Pakistan Tobaco Company

COMSATS Institute of Information Technology

COMSATS Institute of Information Technology M.A.Jinnah Campus, Defence Road off Raiwind Road, Lahore

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It is my privilege to thank our respectable instructor Mr. Agha Muhammad Tariq for his guidance and inspiring attitude during the whole duration. I am highly obliged to our honorable instructor and express our gratitude for his precious, splendid and unraveling guidance, which not only made my mind capable enough to absorb the practical knowledge but also enabled me to explore new areas in the field of marketing.

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EXECTIVE SUMMARY This report is basically a detailed study about marketing department of Pakistan Tobacco Company that how the company distributes their brands in market, promotional activities, merchandizing policies and consumer contact plan. All the aspects, which I have learned during my studies, now I am able to practically, implement those studies. My project was on the DSD productivity and I have gained quite a lot of information about the DSD productivity. Thanks to our respected instructor who gave me a chance to prove myself.

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Internship Program Ahmad Ali Shah Date

27-Jun

Description

Briefing

28-Jun 29-Jun

SP Attachment

30-Jun 1-Jul

DSD Attachment

2-Jul

TMO Attachment

4-Jul

Distributor Attachment

5-Jul

Merchandizing Attachment

6-Jul 7-jul to 7Aug 8-Aug05

SPC Attachment Projects Project Presentation

Introduction and overview of PTC,BAT, TM&D operation Sales promotion Activities, Temporary POP, Pack facing and Consumer Contact and Promotion Activities Salesman accompaniment, Fixed Demand Slip, Coverage, Productivity, DSR and other documents. TMO Role, Distribution Management, Trade Marketing Activities Execution and control. Distribution Structure, Coverage, Manpower Management and Documentation Merchandizing Policy, outlet selection Criteria and Execution Cycle instructions, Promotion Planning and Execution, Consumer Contact Plan How to improve DSDs productivity Report and Presentation

AML

Allied Marketing 21 A Gulberg Lahore near Main Market 042-5753336-5754724

SMR

S M Riaz and Sons Bank Square Mall Road Lahore 042-7235101

SBL

Shahbaz Brothers Gurumangat road Gulberg near Pepsi factory 042-5759510

Location

Responsibility

Regional office

AM

AML

Nasir

AML

Abdul Rehman

SMR AML

Shamshad Ali Inam Ul Haq

SBL

Kashif

AML

Aamir Nadeem/Chughtai

AML

Tariq Ansari

Regional office

Asghar

Regional office

RM

Kashif Tariq Ansari Aamer Nadeem Irfan Abbasi Asgar Ali

0300-4120244 0300-9499914 0300-9430081 0300-4491640 0300-4007404

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TABLE OF CONTENTS Section I ¾ Chapter One

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(Background, purpose, scope & limitations of the study)

¾ Chapter Two

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(BAT history, its market position & regional shares and major brands of BAT)

Section II ¾ Chapter Three

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(Introduction and Historical Background of PT C, services of PTC, Major brands of PTC and Vision & Mission.)

21 ¾ Chapter Four (Organogram of Marketing Dept, Business Operation, Function of Marketing Dept And SWOT Analysis)

Section III ¾ Chapter Five

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(Sales Promotion Activities, Direct Sales Delivery (DSD), Role of TMO Distribution Management, Merchandising and Trade Marketing Activities Execution)

¾ Chapter Six

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(Organogram, Introduction of Distributors, Responsibilities of distributor’s, Merchandising Definition, Merchandising Policy, SPC (Sales Promoter Coordinator).

Section IV ¾ Chapter Seven

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(Covers the project that I worked on, in detail, & finally there are containing the Recommendations which I give on the bases of Questionnaire, interview and personal observation.)

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Chapter-1 Introduction to the report 1.1 Background of Study In order to fulfill the requirements of the MBA degree the students of Comsats Institute of Information Technology are required to undergo an internship program for a period of six weeks at an organization of their choice. The aim of this requirement is to supplement the conceptual knowledge taught in class with practical techniques, learnt in real business settings. For the sack of completing this requirement I did my internship at Pakistan Tobacco Company. PTC has the pride to be first multinational of Pakistan as it was established in 1947. Pakistan Tobacco Company is the subsidiary of BAT. It is engaged in the manufacturing and selling of high quality of cigarettes. Over the years the company has maintained its position in the age of competition and has tried hard to increase the demand for its products. Pakistan Tobacco Company is determined to furnish its customers with high quality products and excellent services.

1.2 Purpose of Study The study is intended to get an overall idea about Pakistan Tobacco Company, analyzing its activities i.e. basic functions performed by PTC, features of the company & products that it offers to its customers. Special emphasis is laid on the activities of Marketing Department and the project assigned to me, which was the main focus of my work during the internship period. The major purpose of the study and report is to fulfill the requirements for Master of Business Administration (MBA) at the Comsats Institute of Information Technology.

1.3 Scope of Work I spent six weeks at Pakistan Tobacco Company Marketing Department in Lahore regional office, as an internee. Though my major concern was Marketing Department but for the sake of knowledge, I visited almost all other distributors in Lahore region. Therefore, the scope of my work is limited to the Pakistan Tobacco Company, Marketing Department. This report encompasses the operations of Marketing dept, the assigned project and recommendations.

1.4 Limitations of the work The span of the operations of Pakistan Tobacco Company marketing department is too large to be covered completely in two months. So there approximately 5 to 6 months

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required implementing my recommendations but I could not fully test my recommendations by Time Constraint thus, constituted a major limitation for my internship.

1.5 Methodology During internship one of the most important tasks that one needs to accomplish is of collecting as much quality information about the organization as possible. This information helps in writing of good and factual report. Following are the main sources from where I utilized the data’ 1.5-a Data from Primary Sources Data that have been originally collected (raw data) and have not undergone any sort of statistical treatment are called primary data. In writing this report I collected the primary data through, I. Personal observation II. Interviews III. Questionnaire

1.5-b Data from Secondary Sources Secondary data is the one that is collected from other sources and is already processed through mathematical and statistical techniques. I used the following sources of Secondary data; i. ii. iii. iv. v. vi.

Manuals Web site of PTC Periodicals (Pak Tobacco) Journals and magazines PTC Newsletters Annual Reports

1.6 Scheme of the Report I have divided my report into five main sections while each section includes the relevant chapters in it. Section I is Introduction to Report and contains two chapters. Chapter 1st covers the background, purpose, scope & limitations of the study, methodology and scheme of the report and chapter 2nd covers BAT history, its market position & regional shares and major brands of BAT. Section II deals with organization review. It contains two chapters. Chapter3 covers the introduction and Historical Background of Pakistan Tobacco Company, services of PTC,

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Major brands of PTC and Vision & Mission. Chapter 4 covers the Organogtan of Marketing Dept, Business Operation and Function of Marketing Dept. Section III contains two chapters. Chapter 5th covers Sales Promotion Activities, Direct Sales Delivery (DSD), Role of TMO, Distribution Management, Merchandising and Trade Marketing Activities Execution. Chapter 6th covers Organogtan, Introduction of Distributors, Responsibilities of distributor’s, Merchandising Definition, Merchandising Policy, SPC (Sales Promoter Coordinator). Section IV contains one chapter. Chapter 7th covers the project that I worked on, in detail, & finally there are containing the Recommendations which I give on the bases of Questionnaire, interview and personal observation.

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Chapter-2 Introduction to BAT 2.1) British American Tobacco British American Tobacco is the world’s most international tobacco group. Based in London, U.K. it is a market leader in more than 50 countries with the strength of 90,000 employees selling more than 320 brands in more than 180 markets worldwide. In 1902, the Imperial Tobacco Company of the United Kingdom and the American Tobacco Company of the United States agreed to form a joint venture the ‘British-American Tobacco Company Limited’. The aim of forming a joint venture was not to trade in each other’s domestic territory, to assign brand rights to each other for use in their respective home markets, and to assign trademarks. The American Tobacco Company controlled two-third of the shares and the Imperial Tobacco the remainder. British American Tobacco got listed on the London Stock Exchange in 1912 and British investors acquired most of its American shares. The company was now free to conduct its business independently throughout the world. By 1990, BAT industries had decided to focus on tobacco and financial services and disposed off almost everything else. 1999 saw the merger with Rothmans International, the world’s fourth largest tobacco company, and, in February 2000, Imperial Tobacco Company of Canada became a subsidiary. In 2001, the Group announced major investments in South Korea, Turkey, Vietnam, Nigeria and Egypt, and decided to invest US$ 500 million in these markets over the next few years. In 2002, with a century’s experience in international tobacco markets and expertise in all aspects of the business, British American Tobacco is facing the future with confidence.

BAT is now performing two major functions all over the world, i.e. Financial & Insurance Services and Cigarette Manufacturing.

a) Financial Services 1. Farmer’s Group: USA’s fifth largest group of property insurers. 2. Eagle Star: UK’s life insurer, working in about 30 countries. 3. Allied Dunbar: UK’s largest life Insurance Company.

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b) Tobacco BAT is the second largest quoted tobacco group with annual shipment of more than 800 billion cigarettes. The BAT divides world into five regions that are; 1. 2. 3. 4. 5.

America-Pacific: Includes USA and Japan. Asia-Pacific: Includes China, South East Asia and Australia. Latin-America: Brazil, South America and Caribbean. Europe: Incorporated into 50 markets including Russia. AMESCA: Includes Africa, Middle East, Southern & Central Asia.

BAT’S MARKET POSITION & REGIONAL SHARES Regions

AmericaPacific Asia-Pacific Latin America Europe AMESCA

Total Market Cigarette Billion Volumes Billion (BAT) 896 109

BAT Share % 12.2

2214 333 1228 697

3.9 49.4 16.9 34.1

87 165 208 238

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2.2) BAT AT GALANCE: The BAT is the world most international tobacco group. It has business in 180 countries with a marker share of 15.1 percent. It has over 300 brands in it portfolio and makes cigarette chosen by one in seven of world one billion adult smokers. It holds strong position in each of its region and gas leadership in more than 65 markets. The group gas over 80 factories in 64 countries, processing some 660 million kilos of leaf and producing over 800 billion cigarettes a year. The company includes associated companies employing over 80,000 people worldwide.

2.3) Major Brands: BAT has particular emphasis on its four international drive brands. International brands are those, which cross a number of regions. These brands are handled globally in order to present one consistent message to consumers worldwide

Lucky Strike: It is the best selling international brand and the premier global brand for the key ASU 30 category. Its volume in 2001 increased by a record 4% showing growth in key international markets such as France, Germany and Spain.

Kent: Kent is the premier freestanding lights brand and its role is to strengthen the portfolio in the critical premium, lights and ASU 30 segments. The original 4 markets that relaunched Kent in 1999. (Russia, Chile, Romania and Hong Kong) has show impressive volume growth up over 50% in 2001.

Dunhill: In 2001 fuelled by its outstanding performance in South Korea, Malaysia and Taiwan, Dunhill achieved the highest ever volume in the history of the brand with 14% growth over 2000.

Pall Mall: It is the leading mid price brand of BAT. In 2001 Pall Mall experienced significant growth with volumes up 21%. It showed strong performance in Germany, Russia, Hungary, Italy, Ukraine and Romania. Rothmans, Kool, Benson & Hedges, State Express 555, Peter Stuyvesant, Viceroy and John Player Gold Leaf are also part of international brand portfolio, playing a key strategic role in the different regions of the business in the world.

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Chapter-3 Pakistan Tobacco Company Introduction: Pakistan Tobacco Company generally known, as PTC was first designation in my quest for the target I am aiming for. It was here at PTC regional office Lahore that conducted my first ever internship in my life, which was a unique experience in its own way. This experience has opened new windows and added stay at PTC. I was guided by one of the best staff with utmost patience and with fullest corporation and compassion. I really wish that every firm in Pakistan had the employees as dedicated and devoted as PTC.

3.1) History of PTC: Pakistan Tobacco Company was established in 1947. It took over the business of the Imperial Tobacco Company (India), operational since 1929 in the territory that formed Pakistan, Pakistan Tobacco Company was the first multinational to set-up business in Pakistan. The company is a member of the British American Tobacco. Manufacturing operations commenced from a small pilot production plant set up in a warehouse in Karachi port with monthly production of 30 million cigarettes against sales of 160-the gap being made up by imports. First full-fledged factory was established in 1955 at Jhelam. The same year Pakistan Tobacco Company became a public limited company. At the same time of birth Pakistan in 1947, all tobacco was imported into the country. In 1952, a development project for tobacco leaf was initialed in the North West Frontier Province (N.W.F.P), which progressed rapidly. A re-drying plant was set up at Akora Khattak and cultivation of Virginia Tobacco Commenced. After the birth of Bangladesh and consequently, withdrawal of Dacca & Chittagong factories, a now new cigarette factory was set up at Akora Khattak (N.W.F.P) in 1975 to meet the increasing demand, Pakistan Tobacco Company’s journey on the road progress and prosperity continues with some major now development/investment projects over the last few years. Due to its high quality and its ingenuity and innovativeness it soon became the trend – setters of Pakistan’s tobacco industry. After pouring a lot of time and energy it gave birth to such ideas and techniques which are now widely and Beneficially used all over Pakistan. Its progressiveness pumped life and energy into the meek tobacco industry of Pakistan. By now there is more than 8 to 10 tobacco units (both large and small) are working in Pakistan. It was total dedication that PTC this year was able to grab a profit of 665 million approximately after tax, which is enough to tell the standard of this institution. PTC is now playing a vital role in almost every field of economy in Pakistan generally and in Punjab and NWFP specifically. If we sit and start counting the services of PTC towards Pakistan I bet, it will take some time.

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3.2) Services of PTC: There are some services of PTC, which I would like to mention as briefly as possible. 1. The very first service I can rank is towards the agriculture sector. As we all know Pakistan’s economy is largely based on the performance of agriculture sector. It is the only sector in Pakistan which is contributing 70% of the GDP of Pakistan in one or another way. It was PTC who initiated the cultivation of FCV, DAC and burley forms of tobacco. With great effort and spending a fortune on betterment of this cash crop it has shown its effects. By now Pakistan is on par with per hectare yield of the most modern countries. All this credit goes to the PTC, which is the mentor of Pakistan tobacco. With propagation of hi tech methods and research the fruits are being reaped by every one concerned. 2. As we know large population of Pakistan is under employed it is the PTC who is providing employment to the almost 2500 people directly and 20,000 indirectly. It is the PTC where an average take away of its workers is 9500 per month. This is making PTC one of the best paymasters in the whole region. Other benefits of employment at such a level are clear to almost every body. 3. It is the PTC being an ethical company is paying almost approximately1.2 billion rupees in form of taxes and other levies annually. This can be translated into approximately 43 million rupees every working day. This amount is paid by none other pays single private sector firm this amount. It is said that this amount is enough for financing the social sector schemes of Pakistan. 4. Forestation schemes and environment friendly policies are very optimistic in already grave situation of Pakistan’s environmental situation. Only this year PTC has allocated 7.6 million rupees for only forestation schemes and other steps are excluded. 5. Running free medical dispensaries, sponsoring and promoting the sports and other recreational activities, sponsoring schools are one too many services rendered by PTC to Pakistan. There are endless more benefits, which are rendered by the PTC.

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3.3) PTC Major Brands: PTC has always considered it-selves a consumer-focused company. They aim to offer a product that excels in all aspects and exceeds the expectations of the consumer. In this section, you will find the story of our brands and their origins. PTC has particular emphasis on its five national drive brands.

Benson & Hedges Lights: In 1873, Richard Benson & William Hedges started a partnership in London. From the very start, the idea was to make Benson & Hedges a style statement, which is why the business started from London’s fashionable West End. PTC launched Benson & Hedges in Pakistan in March 2003. Made with the finest hand picked golden Virginia tobacco from across three continents, the brand is packed with perfection to seal its freshness. The objective of introducing this brand is to establish the locally manufactured B&H Lights as the most preferred offer amongst consumers, in the premium lights segment and to add image to the B&H family by offering a wider product range. It was launched in the three metros of Karachi, Lahore and Islamabad/ Rawalpindi.

JOHN PLAYER GOLD LEAF: The story of John Player Gold Leaf has to start from the story of its founder, John Player. An enterprising businessman, John Player started a small tobacco selling business in 1877 and turned it into a thriving cigarette company, John Player and Sons. With a distinct lifebuoy and sailor trademark, John Player Gold Leaf has an identity entrenched in sailing and maritime adventure. Thus staying true to John Player’s very first big brand -Player’s Gold Leaf Navy Cut cigarettes. Gold leaf is the key value and volume contributor for PTC. It remains the most aspire brand in Pakistan. From 2000, the brand is showing continuously growth.

Capstan: Capstan has a rich heritage, originating in Britain in the 19th century. The brand was created under the auspices of W.D. & H.O. WILLS at Bristol and London. Capstan has grown by leaps and bounds to become the fastest growing brand of Pakistan Tobacco Company (PTC) in the year 2001, recording a staggering growth rate of 104%, overtaking sales volume of the major competitive brand in the early part of the year, and consistently outselling it throughout.

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Gold Flake: Gold Flake, like many of our brands, also boasts its origins at W.D. & H.O. WILLS where it was a premium brand around the end of the 19th century. Launched in 1982, in a 'soft cup' packaging, the brand took off when it was repositioned in the value for money segment and later a 'hinge lid' variant was introduced in 2000. Gold Flake is PTC’s largest brand in volume terms and is also a significant contributor towards the value share. A highly successful pack design change in 2004, soon after the new pack was lunched in the market and Gold Flake smokers accept the new design of the pack, at this point an aggressive promotion in the market that would ensure the maximum exposure of competition smokers to the new pack. There are three new variants were added into the family; Gold Flake 14HL, Gold Flake 10HL and Gold Flake 10SC, in order to offer the consumers a wider choice.

Wills King WILLS takes its name from the heritage of one of the original Imperial Tobacco Company families: the Wills Brothers of London. Wills is also a well known brand in Pakistan.

Embassy: The third leading volume brand in Pakistan is most popular in the Punjab where it enjoys a leading position due to its equity and loyalty. Embassy continued its growth in the year 2001fortifying its position in the market. The brand registered a growth of 3% over 2000. Major focus during the year remained on the introduction of more consumer relevant packaging variants. In the 3rd quarter of 2001 the brand family was extended with the introduction of Embassy filter 16ss pack followed by Embassy kings 14HL variant. With the launch of these variants, the family now offers more choice to its consumer at affordable price.

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3.4) Different Brands of PTC:

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3.5) Vision & Mission

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Distribution Management

PTC Volume 26.8 Billion Regional Warehouses (14) Distributors (485-359) DSD 36 %

W/S 39 %

VDSD 25 %

Wholesalers 7,000 Urban Retailers 158,000 51 % Vol HORECA 3.4 %

C O

N

Rural Retailers 270,000 49 % Vol GROCERY 57.1 %

S

U

M

CONVENIENCE 39.5 %

E

R

S (10

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TM&D Network Comparison

• • • • • • •

Distributors Warehouses Urban DSD Rural DSD Field Managers TMO’s Sales Promoters

LTC

PTC

359 14 744 511 22 84 281

527 27 514 590 28 118 300

Market Share: Volume Share

Value Share Others 10%

Ot h e s 19 % P TC

ITB

42%

5%

I TB 3%

PTC 58%

LTC 36%

LTC 27%

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Chapter-4 4.1) ORGANOGRAM (Marketing Dept) Regional Manager

HORECA Executive

Sales Promoter

Data Analyst

Costing Fund

Admin Officer

Area Manager

TMO

SP

Area Manager

TMO

SP

SP

SP

TMO

SP

Area Manager

TMO

SP

SP

TM

SP

SP

TM

SP SP

SP

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4.2) Marketing Department: My first tour was in marketing department of Pakistan Tobacco Company Lahore region. This Dept is responsible to promote all the brands of PTC in Lahore region, by using different promotional tools and offering other Hotel Restaurant & cafe activities. In Lahore region there is a Regional Manager (RM) on the top of all Executives and he notes their activities and provides guide line to them, After the RM the following flow of executives & their responsibilities.

4.3) BUSINESS OPERATION: Regional Manager (Mr. Raheel Hafeez Khan): The RM control the whole region and also focus on there subordinates, analyze the sales volume of the whole region. HoReCa Executive (Mr. Hassan Najaf): o Hotel events o HoReCa promotions

Sales Promoter Coordinator (Mr. Asgar Ali): o Brand Evaluations o Regional Promotion o Cycle Instructions

Data Analyst (Mr. Muhammad Wasim): o Sales Data Analysis o PC Trouble shooting

Costing Fund Accountant (Miss. Quratulain): o Telephone/TE maintenance/Repairing o Banking Activities Admin Officer (Mr. Jamail): o Hotel Booking

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o Repairing/Maintenance o Room Booking o Utilities Bills

Area Manager (Mr. Agha Muhammad Tariq): o AM is responsible for the whole Area, which and will note all the activities of their own & competitors.

Trade Marketing Officer (Mr. Aamer Nadeem): TMO perform the following Activities o Manage distribution o Ensure business growth o Manage resources Sales Promoter: Sales promoter perform the following activities o Brand availability o Consumer Contact o Market Intelligence o Merchandizing Activity o OOS (out of stock)

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4.4) Function of Marketing Dept:

PTC Marketing Dept Marketing Dept

Brand

Product

Trade

Research

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Brand: •

Brand Promotion

•

Brand Lunches

•

Brand Advertising

Product: •

New Product Development

•

Brand Testing

•

Quality Parameters

Trade: •

Sales & Distribution

•

TM Activities

•

Consumer Engagement

•

Implementation of Cycle Activities

Research: •

Consumer Research

•

Brand Research

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:

4.5) SWOT Analysis Strength:

Pakistan Tobacco Company marketing department Lahore region is responsible to promote all the brands of PTC by using different promotional tools and activities. PTC marketing department has high qualified and experienced staff. They also offer family of brands as compared to their competitors. Pakistan Tobacco Company is regarded as the market leader announced a total turnover of 8060 million in 1991 which went up to 8663 million in 1992, in 1993 the figure went down slightly to 8642 million rupees which picked up again the following year to 8788 million rupees in 1994 and 10151 million rupees in 1995.

Weakness: In PTC marketing dept there is no proper training for DSD (Direct Sales Delivery), the motivation level of DSD is also low. As compare to Lakson Tobacco Company, PTC has fewer sales toward rural areas.

Opportunities: Pakistan Tobacco Company has a big market toward rural areas for lower brands like embassy & Gold flake.

Threats: In Pakistan the big competitors of PTC is LTC, so LTC also offer a better coverage plan in the market and there one or two brands are big threat for PTC. Under-pricing and excessive sales promotion programmes are major problems of the industry. While the domestic industry indulges in what is known as under-pricing by selling their brands cheaper than those of their rivals in the same category, the manufacturers are said to be involved in excessive advertisements and other promotion programmes

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Chapter-5 5.1) Sales Promotion Activities: The SP (Sales promoter) will visit 50 outlets per day, the SP must have good attitude and must give daily report to TMO for any promotional activity which occurs in the market. SP is also responsible to check the salesman that whether he come on the outlet or not, SP also do consumer’s contact and take their view about the competitor brands which they use and motivate competitor’s consumer towards their own brand.

SPs Objective: o Toping up: Talking with shopkeeper, tell them about their company, brand and advantages of the brand. The SP will bring awareness, if the shopkeeper did not know about the company and their brand. o Pack Display/Pack facing: Small 4or3 row displays at hotspots in which prescribed plaogram is implemented. o Brand Availability: To conform from the shopkeeper that all the brands are available or not, means to ensure all time availability of the stocks in the respective beats by doing the exercise of toping up. o Consumer Contact: It is the SP activity that he will contact the consumers and will write their names, complete addresses, phone no and will also write the competitors brand which the consumers use and will also get the consumers feed back after testing their own brand. o Market Intelligence: The SP is also responsible to note the competition Activity of their competitors and look at their promotional tools they use. And also give market intelligence report to TMO about the competitors which they use in the market. o Temporary Merchandizing Activity: The following tools include in temporary merchandizing activity. ™ Posters ™ Stickers ™ Bunting ™ Mobile (Rounder) ™ Sun shade

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o Permanent Merchandizing Activity: ™ Facia ™ Tube shade ™ Modular ™ Counter ™ Tailor – made

Sales Promotion Activities: Sales promotion consists of short – term incentives to encourage the purchase or sale of a product. The marketing department of PTC used many tools to accomplish sales promotion objectives.

Consumer promotion tools o Instant win/point-of-purchase (POP) ¾ Lighter ¾ Key chain ¾ Wrist watch ¾ Swiss knife ¾ Pointer

o Grand Draw: ¾ Sound system ¾ DVD players ¾ TV ¾ Return ticket ¾ Car ¾ Jeep

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5.2) Direct Sales Delivery (DSD): As my third tour with DSD, salesman is consider the backbone of the company because he produce demand and distribute the brands of the company in an efficiently way, the DSD will cover a beat of (50-60) shops per day but salesman also visit daily shops, some salesman also cover three beats the reason is that demand is not too much.

Five Steps for DSD: Every salesman must care these steps when they go on beat. 1. Preparation The company prepare short term and long term plan, these plan are yearly, monthly, weekly and daily bases. Steps in preparation: I. Decide your target/set your target first. II. Analyze the current situation. III. Set your aim ™ For achievement of your aim study all aspects and arrange your view. IV. Before meeting ™ Review your aim and remember of its details and try to make the meeting personal, consider it first where you are going to perform work each and check that every necessary resources are available. V. Before contact ™ Prepare your aim and make list of activities by the help of previous contact information, make sure that you have fulfilled the promise which you made in the previous meeting with your consumer or shopkeeper. 2. Approach The duration of meeting/toping up, the salesman must study the surrounding area of the meeting; he must collect such information before meeting which can be helpful during meeting with shopkeeper. The salesman must put on shoes of consumers and must see that which one method is most attractive to attract him. Salesmen also study the internal environment of the store and analyze the situation as per consumer view. 3. Stock check Salesman will check the stock every time and must sure that the stock is according to beat demand, he will also notice the competitor’s brands (Port Folio) with shopkeeper that how much stock he buy and how much is available now. 4. presentation During this stage salesman will present his brands to shopkeeper and he must present his brand in such a way that the shopkeeper doesn’t refused their brand.

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5. closing Salesman will close their meeting such that for the next time there is some material with him to start the next meeting when the salesman will meet with shopkeeper.

5.3) Role of TMO: During the TMO attachment I observed all those activities which he performed or which is his responsibilities.

Accountability: • •

Manage financial accounts and assets for the area to ensure that trade marketing resources are secure and used in the most efficient and effective manner possible. TMO will provide all those information related to trade marketing and performance report and about accounts to Area Manager, so that Area Manager is fully informed all the times.

Duties: o Submit daily/cycle/other periodic reports and special requests for information as directed by your Area Manager. o Manage adequate inventories of merchandising/sales promotion items.

needed

materials

supplies

and

o Accurately complete and submit expense statement, per company guidelines. o Maintain accurate accounts by recording car stocks, signed delivery receipts, cash and expense receipts. o Maintain adequate car stock of brands. o Keep vehicle clean and in good operating condition to prevent unscheduled repairs and down time and follow Company policy and directives regarding safety, accidents, injuries and vehicle security cash and stock control. o Manage records on each TMO focused outlet by verifying distribution, update sales information, recording promotional activity and other requested customer date after each call. o Accurately communicate daily work activity in accordance with proper procedures and established time frames.

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o Promptly report all competitive personal changes, promotions, merchandising promotions, or other matters of interest through your Regional sales Manager. o Comply with and be aware of the company policy on smoking issues and guidelines on communications with the media etc. Actually the job of TMO is to manage overall Distribution, Merchandising and Relationship improvement activities in a territory to achieve area trade marketing objectives. In the past years responsibility of the job has evolved from mere sales supervision to overall supervision of trade marketing activities of a territory. For the past few years the trading environment of the tobacco category is changing due to increased competition and campaign against tobacco marketing. To gain competitive advantage and to enhance brad, volume and profit performance a TMO needs to successfully implement PTC trade marketing activities and maintain full compliance of the Marketing Standard. The job of TMO is related to implementation of core trade marketing and distribution activities. The job is the entry level post of Trade Marketing Department and is responsible for any trade marketing and promotion activities in a territory and thus need to interact with Brand Marketing and CORA for modality approval. The TMO has the following Skills: Knowledge Graduation level must necessary for a TMO post. Skill o Computer literacy and basic knowledge in spreadsheet program o Good communication skill o Leadership skill Key Success Factor o POP Management – in store communication and advertising, display, promotion. o Supply Chain Management – Supply chain strategy and management, Order Management, Order Fulfillment, inventory management. o Strategy and Planning – TM&D planning and management, man power planning, Organization development, Identification and implementation of best practices. o Information Management – Market intelligence, internal monitoring, information Technology.

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It is necessary for TMO to keep close contact with all the distributors of the territory; inform them about the sales plan, lifting status, investment requirement for targeted availability of PTC brands. Beside the TMO needs to monitor workforce of a distribution house and give input to improve the overall performance of the distribution house and give input to improve the overall performance of the distribution house in line with PTC requirements. A TMO need to keep the Area Manager always updated about the sales performance of the distribution house, key competition activities in the territory. Apart from that the TMO needs to keep the Cycle Planning Manager updated about key competition activities, consumer contact information, and customer complaint information and suggest activities to further boost up PTC brands nationally. A TMO, from time to time, needs to communicate the MSDM (Marketing Skills Development Manager) about training information of distribution field force. A TMO also needs to interact with the Area Manager about scope of investment in key identified channels in the territory for further market penetration.

5.4) Distribution Management Accountability •

Ensure that the territory distribution objectives of company brands are achieved by trade channel and outlets type in order that availability is maximized in line with brand strategies and the needs of the market.

¾ Develop the route design to allow time for achieving agreed coverage objectives, supervision of subordinates and timely completion of administrative responsibilities. ¾ Manage returned goods at or below targeted levels by ensuring on-going stock rotation, eliminating over stock of marginal brands. Use agreed incentive programmes to generate now trial and repeat purchases. ¾ Monitor brand availability on shelf and in stock and take corrective action if agreed targets are not being maintained. If there are persistent shortfalls report to Area Manager. ¾ Establish the secondary channel to ensure uninterrupted supplies to all outlets. ¾ Design and rearrange salesman beats in each distributor’s territory to ensure smooth uninterrupted supplies to all outlets in order to secure 100% stock availability for all brands. ¾ Prepare annual business plane in consultation in line with company objectives and conduct quarterly milestone reviews.

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¾ Conduct bi – annual Distributor Evaluations and use this platform to ensure optimal stock investment and resource deployment by the distributors. ¾ Identify weak areas and provide regular training to distributors, FSOs (Field Sales Officer) and their salesman through on the job field contacts as planned in the monthly tour program, agree on annual objectives and review performance on quarterly basis and at year end. ¾ Estimate and monitor competition sales and distribution activities in the area and develop and implement appropriate actions. ¾ Maintain all necessary documentation and record of sales, invoices, and handles distributor’s claims etc, to provide excellent after sales service and achieve bench mark status.

5.5) Merchandising Accountability •

¾ ¾

¾ ¾ ¾

Implement national presence marketing and promotion programmes with optimum use of resources and materials in order to achieve the highest in – store visibility and sales performance for the key strategic brands in TMO focused outlets throughout the territory by gaining the active support of the trade. Develop ideas and use feature, advantages, benefit terms to sell promotion and merchandising programmes through awareness of in – store conditions and by taking advantage of all in – store opportunities. TMO will obtain and maintain adequate carton/package shelf space to accommodate the sales potential of our brand by: I. Determine space and inventory needed to meet consumer demand. II. Presenting the features, advantages and benefits of our benefits of our brands. III. Advantageously use market share and brand/segment trend information. IV. Maintain up – to – date knowledge on competitive activity and promotional offers in order to effectively maintain/build space and display presence. V. Presenting brand /promotional program profitability to the selected outlet. VI. Developing and ensuring compliance with planograms as applicable. VII. Signing agreements with selected outlets which accommodate our permanent on – store / in – store materials in selected outlets, which were approved by the centre. Increase product accessibility and visibility to consumers by selling the benefits of temporary counter and floor displays. Determine strategies placement of permanent and temporary point – of – purchase materials. So as to clearly communicate brand imagery to consumers. Manage and direct Sales Promoters / FSOs to support and maintain agreed shelf facings and all Permanent and Temporary Merchandising.

34

¾ Ensure premium merchandising maintenance services by implementing system of complaint feedback through DSD, and provision of routine cleaning and efficient resolution of complaints by local suppliers. ¾ Ensure all merchandising is compliant with NMS (New Marketing Standards)

5.6) Trade Marketing Activities Execution Accountability •

Complete ownership and effective implementation of cycle plan activities for the section in terms of distribution, merchandising, POP placement, trade promotion and customer/consumers service imperatives.

¾ Cascade cycle guidelines to Sales Promoters, distributors, FSOs and salesmen and develop Urdu guideline handouts for each member ¾ Evaluate achievement of own and team objectives ¾ Forward SWOT analysis to Area Manager after the conclusion of activities which should encompass feedback from distributor staff, trade and consumers.

35

Chapter-6 6.1) ORGANOGRAM

Factory Factory

Ware House Ware House

Distributor

Distributor

Distributor

Whole Sellers

Whole Sellers

Whole Sellers

Retailers

Retailers

Retailers

Consumers

Consumers

Consumers

36

As in the history we have discuss that there are two factories of PTC, one in Jhelam and second one is in Akora Khattak. So the stock comes in ware house from these factories and then comes to the distributors, then they distribute these stock among whole sellers and retailers and the whole sellers and retailers available the stock to consumers.

6.2) INTRODUCTION OF DISTRIBUTORS Distribution channel play an important role in the economic development and the social welfare of country. In business point of view distribution mean provision of products evenly, timely, properly and perpetually so as to make the product available at convenient point for consumers to pick up without any difficulty. It may however be noted that distribution alone cannot ensure marketing success.

Infrastructure and facilities The basic facilities that a distribution company has to provide includes highly motivated sales force, reliable transport, storage space for maintaining information system and effective control system etc.

6.3) Responsibilities of distributor’s The responsibilities include: ™ Ensuring width, depth and merchandizing of brands at all potential outlets ™ Ensuring equitable and judicious distribution ™ Building good trade relations and project a favorable company’s image ™ Market Feedback to principals ™ Achievement of sales targets ™ Ensure adequate investment levels as per principal’s requirement

37

There are three distributors of PTC in Lahore region, who distribute their products in the whole region.

1. ALLIED MARKETING ( Pvt ) LTD Allied Marketing is a well established full service Marketing and Distribution Company of just the right size. It is not too large so that management is closely involved with day to day operation, and big enough to provide the full range of services that their principals expect. S.M. Ilyas & Sons opened the door for business in 1898. Allied Marketing is the Distributor of the following companies: o Pakistan Tobacco Co. Ltd. o Lever Brothers Pakistan Ltd. o Dalda Food

OUR MISSION Our mission is continuous improvement to achieve our concept of:

Service + ¾ ¾ ¾ ¾ ¾ ¾ ¾

In distribution efficiency, In management information systems, In logistics cost reduction In ware housing/storage, In competitive market coverage, In new product launches and Market intelligence.

Allied Marketing is one of the best distributor of PTC that fulfill their requirement

Dist. Total sales =70% DSD+30% Wholesale And get the “Award of Excellence” from Pakistan Company on December 14, 1989.

And on Februarya9, 1993 they get performance from Pakistan Tobacco Company.

Tobacco

Award

38

2. S M RIAZ AND SONS S M RIAZ AND SONS is situated on 4-bank square, The Mall, Lahore and the big distributor in the region. They are working for PTC since 1898. The average monthly volume is 43.4 Million; the share of PTC business on basis of turnover is 100%.

OVERVIEW a) Number of retailers

3213

b) Number of villages

104

c) Number of 80% volume villages

34

d) No of wholesales

34

e) No of village retailers

698

f) Coverage frequency g) Number of outlets covered Daily, twice & thrice On weekly basis

Twice & Thrice

Da 302

h) Number of merchandised outlets own And competition

Tw 1752

Own 332

Th 1159

Com 450

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ORGANOGRAM

MD Distributor Manager

Assistant Manager

Accountant

Godown In charge Main Depot (1)

Loaders (5)

Godown In charge Shahdara Depot (2)

Loaders (2)

Computer Operator (1)

FSO (3)

Salesmen (26)

Cashers (3)

40

3. Shahbaz Brother (Private) Limited Shahbaz Brother (private) limited is also one of the distributor’s of PTC since 1984. It is situated in 43-C, N Block Industrial Area Gulberg II Lahore near Pepsi factory. Distributors of Lever Brothers Flying Tissues, Toyo Nasic, Flora, rice. The average monthly volume of Shahbaz brother (private) limited is 62.4 Million (2004) and the share of PTC business on the basis of turnover is 50%.

OVERVIEW a. Number of retailers

3080

b. Number of villages

0

c. Number of village retailers

0

d. No of village wholesalers

0

e. Coverage frequency

Daily Twice Thrice

f. No of outlets covered on Daily bases, twice & thrice

Da 124 Tw 2396 Th 567

g. No of merchandised outlets Own & competition

Own 217

SBL (WHOLE) RESOURCE DD salesmen VDD salesmen Whole salesman Vans Trivans Rickshaw Accountant Godown Keeper Loaders Computer Operator Security Guard Driver

19 00 01 12 04 03 01 02 05 01 08 03

Com 297

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ORGANOGRAM

CHIEF EXECTIVE

DIRECTOR

FSO

FSO

SALESME

SALESMEN

FSO

SALESMEN

42

6.4) Merchandising Definition Merchandising means to maximize visibility and impact of different brands in target market and maximize the return on investment.

1. Tailor – made ¾ The outlets those fall in both in store only and on store only, are Tailor Made Outlet. These outlets will have tailor made in store as well as tailor – made on store. ¾ The outlets that will have tailor made on store and any two in store standard items. ¾ Standardized fascias and any two or more of the standard items.

2. In store only There are two types of in store only outlets I. Tailor made Instore with no Onstore. Tailor made instore is the instore furniture made as per the measurements of the outlets. II. If the outlets have two or more of any standard instore items. Following is the list of standard instore items. o Modular o Tube shade o Counter

3. On store only ¾ Outlets with tailor made onstore and no instore. ¾ Outlets with made onstore and only one standard instore item. ¾ Outlets with standard fascias and no instore.

4. Miscellanies Merchandising ¾ The outlets having any one of the standardized items of instore like standard Modular or Tube shades or wall Clock or Counter etc are called miscellaneous merchandised outlets. ¾ Outlets with standardized fascias will not come in miscellaneous they will go in onstore outlets.

6.5) Merchandising Policy Following are some policies for merchandising

1. Selection of markets

o The market selection is usually on the basis of volume whether their volume is high or low. o In the selection of market the top executives also confirm that how the target brand volume exist in the market o Market will be selected by RMs and A.Ms themselves only

2. Area selection/Localities within markets

o Consumer profile: The area to be selected within the city on the basis of target market of that brand o Retail sophistication:

43

In the area selection the overall profile of bazaars and outlets will be checked o The area will be selected by A.Ms and TMOs.

3. Selection of outlets:

o Type of outlet: o Visibility and impact: Mean that how much rang of vision, instore display space and exposure to target consumers. o Volume: High selling brand in the outlet. o Consumer profile: In the selection of outlet it is necessary to focus on consumer profile that which kind of consumer came to that outlet and what their income levels, and also focus on their socio/demographic profile. o Outlet sophistication : In the selection of outlet, overall environment, cleanliness, shelving of the outlet is notice. o Retailer attitude: In the outlet selection the most important factor is the retailer attitude, that he will be co – operative or not. o The decision of selection for outlet will be taken by the Area Manager, on the bases of the investment.

4. Designing the outlets

The outlet can be designed in two ways

o In store: Drawing it on the paper, find hotspots for pack displays, thematic visuals on high visibility sites, 4 row display optimizing brand portfolio, gravity displays, imported modular, optimum space management. o On store: Highly visible, significantly better quality, top class materials, beneficial to retailers, (name/lighting), perfect to o This is to be co–oriented by MRs and TMOs

5. Selecting materials

The materials for the outlet will be selected according to the outlet requirement. o According to the profile of the outlet, space available and brand selected o Cost efficiency and innovations in materials. o This should be the decision of AM.

6. Selecting Suppliers o o o o

As per supplier selection guidelines. Past experience with suppliers Quality and adherence to deadlines. Follow central guidelines on suppliers Financial strength This will be the responsibility of MCs and MRs

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7. Handling retailers

o Commitment to retailers only when all formal approvals acquired o Signing of contract (v. imp) including firm commitments on electricity bills and maintenance.

8. Maintenance o Very important to ensure the outlets are well maintained. o Third party contracts, distributor staff, SPV. But in any case regular maintenance programs

9. Post installation activities o

o o o o

o o

Start the process from the selection of outlet. Area manger should have a personal list of all outlets with investment of more than 50,000 and RMs should have a personal list of all outlets more than 150,000 investment These outlets must be put in bold in merchandising database for focus. And their share must be monitored at all levels. All outlets with more than 50,000 worth of investment should be visited by AM at least monthly. All outlets with more than 150,000 worth of investment should be visited by RM monthly When visited, shares should be monitored, maintenance standard should be checked, trade relationships should be developed, retailer complaints should be handled and it should be ensured that the fascia are lit NSM, TMDM and MM will visit these outlets on regular basis and ensure that AMs and RMs are visiting these outlets regularly. NSM, TMDM and MM will have live lists of all these outlets for random inspection.

10. Display o The most important activity in these outlets after investment is the maintenance of pack display all the time as per the planograms. o This will be the prime responsibility of TMOs

45

6.6) SPC (Sales Promoter Coordinator): During my attachment with SPC (Sale Promoter Coordinator), I observed all those activities, which they use in the promotion plan, and about the consumer contact plan. Usually the Head Office design the promotion plan, the promotion plan is some time launched in the whole nation or in the whole region or in a specific market. The time of promotion plan is maximum one month and minimum time is half month. Head office also decides that on which brand the promotion must be launched.

Cycle instruction: SPC is responsible to designed a plan for the whole month, and then assign those activities to different responsible persons of the Dept. If there is a promotional plan “during this period he also designs it. Basically promotion mean make the awareness of the brand, promotional plan depends on the history of the brand and its performance. There is also R&D team in Head office which focuses on all brands, give suggestions for the brand in which the problem is occur i.e. consumer taste is being change or the consumer is changing the brand and shifting to competitor’s brand. Thus the marketing dept give some promotion so that consumer should not shift to another brand and if the consumer is price conscious then the company gives some incentive in the promotion plan. I.e. Five to one redemption

Objective: Primary objective: o Increase awareness o Increase loyalty o Image building

Secondary objective: o Maximum stock availability o Increase the brand width in all areas and other retailers of the city

Activities: The SPC defines the different activities of the promotion. o Consumer engagement o Pack display o Consumer feedback o Check competition activities o Check stock o Merchandizing activities etc.

46

Mechanics: On this step the SPC gives the above activities to different responsible persons of the dept. i.e. o TMO will do consumer contact o SP’s will check the pack display/merchandizing activities o DSD (salesman) will check stock

Budget for promotion: On this step the SPC will calculate all the expenses which occur during the promotion e.g. how many expense will come during promotion on stalls, POP, banners, electricity rent, sound system, guards.

Evaluation: In the last the SPC check or evaluate the brand performance after the promotion, the sales volume of that brand on which the promotion is launched.

47

Chapter-7 7.1)

Questionnaire

Q1: How long you are working in this company? □ Less than 6 month’s □ 6 months? 1 year □ 3-5 year’s □ More than 5 years

□ 1-2 years

Q2: Are you satisfied with your position at this company? □ Dissatisfied □Somewhat dissatisfied □ Neutral □ Satisfied □Very Satisfied Q3: Is load of work according to your expectations reasonable? □ Strongly Disagree □Disagree □Neutral □Agree □ Strongly Agree Q4: Usually how many times FSO visits your beat during month? □Once □ Twice □ none Q5: How motivated are you to see the company’s success? □Very motivated □somewhat motivated □Not very motivated □Not at all motivated □Not sure Q6: Is there any performance awarding session at the end of month? □Yes □No Q7: Are Vehicles fulfilling the beat requirement? □Yes □No Q8: Is your beat plan in a proper way. □Yes □No Q9: Are you satisfied from distributor’s commission rate. □Yes □No Q10: What do you think about Management behavior? □ Good

□Satisfactory

□Poor

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7.2) Outcomes of Questionnaire

%

Q1

Q2

Q3

Q4

Q5

Q6

Q7

Q8

Q9

Q10

%

%

%

%

%

%

%

%

%

%

I 14.28

14.28

28.57

14.28

42.85

28.57

14.28

14.28

14.28

28.57

85.71

85.71

71.42

14.28

42.85

II 28.57

III 28.57

IV 14.28

V 57.14

57.14

71.42

57.14

100

57.14

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7.3) Salesman productivity: Introduction As productivity of salesman is very important factor in the organization, productivity may vary by different factors such as motivation, training, job satisfaction, job placement and pay roles. So in order to gain productivity the company should always look upon these factors and as much as company gives importance to these factors productivity will increase or vise-verse. As for checking productivity of DSD I conducted a survey including interview and Questionnaire which is filled from different DSD’s of SMR, SBL and Allied Marketing so I got the following results on the bases of which I have given the following recommendations

7.4) Recommendations: 1) The most important factor according to my opinion that there should be the performance awarding session at the end of the month. a. Which must be conducted in the region by the Area Manager because by doing so the motivation level of the DSD’s increases a lot and will benefited the company in productivity. b. The 2nd most important factor is the DSD’s training session, so the company should provide both type of training. c. On the job training d. Off the job training The company conduct on the job training but off the job training isn’t conducted which I have noticed during interviewing from different DSD. So there must be a seminar conducted by the TMO or AM, and must remained their activities. This type of activity must be conducted on quarterly bases or after six months. So by this the DSD productivity will be increase because they will refresh after a certain period of time. 2) The third and the most important factor by which the DSD’s productivity influence is the distributor vehicles, because according to my survey most of the salesman complain by their vehicles the reason is that most of the distributor vehicles are in poor condition, so the company must force the distributors to maintain proper maintenance of their vehicles, so that the DSD productivity increase. 3) As the payrolls play an important role, so according to interview and Questionnaire which I have conducted from different DSD in Lahore region, so they are not happy from the distributor commission rate. So the company must also focus on these factors and there must also a time period to increase the commission rate i.e. after two years

50

4)

As the company faces the OOS(Out of stock) complain so to fulfill the requirement the regional office must conduct evening duties of some DSD’s in those areas where there is more demand and OOS complain. So by this way the productivity of DSD will increase and it will be also beneficial for the company because the overall productivity of the company will also be increase by this way.

5) Company must also pay some money on quarterly or after six months for the DSD’s motivation but the pay which will pay must be on the bases of best performance of DSD i.e. 1. 2. 3. 4. 5.

Productivity (%) 80-------------95 60-------------79 40--------------59 Below 40

company must pay (%) 20 15 10 8

6) For improving productivity the FSO and TMO must conduct an official meeting with their DSD’s at the end of the month, so that they can aware the company objective to them and its goal and also remainder them their activities. 7) As presentation skill and communication skill is very important for salesman, so the salesman productivity will be increase if the distributor selects the right person for delivery. 8) The DSD must increase daily shops by which there productivity can increase. 9) For increasing in DSD’s productivity, there should be a proper check from FSO and TMO side either they complete their beat shops or not. 10) The salesman must go early in the morning to market because the shopkeeper deals with different salesman who bring different companies product so if our DSD will arrive earlier then shopkeeper will take more stock.

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How Experience Impacts My Career: My Internship was in marketing department of Pakistan Tobacco Company. It helped me a lot in understanding and implementing marketing strategies in multinational organizations. It was a practical exposure for me and it will help me in organizations where I will work.