies by Forbes magazine and among India's Most

Valuable Companies by Business Today. ITC ranks among India's '10 Most Valuable (Company)

Brands', in a study conducted by Brand Finance and published by the Economic Times. ITC also

ranks among Asia's 50 best performing companies compiled by Business Week.

ITC has a diversified presence in FMCG, Hotels, Paperboards & Specialty Papers, Packaging, Agri-

Business, and Information Technology. While ITC is an outstanding market leader in its traditional

businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining

market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel,

Personal Care and Stationery.

As one of India's most valuable and respected corporations, ITC is widely perceived to be

dedicatedly nation-oriented. Chairman YC Deveshwar calls this source of inspiration "a

commitment beyond the market". In his own words: "ITC believes that its aspiration to create

enduring value for the nation provides the motive force to sustain growing shareholder value. ITC

practices this philosophy by not only driving each of its businesses towards international

competitiveness but by also consciously contributing to enhancing the competitiveness of the larger

value chain of which it is a part."

ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of

growth anchored on its time-tested core competencies: unmatched distribution reach, superior

brand-building capabilities, effective supply chain management and acknowledged service skills in

hoteliering. Over time, the strategic forays into new businesses are expected to garner a significant

share of these emerging high-growth markets in India.

ITC's Agri-Business is one of India's largest exporters of agricultural products. The ITC group's

contribution to foreign exchange earnings over the last ten years amounted to nearly US$ 5.4 billion,

of which agri exports constituted 56%. The Company's 'e-Choupal' initiative is enabling Indian

agriculture significantly enhance its competitiveness by empowering Indian farmers through the

power of the Internet. This transformational strategy, which has already become the subject matter

of a case study at Harvard Business School, is expected to progressively create for ITC a huge rural

distribution infrastructure, significantly enhancing the Company's marketing reach.

ITC's wholly owned Information Technology subsidiary, ITC Infotech India Ltd., provides IT

services and solutions to leading global customers. ITC Infotech has carved a niche for itself by

addressing customer challenges through innovative IT solutions.

ITC's production facilities and hotels have won numerous national and international awards for

quality, productivity, safety and environment management systems. ITC was the first company in

India to voluntarily seek a corporate governance rating.

ITC group directly employs more than 31,000 people and the Company's Businesses and their value-

chains generate over 5 million sustainable livelihoods. The Company continuously endeavours to

enhance its wealth generating capabilities in a globalising environment to consistently reward more

than 4, 22,000 shareholders, fulfil the aspirations of its stakeholders and meet societal expectations.

This over-arching vision of the company is expressively captured in its corporate positioning

statement: "Enduring Value. For the Nation. For the Shareholder."

OBJECTIVES OF THE STUDY

1. To make in depth study of recruitment process of sales personnel; their training and development;

compensation, evaluation & control by the company

2. Develop proper insight about distribution management involving channel member selection;

effective working; monitoring and control of logistics and channel strategy

3. To compare the service of competitors with that of ITC

4. To identify the problem in sales effort, sales administration and sales and distribution

management strategy developed of the company.

5. Suggest the proper solution for the inefficiencies and inaccuracy found in the process.

APPROACH FOR STUDY

Methodology followed:-

1. Secondary Data (Research Papers and companies’ websites)

• literature review of existing research papers on different aspects sales and

distribution

• Finding the factors which improve the sales efficiency if sales force

• Identifying the ways for designing effective distribution channel

2. Primary Data (Interview of company’s sales official and retail survey)

Methodology followed:-

a. Structured Interview of company’s sales officials

b. Survey of retailers

Research tool

• Questionnaire

• Onsite observation

Sampling method: Convenient sampling

Sample size: 100 retail outlets

Analysis tool: M S Excel-2007

LITERATURE REVIEW

• Specific training of sales people enhances their performance and produces customer-

oriented selling

• In different circumstances firms might choose an appropriate distribution flexibility

strategy which fits with their distribution environment

• Incentives motivates sales people to perform more effectively

• Many companies today are trying to identify innovative compensation strategies that are

directly linked to improving organizational performance

• Evaluating the performance of sales territories.

SWOT Analysis

Strength

Strong brand recognition and product

portfolio

Experienced Management

Diversified Product Portfolio

Established Research & Development

Global market reach

Well established distribution network

Weakness

Dependence on tobacco revenues

Negative Connection of Tobacco

Low export levels

Brand Proliferation

Opportunity

Low per capita consumption of personal

care products

Untapped rural Market

Collaboration with foreign players

e-retailing

Threat

Competition both Domestic &

International

Ban on smoking

Competition from unbranded products

High competition from established

companies

SALES HIERARCHY OF ITC

RECRUITMENT & SELECTION

Sales Trainee

Area Executive

Area Manager

Assistant Manager

Branch Manager

Regional Branch Manager

District Manager

• Assistant under Trainee Top B- Schools

• Sales Trainee Other

B- schools

• Lateral Recruitment (for the post of AE) by BM and HRM

Employee References and

Consultancy

The interview proceeds through five stages:

1. CV Short listing

2. Group Discussions / Business Plan Competition

3. 1st Round Interview

4. Written Test - 3 sections. Total of 55 questions. Numerical - 15, Analytical - 20, Verbal - 20

questions.

5. Personal Interview with HR

TRAINING AND DEVELOPMENT

Stage 1: Induction Training:

Step 2: On Job Training:

It is a three stage process.

1. New Sales Personnel

2. Training through NIS

3. The final process

Sales Trainee

Duration: 1 week

Place: Head Office

Stage 3. Internal Training

For Sales Trainee and

AUT

Duration: 1 month

In Branch office

ProcessTraining Through

NIS

New Sales Personnel

On Job Training

Distributor’s Sales Person

& Supervisor

Top distributors

3 Salesman are selected

New Entrant

(S. Trainee & AUT)

Duration: 3days

Internal

Training

Stage 4: Competency Training:

COMPENSATION

Position CTC (in Lakhs

annually)

Variable

Branch Manager 18 - 20 20% of CTC

Assistant Manager 12 - 14 20% of CTC

Area Manager 8 - 8.5 20% 0f CTC

Area Executive 5.5 - 6.5 20% of CTC

Sales Trainee 2.5 - 2.6 20% of CTC

Branch Manager recommends AE and

AM for training

Location: Head Office

Duration: 6 Days

Performance evaluation of sales personnel:

Performance evaluation of sales personnel:

It follows through three stages as the diagram shows. The sales personnel will be evaluated on their

contribution towards the firm and their profile. ITC is always proved to be a good in the performance

evaluation as their techniques are well accepted.

•Monthly Sales Target

•Visibility Target

Monthly Target

•Sales Volume for each product category

•Market share growth rate

Performance of the branch

Quiz

Motivation

Updated

WHOLESALE DISTRIBUTOR (WD)

WD employees: Recruitment and Compensation:

Recruitment:

The salespersons of distributors are appointed by the distributor himself in consultation with ITC

officials

Compensation:

• Their fixed salary is paid by the distributor but is reimbursed by the company

• The variable salary of salesmen is decided on his meeting of sales target

Salesmen Evaluation and Compensation:

• The compensation received by salesmen depends upon the target achieved by them

• Targets under consideration:

1. Monthly sales target

2. Product wise sales target

3. Category wise

WD

Salesmen

(Salary: 5-6 K)

Supervisors

(Salary: 8K)

Delivery Boy

(Salary: 2.5-4K)

Driver/ Thelawala

(Salary: 3.5-4k)

Control mechanism:

• The performance and work of WD employees is evaluated by company’s officials weekly

• Their daily sales order is monitored by Area Executive

• The salesmen is given a geographical territory which doesn’t consider sales potential

• Salesmen has to cover 30 outlets each day

• They are given a beat plan for each day

• If a WD employee is not performing then the company can sack him

Role of Salesmen:

• Prospecting- Searching for new outlets

• Targeting- Visiting potential outlets

• Communicating- Informing about products and offers

• An order taker- As per requirement in retail and convenience outlet

• Selling to retailers and convenience outlet

• Servicing- Removal of damaged/expired(DND)products

• Information gathering- About needs/ preferences of customers

• Allocating- Fixed time to each outlets

• Cash collection

CHANNEL TYPE:

3-level Distribution Channel:

2 -level Distribution Channel:

Distribution Type:

Company

Wholesale

Distributor

Wholesaler

Retailers

Consumer

Company Wholesale Distributor

Retailers Consumer

Company Wholesale Distributor

Wholesaler

Consumer

Exclusive (Textile)

Selective (Paper Boards & Cigarettes)

Intense (Other FMCG Products)

Effective Working of Channel Members:

Business Area wise Evaluation Percentage

1. Convenience 25

2. Grocery 1/3 25

3. Grocery 2 25

4. WD system & Processes 25

Performance is measured on following broad parameters:

1.) Distribution Health (Outlet coverage, availability, visibility levels, etc)

2.) Business Health (Sales Performance benchmarked to relevant Circle)

Score card for Measurement of WD Performance:

Bands Score

Platinum > 95%

Gold 85-95%

Silver 80-85%

Bronze Star 75-80%

Bronze 60-65%

Non-Performing < 60%

Actionable basis for WD evaluation:

Essentials Check Bands Follow up action

Not Qualified Non Performing Replace with NSA

Not Qualified Bronze On Notice

Not Qualified Bronze Star/ Silver On Notice

BM to revert with follow up

plan

Qualified Non Performing On Notice

Qualified Bronze On Notice

Time bound action plan

Qualified Bronze Star/ Silver Encouragement for further

improvement

PROBLEMS IN SALES AND DISTRIBUTION SYSTEM AT ITC:

• Lack of proper training to distributor’s salesmen

• Territory allotted to salesmen doesn’t consider the sales potential of the areas

• Salesmen hides offers from retailers in ready stock sale model

• Problem of product recall by salesmen

• Salesmen focuses more on large outlets which purchase in large volume

• Billing of new outlets done on the name of other existing outlets

• All the SKU of a product are not brought in the market at a time

• TPS (Sify software) is not updated regularly

SOLUTIONS

• Proper training should be provided to salesmen

• Salesmen should be regularly informed about the changing offers and schemes on the

products

• An apparel containing detail of offers should be given to salesman for ready stock sales

• Apparel should be provided to salesmen to enhance brand awareness

• Territory allotted to salesmen should consider the sales potential and concentration of

outlets in that area

• Salesmen should be provided incentive for adding new outlets

• TPS should be updated regularly to show current stock details

• The incentive of the salesmen should be based on the number of outlets served by them too

rather than merely on sales volume

REFERENCES:

• Sergio Román, Salvador Ruiz, José Luis Munuera, (2002) "The effects of sales training

• Kangkang Yu, Jack Cadeaux, Hua Song, (2012) "Alternative forms of fit in distribution

flexibility strategies", International Journal of Operations & Production Management, Vol.

32 Iss: 10

• Andrew Napier, (1986) "Incentives — A Vector of Improved Sales Performance?",

European Journal of Marketing, Vol. 20 Iss: 6, pp.36 – 51

• Steven H. Appelbaum, Loring Mackenzie, (1996) "Compensation in the year 2000: pay for

performance?” Health Manpower Management, Vol. 22 Iss: 3, pp.31 - 39

• Journal of Marketing; Jan1972, Vol. 36 Issue 1, p31-37, 7p

• www.itcportal.com

@ abdulla.nck@gmail.com