Reckitt & Bata

INTERNATIONAL MANAGEMENT INSTITUTE

Term Project Initial Synopsis

Submitted to – Prof. P C Mehra

Submitted by – Prajith V M

08PGDM099

Prakhar Singh 08PGDM100 Rakesh M

08PGDM043

Somil Joshi

08PGDM113

Tarun Gupta

08PGDM118

Varun S Pilla

08PGDM119

Distribution Network: Conventional Trade

Company Factory

Company Factory

Regional Company Warehouse

CFA

Regional Distributer (Delhi)

Regional Distributer (Delhi)

Retailer A

Retailer B

Regional Distributer (Delhi)

Retailer D

Retailer C

Distribution Network: Modern Trade Company Factory

Company Factory

Regional Company Warehouse

CFA

Regional Distributer (Delhi)

Regional Distributer

Regional Distributer

Reliance Fresh

Big Bazaar

Spencer’s

More

Reckitt Benckiser – About the company Reckitt Benckiser plc is a global consumer goods company, making and marketing home, health and personal care products. The annual revenue of Reckitt Benckiser was £6,563 million for the year 2008. Reckitt Benckiser manufactures variety of power brands such as Dettol, Clearsil, Harpic etc. Globally, the product line is divided into six categories such as surface care, fabric care, dishwashing, home care, health and personal care, and food. In Indian scenario, the product line analysis of Reckitt Benckiser yields us the following result Product Line Analysis – Reckitt benckiser Health & Personal Care Veet Dettol Clearasil Strepsils

Fabric Care Calgon Vanish Woolite

Surface Care Harpic Dettol Lysol

Home Care Mortein Airwick

Functioning of the Channel Reckitt Benckiser has its manufacturing units for different products at different regions of the country. For example, Dettol is manufactured at Jammu and Harpic is manufactured at Uttaranchal. The products from all of these manufacturing units are brought to a central warehouse, for the northern region. From this central warehouse the products move to the various Carrying and Forwarding Agents. Distributor has with him 10 salesmen and 2 merchandisers. These numbers are fixed by the company. The salesmen in company terminology are called Distributor Sales Representatives (DBSR). The company prepares a weekly schedule which mandates the visits of each of these 10 salesmen in the distributor’s territory. The distributor’s territory is also decided by the company. Reckitt Benckiser works on a before-cash basis. Payments are required to be made up front, and there is no credit policy. However, payments can be made on a per week basis, even if the sales targets are set on a per month basis. (eg. If the sales target is set to Rs 2 crores for the month of July, it is not necessary for the distributor to pay all of this 2 crore on July 1st. He can pay Rs 20 lakh and take products equal to or less than 20 lakhs.)

All dealings of the distributor are with the C&FA. The dealer places his order via email, and the payment can be made by either an RTGS fund transfer or a DD. Since DD procedure is cumbersome, generally distributors makes all its transactions through RTGS. Once the order is made, the C&FA agents ensure that the order is executed within 24 hours. All the carrying cost, until the point where the products are stocked into the shelves of the distributor is born by the C&FA. Any damages to the goods in transit are also born by the C&FA. The distributor then signs, and takes ownership. All the products the distributor is associated fetches him a margin of 5%. Conventional Trade The salesmen travel to the retail points, and procures orders from the retailers. The order is then filled in to two software – one which is the dealers own software, and software of the company. The dealer software is to keep track of the logistics, and the company software is for the company to have a real time data. The dealer software then makes a dispatch summary sheet, which contains information as to how much of which product to send to which retailer, in what vehicle. On average distributors have has 8 - 10 vehicles of its own. The order is taken to the retailer as per the dispatch summary, in one of these vehicles accompanies by a driver, helper and the same salesman. Any damage in transit is born by the distributor. The salesman collects the payment from the retailer, either as cash, credit, dd or cheque. Every cash payment gets a discount of 2.5%. It is to be noted that the company mandates the distributors to have 3 weeks of inventory always in storage. Modern Trade Modern trade refers to the organized retail chains which sprouted in recent times, like the Big Bazaar, More, Reliance Marts, etc. There are a few differences in the functioning when it comes to modern trade. There are no salesmen involved to deal with the modern trade. The order is placed by the retail chain through email, and that initiates delivery. Different retail chains have different methods of operation. For instance, Big Bazaar orders are made centrally, and the delivery is always to the central warehouse of Big Bazaar. But when it comes to Spencers, each retail outlet sends order separately, and the deliver has to be made individually to these outlets. Reckitt Benckiser provides support to its distributors in terms of internal schemes and offers. There are various schemes or lucky offers which the company floats on a timely basis for the benefit of its dealers. Also, as a help, there is an area sales representative of the company to overlook the sales and delivery procedures occurring at the retail points. Issues like conflict between retailers, territory sneak-ins by other distributors, etc are handled by these area sales representatives.

Bata India Limited About the Company Incorporated as Bata Shoe Company Private Limited in 1931, the company was set up initially as a small operation in Konnagar (near Calcutta) in 1932. In January 1934, the foundation stone for the first building of Bata's operation - now called the Bata. In the years that followed, the overall site was doubled in area. This township is popularly known as Batanagar. It was also the first manufacturing facility in the Indian shoe industry to receive the ISO: 9001 certification. The Company went public in 1973 when it changed its name to Bata India Limited. Today, Bata India has established itself as India's largest footwear retailer. Its retail network of 1250 stores gives it a reach/ coverage that no other footwear company can match. The stores are present in good locations and can be found in all the metros, mini-metros and towns Bata's smart looking new stores supported by a range of better quality products are aimed at offering a superior shopping experience to its customers. And the new face of Bata India is now visible to the industry as well as its customers. Today, backed by a brand perception of experience, the company is working towards positioning itself as a vibrant and contemporary young brand. It has significantly transformed its retail formats to become more lifestyle-oriented, which has helped change consumer perceptions to a large extent.

Bata India - Today • • • • •

Sells over 45 million pairs of footwear every year Serves over 120,000 customers every day Sells through over 1200 retail stores Operates 5 manufacturing facilities Employs more than 6800 people

Manufacturing Bata India Ltd. has six manufacturing plants all over India. These factories are responsible for the production of the entire range of BataTM products apart from Sandak sadals, which are exclusively manufactured in the Sandak Factory. Apart from the manufacturing plants, Bata India Ltd. also has two raw material processing plants: •

Kottayam Rubber Plant

•

Mokhameghat Tannery

These plants take care of the major raw material requirements of Bata. Apart from these the raw material required are procured from quality certified suppliers, who hold a long term relationship with the company. Sl No 1

Plant Name

Location

Bata Nagar Factory Batanagar,

Work Done West Complete

Bengal

Manufacturing

2

Rubber Dept

3

Bataganj Factory

Bataganj,Patna Bihar

Complete Manufacturing

4

Bata Tannery

Mokamehghat, Bihar

Leather Processing

5

Faridabad Factory

NIT, Faridabad UP

Complete Manufacturing

6

Sandak Division

Shivaji Marg, Sandak

Sandak Footware

Purchasing Kottayam, Kerala

Rubber purchase and processing

7

Bata Shatak

Hosur, Tamil Nadu

Complete Range

8

Bangalore Factory

Bangalore, Karnataka

Complete Range

Distributor Base From the factory site the finished goods are moved by 3rd party CFA agents which are logistics companies. These companies take care of transportations from factory site to distributor points. The distribution of Bata India Ltd is majorly controlled by the four distributors located in four regions of the company. 1. East – Kolkata 2. West – Thane 3. North – Faridabad 4. South – Bangalore These are the 4 major distribution points and are owned by the company and manned by people on company payroll. The given figure depicts roughly, the regions covered by the four major distribution points.

Sub Distributors The following diagram depicts the location of some of the major sub distributors of the company. These sub distributors acts as company’s intermediaries in places which are far off. The density of such sub distributors is much more in Tier II and Tier III cities as they tend to be much farther away from the zonal distribution point eg Udaipur falling under Faridabad region would have a sub distributor serving the retailers/dealers in that region.

Sub Distributors In NCR

Retail Network Bata India Ltd. has a huge network of retailers across the country. These outlets can be classified in the following three categorised •

Bata Owned Stores – Operated and run on company property by company employees o

Flagship City stores

o

Family and Bazar outlets

•

Bata Franchises - Operated and run by franchise owner on their own property but adhering to company norms

•

Multi-Brand Outlets – selling footwear of various kinds and also giving shelf-space to Bata products

Bata Outlets in Delhi

Distribution Network

Bata Dealer requirements Bata - Basic Requirements • • • •

Availability of location in major semi-urban/ urban centres with at least 30,000 inhabitants or in major shopping centres. Selling area of at least 500 sq. ft. fro half dealership or 1,000 sq. ft. for full dealership. Start-up investment/ capital of minimum RM50,000.00 Adherence to terms and conditions of dealership such as payment terms and follow strict pricing policy.

Bata - Special Services • • • • • •

Site and store evaluation, competitive analysis and turnover forecast. Profitability calculation and feasibility. Store design, layout, furniture and fittings will be provided by Bata on a cost sharing basis. Sales tracking and re-order. Full management support for new openings. Long term business and management support.

Bata - General Condition • • • •

Exclusive selling areas dedicated to Bata products only. Management training will be provided. Point of Purchase (P.O.P) materials will be provided free of charge. DSP van/ artist assist in the in-store display of your shop.

Organisation Structure Urban division Urban Wholesale Division consists of 16 depots selling over 15.0 Million pairs across the country through 150 distributors and over 20,000 dealers. The focus is on selling volume products catering to complete family needs. Under Urban Bata have Wholesaler and Dealer.

Wholesaler Shoe trader who buys merchandise to resell to dealers (multibrand outlets) located in street markets of major cities / towns and rural areas. They keep inventory of Bata products for replacement and sell on credit or cash basis. Their focus is on volume products like basic closed shoes, sandals / chappals, school shoes, Canvas shoes, Hawai, Sandak and Batalite.

Dealers Multibrand outlets located in major cities selling Bata products also. Products consist of medium to high priced shoes for the whole family. These shops deal in regional brands and unbranded footwear from small manufacturers also. Some of the dealer stores are located in high streets and are also air-conditioned.

Branding division

Dr Scholls Shoes India, Hush Puppies Shoes India, Power Shoes India Branding division consists of 15 distributors located in major metros selling footwear under Hush Puppies, Dr Scholl's, Power & Bubblegummer brands to departmental stores, footwear chains, specialty stores and high street dealers.

Branding division

Dr Scholls Shoes India, Hush Puppies Shoes India, Power Shoes India Branding division consists of 15 distributors located in major metros selling footwear under Hush Puppies, Dr Scholl's, Power & Bubblegummer

brands to departmental stores, footwear chains, specialty stores and high street dealers.

Some Additional Moves Utilizing Distribution Channel Capacity  Bata partnering with Adidas, Reebok, M & B, Lee Cooper to effectively utilize its distribution channel capacity  Bata charges a direct commission on MRP  Adidas – 40% - Footwear / 42% - Apparels  Reebok – 36%  M & B – 40%  Sierra (Lotto) – 42%  Puma* – 35%

Direct Sales Channel  Bata Direct - Bata venturing into Direct Selling

 Sale through Catalogs  Sales Force –  Sales coordinators  Bata sales consultants  High end products on sale thorough this channel