DISTRIBUTION STRATEGY OF FRITO-LAY

WITH RESPECT TO ITC SNACKS

DISTRIBUTION IN VARANASI

Made By
Sudhir Mishra
Sales Trainee, ITC Limited
INDIAN SNACKS INDUSTRY
AN OVERVIEW

 According to the ministry of food processing, the snacks food

industry is worth Rs 100 billion in value and over 4,00,000
tones in volume.
 Almost 1,000 snack items and 300 types of savouries are sold
across India. Branded snacks are sold at least 25% higher than
the unbranded products.
 The industry has been growing around 10% for the last three
years, while the branded segment is growing around 25% per
annum to stand at Rs 5,000-Rs 5,500 crores, due to various
reasons like Multiplex culture, snacking at home while
watching TV, pubs and bars .
CONTINUED
 Indian Foods market is a monopolistic market. There are
many competitors in all the categories and although they
all have similar products available at similar prices, they
are trying to prove themselves different through their
marketing and promotional strategies.
 Indian snack industry = 5000- 5500 crore.

Frito Lays = 45%,

Haldirams = 25% market share and
ITC bingo = 16% share.
Rest of the market is dominated by few
regional players.
MAJOR PLAYERS IN THE SNACK
INDUSTRY
 Frito-Lay Inc.
 Bingo

 Parle’s

 Haldirams

 Others
FRITO-LAY
 Frito-Lay North America (FLNA) is a division of
PepsiCo, Inc. which manufactures, markets and sells a
variety of corn chips, potato chips and other snack foods.
 The company's current form is the result of a 1965
merger of Frito-Lay, Inc. and the Pepsi-Cola Company,
which resulted in the formation of PepsiCo, Inc.
 Products sold under the Frito-Lay name are now recorded
by two PepsiCo divisions: Frito-Lay North America
(North American sales) and PepsiCo International
(international sales).
BINGO
 The launch of Bingo represents ITC Foods’ fifth
major line of business after the highly successful
staples, biscuits, ready-to-eat and confectionery
products, Introduced in the market in March 2007.
 The initial offerings from Bingo include an array of
products in both Potato Chips & Finger Snacks
segment.
 The Potato Chips offerings comprise of different
innovative variants inspired by the snacking habits of
different parts of the country.
FRITO-LAY (PEPSICO.) AND BINGO (ITC)

 Currently, the size of the snack food market is

estimated to be Rs 4,500-5,000 crore of which
branded players account for Rs 2,000 crore.
 The snack food market is growing at 30 per cent
annually and foods and beverage giant PepsiCo's Frito
Lays is the dominant market leader.
 Lays has revamped its branding strategy with new
promotions featuring actress like Juhi Chawla,
Kareena Kapoor etc.
CONTINUED
 This was perhaps a move to outdo competition
from ITC’s snack brand Bingo, which was
launched in March 2007.
 Since Bingo was a youth brand, digital media
was used heavily for promotions.
 The offerings under the Finger Snacks segment
are equally unique presentations with innovative
finger foods like Khakra inspired Mad Angles
and the specially developed time pass snack in
the form of Tedhe Medhe.
DISTRIBUTION
 Distribution refers to Physical Distribution. Physical distribution (or
place) is one of the four elements of the marketing mix. An
organization or set of organizations (go-betweens) involved in the
process of making a product or service available for use or
consumption by a consumer or business user.
 Chain of intermediaries, each passing the product down the chain to
the next organization, before it finally reaches the consumer or end-
user. This process is known as the 'distribution chain' or the 'channel.'
Each of the elements in these chains will have their own specific
needs, which the producer must take into account, along with those
of the all-important end-user.
DISTRIBUTION CHANNEL AND
STRATEGIES
 Product availability where and when customers want them.
 It Involves all activities from raw materials to finished
products.

Distribution Objective
 Minimize total distribution costs for a given service output.

 Determine the target segments and the best channels for each
segment.
 Objectives may vary with product characteristics e.g.
perishables, bulky products, non-standard items, products
requiring installation & maintenance.
DISTRIBUTION CHANNEL
 In the marketing channels there is transfer of product from the
producer to the consumer. The intermediaries involved in this
network are Warehouse, distributors, wholesaler and retailers. 

Wholesalers

Manufacturing
Warehouse Distributor Retailer
Unit

End User
Or
Customer
FRITO-LAY DISTRIBUTION NETWORK
IN VARANASI
 One C&F exists in Varanasi at Lahartara.
 In Varanasi, there are 4 Distributors of Lays :
 3 Distributor deal in town markets and surrounding rural
markets.
 1 Distributor works for railway, key a/c and other
consumption centers.
 The stock is supplied to all distributor of Varanasi through this
C&F. Distributors serve town markets, rural markets and Key
a/c.
 Total Monthly Turnover in Varanasi is around 43
Lakhs rupee Value or 21 tonnes on Volume basis.
SELLING, SUPERVISON & DISTRIBUTION
SYSTEM

 Company Personnel- 1) Mr. Neeraj Singh

 (Area Sales Manager)
2) Mr. Tushaar Baneerjee (Sales Officer)
3) Mr. Rakesh Srivastava (Sales Officer)
Distributors are -
 Shyam Agencies, Mahmoorganj

 Nishta Enterprises, Lahartara

 Barnawal Trading Co., Ordali Bajaar

 Surya Enterprises , Cantt.

CONTINUED….
Segment Of Customers: 1) General Stores
2) Pan Shops
3) Kirana Shops
4) Bakeries
5) Dhaba
6) Theater
7) Malls
8) Restaurants
9) Petrol Pumps
10) College Canteens
11) Consumption Centers
 
CONTINUED….
 No. of SalesMan :- 1) Shyam Agencies – 7 DS
2) Nishta Enterprises – 5 DS
3) Barnawal Trading Co. – 8 DS
4) Surya Enterprises – 4 DS
 Three PSR in Varanasi town to look after rural & upcountry
markets.
 No. of Routes :- 1) Shyam Agencies – 7 DS X 6 = 42
2) Nishta Enterprises – 5 DS X 6 = 30
3) Barnawal Trading Co. – 8 DS X 6 = 48
4) Surya Enterprises – 4 DS X 6 = 24
CONTINUED…
 1 PSR to look after the all Wholesale Market.
 1 Sales Officer for Wholesale Market in Varanasi,
Allahabad and Gorakhpur.
 4 Stockists in Varanasi to cater surrounding upcountry
and rural market. They are at Kachawan road,
Mugulsarai, Chandwak and Jansa.
 8 DS in Varanasi work on Order Capture Basis.
 3 Route Trainer and 1 Growth Agent.
 Total Lays serviced outlet base in Varanasi is 3800.
 Frequency of visit of salesman is on weekly basis.
FRITO-LAYS FACT FILE IN VARANASI
Town Wholesale
Route Type Town Retail
24
No. of Routes 120
No of Outlet per 25 approx
Route 35-40
Once in a week
Coverage Once in a week
Ready Stock Model &
Order Capture Model
Format Ready Stock Model Both
Same Day & Next Day
Delivery Same Day
8 Three Wheeler and 12 4 Three Wheeler
Delivery Vehicle Trollys
Salesman 20 DS 4 DS
FRITO-LAY WD REDISTRIBUTION
FIXED EXPENSES @ SHYAM AGENCIES

Cost per Month in

Particulars No.s Cost/ Unit
Rupees

Salesman 7 2400 16800

Driver 2 2500 5000
Trolly Man 5 3500 17500

Running Cost 1 Route in a

Average Cost 26*2*4*20 + Rs. 6640 per
for 2 Three Day & 20
of 4 Rs/ Km 400 month
Wheelers KM./ Route

Total Re-Distribution Rs. 45940 Per Month

Fixed Expanses
CONTINUED….
 There are two types of DS –
1) Regular DS
2) FSC (Frito-Lay Star Outlet) DS {they only service Star Outlet of Lays}.
 Salary Structure –
- Fixed Salary + Variable ( Variable contains Line Cut, Bill Cut,
Product Incentive& Target Achievement)
- Fixed Salary for 1) – Regular DS – Rs. 2400
2) – FSC DS – Rs. 3200
 Salary of Route Trainer & Growth Agent – Rs. 8500
( Route Trainer plays the role of Team Leader and Growth Agent usually taking
care of merchandising, maintenance & look after competition activities.)
BINGO’S DISTRIBUTION IN VARANASI
 One WSP present in Varanasi at Ramnagar.
 In Varanasi, there are 2 Distributors of ITC :

1 Distributor deal in town markets and surrounding rural

markets.
 1 Distributor works only for town market.
 The stock is supplied to both distributor of Varanasi through
this WSP. Distributors cater the needs of town markets, rural
markets and Key a/c.
 Total Monthly Turnover in Varanasi is around 11 Lakhs
rupee Value or 6.6 tonnes on Volume basis.
SELLING, SUPERVISON &
DISTRIBUTION SYSTEM
 Company Personnel- 1) Mr. Ashish Kumar JHA
( Area Manager)
2) Mr. Kaushlendra Singh
(Area Executive)

Distributors are –
 Mosaram Vyapar, Sidhgiribagh
 Shri Ganesh Trading Co., Jagatganj

 Two Grocery 3 Team Leader , One is on one WD point.

 Total 12 DS in two WD points.
CONTINUED….
Segment Of Customers: 1) General Stores
2) Pan Shops
3) Kirana Shops
4) Bakeries
5) Dhaba
6) Malls
7) College Canteens
8) Consumption Centers.
 
CONTINUED….
 No. of SalesMan :- 1) Mosram Vyapar – 6 DS
2) Shri Ganesh Trading Co. – 6 DS
 One PSR in Varanasi town to look after rural markets & Stock
Carrying Points for all categories.
 No. of Routes :- 1) Mosram Vyapar – 6 DS X 6 = 36
2) Shri Ganesh Trading Co. – 6 DS X 6 = 36
 Total No. of Outlets in Varanasi = 2860
 Grocery 3 Teamleader – There are 2 Grocery 3 Teamleader,
each at one WD point to look after
town markets & managing all 6 DS.
BINGO FACT FILE IN VARANASI

Route Type Town Retail

   
No. of Routes 72
No of Outlet per Route 30-35
Coverage Once in a week
Format Ready Stock Model
Delivery Same Day
4 Three Wheeler and 8
Delivery Vehicle Trollys
Salesman 12 DS
BINGO WD REDISTRIBUTION FIXED
EXPENSES @ MOSARAM VYAPAR
Cost per Month in
Particulars No.s Cost/ Unit
Rupees
Salesman 6 2300 13800

Trolly Man (with 4 3200 12800

Trolly)

Hiring Cost
Hiring cost Hired for 26 Rs. 18200
for 2 Three 26*2*250
Rs 350/ Day Days per month
Wheelers

Total Re-Distribution Rs. 44800 Per Month

Fixed Expanses
CONTINUED….
 The Re-distribution expanses comprises of three parts
1) Selling Expanse
2) Supervison Expanse
3) Freight Expanse
 In selling Expanse there are two parts –
a) Fixed Salary – Rs. 2300 per DS
b) Variable Expanse – It consists of Line cut, Bill cut,
Unique Bill cut, Target achievement.
 Supervison Expanse also contains –
a) Fixed Salary
b) Variable Expanses
 Freight Expanse is the cost of distribution of stock in the market.
MERCHANDISING
Frito-Lay – Bingo –
 Merchandising is done in form of  Merchandising is done in form of
providing racks, POSM materials providing racks , banners, posters
etc. etc.
 Lays racks are Five Type –  Bingo Umbrella Placement to
good location is also a
1) Trimurti merchandising activity.
2) FSC Rack  Bingo Racks are –
3) Snack Smart 1) Counter Top
4) Metal Rack 2) Small Metal Rack
5) Antirodent 3) Large Metal Rack
 Dealer boards of Uncle Chips is
4) Fibre Rack
also visible in the market.
 Maintenance & availability of rack
is governed by Growth agent.
D & D NORMS

Frito-Lay –
 D & D collected by the salesmen in the last week of every month from the
outlets.
 Collected D & D stock from all distributors sent to C&F godown.
 D & D is verified by CA and destroyed in presence of WD, ASM & SO.
 The claims are made on a monthly basis & submitted to the company.

Bingo –
 D & D collected by the salesmen in the last week of every month from the
outlets.
 Collected stock is verified at the destruction point by CA and destructed in
the presence of AE & AM.
 The claims are made on a monthly basis & submitted to the company.
MAJOR HURDLES FACED BY BINGO
 Brand Loyalty of Lays customer is posing threat to
Bingo.

 Entry of new players in the market.

 Rack Placement by Lays in most of the outlet.

 Brand Promotional strategies taken by Lays.

 Threats of local players.