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This report is a part of our Project submission for the subject “Sales & Distribution Management” under the guidance of Prof. Jaydeep Mukherjee.
The Company which we have selected for our Project is Mondelēz International, formerly known as Cadbury India. As the first part of submission of our project this report includes the details of distribution channel of three product category, which are as follows:
This report focus on product level analysis which includes the economics of business, the paradigm of service output desired by the customer and the service provided, decision making elements of the intermediaries, challenges faced, skill required by the sales and KRA’s of the sales team.
As sales and distribution management is a subject which is highly practice oriented, we visited and interacted various shops in nearby markets within new & old Gurgaon along with our visit to M/S Chandana Enterprise, a re-distributor of Cadbury India and sales & marketing office of Mondelēz International, Vatika Tower, Golf course road, Gurgaon.
This report is prepared on the basis of face to face interviews conducted with few retailers, store managers of Modern trade like Le Marche, SRS Value bazaar, along with that face to face interview with the distributor and the sales team of Mondelz International. Some of the information like company’s background and factual details has been gathered through internet. The reference of those sites has been given at the end of the report.
About Mondelēz International
Mondelēz International, Inc., is an American multinational confectionery, food, and beverage company based in Illinois which employs about 107,000 people around the world. It consists of the global snack and food brands of the former Kraft Foods Inc after the October 2012 spin-off of its North American grocery operations. The Mondelēz name, adopted in 2012, was suggested by Kraft Foods employees and is derived from the words mundus (Latin for “world”) and delez (a proxy for the word delicious).
Name: Mondelēz International
Industry: Food Processing.
Predecessor: Kraft Food Inc.
Founded: October 2, 2012.
Founder: Thomas H. McInnerney
Head Quarters: Chicago suburb of Deerfield, Illinois.
Area Served: World Wide
Brand Owned: Belvita, Chips Ahoy!, Nabisco, Oreo, Ritz, TUC, Triscuit, LU, Club Social, Barni, and Peek Freans (cookies and crackers); Milka, Terry’s, Côte d’Or, Toblerone, Cadbury, Freia, Marabou, Fry’s, Lacta (chocolate), Trident, Dentyne, Chiclets, Halls, Stride (gum and cough drops) and Tang (powdered beverages).
Products: Baby Food, Coffee, Dairy Products, Breakfast Cereals, Confectioneries, Bottled Water, Pet Foods etc.
Revenue: US$25.92 billion (2016)
Website: www.Mondelēz international.com
Cadbury, formerly Cadbury’s, is a British multinational confectionery company wholly owned by Mondelēz International (originally Kraft Foods) since 2010. It is the second-largest confectionery brand in the world after Wrigley’s. Cadbury is internationally headquartered in Uxbridge, West London, and operates in more than 50 countries worldwide. It is famous for its Dairy Milk chocolate, the Creme Egg and Roses selection box, and many other confectionery products. One of the best-known British brands, in 2013 The Daily Telegraph named Cadbury among Britain’s most successful exports.
Cadbury was established in Birmingham, England in 1824, by John Cadbury who sold tea, coffee and drinking chocolate. Cadbury developed the business with his brother Benjamin, followed by his sons Richard and George. George developed the Bournville estate, a model village designed to give the company’s workers improved living conditions. Dairy Milk chocolate, introduced in 1905, used a higher proportion of milk within the recipe compared with rival products. By 1914, the chocolate was the company’s best-selling product. Cadbury, alongside Rowntree’s and Fry, were the big three British confectionery manufacturers throughout much of the nineteenth and twentieth century.
Cadbury was granted its first Royal Warrant from Queen Victoria in 1854. It has been a holder of a Royal Warrant from Elizabeth II since 1955. Cadbury merged with J. S. Fry & Sons in 1919, and Schweppes in 1969. Cadbury was a constant constituent of the FTSE 100 on the London Stock Exchange from the index’s 1984 inception until the company was bought by Kraft Foods in 2010
Cadbury in India: The operations of Cadbury India initiated in 1948. The head office is situated in Mumbai, Maharashtra with 4 sales offices at New Delhi, Kolkata, and Mumbai & Chennai. It has five manufacturing units all over India at Thane (Maharashtra), Induri (Maharashtra), Malanpur (Madhya Pradesh), Bangalore (Karnataka), Baddi (Himachal Pradesh) and Hyderabad (Telengana) .
The Company is planning to open its seventh manufacturing unit in Andhra Pradesh. It has one cocoa operations office at Dharapuram (Tamil Nadu)
Cadbury India has a share of over 67% in the market, which is the highest Cadbury brand share globally.Cadbury India’s one of the most popular brands, Cadbury Dairy Milk is a benchmark for other chocolates in India and is regarded as the “gold standard”.Some of the other popular brands are 5 Star, Perk, Bournville, Celebrations, Halls, Éclairs, Tang and Oreo. The main brand in the Milk Food drinks segment is Bournvita, which is known as the leading Malted Food Drink (MFD) in the country.
In the medicated category, Halls is a favorite candy while Cadbury India has also entered the biscuits category by launching Worlds no.1 biscuit brand Oreo.Cadbury has also been the leaders in the development of cocoa cultivation in India since 1965. The research work has been carried out in collaboration with the Kerala Agricultural University. The team from Cadbury also conducts training sessions for the cocoa farmers on cultivation aspects to have an increased cocoa productivity.
In India Cadbury reaches to 1.2 million retail stores and 490, 00,000 RD’s. Its traditional trade to modern trade ratio is 90:10.
Intensive Product: Cadbury Éclairs
Extensive Product: Cadbury Silk Praline
Intensive Distribution: A marketing strategy under which a company sells through as many outlets as possible, so that the consumers encounter the product virtually everywhere they go: supermarkets, drug stores, gas stations etc.
Exclusive Distribution: Situation where suppliers and distributors enter into an exclusive agreement that only allows the named distributor to sell a specific product.
Product: Cadbury Éclairs
About the product: Cadbury Éclairs are a confectionery currently manufactured by Cadbury. Introduced in the United Kingdom in 1965, they were adapted into a Dairy Milk version of Éclairs after Cadbury was acquired by the privately owned company HYPERLINK “http://en.wikipedia.org/wiki/Pascall_(company)” \o “Pascall (company)”Pascall in 1922. They are available in bags or rolls and can be found in the Cadbury Heroes selection. Éclairs are currently available in South Africa, United Kingdom, Ireland, Kenya, Hong Kong and India; where they are known as “Dairy Milk Éclairs”. In 2013 Mondelēz International updated the UK ingredients list to add in the inclusion of palm oil in the recipe.
Éclairs was launched in 1971 in Indian market. In 2013 Cadbury rebranded its product to Choclairs in India.
Distribution System: Intensive
Cadbury Éclairs is manufactured at xyz manufacturing unit of Cadbury India. This is the only facility which manufactures the product to meet the demand of several regions across India.
Once ready the product is transferred to the State depot of various states the country through roadways /airways. Product form these state depots is then transferred to various C&F located at different cities/districts. These C&F’s acts as a warehouse for the company.
Mondelēz appoints some private firm as its C&F agent. C&F agent further supplies the product to the redistributors. Mondelēz employs employees either on direct pay role or on an indirect payroll through the C&F agent for operating these C&F agencies.
The RD or the re distributor receives its supply from the C&F agency. An area sales manager is appointed to manage and monitor the RD centers in his/her area.
The distributor is supposed to have its own sales team, which is groomed and trained by the Sales Team of Mondelēz . Usually 12 to 15 sales executives are appointed by the distributors.
Each sales executive is designated to a particular territory known as “Beat”. Each such beat comprises of 30 to 40 outlets.
Distribution Flow Chart- Cadbury EclairsC&F
Market: Modern Trade
E.g.: Big Bazaar, Le Marche, Reliance etc
Tradition Trade Retailers E.g.: Grocery stores, Betel Shop, Med Shops, and Stationeries etc.
Tradition Trade Retailers E.g.: Grocery stores, Betel Shop, Med Shops, and Stationeries etc.
Selection of Channel Partners
Selection of channel partner is based on following parameters:
Business Capacity & Salesmanship
Credit worthiness, financial and social status.
Expertise & experience
Presence in Market
Producer Channel Fit
Investment Made by Channel Partners
These C&F agencies and Re-distributors have to make investment in terms of:
Security money to the company.
Infrastructure which includes Temperature Controlled Go down with (Self owned/rented).
To supply product on credit in the market.
Distribution Channel Management
Channel Management is done through
Rewards: Monetary & Non-monetary
Target Setting and monitoring
Training & capacity building
In GT is around 4.5% and 1% is activity based
In MT margin is around 4.5% and !% is activity based
Super Stockiest margin is around 2%
Retailers have a margin of 15% on Éclairs pouch & 12% on Éclair Jar.
Incentives to the Sales executives after surpassing the target.
Non- Monetary Benefits
A scheme called “Udaan”, which includes trips to abroad, based on the performance of RD’s and Super Stockiest.
Visicooler’s to food stores and chemist’s based on their weekly sales.
Mass dispenser’s to Chemists & Betel Shops.
Borrow Dispensers are given to small shop’s and Betel shops.
Target Setting and Monitoring
Monthly target is set separately for Traditional trade, Modern Trade and Institutional Trade. Incentives are given only after surpassing the give targets.
A rough figure of avg. monthly targets for Modern & Traditional trade are as listed below
Modern Trade: Over 20 lakhs
Traditional Trade: Over 1 Cr.
These targets vary from city to city. For example one of the RD located in Gurgaon M/S Chandana Enterprise alone give a business of INR 8, 00, 00,000 alone.
The monitoring is done by the company’s sales force by analyzing the invoice generated by the distributors.
Distributor make the payment to the company through rtgs and pre-paid cheques .The cash flow cycle of the distributor varies form 1- 7days.Only those Firm’s which are financially sound are appointed as company’s distributors. This is because if a company is not financially well to then its won’t be able to provide credit to its retailer hence won’t be able to sustain in the market.
The cash flow between the company, the C&F and the retailer has to be well synchronized as any break or halt in the payment process can put a break on the entire cycle of events. In Modern trade and institutional Trade cash flow cycle varies from 16 days to a month.
The distributors are liable to pay salary to its sales force but the incentives are given by the company.
SEQ Figure \* ARABIC 1 Direction of Cash Flow
Mode of Trasport
SEQ Figure \* ARABIC 2 Mode of Transport
Skills Required by the Sales Team
It’s very important that the sales team should have certain skill sets, which help them to increase the productivity in terms of Sales output and market capture.
Few of the skills which Mondelēz International expects from its sales team are as listed below:
Knowledge of Customer.
Should know how to pitch in the cost of the product in the market.
Justify the product as per product’s marketing plan.
Should know the seasonality pattern.
Should know about the competitors
Should have a sound knowledge of distribution management.
KRA of a Sales Officer
To achieve the give monthly target
To identify the market potential in the beat assigned.
To continuously work in increasing Product visibility and presence in the market.
Apart from the Sales officer, sales executive working directly in the market are the first line of interface between the company and the market. Although these sales executives are employed by the Re-distributors, their incentives and training expenses are borne by the company.
These sales executives are responsible for:
Bringing order form the retailer.
To check and ensure the visibility & the presence of product at retailers shop floor
To collect the money from retailers on behalf of the distributor.
Apart from the above mentioned responsibility the sales executives are involved in a 8 step called as per the training given to them by the company.
This 8 step call includes:
Greeting the Retailer.
Checking the Stock Available.
Taking the Order.
Negotiating with the retailer.
Revising the order and order confirmation.
Greet the Retailer.
Pre pare for next call.
The inventory management system of Mondelēz works on a very prompt basis. The replenishment of stock with the distributor is done based on an automatic ERP system.
Let us suppose that the minimum stock that M/S Chandana Enterprise needs to keep for say Dairy Milk is 10 cartons. M/s Chandna Enterprise receives an order of say 3 cartons out of these remaining cartons today. As soon as an invoice is generated at the end of M/s Chandna enterprise the system updates the same and the very next day 3 cartons of Dairy milk will be send to the distributor form the C&F warehouse and the same will be updated in the system.
This process ensures the timely replenishment and availability of minimum stock with the distributor as specified by the company.
Product: Cadbury Silk Praline.
About the product: Cadbury Silk Praline is a premium gifting range of Luxury chocolates currently manufactured by Cadbury. The product was first introduced to the Indian market in September 2014. Cadbury Glow was inspired by the warm glow of happiness that comes from seeing dear ones & light up with happiness when they receive a special gift. In a busy world where emotions are forgotten and people have less time for their near and dear ones, Cadbury Glow aimed to empower people with a thoughtful gift to show how much they care. Staying true to this philosophy, the chocolate gift is filled with little details that are symbolic of the care that went into creating it. The chocolate pralines are crafted in Europe, and special attention is required post production in designing and packaging, making it more than just a chocolate and something truly worthy of gifting to a loved one. The beautiful gold and purple packaging of Cadbury Glow is reminiscent of a treasure chest that glows from the inside out, filled with delicious chocolate pralines that would leave a precious feeling.
To make the gifting experience truly personalized Cadbury Glow will also be launching in September a unique gifting website that will connect both the gifter and recipient. The website www.cadburygifting.in allows consumers to experience the world of Cadbury Glow, and to add a personal touch to their gift of Cadbury Glow by writing a personal note, sending a lovely song or experiencing again fond memories by videos and photos.
In 2017 Cadbury rebranded its product to Cadbury Silk Praline in India.
Distribution System: Extensive
Cadbury Silk Praline is manufactured at Mondelez’s manufacturing facility at Slovakia. The product is the Imported by Mondelez India food Pvt Limited and is packed by M/S Ameya Plastics, near Pune, Maharashtra.
The Product form Slovakian facility is imported through air freight, which further is sent to the packing facility in insulated trucks. Once packaging is done Cadbury Silk Praline is sent to various C&F in insulated trucks through roadways. The C&F agent further distributes the product to the re-distributors from where it is supplied to the retailers & modern trade market.
Cadbury Silk Praline is an exclusive range of luxury gifting chocolates, which is seasonal in nature. Mondelez register peak sales of the product in india market during the festive months of October –November.
Cadbury Silk Praline is major sold through Modern Trade and Institutional Trade. The product is meant for the niche market and hence not available at every nick & corner shops. Being a temperature sensitive product it’s very important to store Silk Praline at a company prescribed temperature of 24 degree Celsius .Mondelez assign the dealer ship and retailer ship to only those business units which have facilities to maintain the prescribed temperature for storage of the product. The Product is also meant to transported through insulated temperature controlled trucks and mini vans.
For this particular product the system in Mondelez is designed in such a manner that even if the distributor tries to supply the product to certain retailer who is not well equipped with the visicoolers or storage facility ,the system won’t allow to generate the invoice.
Apart for the exclusivity and seasonality of the product rest of the factors remains same as explained above.