Territory allocation at Nilgai Foods

It was Friday afternoon at the regional sales office of Nilgai Foods in Salt Lake,
Kolkata. Paritosh, who joined last month as the regional sales manager to drive
the latest product of Nilgai foods, Rapido. Nilgai foods was a processed
packaged food company with headquarters in Mumbai. It was a new entrant in
the highly competitive F&B market with innovative products like sauces,
spreads and condiments in Indian flavors. Rapido was a packaged coconut water
based energy drink, which was available in tetra packs of 200 ml, 500 ml and
750 ml.
As per their planned launch strategy, Nilgai Foods was palling to
introduce Rapido in metro towns first and then to smaller cities. Rapido as a
product was competing against carbonated drinks and packaged juices. The
product was proposed to be distributed in retails outlets which includes, kirana
stores, paan shops, juice centres and small restaurants.
The management team asked Paritosh to recruit the sales team and
present a sales plan during their next monthly review meeting at Mumbai head
office. Before going ahead for recruitment, Paritosh wanted to be very clear on
the territory and allocation so that he could arrive a reasonably accurate number
of sales executives.
City of Kolkata, with a population of around 14 million is the third most
populous city in India. The city metropolitan area extends to around 200 square
kms, with the east-west dimensions being narrower than the north-south (Refer
Figure 1).
Based on the competitor data and other information, the monthly sales
target for Rapido was proposed for 2400 liters for 200 ml tetra pack in the first
year. This translated to 1000 cases, where each case contained 12 tetra packs of
200 ml.
For ease of operations, the city was divided into North, South and South-
west regions with total 400 identified retail outlets. The outlets were classified
into A, B and C category based on their sales potential. Based on competitor’s
sales and other relevant factors, the demand for Rapido was estimated for each
outlet. For an A category outlet it was 200 cases per week, for B it was 125
cases per week and for C category outlets it was estimated to be 75 cases per
week. The north region of the city had the maximum number of outlets, whereas
the southern region has maximum A category outlet, whereas the South-west
region had equal distribution of A, B and C category outlet. The average travel
time between two outlets in North region was found to be 15 minutes, whereas
it was 10 minutes and 18 minutes for south and south-west region respectively.
The typical working hours for a salesperson ranged between 8-9 hours in a day.
As per industry standards, the A category outlet needs to be serviced by the
salesperson twice a week, B category outlet once a week and C category outlet
once in 2 weeks.
With the given constraints, Paritosh had to formulate a tentative territory
mapping for its distributors in each region along with the manpower
requirement. The distributor’s margin and other commercial terms were
dependent largely upon the number of salesperson appointed by the distributor.

Figure 1: Map of Kolkata City