Pushya Francis

8/11/2019 Pushya Francis

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SUMMER PROJECT REPORT

ON

A STUDY OF DISTRIBUTION AND POINT OF PURCHASE

PROMOTION OF

COLGATE-PAMOLIVE (INDIA) LTD.

Prepared for the Mumbai University in the partial fulfillment of the requirement

for the award of the degree in

MASTERS OF MANAGEMENT STUDIES

Submitted By:

Name: PUSHYA FRANCIS

Roll No: 41

YEAR -2010-2011

Under the guidance of

Prof. Simmi Prasad


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ACKNOWLEDGEMENT

I am highly indebted to Colgate-Pamolive (India) Ltd. for giving me the pleasure to be a member of

this esteemed organization during the summer internship period.

I would also like to thank Mr.Sarath Krishnan, Regional Manager (Company Guide) and Ms. Shilpa

Nayak,Area Manager - Customer Development,(mentor), for their guidance and constant supervision.

I would like to express my gratitude towards Mr.Gaurav Bujh and other members of Colgate-

Pamolive (India) Ltd for their kind co-operation and encouragement which helped me in completion of

this project.

I would also like to express my special gratitude and thanks to Prof. Simmi Prasad for giving me such

attention and time.

My sincere thanks to all other concerned people without whom it would not have been possible to

complete the project successfully


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Table of Contents Page No.

1. List of figures 1

2. Company History 2

3. Department Introduction 17

4. Project Intro & Need for the Study 18

5. Objectives of the study. 20

6. Research Methodology 21

7. Data Collection, Research Design 23

8. Analysis of Data and Results 29

9. Findings and Interpretations 34

10. Recommendations and conclusion 42

11. References 43

12. Appendix 45


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Executive Summary:

Colgate Palmolive is a well-reputed company with a large series of its well-known products havingdifferent varieties in terms of flavour.

Distribution is one of the basic tools in the marketing mix.

The most important part of marketing is how a product will arrive from the seller to the buyer.

Colgate-Pamolive products go through a channel of distribution, which involves manufactures,

distributors, wholesalers, retailers, and consumers.

There are various players or intermediaries who handle this very important role in the distribution

chain.

These intermediaries form what is commonly referred to as marketing channels (also called trade or

distribution channels). There are different types of distribution channels such as manufacturers agents,distributors and dealers, wholesalers, retailers, franchisees and multiple chains. Whereas wholesalers

take title to goods, agents sell goods on a commission basis

With growing market and opportunities, FMCG manufacturers and retailers will have to develop and

implement deliberate strategies for gaining market access.

Colgate has the largest market share of 56%.In the recent years it has been observed that the retail

distribution of Colgate has been rapidly increasing.

Therefore Colgate Pamolive India Ltd would be an ideal company to study the distribution and

promotion of its products.

Colgate uses a well defined distribution channel and store promotions to provide the customers with a

high customer service level.

This project is also a sincere attempt to discuss about promotional strategy of launching the new productCOLGATE SENSITIVE PRO RELIEF


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List Of FiguresSr.No Title Page no

1 Distribution Network 17

2 Analysis of reasons for gap 30

3 Analysis of efficiency of distribution 31

4 Analysis of benefits of mediators 32

5 Marketing Channel 37


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Company History:

Colgate-Palmolive Company's growth from a small candle and soap manufacturer to one of

the most powerful consumer products giants in the world is the result of aggressive

acquisition of other companies, persistent attempts to overtake its major U.S. competition,

and an early emphasis on building a global presence overseas where little competition

existed. The company is organized around four core segments--oral care, personal care,

home care, and pet nutrition--that market such well-known brands as Colgate toothpaste,

Irish Spring soap, Soft soap liquid soap, Mennen deodorant, Palmolive and Ajax

dishwashing liquid, Ajax cleanser, Murphy's oil soap, Fab laundry detergent, Soup line and

Suavitel fabric softeners, and Hill's Science Diet and Hill's Prescription Diet pet foods.

Colgate-Palmolive has operations in more than 200 countries and generates about 70

percent of its revenue outside the United States.

Beginnings

In 1806, when the company was founded by 23-year-old William Colgate, it concentratedexclusively on selling starch, soap, and candles from its New York City-based factory and

shop. Upon entering his second year of business, Colgate became partners with Francis

Smith, and the company became Smith and Colgate, a name it kept until 1812 when Colgate

purchased Smith's share of the company and offered a partnership to his brother, Bowles

Colgate. Now called William Colgate and Company, the firm expanded its manufacturing

operations to a Jersey City, New Jersey, factory in 1820; this factory produced Colgate's two

major products, Windsor toilet soaps and Pearl starch.

Upon its founder's death in 1857, the firm changed its name to Colgate & Company and was

run by President Samuel Colgate until his death 40 years later. During his tenure several

new products were developed, including perfumes, essences, and perfumed soap. The

manufacture of starch was discontinued in 1866 after a fire destroyed the factory.


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In 1873 Colgate began selling toothpaste in a jar, followed 23 years later by the introduction

of Colgate Ribbon Dental Cream, in the now familiar collapsible tube. By 1906 the

company was also producing several varieties of laundry soap, toilet paper, and perfumes.

Colgate & Company shifted its headquarters to Jersey City in 1910.

While the Colgate family managed its manufacturing operations on the East Coast, soap

factories were also opened in 1864 by B.J. Johnson in Milwaukee, Wisconsin (under the

name B.J. Johnson Soap Company), and in 1872 by the three Peet brothers in Kansas City,

Kansas. In 1898 Johnson's company introduced Palmolive soap, which soon became the

best-selling soap in the world and led the firm to change its name to the Palmolive Company

in 1916. The Peets, who sold laundry soap mainly in the Midwest and western states,

merged their company (Peet Brothers) with Palmolive in 1926, forming Palmolive-Peet

Company. Two years later that firm joined with Colgate & Company to form Colgate-

Palmolive-Peet Company, with headquarters in Jersey City. Palmolive-Peet's management

initially assumed control of the combined organization.

On October 25, 1929, management signed an agreement to merge the company with KraftPhenix Cheese Corporation (forerunner of Kraft Foods) and Hershey Chocolate Company.

The three companies would continue to operate independently, but they would become

subsidiaries of a holding company slated to be called International Quality Products

Corporation. Just four days after the deal was signed, however, the stock market crashed,

forcing the huge amalgamation to be scuttled. In the wake of the crash, the Colgate family

regained control of Colgate-Palmolive-Peet and installed Bayard Colgate as president in

1933.


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International Expansion

Colgate & Company had been a pioneer in establishing international operations, creating a

Canadian subsidiary in 1913 and one in France in 1920. In the early 1920s the firm

expanded into Australia, the United Kingdom, Germany, and Mexico. Colgate or its

successor firm next created subsidiaries in the Philippines, Brazil, Argentina, and South

Africa in the late 1920s. In 1937 the company moved into India and by the end of the 1940s

had operations in most of South America. By 1939 Colgate-Palmolive-Peet's sales hit $100

million.

In the 1940s and 1950s the company also built upon its strategy of growth by acquisition,

buying up a number of smaller consumer product companies. Organic growth remained on

the agenda as well, and in 1947 the company introduced two of its best-known products,

Fab detergent and Ajax cleanser. These acquisitions and new products, however, did little to

close the gap between Colgate and its arch-rival, the Procter & Gamble Company, a firm

that had been formed in the 1830s and had by now assumed a commanding lead over

Colgate in selling detergent products in the United States. Meanwhile, the firm adopted its

present name in 1953 and moved its offices for domestic and international operations to

New York City in 1956.

In 1960 George H. Lesch was appointed Colgate's president in the hopes that his

international experience would produce similar success in the domestic market. Under his

leadership, the company embarked upon an extensive new product development program

that created such brands as Cold Power laundry detergent, Palmolive dishwashing liquid,

and Ultra Brite toothpaste. In an attempt to expand beyond these traditional, highly

competitive businesses into new growth areas, Colgate also successfully introduced a new

food wrap called Baggies in 1963. As a result of these product launches, the company's

sales grew between 8 and 9 percent every year throughout the 1960s. Sales topped the $1

billion mark in 1967.


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New Strategies for the 1970s

During the 1970s, as environmental concerns about phosphate and enzyme detergent

products grew, the company faced additional pressure to diversify beyond the detergent

business. In response to this pressure, Foster instituted a strategy that emphasized internal

development via a specialized new venture group; joint ventures for marketing other

companies' products; and outright acquisitions of businesses in which Colgate could gain a

marketing advantage over Procter & Gamble. In 1971, for example, the company began

selling British Wilkinson Sword Company razors and blades in the United States and other

countries. In 1972 Colgate-Palmolive acquired Kendall & Company, a manufacturer of

hospital and industrial supplies. It was originally hoped that the Kendall acquisition would

bolster the pharmaceutical sales of Colgate's Lakeside Laboratories subsidiary, which had

been acquired in 1960. The partnership never materialized, however, and Lakeside was sold

in 1974. The Kendall business proved to be one of Foster's most successful acquisitions.

Within two years, the subsidiary was producing sales and earnings results well above the

company's targeted goals. On the product development side, meanwhile, Irish Spring

deodorant soap was introduced in 1972.

In 1971 the U.S. Federal Trade Commission enacted restrictions on in-store product

promotions, such as couponing. In response to these restrictions, Foster began to employ

other tactics designed to enhance Colgate's visibility in the marketplace. Two such programs

awarded money to schools and local civic groups whose young people collected the most

labels and boxtops from selected Colgate products.

Under Foster, Colgate-Palmolive also began to sponsor a number of women's sporting

events, including the Colgate-Dinah Shore Winner's Circle, a women's professional golf

tournament. Foster chose women's sports in an effort to appeal to Colgate-Palmolive's

primarily female customer base. He even went so far as to have Colgate buy the

tournament's home course, the Mission Hills Country Club in Palm Springs, California, so

that he could supervise the maintenance of the greens.


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In 1973 Colgate acquired Helena Rubinstein, a major cosmetics manufacturer with strong

foreign sales but a weak U.S. presence. Believing that its marketing expertise could solve

Rubinstein's problems, Colgate reduced both the number of products in the company's line

and the number of employees in its workforce, increased advertising expenditures, and

moved the products out of drugstores and into department stores. The following year the

company acquired Ram Golf Corporation and Bancroft Racket Company, and in 1976 it

bought Charles A. Eaton Company, a golf and tennis shoe manufacturer.

Although total U.S. sales of consumer products appeared to be slowing by the end of 1974,particularly in soaps and detergents, Colgate's international sales continued to carry the

company forward. It maintained its leadership position abroad through new product

development geared specifically to local tastes throughout Europe as well as through its

involvement in the growing markets of less-developed countries in Latin America, Africa,

and Asia.

Setbacks in the Late 1970s

Foster's diversification strategy initially improved earnings, but Colgate's domestic sales,

market share, and profit margins were beginning to soften. This was due, in large part, to an

economic recession and an advertising cutback the company had made in an attempt to

boost earnings. Colgate was consistently losing the marketing battle in personal care

products to Procter & Gamble. It had no leading brands and few successful new product

introductions because of reduced spending for research and development.

In an effort to remedy this problem and broaden its product mix, Colgate moved into food

marketing in 1976 with the acquisition of Riviana Foods, a major producer of Texas long-

grain rice with its own subsidiaries in pet food (Hill's Pet Products), kosher hot dogs

(Hebrew National Kosher Foods), and candy.


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The Riviana acquisition, however, did not live up to the company's expectations. Along with

purchasing a successful rice-milling business, Colgate found that it had also saddled itself

with two unprofitable restaurant chains and a low-quality candy company. In 1977 declines

in the price of rice seriously eroded Riviana's cash flow.

Helena Rubinstein created additional headaches. Whereas other cosmetic manufacturers had

moved their products from department store distribution to higher-volume drugstores,

Colgate's management elected to keep Rubinstein products in department stores even

though stores' demands for marketing support eroded the company's margins so severely

that it lost money on every cosmetic item sold. Colgate finally sold the business in 1980 to

Albi Enterprises.

Foster had become chairman in 1975. In 1979, embattled by a series of marketing failures

and the pressures of an acquisition strategy that yielded more losers than winners, Foster

suddenly resigned, citing ill health. The company's president and chief operating officer,

Keith Crane, was appointed as Foster's successor. A 42-year Colgate employee, Crane

quickly instituted a new management structure consisting of several group vice-presidents,reunited all domestic operations under one group, and realigned division managers in an

attempt to promote a more cohesive organization. Consumer advertising and product

research were given renewed emphasis to support the company's basic detergent and

toothpaste lines.

Over the next two years, Crane sold a number of Foster's acquisitions that no longer fit with

the company's long-term strategic plan, including Hebrew National Kosher Foods, which

had been part of the Riviana purchase; Ram Golf; and the Bancroft Racket Company. Crane

also put the Mission Hills Country Club up for sale and withdrew Colgate's sponsorship of

the sporting events his predecessor had nurtured.


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Also during the late 1970s and the 1980s, Colgate found itself named as a defendant in two

lawsuits. In 1981 the company lost a suit brought by United Roasters, who successfully

argued that Colgate had violated the terms of a contract between the two firms for Colgate

to market Bambeanos, a soybean snack produced by United Roasters, and was awarded

$950,000. The following year the company was sued by the federal government for alleged

job discrimination. According to a complaint filed with the U.S. Equal Employment

Opportunity Commission, Colgate had failed or refused to hire people between the ages of

40 and 70 since 1978 and had also deprived employees in that age group of opportunities for

promotion.

By the end of 1982 Crane also experienced problems at Colgate. Several attempts at newproduct development never made it out of the test-market stage. Increased advertising

expenditures for a limited number of major brands produced only temporary gains in market

share while slowly killing off other products receiving little or no media support.

Even Fresh Start detergent, one of the most successful new products to come out of the

Foster era, was having problems retaining market share. Thus while Procter & Gamble's

sales and margins were increasing, Colgate's were on the decline. To make matters worse,

the strong dollar overseas hurt Colgate's international sales, and changes in Medicare policyweakened Kendall's business.

Turnaround Under Reuben Mark, Mid- to Late 1980s

In 1983 Crane relinquished the title of president to Reuben Mark, one of the company's

three executive vice-presidents and a member of Crane's management advisory team. Mark

also assumed the position of chief operating officer at that time; one year later he succeeded

Crane as CEO. Mark built upon his predecessor's restructuring efforts in an attempt to

increase profits and shareholder value. Between 1984 and 1986 several inefficient plants

were closed, hundreds of employees laid off, and noncore businesses sold, including the

remnants of the Riviana Foods acquisition, except for the Hill's Pet Products subsidiary.


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In an attempt to refocus the company's marketing and profitability, Mark developed a set of

corporate initiatives intended to address business areas ranging from production-cost

reduction to new product development, with a heavy emphasis on motivating employees and

involving them in company decision-making. In response to the implementation of these

ideas, the company's U.S. toothpaste business enjoyed a boost with first-to-the-market

introductions of a gel toothpaste and a pump-type dispenser bearing the Colgate brand

name. Similar U.S. market share gains were earned by new and improved versions of its

Palmolive and Dynamo detergents and Ajax cleaner. Palmolive automatic dishwashing

liquid debuted in 1986.

With the company's turnaround firmly underway, business units managed by key executives

were formed to develop plans for the company's major product categories. The purpose of

each plan was to identify how products under development could be best introduced in

domestic and international markets. Two years into this strategic reorganization, coinciding

with Mark's appointment as chairman in 1986, Colgate confronted an embarrassing

controversy.

Since the early 1920s Hawley & Hazel Chemical Company had marketed a product called

Darkie Black and White Toothpaste in the Far East. Colgate had acquired a 50 percent

interest in this company in 1985. The following year, the Interfaith Center on Corporate

Responsibility, a coalition of Protestant and Roman Catholic groups, demanded that Colgate

change what it deemed to be the product's racially offensive name and packaging, which

depicted a likeness of Al Jolson in blackface. The company acknowledged the criticism and

agreed to make the necessary changes.

Colgate also continued to seek out growth areas in its personal care product and detergent

businesses. In 1987 it acquired a line of liquid soap products (including the Softsoap brand)

from Minnetonka Corporation, the first transaction the company had made in the personal

care area in several years. Building upon its success in launching an automatic dishwashing


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detergent in liquid form ahead of its competitors, the company also beat Procter & Gamble

to the market with a laundry detergent packaged in a throw-in pouch called Fab 1 Shot,

although this product failed to sustain consumer interest or reach sales expectations over the

long term.

Buoyed by product development breakthroughs and a renewed commitment to consumer

products marketing, Colgate sold its Kendall subsidiary and related healthcare businesses in

1988 to Clayton & Dubilier. The sale enabled Colgate to retire some debt, sharpen its focus

on its global consumer products businesses, and invest in new product categories. Moreover,

Mark's global approach enabled the company to maintain its overall profitability despite nothaving a leadership position in the United States. Although Colgate lagged behind Procter &

Gamble in the toothpaste category, for example, it held a commanding 40 percent share of

the toothpaste market worldwide.

Mark's strategy appeared to pay off handsomely. By the end of the third quarter of 1989

Colgate's international operations performed strongly while the profitability of its U.S.

operations rose, due mostly to manufacturing-cost economies and greater control over

promotional and sales expenses. Not yet ready to concede the U.S. market for personal care

products to Procter & Gamble, though, Colgate acquired Vipont Pharmaceutical, a

manufacturer of oral-hygiene products, toward the end of that year. Vipont's products,

several of which Colgate had already been marketing overseas, enabled Colgate to

strengthen the market position it had recently established with the introduction of a new

tartar-control formula toothpaste.


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Major Acquisitions in the 1990s

Colgate continued to make significant acquisitions in the early and mid-1990s while it

attempted to gear up its product development program, which had been unable to introduce

more than a few new products each year. In 1991 Colgate acquired the Murphy-Phoenix

Company (whose top brand was Murphy's Oil Soap) to bolster its household care segment.

That same year, Mark initiated a restructuring aimed at improving the firm's profitability

and gross margins, which lagged behind the industry leaders. A major part of the effort was

the elimination or reconfiguration of 25 factories throughout the world and an 8 percent

reduction in the workforce. Consequently, Colgate took a $243 million charge in September

1991, which reduced significantly the firm's net income for the full year.

Colgate's most dramatic acquisition to date came in 1992 with the $670 million purchase of

the Mennen Company, which added to its personal care line the top U.S. deodorant brand,

Mennen Speed Stick, and the number two baby-care brand, Baby Magic. In addition,

Colgate gained footholds in skin-care and hair products, and the Mennen brands gained the

power of Colgate's worldwide distribution and marketing reach. This major acquisition was

followed in 1993 by the purchase of S.C. Johnson & Son, Inc.'s liquid hand and body soap

brands in Europe and the South Pacific, which enabled Colgate to become the worldwide

leader in liquid soap.

Gross margins steadily improved in the early 1990s, reaching 48.4 percent by 1994 (up from

39.2 percent in 1984). This provided Colgate with additional funds for research and

development and advertising. The North American sector also experienced gains in gross

margins, which resulted in part from pricing increases on Colgate detergents. In turn, this

cut into overall North American sales, which declined 8 percent from 1993 to 1994. Mark's

strategy was to turn North American sales around through new product introductions such

as a variant of Irish Spring soap and an extension of the Murphy's Oil Soap brand into a


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Murphy's Kitchen Care line of all-purpose cleaners. Under the leadership of Lois D. Juliber,

who formerly headed up new product development, the North American sector was able to

introduce several products within a short span for the first time.

A hidden jewel within the Colgate empire in the 1990s was its pet foods sector, Hill's Pet

Nutrition. The worldwide leader in therapeutic and specialty wellness pet food, Hill's

enjoyed a compound annual growth rate of 14.6 percent from 1989 to 1994. During this

period the market for premium pet food increased dramatically in Europe and Japan, with

Hill's snatching a substantial portion of this growth. Overall, pet foods were one of Colgate's

leading profit generators, boasting gross margins of 55 to 60 percent.

Early in 1995 Colgate made another major acquisition with the $1.04 billion purchase of

Kolynos Oral Care from American Home Products, which gained it the Kolynos toothpaste

brand, the top brand in Brazil and a leader in several other Latin American countries. This

purchase pushed Colgate's share of the Latin American oral-care market from 54 percent to

79 percent.

In September 1995 Colgate announced another major restructuring of its operations to close

or reconfigure 24 additional factories and cut 3,000 more employees (more than 8 percent of

the workforce). Mark said the action was necessary to finance new growth initiatives;

Colgate took a $369 million charge as a result. The 1995 figures were also affected by a

deepening recession in Mexico, which had accounted for 11 percent of sales and 20 percent

of profits in 1994.


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Boosting Sales with the Introduction of Total

Beginning in the late 1980s, Colgate had begun development of a toothpaste that contained

a gingivitis-fighting antimicrobial agent, triclosan. Researchers found a way to use polymers

to bind triclosan to teeth for up to 14 hours, allowing users to fight bleeding gums and bad

breath continuously with only two brushings a day. The company began marketing the

product overseas in 1992 under the name Total, eventually distributing it to 100 countries.

The toothpaste was a major success, and enabled Colgate to increase its worldwide share of

that market segment.

In the United States, however, introduction of Total was held up by the Food and Drug

Administration (FDA), which required extensive tests to prove the product's effectiveness

before Colgate could make gingivitis-fighting claims on package labels. After some five

years the agency granted final approval, and Total reached store shelves in December 1997.

The company backed it with a $100 million marketing blitz, its largest product introduction

to date.

The response was even stronger than anticipated, and cemented Colgate's place as leader of

the U.S. toothpaste market, a position it had actually reached in the months prior to Total's

introduction. This was the first time since 1962 that ACNielsen's rankings had shown

Colgate on top. Following the successful launch, the company's profits and stock price

climbed steadily. In December 1998 the FDA also approved a variant of Total, Total Fresh

Stripe, which reached stores several months later. A year after Total's release it was the

number one toothpaste brand in the United States. Competitors such as Procter & Gamble,

which already marketed a triclosan-based toothpaste in Canada, were prevented from

mounting a quick response by the lengthy FDA approval process. Powered by Total and the

strong U.S. economy, Colgate continued to do well in 1999, with record earnings

approaching the $1 billion mark.


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New Challenges in the Early 2000s

Under Mark's continued leadership, Colgate-Palmolive maintained its momentum into the

early 2000s. By keeping a tight rein on costs, the company boosted its gross profit margin to

54.6 percent by 2002, when net income reached $1.29 billion on sales of $9.29 billion. On

the new product front, the Colgate Actibrush battery-powered toothbrush was brought to

market in 2000, soon followed by products in the burgeoning at-home tooth-whitening

sector, such as Simply White gel and Total Plus Whitening toothpaste. In pet food, the

company in 2002 introduced Hill's Science Diet Nature's Best, a new line of premium dog

and cat food made with natural ingredients.

Long unable to compete with Procter & Gamble in that firm's mainstay detergent lines,

Colgate pulled back from that sector in certain markets. In 2001 it sold its detergent

business in Mexico, headed by the Viva brand, to Henkel KGA, and then two years later

off-loaded its European detergent brands to Procter & Gamble. In 2004 Colgate sold its

detergent business in Ecuador and Peru. In June of that year, the company completed its first

major acquisition since the 1995 purchase of Kolynos. Colgate spent $866 million for

GABA Holding AG, a privately held European oral care company based in Switzerland.

GABA, operating in 15 countries, had annual sales of about $300 million. Its strength in the

pharmacy channel complemented Colgate's leading presence in the European retail market.

The addition of GABA boosted Colgate's share of the European toothpaste market to 33

percent.

Although revenues increased another 7 percent in 2004, topping the $10 billion mark for the

first time, profits fell 7 percent, to $1.33 billion. Intense global competition--particularly

from a resurgent Procter & Gamble--forced Colgate to allocate additional money for

advertising, and the firm also had to contend with increased raw material and packaging

costs and the growing power of discount retailers such as Wal-Mart Stores, Inc. who were

forcing consumer product makers to hold the line on price increases.


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The latest reorganization, a four-year program, aimed to generate between $250 million and

$300 million in after-tax cost savings by 2008 by closing 26 of the firm's 78 factories

around the world and eliminating about 12 percent of the workforce, or more than 4,400

jobs. Cumulative after-tax restructuring charges of between $550 million and $650 million

were anticipated. As part of the restructuring, further divestments of noncore lines were very

possible.

As Colgate continued to deemphasize its detergent business, it seemed likely to seek buyers

for its Fab and Ajax brands. Just as the restructuring began, however, Colgate faced the

prospect of an even more formidable chief foe.

Procter & Gamble reached an agreement to acquire The Gillette Company in January 2005

for $57 billion, which would add Gillette's Oral-B toothbrushes and toothpastes to P&G's

Crest line. This deal was likely to compound the competitive pressures that Colgate-

Palmolive faced, making the successful implementation of the restructuring that much more

important.


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ColgatePamolive (India)

The strong relationship and the trust of generations of consumers, trade and the dental

profession built over decades of operations in India has made Colgate a trusted household

name.

In 2009, Colgate-Palmolive (India) was adjudged as the Best Value Creator (Mid Cap

Category) in the 2009 Outlook Money NDTV Profits Awards.

In 2003, Colgate was ranked Indias #1 Most Trusted Brand across all categories by Brand

Equitys Most Trusted Brand Survey conducted in conjunction with Nielsena position it

held in succession for four consecutive years from 2003 to 2007 and has been the onlybrand

in the top three coveted position in all the 8 surveys conducted since 2001.

Prior to this, Colgate was also rated as the #1 brand by the A&MMODE Annual Survey

for Indias Top Brands for eight out of nine years during the period 1992 to 2001


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Introduction to the Department

This project has been prepared and studied in the sales and distribution department of

Colgate-Palmolive (India) Ltd, Mumbai Branch.

Distribution Strategy:

Most manufacturers find it useful to go through at least one wholesaler in order to reach the

retailer, and it is simply not efficient for Colgate to sell directly to all neighborhood stores.

However, large retail chains such as Big Bazaar, D Mart etc, buy toothpaste and other

Colgate products in such large volumes that it may be efficient to sell directly to those

chains.

Thus, they have a "parallel" distribution network whereby some retailers buy through a

distributor and others do not.

Fig 1 Distribution Network


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Introduction of the project:

When a firm holds several different brands, different marketing and distribution plans may

be required for each. Several variables come into play in maximizing value.

Importance of Distribution

Channel decisions refer to the managerial decisions on the selection of best routes or paths

for moving goods from the producer to the consumer. Channels of distribution are

concerned not only with the physical movement of goods but also with their promotion,

selling and marketing control.

The term channels of distribution is used to refer to the various intermediaries who help in

moving the product from the producer to the consumer, there are a variety of middlemen

and merchants who act as intermediaries between the producers and consumers.

Channels of distribution are the most powerful element among marketing mix elements.

Many products which were intrinsically sound died in their infancy because they never

found the right road to the market. On the other hand, by developing a sound distribution

network and launching aggressive advertisement campaigns, a company can carve out a

niche for itself.


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Need for study:

India's economy is projected to grow at a fast clip over the next few years.

With increasing purchasing power and a rising middle class, the fast moving consumer

goods (FMCG) industry is posed to grow dramatically.

To leverage opportunities, FMCG manufacturers and retailers will have to develop and

implement deliberate strategies for gaining market access.

Colgate has the largest market share of 56%.

In the recent years it has been observed that the retail distribution (stores) of Colgate, in

every city has been rapidly increasing except in Mumbai City.

Therefore Colgate Pamolive India Ltd would be an ideal company to study the distribution

of its products.


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Objective:

A] To study the Distribution Strategy of Colgate-Palmolive (India) Ltd and to add new

outlets in the distribution network

B] To study the Promotion at the Point of Purchase of Colgate -Palmolive (India) Ltd

Colgate has more than 500 locations around the world, including South and CentralAmerica, Europe and Asia.

Colgate uses a well defined distribution channel and store promotions to provide the

customers with a high customer service level.

Colgate aims to, and has reached every corner of this city.

Colgate-Palmolivesdistribution and penetration is one of the best examples in India.


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Data Collection

Development plan:

Visit the existing retail outlets

Check for outlets which are not in Colgates distribution list.

Identify Retail outlets suitable for promotions.

Research methodology

RESEARCH TYPE

Exploratory

Descriptive

Research Design:

Descriptive Research is the research method used because descriptive studies embrace a

large proportion of market research.

The purpose is to provide an accurate snapshot of some aspect of the market environment.

Descriptive research is more rigid than exploratory research and seeks to describe users of a

product, determine the proportion of the population that uses a product, or predict future

demand for a product.

As opposed to exploratory research, descriptive research should define questions, people

surveyed, and the method of analysis prior to beginning data collection.

In other words, who, what, where, when, why, and how aspects of the research should be

defined.


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Sampling:-

Sampling Technique Followed:

In this project the technique of sampling used was convenience sampling.

Convenience sampling involves the choice of subjects who are most advantageously placed

or in the best position to provide the information required.

Sample unit:

In this project sample were the retailers in Mumbai City.

The aim was to know the penetration level of Colgate in the market.

Sample Size:

1400 Retailers


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Data Collection:

A] For Study of the distribution strategy

Primary data

To collect primary data from retailer questionnaires were used. Questionnaire was prepared

very carefully so that it may prove to be effective in collecting the right information.

Secondary dataSecondary data collected from different website. This secondary data formed the conceptual

background for the project. This secondary data was compared with the primary data

collected in area.

Research instrument

The research instrument used in the project was Questionnaire to collect primary

information; it provided flexibility by using more close ended questions.

Method of Collection of Data

Information was collected by personally contacting retailers through interviews

Analytical Techniques used

Types of data analysis techniques used in the project:

Graphical analysis

Percentage analysis.


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The distribution strategy proposed for the Colgate is through dentists, plastic surgeons, drug

stores, grocery stores, large retail stores, and department stores.

Therefore, Colgate distribution system is indirect because consumers are spread throughout

many geographic areas and often prefer to shop for certain products at specific places.

Aside from convenience stores and large retail stores, many food stores played a key role in

the distribution of oral health care products.

Colgate-Pamolive adopts exclusive distribution contracts to major wholesalers and retailers.

They carefully recruit and select distributors and dealers based on various factors or criteria.These include, inter alia, their locations, credit worthiness, past sales trends, future growth

and potential.

Once selected, they are trained to improve their performance and motivated by being

offered higher margins, special deals, sales contests, premiums and other incentives.

The main objective of motivating them is to improve and maintain high service levels and

output. This approach helps Colgate-Pamolive, achieve marketing tasks such as delivery

efficiency, product availability, after-sales service, product displays or merchandising and

control of distribution costs. When performed effectively, these tasks will ultimately impact

very positively on company revenue and profits.


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Colgate Palmolives Distributors in Mumbai are:

1)

S.B. Enterprises, Bhandup

2) Megor Sales, Ghatkopar

3) Raval Corporation, Kurla

4) Chetna Enterprises, Marol

5) Abhay Marketing, Andheri

6)

Lakshmi Traders, Jogeshwari

7) Bhavana, Malad

8) Rajhans, Borivili

9) Raj, Eliphinstine

10) Bhingade, Byculla

11)

Bhavin, Kandivili

12) Jawahar

Each of these distributors covers approximately 1000 retail outlets in a week.

The salesmen from each distributor/stockiest, visits each store once a week to take the

requirement /order.The material is delivered within 24 hrs along with the purchase order.

Thus the strategy of Colgate Pamolive India Ltd. is very successful.Yet, there are few

outlets which the distributors do not reach, due to various reasons.

These outlets, however, stock Colgate products from other sources such as minimarts,

wholesalers, hyper marts etc.


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A questionnaire was given to all the shopkeepers who did not purchase Colgate products

from the distributors and preferred to go to the local wholesaler.

Based on the answers of the questionnaire filled by the shopkeepers, the various reasons of

distribution gaps were found out.


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II] For study of efficiency and effectiveness of the distribution

strategy

Most manufacturers find it useful to go through at least one wholesaler in order to reach the

retailer, and it is simply not efficient for Colgate to sell directly to all neighborhood stores.

Therefore to study the effectiveness of the distribution strategy and the benefits offered by

this channel a survey was conducted for the distributors and the sales and sales team of

Colgate-Palmolive (India) Ltd.

Research instrument

The research instrument used in the project was Questionnaire to collect primary

information which has some close ended questions and some open ended questions.

Method of Collection of Data

Information was collected by personally interviewing the shopkeepers, distributors and sales

team of Colgate-Palmolive (India) Ltd.


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B] To study the Promotion at the Point of purchase of

Colgate-Palmolive (India) Ltd.

Promotional Strategy:

Colgate-Palmolive (India) Ltd is also adopting the sampling route along with the in-programme innovation placement on popular TV shows.

At the other level, dentist and medical stores across the country would also be made part of

various workshops and seminars to spread awareness about the products.

Towards deeper level promotion and penetration, Colgate planned to put up attractive

displays in retail outlets, apart from the medical stores and minimarts.

Mass merchandisers gained share due to increased in- store promotional support.

As a result there would be increase in the demand for oral care products; stores began

shelving more oral care products.

This was a big advantage for Colgate because there would be more room in the stores for

them to market Colgate products.

Thus the next important task was to identify the right stores to promote the product.


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Data Analysis

Analysis of Data for the Study distribution strategy based on the

answers of the questionnaire

I] Reason for not purchasing from the distributorThe results of the questionnaire is analyzed and presented below

A] Price differences65%

B] Credit policy- 21%

C] Differences with the distributor- 9%

D] Others5%


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65%

21%

9%

5%

Reasons For Gaps in Distribution

A B C D

Fig 2 Analysis of reasons for gaps in distribution


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II] Efficiency of Distribution of Colgate

From the answers of the questionnaire filled by the shopkeepers, the following results wereobtained:

No of Shop owners and their ratings

1] Very good379 shopkeepers

2] Good - 838 shopkeepers

3] Average123 shopkeepers

4] Poor57

5] Very poor3

The quality of the distribution of Colgate can be analysed by the following bar chart.

Fig 3 Analysis of Efficiency of Distribution


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III] Effectiveness of Distribution

The success of Colgate-Pamolive Indias distribution is credited to the 1-level and 2-level

system which has efficient distributors spread across the city. The manufacturer must assess

the benefits received from utilizing a channel partner versus the cost incurred for using the

services.

These benefits suggested by the Colgate family and its percentage:

Cost Savings - 15%

Faster delivery15%

Smaller Quantities Available to the Customers23%

Increase Sales30%

Provide Feedback17%

Benefits Of mediators

1

2

3

4

5

Fig 4 Analysis of benefits of mediators


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B] To study the Promotion at the Point of Purchase of Colgate

To identify the right stores to promote the product the following criteria were selected

Criteria for deciding whether an outlet should be activated:

Store should sell at least 5 of the following categories:

Breakfast cereals, air fresheners, diapers, baby food, hair conditioners, hair colorants,

insecticide sprays, Liquid soaps/body washes, beverages, hair remover creams,

chyawanprash

Store should be at least 150 sq ft in area


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Findings and Interpretations:

A] IN DISTRIBUTION STRATEGY

I] Reason for not purchasing from the distributor

Out of the sample size of 1400 outlets across Mumbai, there were approximately 70 outlets

which did not purchase Colgate-Pamolive products, from Colgates official distributor.

The following reasons were identified:

1) Price differences

2) Credit policy

3) Differences with the distributor

4) Others

1)

Price differences :

Some of the retailers favour the local wholesaler to the distributor due to price constrain.

Wholesalers get comparatively better discounts and also get percentage cut for displaying

Colgate product in the required format from the company.

They get 6% discount for the displays given by Colgate-Pamolive, apart from the normal

discounts that they get.

Thus the wholesaler can give better prices to the small kirana stores and retailers who

purchases very small quantity.

The distributors can give the product only on the fixed price which includes their share also.

Thus the distributors price becomes more expensive than the wholesalers.

Therefore the small retailers prefer purchasing from wholesalers.


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2) Credit policy

The credit policy of the wholesalers is very favorable to the small stores.

These small retail outlets and kirana stores purchase on credit bases and pay the amount

after they have sold out the goods.

The credit period they are granted with vary from 7 days to 30 days.

This facility becomes very profitable for beginners and small star up stores.

The distributors, on the other hand do not give any credit to their customers.

The payments terms are very strict. The retailer has to make the payment as soon as he

receives the material through cash or present date cheque. These terms are not feasible to all

retailers.

Therefore, such stores find wholesalers more preferable compared to direct distribution.

3) Differences with the distributor

Most retailers have a good relation with the distributors, but some do not maintain a good

affinity.

This may be because of reasons such as fall out due to misunderstandings, salesmans

slipups, delivery issues, payment terms, bounced cheque ( no funds in customers account)

etc.

These issues are sorted out by the company executives personally.

Yet in some cases there are unresolved concerns, which leave the retailer with the only

option to opt for another source of purchase.

With the booming hyper marts, supermarkets etc these retailers have a range of options to

buy their products.

Thus they end up purchasing from other sources and back out from the distribution channel.


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4) Other reasons

1) Accumulating and assortment services

Wholesalers give customers the products they want by purchasing from many suppliers.

This is termed as accumulating and assortment services.

Therefore from one shop the retailers get many products. They make it convenient to

purchase by making products available in single location.

2) Long term Relationship

The business between a retail outlet and wholesaler is based on goodwill.

They have a long time relationship since many years.

Most of the shops are familyrun, father and son operate the business.

Hence after the father the son continues to purchase from the same wholesaler as he is

familiar and trustworthy according to him.

On the other hand, distributors do not have direct contact with the retailer.

The distributor sends salesmen to the outlets, these salesmen keep changing.

Thus the shopkeepers prefer to stick to their ancestral traditions and systems.


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II] Effectiveness Of the distribution Strategy:

Colgate-Palmolive (India) Ltd follows 1-Level and 2-Level distribution.

Why Colgate-Pamolive India prefers mediators to reach the consumers and not direct

distribution?

The success of Colgate-Pamolive Indias distribution is credited to this system which has

efficient distributors spread across the city.

Fig 5 Marketing Channel


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Advantages of 1-Level and 2-Level Distribution

When choosing a distribution strategy a manufacturer must determine what value a channel

member adds to the firms products. Several surrounding features can be directly influenced

by channel members, such as customer service, delivery, and availability.

Consequently, for the manufacturer selecting a channel partner involves a value analysis.

That is, the manufacturer must assess the benefits received from utilizing a channel partner

versus the cost incurred for using the services.

Based on the observations and feedbacks given by the distributors and sales team of

Colgate-Palmolive (India) Ladled, the following benefits were identified

Cost Savings

Faster delivery

Smaller Quantities Available to the Customers

Increase Sales

Provide Feedback

Cost Savings

Members of the distribution channel are specialists in what they do and can often perform

tasks better and at lower cost than companies who do not have distribution experience.

Company attempting to handle too many aspects of distribution may end up exhausting

company resources as they learn how to distribute, resulting in the company being a jack of

all trades but master of none.


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Faster delivery

Not only are channel members able to reduce distribution costs by being experienced at

what they do, they often perform their job more rapidly resulting in faster product delivery.

The wholesaler will distributes to the store in the quantities the store needs, on a schedule

that works for the store, and often in a single truck, all of which speeds up the time it takes

to get the product on the stores shelves.

Smaller Quantities Available to the Customers

Not only do resellers allow customers to purchase products from a variety of suppliers, they

also allow customers to purchase in quantities that work for them.

Suppliers though like to ship products they produce in large quantities since this is more

cost effective than shipping smaller amounts.

The ability of intermediaries to purchase large quantities but to resell them in smaller

quantities (referred to as bulk breaking) not only makes these products available to those

wanting smaller quantities but the reseller is able to pass along to their customers a

significant portion of the cost savings gained by purchasing in large volume.


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Increase Sales

Resellers are at the point of purchase when it comes to creating demand for the

manufacturers product. In some cases resellers perform an active sellingrole using

persuasive techniques to encourage customers to purchase a manufacturers product.

In other cases they encourage sales of the product through their own advertising efforts and

using other promotional means such as special product displays.

Provide Feedback

Companies depend on distributors to provide information that can help improve the

product. High-level intermediaries may offer their suppliers real-time access to sales data

including information showing how products are selling by such characteristics as

geographic location, type of customer, and product location (e.g., where located within a

store, where found on a website).

If high-level information is not available, manufacturers can often count on resellers to

provide feedback as to how customers are responding to products.

This feedback can occur either through surveys or interviews with resellers employees or

by requesting the reseller allow the manufacturer to survey customers.


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B] IN POINT OF PURCHASE PROMOTION

A questionnaire was given to all the shopkeepers eligible for activation.

Based on the answers of the questionnaire filled by the shopkeepers, the shops were

recommended for display of Colgate products

Stores recommended for activation and were activated are:

1.

Mahaveer Stores

2.

Omkar Medical

3. Shanti General Store

4. Patel General Store

5. Happy Shoppers

6. Shamji Akai Stores

7. Natraj Stores

8. Valankani General Store

9. Hira Medico & GeneralStore

10.Ajay Medical

11.JANTA MEDICAL

12.D Bazar


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Conclusion:

For product-focused companies, establishing the most appropriate distribution strategies is a

major key to success, defined as maximizing sales and profits.

There are some apparent fissures, which has reasonable explanations to it.

However, from a modest start in 1937, when hand-carts were used to distribute Colgate

Dental Cream Toothpaste, Colgate-Palmolive (India) today has one of the widest

distribution networks in Indiaa logistical marvel that makes Colgate available in almost

4.5 million retail outlets across the country.

The Company has grown to a Rs. 2200 crore plus organization with an outstanding record

of enhancing value for its strong shareholder base.

The company dominates the Rs. 4100 crore Indian toothpaste markets by commanding more

than 50% of the market share.

Today, with sales surpassing $15 billion, Colgate focuses on four core businesses: Oral

Care, Personal Care, Home Care and Pet Nutrition.

Colgate now sells its products in over 200 countries and territories worldwide.


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Recommendation:

Presently Colgate-Pamolive is one of the most successful brands in India for many reasons

one of it being the flourishing distribution strategies.

The distribution strategy used by Colgate-Pamolive is very effective and successful.

The distribution strategy can be improvised by introducing new payment policies with credit

facilities of at least two days.

This will encourage the retailers to purchase directly from the distributors.

Thus they will buy in larger quantity and wider range of SKUs of Colgate-Pamolive Ltd.

Therefore this can help in reaching a larger market and penetrate deeper


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Bibliography:

Marketing Management by Philip Kotler

Webliography:

1] http://www.colgate.com/app/Colgate/US/Corp/WorkWithUs/HomePage.cvsp

2]http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CL

3]http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CL

4] http://www.managementparadise.com/forums/marketing-management/210772-

marketing-strategy-colgate-palmolive-company.html
http://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CLhttp://finapps.forbes.com/finapps/BuyHoldSellAnalysis.do?tkr=CL


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Appendix

DISTRIBUTION STRATEGY

Questionnaire -

1) Name of the outlet

2) Proprietors name

3) Address

4) Ph. No

5)

Type Of Outlet

6) No of years since the outlet has been opened

7) Existing customer or not

8)

If not then source of purchase ( wholesalers name)

9) Reason for not purchasing from the distributor

10) Which other company gives direct delivery?

11) How good is the distribution of Colgate on a scale of 1to 5?

5- Very good 4- Good 3- Average 2- poor 1- very bad


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B] IN POIN OF PURCHASE

Questionnaire -

1) Name of the outlet

2) Proprietors name

3) Address

4) Ph. No5) Type of Outlet

6) Is the store at least 150 sq ft in area

7) Does the store sell at least 5 of the following?

Breakfast cereals

air fresheners

diapers

baby food

hair conditioners

hair colorants

insecticide sprays

Liquid soaps / body washes

beverages

hair remover creams

Chyawanprash

Pushya Francis

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