SALES AND DISTRIBUTION MANAGEMENT

END-TERM REPORT

KETCHUP MARKET

BY Group 7 (BATCH – 3) :
Sanchit Taneja (18PGDM043)
Suraj Prasad (18PGDM053)
Ankur Bajwan (18PGDM196)
Harshita Sandhu (18PGDM210)
Neha Singhal (18PGDM222)
 ACKNOWLEDGEMENT

We would like to express our special thanks of gratitude to our teacher Dr.
D.K. Batra who gave us the golden opportunity to do this wonderful project
to study the sales and distribution channels of Ketchup Market.

It gave us the opportunity to apply the concepts that we have learned

through the course, in practical life and learn about many new things. We
thank him for valuable time at different stages of project which helped us to
correct our mistakes.

We are also thankful to our college International Management Institute

(IMI), New Delhi which provided us platform to carry out this project. We
would also like to thank all the respondents, salesperson and territory sales
manager in our project that helped us a lot in shaping this project within the
limited time frame.
 INTRODUCTION

Ketchup Industry In India

Currently the Indian ketchup market is valued at` 280 crore. The top Ketchup
Brands in India are Maggi Kissan and Heinz. Nestle's Maggi leads the Indian
ketchup market with a market share of 47 per cent. Hindustan Unilever
Limited's Kissan follows with a market share of 41 per cent and Heinz holds
a total market share of around 8 percent. There are also a host of local
ketchup brands that account for the rest of the market share of the ketchup
industry in India. According to industry experts there is still abundant scope
for improvement as ketchup penetration is low in the rural areas. Even in
urban areas people do not consume much of ketchup in the house.
About The Company :

Nestle India :

Nestlé India Ltd. (NIL), the Indian subsidiary of the global FMCG major,
Nestlé SA, introduced the Maggi brand in India in 1982, with its launch of
Maggi 2 Minute Noodles, an instant noodles product. Nestlé India’s business
objective and that of its management and employees is to manufacture and
market the Company’s products in such a way as to create value that can be
sustained over the long term for consumers, shareholders, employees,
business partners and the national economy.

The product mix of Nestle India consists of milk products and baby products
(42.5%), beverages (29.3 %), processed foods (14.4 %), chocolate and
confectionary (13.8 %). Nestle India plans to expand business into similar and
diversified product categories. The management wants to leverage all the
hard work done to establish a particular brand by extending the brand in
some other areas, where it sees an opportunity to make further money. In
other words to derive the maximum benefit from having established the
brand Nestle did exactly, what it wanted with one of their brands- Maggi
Sales Structure of Nestle

The sales structure of Nestle is constituted by a national sales head who

distributes the management functions into 4 zones, at the helm of which are
4 zonal sales managers for North, South, East and West zones. Each zone is
further allotted a regional manager. Area administration executives and the
area sales manager report directly to the regional manager who manages
clusters of states/zones. The regional manager reports to the territory sales
manager.

The Area sales man holds the responsibility of managing the pallet
salesmen, territory in charge (SO) and distributor salesman. Each territory
which is called a grid is allotted a sales person who has a weekly and monthly
meet plans with him. The salesperson has to bill around 100 SKUs.
Salesperson have been equipped with SDS. Each salesperson needs to login
twice a day, once in the morning to get all the offers he can offer and in the
evening to update the logs, due to this process a salesperson can spend
maximum time in the field. The salesperson goes through a constant
periodical training session, in addition to this he is accompanied by the sales
officer for the first couple of weeks.
Nestle’s Supply Chain Management
Nestle is prominently known for the extensive distribution channels all over
the country. Nestle follows a very well-ordered supply chain management
system for smooth delivery of products to its consumers. All stakeholders
involved with Nestle including the suppliers firmly abides by compliance. It
is compliant with the ‘Supplier Code and the Responsible Sourcing
Guidelines’ (RSG) policies for sustainable procurement and supplier
management for an eco-friendly value chain. The way of doing business by
suppliers is also by following safety and health guidelines, integrity and
contributing to the sustainable cycle. It has 100% sustainable sourcing of the
prime 14 raw materials obligatory for Nestle’s products manufacturing, with
the support of an enormous base of human resources right at the farm level
who are trained and supported by Nestle to ensure A grade quality.
Nestle stands by a stern quality management system. It includes 4 main
objectives:

 Build trust with stakeholders  Quality focused

 Food safety and security  No waste attitude (Zero defect)

Further, a Nestle adopts a 3 Fs policy, ‘Fast, Focused and Flexible’ approach

to concentrate on zero miss on availability, quality assurance, bad goods
avoidance etc ultimately creating value to the end users. The value chain is
strengthened by their commitment to climate change leadership. It is
committed to take all measures to reduce their carbon emission by
standardising their vehicle fleet used for their numerous activities across
India through technological and data simulation processes. This step has
caused a savings of Rs. 352 million annually.
Nestle characteristically follows a structured manner of their product
distribution. The 8 manufacturing units across the country produces the
value and quality filled products. The production size is determined by

 Sales planning based on historical data analysis by methods like regression

analysis, time series analysis, statistical demand analysis etc.

 Demand planning which is forecasting demand based on present and

expected trends. Expected trends may include consideration of traditional
forecasting methods based on contemporary data, occurrence of
occasions/festivals, introduction of promotional techniques.

They are manufactured and then packed in a neat and arranged

environment and loaded for them to be directed to the distribution centers.
The 22 Distribution Centers (DC) are owned by Nestle and aid as godowns
for them to stock the product until they reach to the Order Management
Centers (OMC) where the orders are processed before they are moved to 3.2
million Cash Distributors (CD) spread over distance across the country.
These Cash Distributors cater to two units based on the location they are
catering to. In the rural and sub-stockist towns regions the Cash Distributors
supply to the Redistributors as it is not feasible to cater to each outlet in
these areas. A few villages and sub-stockist towns are collaborated to be
supplied by a single Redistributor to increase their efficiencies. The urban
region is directly catered by the Cash Distributors. The two regions consist
of Distributor Sales Force (DSF) that is assisted by the Cash Distributors and
Redistributors in their respective areas.

These Distributor Sales Force then further supply to the distribution units
like the retailers and wholesalers. The retailers are responsible for direct
reach of the products to the customer and wholesalers are to facilitate the
indirect reach of the products. The merchandisers are then responsible for
systematic and appropriate kind of branding with the help of the visibility
programs designed at the channel level. They assure that the Nestle’s
products in the outlets accomplish (AVA) :

 Availability

 Visibility

 Accessibility
The Distributor Salesman (DS) cover the market depending on the
requirement of the outlets based on several factors like size of the outlet,
frequency of visits by the customers, location of the outlet, availability of the
products etc. The cover can be once or twice a week depending on the above
listed parameters.

Channel Classification
There are eleven main mode of outlets termed as channels. The channel
types are based on certain characteristics and are broadly classified under
the customer shopping behaviour.
Existing market channels for Maggi Ketchup

The channels for maggi can be broadly divided into the following:

1. Market channels through push strategy

With a push strategy maggi tries to impact the retailers and wholesalers and
big retail chains to carry, store, promote and sell its ketchup to the
consumers. The influence can be through discounts, free gifts etc. In the due
course, the manufacturer purchases shelf space too so that the consumers
find its product at the high visibility areas in the store.

2.Market channels through pull strategy

Through this strategy the manufacturer compels the end users to reach the
manufacturer’s products. This is done through excessive marketing of the
channel through
•Indirect ways such as showing the product in popular movies or tv shows
•Promoting the product through celebs
•Advertisement of the product which provides another complementary
product such as maggi noodles pack or any other Nestle product etc.
The pull strategy is attributed to the image of maggi and its brand loyalty
and brand recall.
Physical distribution channel
Maggi an important producer of ketchups in India presently uses the
following channels:

In the customary channel the product flows from the producer to the carry
and forward agents. These CFAs are small in no. in the country and take care
of all warehousing of the product as well as its distribution to the
distributors.

•To reach far flung places where the demand is scare, the distributors only
send the product to wholesalers who either directly sell or sell to a few
retailers.
•Places where demand is high, distributors forward the product to the
wholesalers who again forward it to retailers according to their quantities
demanded. The consumers are served through these retailers.

•In modern distribution channels CFAs cater to the special distributors who
are again present in small numbers in the country.

•The special distributors only cater to the special and long chain retail stores
like big bazaar and big marts

Fitness of the Channel Strategy

The strong distribution channel of Maggi provides a market penetration of

the ketchup to almost 47% of the target customers of upper and middle level
consumers. The market size is of Rs.220 crore.

• The introduction of CFAs in this distribution channel as a third party takes

the clumsiness and responsibility of handling, warehousing and
transportation to the vast market.

• The presence of special distributors to cater to the retail chains and the
existence of a separate traditional channel to cater to small retail channels
brings out two different channels which helps in many ways such as no
clutter in distribution, mapping the demand appropriately, providing
products according to the demands without delay etc.

Suggestions for improvements:

• Maggi can go for a direct marketing channel in which it can approach
restaurants and bigger fast food outlets in which Maggi can influence them
for bulk deals or use them as medium of advertising to their consumers.
• Maggi can also associate with crockery competitions or be sponsors for such
shows to strengthen its market penetration and bulk deals.
• Although the CFAs take a lot of responsibility of warehousing and
transportation of the Maggi Ketchup onto them but in situations in which
they charge the manufacturer a huge fees for such a service Maggi can
directly reach the distributors by just enhancing its warehousing facilities.
Channel Coverage
There are eleven different channels that Nestle shake hands with. Due to
their different nature and features, each channel must be serviced in a
unique manner. The servicing and support also change with the size and
location of the outlet.
Nestle nurtures its participants with the appropriate manner of coverage. In
case of E-commerce, a salesman is not necessary, as the order generation
for the goods need not be made a note of, as the order is dynamically noted
online, based on which invoicing is done. The other ten channels require a
salesman to visit the market physically. He follows a typical procedure to
note the item requirements in order for the distributor to supply:

 Greets the owner and the manager, if any

 Communicates the schemes, the Must Sell SKUs (MSS) and visibility or
any programs

 Reminds monthly targets and target remaining to accomplish the

quarterly targets

 Uses the Nestle suggested mobile application to make a note of the order

 Validates the expired/bad goods and make a note of the same to be

handed out to the supplier to exchange the good or obtain a credit note
against the return

 Collects pending cheque/cash within the credit period provided to the

retailers
 Addresses complications concerning merchandisers, suppliers,
distributors etc.
The salesman visits the market once a week in case of outlets contributing
to the revenue generation, below a certain criterion. It mostly includes
regular, small and redistribution centers. Some of these outlets are covered
by the telecaller/STING (Strategy To Induce New Growth ) boy. He visits the
markets along with the small SKUs and delivers immediately without any
credit facility. These outlets are mainly for brand awareness and to attain
presence in the market.
The key outlets are the prime source of generating revenue for the company.
They produce more than the threshold revenue decided by Nestle and
contribute to high turnover. These key outlets cater to high demand and are
thus covered under a specialized coverage idea named the Split Coverage.
In split coverage the outlets are covered twice a week by the salesman. The
split coverage aims to increase the service level to the retailers.

It is broadly categorized into two types:

Frequency Split Coverage

 Frequency of order generation is twice a week

 Same salesman covers twice
 All product categories can be ordered
 Effective in Grocery Large, Chemist, Out-of-home for product availability
Category Split Coverage

 Frequency of order generation is twice a week

 Two different salesmen cover once a week each
 Each visit, by each salesman focuses on specific product categories, thus
all products cannot be ordered
 Effective in Supermarkets for product focused approach
 PRODUCT PORTFOLIO

The product portfolio of the two companies in ketchup/ sauce category are
given below:

Ching’s Heaven’s

Red Chilli Sauce Ketchup bottle

Green Chilli Sauce Ketchup sachet

Soy Sauce Green Chilli Sauce

Chilli Vinegar Sauce Soya Sauce

Schezwan Chutney Vinegar Sauce

Badnaam Chutney

Number of beats
The number of beats is different for Ching’s and Heaven’s, shown below:

Ching’s Heaven’s

Number of beats Average 34 over 6 days Average 31 over 7 days

From the discussion with the distributor, it was learnt that Ching has a beat
of average 34 over 6 days as it is an established brand which employs a lot
more distributors and salesman and thus can afford to give a break of 1 day
per week.
In comparison, Heaven’s is a local brand and thus to ensure customer
retention, it has a beat of average 31 over 7 days so that distributors cover as
many territories as possible.

Number of autos
The number of automobiles employed by the distributors to serve their
territories is given below for the two companies:

Ching’s Heaven’s

Number of automobiles 2 1

Type Tata Ace Maruti Eeco

Both the number and type of automobiles vary for the 2 companies. The
reasons for the same are as under:

 Ching’s distributor serves the territories not only for ketchups and
sauces, but for other products as well like pickles, noodles and soups.
 The volume demand for Ching’s products is higher
 Ching’s requires that its distributors use only a commercially registered
vehicle

Storage space
The storage space details used by the distributors of the two companies is
shown below:

Ching’s Heaven’s

Type Warehouse Godown

Area About 100 ft by 40 ft by 20 ft About 30 ft by 20 ft by 15 ft

Add-ons Plastered for pest protection -

There is a significant difference in the size of the storage area, which is due
to large demand for Ching’s and also since the distributor for Ching’s stores
other products as well.

However, a significant point to learn was that the distributor maintains

about 25-30 days of inventory for Ching’s products while for Heaven’s, about
12-15 days of inventory is maintained.

Inventory movement
 The fastest moving, median moving and slowest moving products for the
two companies are shown below:

In terms of quantity Ching’s Heaven’s

Fastest moving Small sachet ketchup Small pack of soya sauce

Median moving Small pack of soya sauce Small sachet ketchup

Slowest moving Large pack of soya sauce Large pack of ketchup

In terms of sales Ching’s Heaven’s

Fastest moving Small pack of soya sauce Small pack of soya sauce

Median moving Small sachet ketchup Small sachet ketchup

Slowest moving Large pack of ketchup Large pack of ketchup

It is observed that in terms of quantity, small packets are faster moving in

case of both Ching’s and Heaven’s. While Heaven’s is able to move soya
sauce packets faster, Ching’s ketchup packets move faster.
In terms of sales amount though, for Ching’s, small soya sauce packet moves
faster as compared to ketchup. This may be due to the price per sachet of
soya sauce being greater than ketchup. For Heaven’s, the order in terms of
sales amount is same as quantity.
 SALESMAN

KRAs of salesman
KRA 1: Service current outlets with efficiency to retain and keep the retailers
delighted
KRA 2: Develop new outlets/markets to meet sales targets and explore the
opportunity with the untapped market.
KRA 3: Increase the penetration of new products in the market through
effective sales pitch.
KRA 4: To optimise retention of existing business by increasing the quality
of service.
KRA 5:To provide effective, efficient, professional service and advice to
ensure the long lasting relationship between the retailers and the company.
KRA 6:Remain informed and up to date with regards to the schemes,
industry related news, competition promotions & schemes, product
knowledge and continuously strive to develop own skills and knowledge in
order to perform optimally.
KRA 7: Maintain the right cycle of credit period and fund management.
KRA 8: Monitor competitive activity and report significant developments in
order for the company to build competitive strategies.
KRA 9: Attend and participate in workshops and training programmes when
required.
KRA 10: Attend all Daily Review Meetings.

Efficiency of salesman
The stores are divided into categories depending on the amount of revenue
they generate for Nestle. For example, Platinum Club1 outlets were
supermarkets ordering for products worth more than Rs. 1 Lakh per month.
Every salesman is given a month’s target based on various factors like past
store size, store sales, economic conditions, occasional seasons/festivals,
new product launch, association with the company etc. Therefore, each
salesman has a different target to achieve. Efficiency of a salesman is very
subjective to measure. A major matrice that supports understanding
efficiency is the throughput of a salesman, i.e., the ratio of the particular
salesman’s sale to that of the total sales. This alone can not decide the
efficiency of a sales executive though. Various other factors like store size,
location of the store, lifestyle of customers in that location etc also affect the
sales of the store.
Nestle also takes into account the sales of MSS (Must-Sell-SKUs). For
example, a Rs. 2 Nescafe coffee sachet is a must in a small grocery channel.
A 100% achievement of MSS targets are encouraged and incentivised.
SKU/call is another matrix for assessing the salesman’s performance. This
measures the number of SKUs sold per visit. More the SKUs sold, better the
brand visibility and access to different segments.

DISTRIBUTOR

Investment in stock= 11 lacs per month

Inventory Holding Period= 4 days. (Almost 80,000 INR of products is sold
per week)
Number of Units sold per month=
DISTRIBUTOR
Margin= 7-9% on all products for Retailers. Approx. 5.5 % on all products for
Distributors
Credit Period= Distributor gives a credit period of 15 days to Retailers but
distributors do not get any credit limit from sub stockist. Credit of almost
90% is given on total consignment.
 TERRITORY MAPPING

Consolidated map for Heaven’s weekly distribution

The map higlights Heaven’s weekly distribution chain in 7 different areas:

Color Area Day
Green Inderpuri Monday
Yellow Karol Bagh Tuesday
Magenta Kirti Nagar Wednesday
Blue Moti Nagar Thursday
Olive Mangolpuri Friday
Orange Punjabi Bagh Saturday
Purple Patel Nagar Sunday

Karol Bagh Map

The map shows Karol Bagh vicinity, highlighting the stores covered by Heaven’s
ketchup during its weekly beat. The map shows 12 different stores, modern bazaar
and restaurants, however there are 29 stores that the salesman covers during his sales
beat. The yellow icons highlight the tapped stores, and green icons highlight other
local kirana stores and confectionery which the distributor can tap.
We have also suggested the appropriate route from A to I, for the salesman, some
stores are next to each other so we’ve considered them as 1 destination,
Icon references
Yellow Balloon – Kirana Store
Green Balloon – Untapped Kirana Store
Yellow Star – Modern Bazaar/Super Store
Yellow Dining – Food Joints/Restaurants
 PROMOTION STRATEGY

Promotions are important features in order to affect purchase decisions of

customers. There are different tools in promotion mix such as advertising, direct
marketing, sales promotion, personal selling and public relations. Advertising and
public relations are important parts of ketchup’s promotion strategy.

Advertising
Maggi use advertising tool effectively. Especially, there are commonly known
commercials of Maggi ketchup. The content of message which Maggi ketchup
tries to give is that Maggi is better ketchup brand than other ketchup brands and
is different from others. Commercials are also shaped by this message content.
For example, slowness of ketchup is an important sign for quality of ketchup, so
there are various TV commercials which tell Maggi is the slowest Ketchup in the
world.

Premium ketchup brands generally uses major media to this message content.
Namely, TV commercials form important part of their advertising strategy.
Maggi and Heinz also uses celebrities in advertisements.

Public Relations
Premium ketchup brands also use public relation tools in order to affect
customers buying decision and make customers more loyal to the company. For
example, there are different recipes in Heinz’s and Maggie's website. Ching’s also
uses Ranveer Singh as its brand ambassador which has made its sale to rise and
also created brand awareness and recall in the mind of customers. It makes
company and customers more close to each other. Maggi and Heinz touch a part
of customers’ life by giving them some recipes. Besides, Heinz is using by some
quality restaurants.
This also supports the message of Heinz about quality. This situation also creates
buzz marketing. Customers who prefer quality restaurants eat Heinz there
and they become familiar with the brand. They position the brand with quality in
their minds. They may recommend the brand to other people.

However, in case of non-branded Ketchups, such as Heavens and Silver baker

ketchups. These ketchup brands don't have much to spend for consumer
promotion. They are mainly used by Tapris and small sellers such as
confectionaries and small restaurants who just fulfil the basic need of ketchup.

Promotions are important features in order to affect purchase decisions of

customers. There are different tools in promotion mix such as advertising, direct
marketing, sales promotion, personal selling and public relations. Advertising and
public relations are important parts of Heinz’s promotion strategy.

Consumer promotion for Maggi and Ching’s

One way of increasing the reach is to offer gift packs to the customers in the
season of festivals like Diwali and Raksha bandhan. The strategy used in these
type of promotions are the stock which is bound to expire in some days are made
to pack properly to be used as the gift packs, thereby increasing the sales.
 RECCOMENDATIONS

● Concentrate on the most contributing and fast-growing channels that is

supermarkets, grocery large etc. with channel-specific trainings for salesmen
and then eventually move to other channels like Grocery small
● Prioritize servicing of high revenue generating outlets by increasing frequency
● Workload balance of the salesman must be maintained at all times for better
efficiency
● Remind monthly and quarterly targets via handouts, SMS and business
WhatsApp showing an attractive graphics indicating the target achieved vs yet
to achieve
● Methodical SKU mapping to the right channel with delivery of appropriate
schemes
● Sales is not the only growth driver but also visibility
● Better fund management with least credit period
 APPENDIX

Interview Questions (Retailers):

Which brands of ketchups are available at your store?

I have all brands of ketchups namely : TOPS, Kissan, Nestle(Maggi), Heinz,
Chings, Patanjali

What are the SKUs and variants available?

1 kg bottles, 500 gm bottles. Small pichkoo packs 100 gm and sachets also.

What is their proportion? What is your parameter for this proportion?

(Price, margin, credit period, customer’s demand etc)
Generally there are customers for all the SKUs so we keep all. Maximum
proportion is of 1 kg packs as families prefer big pack. All the youngsters
living alone prefer small bottles. Parameters to be followed are: Price and
Margin as absolute margin for big packs are high. Credit period is the same
for all the products. Demand is almost linear and equal.

What is the highest selling brand/SKU/variant?

It is very difficult to give one particular name because we don’t keep a track
on individual brand. From my experience, I believe Kissan sells more.
What are usually the schemes offered by each brand?
Almost all the brands gives the same scheme like providing hoarding, trade
discounts.

APPENDIX

What is the frequency of their service?

Once or twice a week.
Does the same salesperson cater? Does it help you build trust over the
brand?
Most of the time the same salesperson comes. We have trust in the brand
not the salesperson that too if the salesperson does not deliver on time, we
can always ask any other distributor to send the supply.

How fast and well are your issues, if any, are resolved by the company?
Maximum 1 day

What is the credit period by each?

We don’t take any credit period. Every consignment is paid at the time of
delivery

What is the mode of payment to them?

Mostly cash

Is the merchandising done by each brand? What is the frequency?

Only Big brands like Kissan and Maggi do the merchandising.

APPENDIX

Wholesaler’s Input

Brands – Funtop, Tasty

Credit Period – NA
Inventory storage for 2-3 days only, if late doesn’t accept the order – 1-day
delivery on first come first serve basis (from distributors to retailers)
Beat – 7 days, 15 days
Margin
₹100 item - ₹2 margin (Brand)
₹100 item - ₹10 margin (Local)

Silver Baker – Tapri uses this brand, it is considered of high quality

Category of Ketchup Consumers

Institutes – Tops
Tapri/Dhaba – Either Local (for small vendors) or Funtop (for big dhabas)
Family – Maggi Ketchup
Students – Maggi Pichku (Ketchup)

APPENDIX

Interview Questions (Distributors):

What are the brands you deal with?

Nestle, ITC

What are the SKUs and variants available?

Almost all the SKUs.

Which is the best selling SKU and variant?

Maggi 1 ltr bottle, Maggi Single Pack, Nescafe coffee
What kind of brand do you prefer to deal with? What is your parameter
for this? (Price, margin, customer’s demand etc)
I am associated with Nestle since more than 2 decades now. They provide
me with good bad goods service and margins.

How many salesmen assist you? Does a good salesman help push the
sales further?
I have 7 salesmen. Yes, most of my salesmen have been working for Nestle
since more than 15 years. loyalty pays off in pushing not only established
products but also new products along with effective schemes.

What factors were considered while designing their routes?

Workload is important for my salesmen. Market time is 6 hours and admin
work is about one hour per day. The city is divided into sectors and so area
optimisation is easier. An approx of 25 outlets are covered everyday of mixed
sizes

APPENDIX

What is approximately the margin cut that you make?

Are the supplier vehicles also managed by you or a third party?
I have a third party appointed for supplier vehicles. I have 2 vehicles

What is the overall expense per month?

20k per vehicle 12k-14k per salesmen
 APPENDIX

SALESMAN DAIRY 1 :
APPENDIX
 APPENDIX

SALESMAN DAIRY 2 :
Inder Puri Monday :
 APPENDIX
Karol Bagh Tuesday :
 APPENDIX

Kirti Nagar Wednesday :

 APPENDIX

Moti Nagar Thursday :

APPENDIX
Mangolpuri Friday

APPENDIX
Punjabi Bagh Saturday :

APPENDIX
Patel Nagar Sunday :