TABLE OF CONTENTS

Details Page no.

Distribution Structure Of Nestle India 4

- Structure

- Ownership transfer

- Transportation

- Policies
Selection of distributors 9

Incentives to the distributors 10

Motivation of Channel Partners 12

Evaluation 14

Distribution in Practice (DIP) Training 17

Forecasting and target setting 18

Channel Conflicts 21

- Distributor

- Sales Officer
Distributor survey - Ghaziabad 24

Retailer Survey – Delhi 26

Observations 27

Annexure A
Annexure B
Annexure C

1
COMPANY BACKGROUND

Pidilite was established as a partnership firm, Parekh Dyechem Industries, in

1961 by Mr B K Parekh and his two brothers, SK Parekh and H K Parekh. It was
converted into a private limited company in 1969. A group company Kondivita

2
Industries was merged with the company in 1984. Its name was changed to PDI
Chemicals Limited in 1988. In 1989, another group company. Pidilite Industries
Ltd was merged with PDI Chemicals, and the name of the merged entity was
changed to Pidilite Industries. M/s Triveni Chemicals, another group company,
was also merged with Pidilite in 1992. While the Fevicol brand, launched in 1959,
has been in existence for almost 40 years, Pidilite’s consumer products division
was set up in 1984, when the company decided to build up a strong distribution
network.

Pidilite is India’s largest manufacturer of adhesive. Pidilite’s mainstay of earnings

is consumer & industrial adhesives and sealants, which contribute to 60% of
turnover. Its other product lines are art materials, construction/ paint chemicals,
industrial and textile resins and organic pigments & preparations. Its largest
brand Fevicol is synonymous with the category itself. The company has in total
40 brands spanning 400 industrial and consumer products.

Pidilite has gradually expanded its branded product portfolio, which earn higher
margins and has come to be recognized as a leading FMCG player. Consumer
and Bazaar products today account for over 65% of the company’s turnover.All
its brands are either No. 1 or No. 2 in their respective product segments. Fevicol,
Parcol, Fevibond, Fevikwik, Pidifix, Pidivyl, Pidiseal, Acrolyte, Fevicryl, etc are
some of its leading brands. The company has launched several new products in
the last few years like Fevi Stik Super glue stick. Feviseal EasiMix epoxy putty,
Acron art materials, Prime tape, Pidifin water proofing system and Wudfin wood
polish in the consumer product segment.

Consumer goods business is characterized by the two pillars of brand equity

and distribution reach. In adhesives, brand loyalties are high and demand is
relatively price insensitive, as adhesives account for an insignificant proportion of
the total cost of the end product for which they are used. Construction/ paint
chemicals, pigments, resins etc are typically sold in bulk to industrial buyers.
Meeting technical specifications as per the users requirement and consistency in
quality play an important role.

3
 The adhesives and sealant market, is estimated at Rs. 5 bn and has been
growing at 19-20% pa. Pidilite is the leading player in the segment. Other major
players are Vam Organic, Mafatlal Dyes & Chemicals (MDC), Kit ply and Ciba
Speciality. Industrial & textile resin is a Rs3.5bn market growing at 17% pa.
Pidilite has a 13% market share in the segment. Organic pigment is a Rs4.5bn
market growing at 10% pa, with a large presence of the unorganized segment.

DISTRIBUTION STRUCTURE OF PIDILITE INDUSTRIES

MANUFACTURING
UNITS

4
 MOTHER GODOWN

C&F COMPANY
AGENTS DEPOTS

WSS
(WHOLE SALE
STOCKIST)

WHOLESELLER RETAILERS

FORMAL

INFORMAL

DISTRIBUTION STRUCTURE ( UTTAR PRADESH )

MANUFACTURING UNIT

AMRITSAR CHANDIGARH
(PUNJAB) (HARYANA)

MOTHER GODOWN
5
(DELHI)

COMPANY DEPOT. C&F AGENT

(KANPUR) WSS(46)
GHAZIABAD
 WSS(42)

WHOLESELLER RETAILER RETAILER WHOLESELLER

FORMAL
INFORMAL
OWNERSHIP TRANSFER

6
 MANUFACTURING UNIT

CHALLAN UNDER PIL

MOTHER GODOWN TRANSFER OF

OWNERSHIP FROM
PIL TO PML

CHALLAN UNDER PML

CO.
C&F DEPOT

PRIMARY SALES INVOICE UNDER PML

WSS

SECONDARY SALES BILLING IN THE

BOOKS OF WSS

RETAILER BILLING IN THE

BOOKS OF RETAILER

The goods are first manufactured in the company owned manufacturing units situated at
Vapi, Bhiwandi and Malhaar. Here the goods are posted in the challan under Pidilite
Industries Ltd. Then the goods are sent to the various mother godowns spread across the
country for further distribution. Once the goods reach the mother godowns, they are
transferred under the name of the marketing concern of Pidilite Industries Ltd. ( PIL)
called Parek Marketing Ltd.(PML). This is done for some financial implication which
have two fold benefits. They not only account for certain percentage of tax saving but
also enable the company to show double th profits. Ofcourse, the PML rates are higher
than those of PIL due to central sales tax and other taxes levy on the goods during
transport to godowns.

This is sent to the C & F agents and the Company owned Depots. From here the goods
are invoiced under PML and sent to the WSS who inturn bill the goods under the name of
their respective concerns and sell the goods to the retailers. The retailers also sell the
goods to the end consumers under their dealership.

TRANSPORTATION SYSTEM

7
 FACTORY (MAHARASTRA)

TRUCKS

MOTHER GODOWN
TRUCKS TRUCKS

KANPUR(COMPANY GHAZIABAD(C&F AGENT)

DEPOT)

TRUCKS TRUCKS

WSS(42)
WSS(46)

3 WHEELERS/VANS

RETAILER RETAILER RETAILER RETAILER RETAILER

THE TRANSPORTATION SYSTEM

The transportation system from the factory to the respective distribution stages are
covered solely by road.
 From the factory, the goods are transferred to the mother godowns in respective
zones via trucks.
 From the mother godown ( in Delhi ) , trucks are used to transfer the goods to
company depots and C&F agents.
 From the company depot or C& F agents , the goods are sent via trucks to
different WSS in their assigned regions.

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  From the WSS , the goods are sent to wholesalers or retail outlets, via three
wheelers or vans.
 Sometimes the goods are sent to their company depots and C&F agents directly
from the manufacturing unit, instead of going via . company godown depending
on route compatibility.

DESCRIPTION OF CHANNEL PARTNERS

I. C&F Agent

These agents have infrastructural and transportational facilities and are the
responsible for the transfer of goods.No sale takes place at this level.These
C&F agents get monthly emolumentsn from the company for their service.

II. WSS

The company appoints various wholese stockist who are a very important link between
the C&f Agents and the retailers. The number of these stockist is not fixed and varies
according to the sales potential and geographic size of the region.

Primary sale takes place at the Wholesale stockist. Hence their selection, motivation and
evaluation becomes very important to the company.

9
 TYPES OF WSS

The company has divided the WSS on the basis of their sales value and sales
potential.The various categorise of WSS are

1. CLASS A : These stockists are the ones who have a sales potential above
Rs 10,00000 Per month.

2. CLASS B: These stockist have the sales potential between Rs 5,00000 and
Rs10,00000 Per month.

3 . CLASS C: These stockist have a sales potential of less than Rs

III. RETAILER

The WSS sell the goods to the retailers who in turn sell it to the end
consumers.The retailers are classified in terms of their dales potential in the
following manner-

Class A- Greater than Rs 30,000 pm

Class B- Between Rs 30,000-10,000 pm

Class C –Between Rs 10,000-5,000

10
 Class D- Below Rs 5,000

SALES STRUCTURE: PIDILITE INDUSTRIES

NATIONAL SALES HEAD

REGIONAL SALES [ 6 RSMs divided zone

MANAGER wise ]

AREA SALES
[ one ASM per eight
MANAGER territories ]

TERRITORY SALES [ one TSI per WSS ]

COMPANY LEVEL INCHARGE

DISTRIBUTOR LEVEL

Interim Sales Interim Sales Interim Sales Interim Sales

Representatives Representatives Representatives Representatives

Pidilite Industries Ltd. is internally divided into four broad product usage based divisions.
They are :

 FEVICOL called FE

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  CONSUMER PRODUCTS called CP
 CONSTRUCTION CHEMICALS called CC
 INDUSTRIAL PRODUCTS called IP

These divisions are looked after by their independent National Sales Heads responsible
for their respective divisions. Below these heads, their entire division is divided into
zones headed by the Regional Sales Managers who are next in the sales hierarchy.
In our concerned division, i.e. FE , the entire country is divided into 6 zones headed by
respective RSMs.

Next in line are the Area Sales Managers who report directly to the RSMs. FE division
has a ASM per eight territories. Under them are the Territory Sales Incharge who act as
an interface between the company, distributors and retailers. Every WSS has one TSI
looking after their order and requirements. To supplement the TSI and ensuring closer
monitoring of the retailers needs and payments, the distributors themselves recruit sales
representatives called Interim Sales Representatives( ISRs). One distributor normally has
2-3 ISRs depending on the expanse and value of his territory.

SELECTION OF WSS

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Criteria are:-

1) Capital Investment :

This is dependent not only on the present required turnovers but also on the
estimated future capital investments that will be required by the distributor (based on
company’s growth plans in the area). Amounts required vary from area to area and
markets to markets.

2) Relevant Experience :

It is imperative that the distributor has had some prior experience as a channel
member in the FMCG sector so that no training is required to be imparted to him on
aspects of the business. The distributor should not be dealing in competitor’s products
and should be able to function as a dedicated channel for Pidilite. Also, he should have
atleast 2-3 years of experience as a distributor in the market. But most importantly the
business should not be totally driven by his staff rather has complete self involvement of
the WSS.

3) Infrastructure :

The basic infrastructural requirements for a WSS are :

a) Two rooms measuring atleast (10*10) sq. feet each.
b) Delivery vehicles preferably 3 wheelers
c) Sales executives called Interim Sales Representatives or ISRs.
d) Storage Godown

13
However, there is no set guidelines for the above criteria with the same being variable
with market condition and turnover expected of a WSS. Every new WSS furnishes the
Company with basic information in a format specified by the Company called a WSS
Appointment Form ( Annexure) which had details about his shop registration number,
type of delivery vehicle, computer configuration etc.

INCENTIVES TO THE WSS

1) Margin

MARGIN LAYOUT

14
 COMPANY

C&F AGENT

SOLD AT SOLD AT
108.93 107.82
SOLD AT
108.65

WSS A WSS B WSS C

SOLD AT SOLD AT SOLD AT

112.30 112.30 112.30
(MARGIN (MARGIN (MARGIN
3%) 3.25%) 4%)

RETAILOR RETAILOR RETAILOR

BILLED AT BILLED AT
BILLED AT
114.60 114.60
114.60

MRP 127 MRP 127

MRP 127

C&F to WSS

 WSS A buys the product at 108.93 from the C&F agent.

 WSS B buys the product at 108.65 from the C&F agent
 WSS C buys the product at 107.82 from the C&F agent

WSS TO RETAILER

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 WSS A sells to retailers at 112.30,with cash discount of 2%.The billing is done at
114.60.Hence the WSS gets a margin of 3%.

 WSS B sells to retailers at 112.30.60,with a cash discount of 2%.The billing is

done at 114.60. Hence the WSS gets a margin of 3.25%.

 WSS C sells to the retailers at 112.30,with a cash discount of 2%.The billing is

done at 114.60. Hence the WSS gets a margin of 4%.

AT THE RETAILER

 The retailer is given 2%cash discount by the WSS,which is common to all the
retailers.This 2%cash discount is divided into two parts-

a. Cash Discount 1% on bill.

b. Discount of 1% if the money is delivered within 20 days.(the credit perioud)

 The MRP is 127 and the actual selling price varies across retailers.

*All the above margins are in Rs.

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RATIONALE OF DIFFERENT MARGINS FOR WSS.

The basic logic of giving higher margins to lower class WSS is that as the business of
the stockist is lower in terms of value, he may not be able to make up for his
infrastructural costs which are accrued in storing and transportation.

In case of Class A wss,he is able to generate enough volumes to justify his

infrastructural costs.Hence even though his margins are lower, he is able to generate
very high volumes and meet his additional costs.

2) Certificates

Certificates of acknowledgement for achieving the targets for a name like Pidilite are
priced by the distributors. They frame them and display them in their offices.

MOTIVATION OF CHANNEL PARTNERS - “KABHI GIFT KABHI

TRIP” OFFER

The company consistently comes up with schemes for its wholesale stockiest and dealers
to enable them to enjoy better margins and thus motivate them to sell more.
One such scheme is “ Kabhi gift Kabhi trip” offer for the dealers.

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Duration: April 2004 to Dec. 2004

Valid on product range : FEVICOL SH/P + SPEEDX + MARINE

Open for: Registered dealers of Pidilite

Workability :

In a nutshell, the offer has a qualifying criteria of purchase of 1000 kg during the scheme
period. The dealers satisfying the criteria get points on this purchase which in turn qualify
them for gift / trip slabs.

Broadly, the whole scheme period is divided into three quarters namely, April-June, July-
September, October-December. Every quarter has a pre-specified target in kgs which
when achieved by the dealer fetches him 1 point.

Also, 5 achievable points are distributed among the following heads :

 Purchase Points
On a purchase of 1 kg , the dealers gets one pt.
 Exclusive Display Points
On exclusive display of 1 kg of either of the three products the dealer gets 1
pt.
 Pack Specific Points

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 This is specific on pack quantities. For eg, packs of 2kg and below, between
5kg and 10 kg and above 20 kgs. These pack specific quantities fetch him 2pts each.
 Others
Again gives him 1 pt per kg.

These points and the target achievement points are added up for all quarters and thus
the grand total is reached.

This final point achieved by the dealers makes him fall in one of the gift/ trip slab in
the gift chart if the points are greater than 3000.
The gifts range from watches to DVD players, from trips to Goa to even Singapore,
Pattaya etc.

EVALUATION

Once a distributor is appointed, the company generally does not take away business from
him, except when the underperformance has been observed over long periods.
While evaluating his performance, his targets performance is studied relative to that of

other distributors in the nearby area (because growth patterns may by regions). Also,if a
WSS is found guilty of Stock inflow,he is terminated.

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If a retailer has not beenpaying his credit for long periods,he is discontinued from the
channel.Also,if a WSS is found guilty of Stock inflow,he is terminated.

TRAINING PROGRAMMES

 WHOLESALE STOKIESTS :
The WSS prove to a very important channel partner for the company
as they forward the goods to the retailers and make them aware about the same.
Hence, product awareness becomes a mandate for this level so as to completely
understand the product utility and application. Also the company has some
policies which the small distributors may find difficult to understand and thus
falter in implementation.
To avoid the above situation , the company sends distribution managers from
the head office to brief them about the products and also give them the complete
system and functioning description. They are also elaborately told about the
schemes launched by the company because they would be further responsible to
ensure that retailers are rightly aware of the schemes.
This training is mostly given to the B and C class WSS.

 RETAILERS :
The retailers are the most important channel partners as they are the
direct link between the company channel partners and the end consumer. They are
also given training in the form of seminars and meets organized by the company.

 MECHANICS AND CARPENTERS :

Though large offices, industries and households buy products from the
company but the end users are the mechanics and carpenters among other masons.
Their recommendation to buy the product is what drives the customer to buy the
particular brand of adhesive.

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 The company arranges meets and knowledge shows for them to make them aware of
the products and also to know about their requirements and necessities.

FORECASTING AND TARGET SETTING

Target setting is a result of negotiation between the distributor and the company.
Mid month targets for the next month are given by the company at around 5 th -10th of a
month. These are set for the RSM, ASMs and TSI in the hierarchy and driven down by
them.
At the month end the distributor can negotiate these targets in the range of +/-
10%.However ,we see that the Pidilite products have many seasonal and cyclic
variation,due to the very nature of the product and their usage.Alot of forecasting is done
on the suggestions of the WSS ,as they are very experienced in these variations.

SEASONAL VARIATION IN DEMAND

Though forecasting is done at the ASM level, there is always an estimation put forward
by the WSS depending on seasonal variations in demand. The following graph depicts the
demand in various months for different products .

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 DEMAND

Festival
Holi/Id and
Beginning of
season marriage
financial
season .
Demand year. New
for paint Schemes Painting.
related introduced.
New
products All products furnitures
sell.

August
march

July
April
MONTHS

Dec
Sep
Jan

.
Paint
DDL Fevicol SH related
stainer products
Fevicol and
SR900 fevicol SH
Slump
season due
to rain.

As shown above, from the month of Jan to March , there is a demand for paint related
products due to festivals like Id and Holi , when people paint their houses.
In April , with the start of the financial year, many new schemes are introduced .
Generally all the products sell during this period . Products like fevicol SH and fevicol
SR 900 , sell well during these few months.
As July approaches, sales takes a dip. Due to monsoon , there is no painting of houses.
The month of July experiences a slump in demand.
From august to November, demand rises again due to festive and matrimonial season ,
where people paint their houses, goes for new furniture and other renovations.

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CHANNEL CONFLICTS

A. UNDERCUTTING

As in most fast moving goods, Pidilite also faces some channel conflicts.The problem of
undercutting is also present. Although the wholesellers are not a formal route to
duistribution by the company, they are very much a part of the distribution structure. The
presence of a huge wholesale market leads to obvious channel conflicts.In addition to
this, the various margins given to the different categories of WSS leads to stock inflows.
The various channel conflicts faced by the company today are-

WHOLESELLERS

The wholesalers in this market are a very active link in the distribution of Pidilite
products and area involved in bulk purchase from the WSS.Let us take the same price
point of 112.30,which the WSS gives to the retailers as well as the wholesalers.

The wholesaler sells the product to the retailer at lesser than 112.30,the price which the
WSS offers them.There are primarily two reasons for this undercutting-

I. The wholesaler wants the retailer to buy the other non branded products too,at
which he charges heavy premium.This more than offsets his loss in selling the
Pidilite product below purchase price.

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 Eg:A retailer dealing in hardware and paints will have to buy other products like
Plywood Mica, Nails etc In order to woo the retailer,the wholesaler will sell the
Fevicol SH at Rs111,which is lesser than what the retailer would have got from the
WSS(112.30).in this way he is able to retain him and persuade him to buy other non
branded products.On these non branded products,he gains margin of 3 -4%,hence
making the deal very lucrative for himself.

II. The wholesaler also avails the benefits of discount in various primary schemes
meant for volume retailers,as thewholesaler buy in bulk..The company offers bulk
discount and gold jewellery at various volume slabs.By availing these regular
schemes,the wholesalers are able to make up any losses from selling at lower than
cost price.Eg;

SLAB SCHEME

 >30 Kg 1 Re /Kg off

 >50 Kg 2 g Silver
 >1 Tonne 2 g Gol

RETAILERS

At the retilaer level also there are variations in price and undercutting.The major reasons
for undercutiing at the retailetr level are-

Many retailer keep the branded products because it increase credibility of their
shop.They are primary dealing in non branded products like Mica, Plywood etc.

24
Hence,they give discounts on the Pidilite products and woo the consumer to buy other
products too.He charges a high premium on the non branded product,which more than
offsets the discount given on the Pidilite product.

B. STOCK INFLOW

Many times, A class B or C WSS of different territiory, sells his product in the area
charging lesser price because the company offers him more margins,in order to support
his infrastructural costs.As explained in sect ,the class C WSS gets 4% margins by
company.Hence in order to increase sales,he at times goes to other territories and sells
at lower price than the class A WSS available there.

Eg: Company price Selling price Selling price Retailer

(own area) (WSS A area) SP

Class A WSS 108.93 112.30 112.30 118

Class C WSS 107.82 112.30 110 116

In this way, two retailers in the same area end up selling at different prices as the
product bought by one retailer has been supplied by a different WSS of different
territory.

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PIDILITE WSS SURVEY: GHAZIABAD

Name of WSS: M/S Bansal Traders

TYPE A WSS
Experience: 3 years

Bansal Traders is one of the prominent wholesale suppliers in Ghaziabad area.Apart from
Pidilite ,he also keeps the products of he following companies-

1. Airtel
2. Amul
3. Godrej

As we can see,none of the other products are competing with Pidilite products.

The Infrastructure

Bansal Traders are Type A wss ,hence they have a very good infrastructural facilities.The
facilities available at Bansal Traders are-

a. A 20 by 10 sqr feet front office with two telephone lines and

one Fax machine.

b. An unbranded computer(assembled) with 128Mb RAM and

26
 40 GB hard disk,which is as per the recqirement of the
Company
c. A huge godown

d. 3 Three wheeler auto- Bajaj Tempos

e. 2 Hand Rickshaws

Sales Staff

Bansal Traders have one ISR( Inteim Sales Representative) ,working for Pidilite
products.In addition,Mr Bansal himself along with his younger brother work as sales
executives.

Retailers Covered

Bansal traders cover around 150 Retailers.The various kinds of distributors falling in
his area are-

1. Class A - 10 To 15

The class A retailers are catered by Mr Ankur Bansal himself.Around two times a
week he visits these retailers and takes their orders.

2. Class B – 35

Class B WSS is visited by the ISR and Mr Bansal’s brothers,again

4. Class C – 100

The class A retailers are catered by ISR. Around two times a week he visits these

27
 retailers and takes their orders.

Credit Policy

The WSS sells the goods at credit to the retailers for a 20 day perioud.The retailer has
to pay within the limited perioud or the 1% cash discount which is offered by the
company,is not given to the retailer.As already explained,out of 2%CD( Cash
Discount) given to the retailers,1% is given at the time of delivery and 1%if the
retailer pays back wihin 20 days.

In case the payment is not made in 20 days,an intrest n the money @4%is charged by
the WSS.

If the retailer does not pay by the end of the month,the remaining goods are
confiscated by the WSS,as a accompany policy.This ,however,has never happen at
Bansal Traders.

Lead Period
The lead periods in providing stocks to the dealers differs from the SKU and quantity
ordered; some SKU’s are delivered correspondingly with taking order but some are
sent from the warehouses. A higher quantity ordered has to be replenished from the
warehouse.

Stock Policy:
As per the company regulations the distributor is supposed to maintain a stock of 3
weeks; the distributor maintains a stock of 3 -3.5 weeks in monetary terms it equals to
Rs. 30 lakh for the distributor.

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The stock is formalized by the company; the dealer can negotiate on 3-4 end days, the
stock policy is formed for the month.

Return Policy
The company follows a policy of return when the product has not been sold for six
months, is damaged or has defects.The replenishment is done with cash and happens
at the end of every six months.

Return on Investments
The company does not gives any guarantee to the distributor with regard to returns on
his investment which is in line with the market credentials of the company; the
distributor has invested Rs. 3 lakhs as security money and around 30 lakhs in the
infrastructure.

Promotion Policy
The trade promotions are mostly secondary schemes,which are primarily for the
retailers.These schemes are notified to the WSS around 7 of everymonth and then are
passed down to the retailers.

CHANNEL CONFLICT: STOCK INFLOW

As already explained, different class of WSS are given different margins on the
products.The B and C class WSS are given higher margins in order to help them meet
their infrastructural costs.This difference in margins ,at times ,drives the C class WSS
to push their products in the territory of WSS A at a lower price.This has happened at
the Bansal Traders and there is no effective check which can be done to stop this
Inflow.

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 DUMPING

Another issue,which the WSS told us was the case of dumping by the ASM under
pressures of meeting targets in certain months.
He said that it is a tacit understanding between the company and him that at times he
shall keep more stock than recquired in order to meet the targets of ASM.He says it is
a bit of problem,but most of the business is run by relation,which can not be spoilt.

PIDILITE RETAIL SURVEY

LAXMI NAGAR: Sri Ram Plywood And Paints

(UNDERCUTTNG TO PUSH UNBRANDED GOODS)

This retailer is a hardware store who deals primarily in paints,warnishes and

plywood.He buys his Pidilite products from an authorized WSS in this area at the
price fixed by the company.

The sales representative vists him once in a week .The delivery of the demand is done
the next day only.He prefers WSS rather than the wholesaler in his area because he
bcan return the unsold goods to him.Whereas the wholesaler gives him at a
discount,he will never return the goods unsold.

UNDERCUTTING

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 This retailer seels the Fevicol SH at below his cost price from the WSS.The reason
for doing so is that he primarily deals in unbranded goods like plywood,mica,paints
etc.Hence two main benefits are derived by doing undercutting-

 He is able to woo the customer to buy other non branded commodities by

showing them discount on Pidilite products.On these unbranded goods,he
heavily charges premium,which more than offset his loss in selling fevicol
below cost price.

 Presence of a strong brand like Fevicol increases his shop visisbility and
credibility.

GHAZIABAD

RETAILER 1: S.K.Hardware
(UNDERCUTTING BY BUYING FROM WHOLESALER)

The retailer is a hardware shop,who keeps many ranges of Pidilite products.Also he

keeps a range of hardware products.Rather than buying the Class A WSS in his
area ,he buys from the wholesaler,Agarwala and Sons.

Since he buys in bulk,the discounts given by the wholesalers gives him large
margins.The price points which is offered by the WSS and Wholesaler is

WSS (Bansal Traders): 112.30

Wholesaler (Agarwala Brothers): 109

This huge difference forces the retailer to buy from the wholesaler.This retailer also
buys the non branded products from the same wholesaler.Since he buys from the
wholesaler at a lower price,he charges lesser to the consumer, thus resulting in
undercutting.

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RETAILER 2:Jyoti Hardware
(UNDERCUTTING BECAUSE OF STOCK INFLOW)

This retailer is a paint shop which keeps a whole range of pidilite products.This shop
buys fromb Sharma Traders, a Class C wss , who encroaches in the territory of Bansal
Traders( Class A wss).
The prices offered by the two WSS are

Sharma Traders: 110

Bansal Traders: 112.30

This type of stock inflow results in the undercutting at the retailer level.

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RECOMMENDATIONS

1. APPLYING SPLIT RANGE DISTRIBUTION :

A split range distribution strategy has been successful in similar cases of

large SKU sizes co existence of 2or more main brands where each needs separate
attention. A case of Perfetti can be taken for understanding where split range distribution
had been largely successful. In a nutshell, Perfetti has three main brands with 10-12
SKUs for each i.e. Alpenlibe, Centre Shock and Centre fresh. They applied split on a
equal value – equal volume basis. The same was done at Britannia to provide focus and
thus increase sales.
At, Pidilite , for FE division we suggest a split among the range of adhesives for sticking
and those used for binding in paints. Then again, to provide atmost focus , we suggest
that separate WSS for the two unlike the same handling the entire range and not being
able to concentrate on all SKUs.
Lets say , P1 : is the range of Hardware adhesives ( for sticking plywoods, mica etc)
Then , P1a, P1b,P1c etc are the different SKUs in hardware.
Similarly, P2 : is the range of Paint Adhesives ( binders, distemper etc).
Then, P2a,P2b,P2c etc are the different SKUs in paint adhesives.

– Separate salesman for the splits

• Before split, 3 salesmen, 2 beats each all products
• Now 3 salesmen, 6 beats each, 1/3rd the products (one split
group)

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Now, as the WSS for hardware and paints are different, the ISRs under them also
concentrate on separate SKUs. Thus their beat frequency would increase as the products
range has largely reduced resulting in more focus and higher no. of visits to dealers.

Area Sales Manager (ASM)

for P1a, P1b, P2a, P2b.

Distributor for P1a and Distributor for P2a and

P1b. P2b.

Salesman for Salesman for

P1a P1b

Salesman for Salesman for

P2a P2b

APPLYING SPLIT RANGE DISTRIBTION AT PIDILITE

2. CONSUMER PROMOTION SCHEMES: The comp

any should start consumer promotion schemes like scratch cards etc,which will have gifts
like watches,radio etc.This can woo the carpenters,painters to buy and recommend
fevicol over other brands.

3. “FEVICOL SHOPPE”: Since fevicol has strong brand equity even among
children and stationary consumers,it can open up shops specifically for selling home

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consumption products.This may not drive sales but will be a right step in distribution to
do brand building.

Contacts

PIDILITE

1. Shekhar Jethi
Regional Sales Mananger
Parekh marketing Limited
6th Floor,Vikas Deep
Laxmi Nagar District Centre
Vikas Marg,ND Ph-25541970
Email:pidilite@del2.vsnl.net.in

Distributors

1. Ankur Bansal
M/S Bansal Traders
Authorised Distributors
D31,Shyam Park Extension
Sahibabad Ph- 9818390334
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.
Mr. Lalit Kumar – Distributor, Ghaziabad
150, Durga Tower, Gound Floor,
Raj Nagar, Ghaziabad

Retailers

Laxmi nagar
 Sri Ram Plywood and Paints

Ghaziabad
 S.K Hardware
 Jyoti Hardware

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