A Detailed Study of Sales & Promotion and Distribution Management at Abbott Nutrition International

In Partial Fulfilment of the Requirements for Masters in Management Studies (MMS) Degree Course 2011-13

Roll No. M21 Specialization: Marketing

Jamnalal Bajaj Institute of Management Studies, University of Mumbai

Acknowledgements
This report is a culmination of my efforts during my third and fourth semesters of Masters in Management Studies course at JBIMS, Mumbai. The yearlong project has been a great learning experience for me and I have been ably guided and supported in my endeavor by many people. I am highly indebted to my Project Guide, for his advice and guidance from the very early stage of this project. His able supervision has nourished my intellectual maturity that I will benefit from for the rest of my life. I am grateful to the Director, JBIMS for giving me an opportunity to undertake such a useful thesis. I am also thankful to the respectable faculty members at JBIMS for their teachings and thorough concept building in various managerial disciplines which helped a lot during the course of my internship. I would like to thank everybody who has directly or indirectly helped me in successful completion of my yearlong project.

Table of Contents
1. Introduction ...............................................................................................................................5 1.1 About FMCG industry.......................................................................................................................... 5 1.2 About Abbott Healthcare .................................................................................................................... 6 1.3 About Abbott Nutrition International (ANI)........................................................................................ 7 2. ANI Business Structure................................................................................................................8 2.1 Business Split....................................................................................................................................... 8 2.2 Organization Structure- Trade Business ........................................................................................... 10 2.3 Geographical spread of the Business ................................................................................................ 11 3. 4. ANI Approach towards Selling ................................................................................................... 12 Channels for the Nutrition Business .......................................................................................... 13 4.1 Traditional Trade ............................................................................................................................... 13 4.2 Modern trade .................................................................................................................................... 16 4.3 Customer Marketing ......................................................................................................................... 19 5. Key Stakeholders and Current Footprint .................................................................................... 22 5.1 Channel Partners............................................................................................................................... 22 5.2 Feet on Street ................................................................................................................................... 27 5.3 Shopper Levels .................................................................................................................................. 30 6. Sales and Promotion strategies ................................................................................................. 36 6.1 Showcase .......................................................................................................................................... 36 6.2 EMT (Emerging Modern Trade) ........................................................................................................ 40 6.3 Connect ............................................................................................................................................. 44 6.4 Khiladi................................................................................................................................................ 47 7. Latest Developments- MIS in Supply Chain ................................................................................ 49 7.1 Need for Supply Chain Automation .................................................................................................. 49 7.2 Solution ............................................................................................................................................. 51 7.3 Objective behind implementing a DS ............................................................................................... 51 7.4 Components of a Distribution Software ........................................................................................... 52 3

7.4.1 Working of the Distribution Software ........................................................................................ 52 7.4.2 Benefits from Distribution Software .......................................................................................... 53 7.4.3 Modules and Functions covered by DS ...................................................................................... 53 7.5 Alternative approaches towards SC automation .............................................................................. 55 7.6 Comparison of various automation models...................................................................................... 57 7.7 Vendor quotes .................................................................................................................................. 58 7.8 Final recommendation ..................................................................................................................... 58 8. References ............................................................................................................................... 60

List of Figures

Figure 1: Organisation Structure - Trade Business...................................................................................... 10 Figure 2: geographical distribution of the Sales force of ANI ..................................................................... 11 Figure 3: geographical distribution of the Customer Marketing team of ANI ............................................ 11

List of Tables
Table 1: Business Split of ANI ........................................................................................................................ 8 Table 2: Business split of ANI- branch wise .................................................................................................. 9

1. Introduction
1.1 About FMCG industry
The Indian FMCG sector is the fourth largest in the Indian economy and has a market size of $13.1 billion. This sector is expected to grow to a USD 33 billion industry by 2015 and to a whooping USD 100 billion by the year 2025. This industry primarily includes the production, distribution and marketing of consumer packaged goods, that is those categories of products which are consumed at regular intervals. These are items which are used daily, and so have a quick rate of consumption, and a high return. The sector is growing at rapid pace with well-established distribution networks and intense competition between the organized and unorganized segments. It has a strong and competitive MNC presence across the entire value chain. FMCG can broadly be categorized into three segments which are - Household items as soaps, detergents, household accessories, etc, Personal care items as shampoos, toothpaste, shaving products, etc and finally Food and Beverages as snacks, processed foods, tea, coffee, edible oils, soft drinks etc. The Indian packaged food market at $10 billion, or about Rs 55,000 crore, in 2010 and expects it to grow 20% CAGR to $30 billion by 2015. Categories seen with health benefits are showing far better growths this year. Once it becomes part of lifestyle, then price sensitivity is not much of concern. In India the easy availability of raw materials as well as cheap labour makes it an ideal destination for this sector. There is also intense competition between the organized and unorganized segments and the fight to keep operational costs low.

1.2 About Abbott Healthcare

Abbott Healthcare is a global, broad-based health care company devoted to discovering new medicines, new technologies and new ways to manage health. Its products span the continuum of care, from nutritional products and laboratory diagnostics through medical devices and pharmaceutical therapies. Its comprehensive line of products encircles life itself - addressing important health needs from infancy to the golden years. Abbott employees have been driven by a constant goal: to advance science to help people live healthier lives. Around the world, they share the passion for "Turning Science Into Caring." It's a commitment to focusing on what matters most: life and the potential it holds. On 8th Sep 2010 Abbott completed its acquisition of the Domestic Formulations business of Piramal Healthcare, which now operates as an independent entity by the name of Abbott Healthcare Pvt Ltd. Deal propels Abbott to top position in India with pharmaceutical sales expected to exceed $2.5 billion by 2020. Abbott Healthcare has some of the strongest brands in the Indian pharma market. The divisions at Abbott Healthcare are as follows: acute care, biotech, cardiac, cardio-diabetes, critical cardiology, derma, diabetes, general medicine, multispecialty, multi-theraphy, neuro-psychiatry, ortho and pain management. A strong culture of brand building at Abbott Healthcare Pvt Ltd and its unmatched sales and marketing coverage has seen 11 of their power brands make it to amongst the top 300 in the Indian pharmaceutical market.

1.3 About Abbott Nutrition International (ANI)

Abbott Nutrition is a division of Abbott, the global, broad-based health care company. Founded in 1903 and restructured to focus on innovative nutrition products, the company that evolved into Abbott Nutrition built its reputation on nutritional excellence through solid scientific advances. They are a worldwide leader in nutrition science, research, and development. ANI provides cutting-edge nutrition products that meet changing nutrition needs. It provides vast
array of nutritional and therapeutic products that help babies and children grow, work to keep bodies strong, and support the unique needs of patients with chronic illnesses.

The products of Abbott nutrition are split into the following categories: Infant and new mother - products such as Similac, Pedialyte, and EleCare Child products such as Pedialyte and PediaSure Adult products such as Ensure, and Glucerna Sports & Active Living - products such as EAS, Myoplex and ZonePerfect Therapeutic Nutrition - products such as Glucerna, Oxepa, Vital and Pivot 1.5 Cal Medical Devices - important safety information about our enteral pumps, pump sets, tubes, and kits. ANIs goal is to streamline business processes and improve efficiency with several e -commerce options: e-Abbott.com, EDI or flat file transfer. More than 5,200 employees that work in their global supply chain and manufacturing organization are dedicated to maintaining the highest level of product quality and safety standards.

2. ANI Business Structure

2.1 Business Split
The Abbott Nutrition International business is divided into three broad segments: Traditional Trade Modern Trade Customer Marketing Table 1: Business Split of ANI

The following inferences can be made from the above mentioned data: Overall CAGR of 111% for Trade Modern Trade: Exclusive Team set up in 2010 Pharmacy Chains Incorporated in 2011 Traditional Trade

Infra Expansion in 2010 2012 CSD Set up in 2012- Still a remarkable growth Table 2: Business split of ANI- branch wise

The following inferences can be made from the above mentioned data: Increase in average sale per ASM from 30 lacs to 59 lacs Threefold jump in North and East with infra growth in 2011 and 2012 Overdependence on South has gown down from 57 % to 45 % Significant increase in North Business with opening up of new chains higher level of activations South 1 growth at 37 % due to relative maturity of market and no inorganic elements in business (sale per store is highest in Bangalore and Hyderabad)

2.2 Organization Structure- Trade Business

Business HeadTrade (1)

Branch HeadsTraditional Trade (2)

Head of Modern Trade and CSD (1)

Head- Customer Mktng Manager (1)

Area Sales Managers (37)

NACs (2)

Canteen Service Dept Head (1)

Regional CMM (4)

CAM

Territory Sales Executive (76)

Regional Mgr- MT (4)

Activation Executive (17)

Distributor Salesmen (159)

Key Developement Executive (13)

Figure 1: Organisation Structure - Trade Business

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2.3 Geographical spread of the Business

The depiction is in the following format: No. of ASMs/ No. of TSEs

Figure 2: geographical distribution of the Sales force of ANI

The Headquarters of the CMM team is depicted as

Figure 3: geographical distribution of the Customer Marketing team of ANI

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3. ANI Approach towards Selling

In the pyramid of shopper levels, the idea is to generate demand from the bottom of the pyramid going up. Simultaneously, it involves generating the prescriptions from the top of the pyramid to extract demand from the lower rungs. In brief, building on the positive of Rx and imbibe the best practices of Cx. Trade performs the role of building on the Science of Nutrition through customer centric practices.

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4. Channels for the Nutrition Business

4.1 Traditional Trade
Characteristics of Traditional trade Coverage Geographical Top Town Prioritization based on Market Potential

Based on the sales generated, town wise classification takes place. This is particularly useful when it comes to formulating programs to generated extra sales and market potential. Based on these programs the budgets get formed and marketing strategies get formulated. Stockist Appointment

As a part of the traditional trade stockiest visits take place on a daily basis as the delivery is done be preferably done also on a daily basis. Channel Focus

The traditional trade function has four channels in the ANI parlanceGeneral merchants General Retailers (GMGR), Chemists, Self service stores and Wholesalers. Every channel has a set of dedicated programs and strategies that are exclusive and channel specific in nature and are modified periodically. Outlet Addition

In a rapidly growing business as that of ANI, new outlets are added across all the four channels in the hundreds every year. DBSMs are awarded increments for new outlet addition.
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Visibility Ensuring Merchandising and Primary Visibility as per norms

Primary visibility is the one which is done physically at the point of sales. Traditional trade salesmen are instructed to well guarantee primary visibility and are incentivized accordingly. Secondary Visibility as per channel

Depending on which channel and the presence of competition, certain channels are chalked out for secondary visibility. Secondary visibility is where your product is on a physical display with other competitors products. Merchandiser Planning

DBSMs are trained to use certain merchandise to the fullest. These include visiculars, counter tops, parasites etc. The DBSMs are expected to use merchandising well and are incentivized for that. Distribution Planning Beat Planning

Every DBSMs territory is divided into 6 beats. A beat is a smaller territory containing 40 outlets each. This helps in outlet coverage planning and coverage efficiency. Appointment of DBSMs

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A DBSM is required to have certain skill sets to get business out of every potential outlet he visits. Appointment of DBSM is done keeping in mind all these skill sets required. Training Field Force

The field force containing all the DBSMs and their TSEs(Territory Sales Executives) in charge are robustly trained at the time of joining. Additionally they are trained periodically every three months with a refreshment and updating course. Ensuring Service Efficiencies

The entire field force right from the DBSM level to the Branch head level focus on efficient selling and relationship mgt. with the customers. Ensuring Distributor ROI through focus on secondaries

ANI as an organization focuses on the secondary sales rather t5hyan primary or tertiary sales. Secondary sales happen from Distributor level to the Retailer level. KPIs Assortment, Depth, Quality Productivity Enhancement at ground level Effective Coverage, Lines Sold

The sales of the company are measured on certain parameters like lines sold, outlets covered, outlets billed, lines per outlet etc based on which concomitant remuneration is provided. Driving Dept as per Channel

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The focus is to assign some specialty or the other to every department concerned in terms of which channel is to be driven. Driving New Launches

In such a competitive scenario and considering that ANI is a new growing business, new products are to be launched periodically with continuous support from the RnD team. Systems Processes

Efficient distribution processes need a firm backing from the IT department in the form of MIS support. Initiatives like SMART, Chrysalis etc. are a step in that direction.

4.2 Modern trade

Characteristics of Modern Trade Account Strategy TOT closures with accounts

Every scheme or a new account to be opened with a party comes attached with an exhaustive and a comprehensive Terms of Trade documentation. Format wise strategy at brand / SKU level

Every SKU has its own significant contribution for the business. For that, each SKU is made a part of certain formats depending own the type of growth the format promises.

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Channel loyalty programs

To keep customers engaged, loyalty programs are designed and formulated for every channel. Service Efficiencies Ensuring high fill rates

Fill rate is defined as no. of SKUs sold by a retailer divided by the No. of SKUs supplied to the retailer. Higher fill rates translate into a good business. Ensuring freshness of stocks on the shelf

Expired or non-moving stocks hamper business. It is the task of every DBSM to ensure such SKUs are spotted and replaced quickly. Effective TOT closures with accounts

Every scheme or a new account to be opened with a party comes attached with an exhaustive and a comprehensive Terms of Trade documentation. Category Growth initiatives with accounts

Certain schemes and programs need to be started to ensure steady growth of the entire HFD category of ANI and not any particular product or SKU solely. Visibility In Store Excellence through Merchandising

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DBSMs are trained to use certain merchandise to the fullest. These include visiculars, counter tops, parasites etc. The DBSMs are expected to use merchandising well and are incentivized for that. Asset / space hiring

To ensure maximum visibility and proper one that too, appropriate spaces need to be hired in any given shop of a retailer. Shopper insight based vantage pts.

It is the duty of the DBSM to take pin point insight on shopper behavior and devise selling techniques to make full use of the same. Shopper Engagement Consumer Offers to ensure upsizing

Offers need to be rolled out to the end consumer to upsize him to a larger SKU of a product or to a product that gives higher margin. Nutritional Counseling Centers for demand generation

Modern trade format enables the deployment of in house nutrition centers to educate new potential consumers about the companys product. Training Shop personnel and pharmacists for better shopper interaction

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DBSM by the way of maintaining good relations with the pharmacists nd retailers should train them in promoting ANI products in the best possible way. Nutrition Advisors for shopper interface

Modern trade format enables the deployment of in house nutrition centers to educate new potential consumers about the companys product.

4.3 Customer Marketing

Characteristics of Customer Marketing Channel Programs Channel Led visibility designing activations to impact highest vantage points

It is the outlook of the CM team to innovate and design novel and captivating activations like visiculars, parasites and other display techniques. Share Gain Inc.

Through appropriate merchandising plans competitors market share can be eaten into Impactful POSM

It is the outlook of the CM team to innovate and design novel and captivating activations like visiculars, parasites and other display techniques.

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Systems and Processes Sales Force Automation Systems for order taking at field level

Efficient selling and distribution processes need a firm backing from the IT department in the form of MIS support. Initiatives like SMART, Chrysalis etc. are a step in that direction. Designing Market Working Formats at Executive level and MOR reports

Sales formats are designed so that all the crude data of sales is obtained in the form of pin point reports. Eg. Outlets billed, No. of outlets covered, Top selling retailers etc. Motivation and Incentives Designing productivity metrics for FF and Customers

Certain parameters and metrics need to be designed to measure the business performances. It converts raw data into insightful reports. Incentive Programs for FoS

DBSMs and other Feet on Street need to be recognized and rewarded for their efforts on the field as they are ultimately the ones who get the business. Building motivation through effective track

Periodic training sessions especially during cycle meets and proper rewards and recognition is important to keep the sales force motivated.

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Shopper understanding Shopper Research determining the purchase decision hierarchy

Shopper research through various routes like direct interviewing, questioner etc gives the CM headway into the thought process of consumers before selecting an ANI product. Cross Category Study to understand shopper basket

Benchmarking a certain category with a similar category and studying the two on the basis of various parameters can help understand the customer profile in more detail. MIS maintenance for the BU

Efficient selling and distribution processes need a firm backing from the IT department in the form of MIS support. Initiatives like SMART, Chrysalis etc. are a step in that direction. Channel Programs designed on the basis of shopper study

Programs and activations like Maalamal, Khiladi, Showcase etc. cam be designed on the basis of understanding what the customers at various levels wants.

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5. Key Stakeholders and Current Footprint

5.1 Channel Partners

1) Stockists (TT/MT)
Key Features of Trade Stockists Primarily FMCG Stockists, handling companies viz. Dabur, J & J, Cavincare, Heinz etc No. of Companies Handled by each distributor 4 to 10 Average size of business - 25 lacs + (ANI share between 5-20%) Investment made by stockist Market Credit

Sometimes some distributors buy on credit where the company issues a credit note to the distributor.
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Stocks

Stockists generally order in bulk and hence there is always a pemding stock at any given point of time. Company Claims

Sometimes some distributors buy on credit where the company issues a credit note to the distributor. Business Expenses of Trade Stockists Exclusive Distributor Salesmen (DBSMs) to take orders from the market Separate / shared delivery services for stocks to the market Drive Productivity and Coverage to build ANI business Merchandiser Incentives (in case of MT)

What does a stockist expect from a company Reasonable Inventory levels

Ideally one week lasting stock is what a stockiest would expect in his godown. Faster Claim processing

No distributor would like to be handling credit to the company for a long time and expects quick liquid cash.

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Fast Moving SKUs / Brands (200 gms)

Highest turnover of investment for ANI. They offer the highest margin by volume ratio. Channel Incentives viz. Share Gain Incentive (Marico), Target Incentive (Colgate / Dabur), Motivation Programs / Contests The following data shows the steady growth in the no of ANI distributors across geographies.

2) Direct Accounts- Modern Trade

Key Features of Direct Accounts Lower Cost to Serve due to saving in distributor margin High focus on fill rates due to direct supplies to the customers CFA Quality of operations are key due to freshness norms requirement

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Special mapping of CPs at CFA level Quarterly Reconciliation a must

3) Super Stockists
Key Features of Current Superstockists Act as pseudo CFAs in absence of appointed AI CFAs Highest cost to serve Cover 33 towns in North East and 7 in Uttarakhand

4) Canteen Service Department

Key Features of Current Superstockists CSD is the single largest retail chain in India with turnover of Rs. 6700 crores ($1.5 bn) Serving 42 million households of serving and retired defense personnel Captive audience- select by nature; confined geographically by and large Highly health conscious consumer profile High purchasing power (6th pay commission) resulted in a 40% increase in salaries and pension Tremendous reach 4000 + Unit Run Canteens (CSD retail outlets), serviced through 34 CSD Depots. Changing format 1800 Self service stores to adapt itself to Organized Retail environment Customers for the CSD department can be identified as:
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i) Ex-servicemen Key Features of Ex-servicemen Being in shape is still important after retirement Morning & evening walks are part of daily routine Yoga to enhance mind and soul Visit gyms regularly to keep up the energy level

ii) Army Jawans: Key Features of Army Jawans Staying fit is part of the job Morning drills and parade are part of daily routine. Also participate in free hand exercise, sports events like running and horse riding.

iii) Wives and kids Key Features of Wives and Kids Women in the household feel that they need not put in extra effort. Daily household chores are enough to ensure a healthy lifestyle. The women do not exercise. Older women do yoga to keep fit Children play regularly. Teenagers in the family prefer visiting gyms.
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5.2 Feet on Street

1) DBSM
A DBSM is the Distributor Salesman who is employed by the distributor for the threefold objective of Merchandising

DBSMs are trained to use certain merchandise to the fullest. These include visiculars, counter tops, parasites etc. The DBSMs are expected to use merchandising well and are incentivized for that. Order Taking

Weekly visit to every outlet in a territory is a must. The orders need to be taken generally into the order booklets but for DBSMs provided with SMART, the order needs to be taken on their application on the phone Increase Awareness at Retail Level

DBSMs are trained to use certain merchandise to the fullest. These include visiculars, counter tops, parasites etc. The DBSMs are expected to use merchandising well and are incentivized for that. Every DBSM Covers 40-45 outlets a day on a pre-decided route and 240-270 outlets a week.

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Given below is a step by step a DBSM needs to follow while on a retailer call:

Step No.

Step Description

Activities during the step

Pre-Call Preparation / Beat Preparation

Target for the outlet Previous commitments/issues Any offers for this outlet Own stock by SKU. Competition stocks by SKU Merchandizing remove expired scheme/offer leaflets replenish with updated leaflets

Store Check

Selling

Sales Presentation Using the detailer Schemes/Activities/Promos, if any Related to Expiry, Stock Connections

Handling Objections

Closing the Sale

Get desired order on Dealer Card Get a commitment to endorse Use of normal POP Updating of look & feel

Merchandizing

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2) Merchandisers
There are overall 60 merchandisers in MT and 15 in TT The norms for Merchandisers are as follows: 12 outlets to be covered per day Coverage can be at a bi-weekly or weekly basis No coverage at a fortnightly basis

3) Nutrition Advisor
A Nutrition Advisor is a trained In Shop Counselor whose role is to: To Build up an Advanced Nutritional Category in the Channel To Become Face of ANI in the mind of Shoppers Enhance Store Throughput by adding value to the Store by promoting Science of Nutrition to the Target Shoppers The NAs are present in the hypermarket and supermarket channel of Modern Trade covering more than 7.2 lac shoppers annually

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5.3 Shopper Levels

Traditional trade channels: i) GMGR (General Merchants General Retailers)

Characteristics based on customers insights based on primary research I am of Age 30-45, Middle Class, Joint Family, Discount & Convenience Hunter I consider myself as Evolving, heritage, loyal wanting Customised service, range, savings and accessible For me these are independent Stores and Other Retail chains I like to shop in a place that is close to my house which addresses my customized needs It suits my need for neighbourhood locations, discounts, credit, home delivery assortment It addresses my core needs of customised shopping, discounts I prefer it because it is Middle class, accessible

ii)

Chemists

Characteristics based on customers insights based on primary research I am of Age 25-40, LSM 5-7 , Middle Class, a compulsive & intelligent shopper I want to save money on her shopping of medicines I need the store to be accessible, Help me save money and trustworthy, genuine
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I need educated store people with proper hygiene & genuine products who can guide me on medicines and also guide me on health & hygiene needs. I have lot of Trust on them

Store people should normally have Pharmacy background & guide shoppers on their pharmacy & other health & hygiene, nutrition, baby foods requirements

Only Apollo/Medplus stores caters to all my pharmacy needs, also gives me discounts on buying FMCG products

iii)

Self service stores

Characteristics based on customers insights based on primary research I am of Age 35-45, Middle Class, Joint Family, Progressive by nature and with a modern outlook I like to shop in a place that is close to my house and provides me a good shopping ambience and hence makes me feel I am moving up in life I look forth to an enhanced shopping experience versus GT, range, savings and accessibility It gives me the opportunity to initiate myself into a new shopping environment I primarily prefer prime locations, offers, assortment, good layout I am typically middle class, accessible, Evolving, heritage conscious

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iv)

Wholesale

Characteristics based on customers insights based on primary research I am a middle class 30 yrs old kirana store owner I prefer a wholesale outlet that is accessible to my shop Most importantly I prefer lump sum discounts and good profitable schemes

Modern Trade Channels i) Supermarkets

Characteristics based on customers insights based on primary research I am of age age 25-40, LSM 5-7 , Middle Class, I am a typical bargain hunter and open to experimentation. As the nurturer I have to manage my family budget. I want to shop in an environment which makes this task fun for the family I want a typical Indian feel,wet bazaar, organisedchaos environment (Atta chakki / Tea blending machine / Hinglish Chamosa/Hungry Kya?)Raddi sale & exchange. Celebration of Indian festivals Large number of offers and brands to choose from. Only Big Bazaar provides me a family experience and the best offers that help me save

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Making shopping an enjoyable family outing and saving money on monthly purchases makes me feel as the saver of the family

I want the outlet to be Accessible, Helps me save money and trustworthy, comfortable

ii)

Hypermarkets

Characteristics based on customers insights based on primary research I am of age 18-45, LSM 5+, Evolved progressive Shopper, Value Conscious, open to ideas & experiment I deserve the choices and options for managing my family budget I get to interact and discover products in a non hurried environment I am always on the lookout for a Wide Assortment, International Brands & Imported Range I want to outlet to have Great Ambience: Wide aisles; impactful visual merchandising; spacious Only Tesco provides me an unhurried shopping experience with a wide product range to choose from at affordable prices

iii)

Cash and Carry model

Characteristics based on customers insights based on primary research-

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I need to interact with so many vendors & companies, dont know whether they give fair rates & value, at Cash & Carry I get all these under one roof

I always want a large assortment, retailer loyalty cards, bulk packs, quantity purchase deals

Only Cash & Carry lets me complete my entire shopping under one roof with great deals, professional approach and unique assortment needs, ultimately delivers my margin & profit requirements

Want everything with great deals, should address my profit needs Retailers, medium sized wholesalers with Modern outlook

iv)

Convenience stores

Characteristics based on customers insights based on primary research I am the typical Indian housewife, age 24 to 45, Middle Class, Image conscious and with a modern outlook Only Easy Day lets me complete my entire shopping under one roof. It also offers me on shelf availability, quality, hygiene, deals & service I find all my requirements in Easy Day store. Hence I can complete my shopping under one roof I need to go to multiple stores to complete my monthly shopping for my family needs. I get all these under one roof

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I want the store where I shop to be accessible location, widest choice; Easy to navigate

v)

Pharmacy chains

Characteristics based on customers insights based on primary research I need educated store people with proper hygiene & genuine products who can guide me on medicines and also guide me on health & beauty & personal care needs. I have lot of Trust on them I expect and assume the store people to normally have Pharmacy background & guide shoppers on their pharmacy & other wellness & beauty requirements besides being knowledgeable, well behaved store in charges, good displays, promoters guide us on personal product purchases, assortment Only Religare/Viva stores along with my pharmacy needs, also caters to my nutrition, baby care & personal care requirements I want to save money on my shopping of medicines, also get my space & guidance when required on personal care products I want the pharmacy store to be accessible, helps me save money and trustworthy, genuine, and the one that recommends me good products

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6. Sales and Promotion strategies

6.1 Showcase
The aim of the program is to create best in class visibility for ANI products thereby rewarding the partners in helping to make the program a success. The details of the program are given below 1. Program Duration SHOWCASE was to be an annual calendar program for retailers, i.e. 1st January 2011 31st December 2012 a) Further the period was divided into 4 Quarters ; Quarter I: Quarter II: Quarter III: Quarter IV: Jan Mar12 Apr - Jun 12 July Sep12 Oct Dec12

2. Program Objectives The program has been divided into 2 parts a) Visibility related The first objective of the program is to deliver Best In Class visibility at the retailer points which would help in supporting the efforts of sales team and retailers in generating awareness and trials with the consumers. b) Sales related The second objective of the program is to incentivize higher sales from the outlets. The program intends to deliver greater sales from the retailers and reward their efforts to sell more of ANI products in the form of greater margins.
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3. Visibility Construct The visibility in SHOWCASE is broken down into the following parts a) Primary Shelf Primary shelf is being defined as the window in which the Health Foods Drinks category is stocked in an outlet. Hence, our presence would be among other players like Horlicks, Bournvita, Complan, etc. ANI needs to be given 2 pack face-up visibility in the primary shelf of the health drinks category of the outlet.

b) Secondary Visibility Window Secondary visibility window would provide exclusive separate visibility different from the primary shelf. For ANI, the outlet needs to give an exclusive secondary visibility which will display only ANI products, and one where ANI can put up its display kit as per the size of the window. This visibility window should be of a minimum of 18 X 24 size, and should be ideally behind the cash counter of the outlet. If the space is already

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occupied, then the next best available space as deemed fit by the ANI sales team should be given for the display. c) On a monthly basis, the ANI team shall decide Which brands to be put up in the Secondary Visibility Window. d) Over the period of the year, the retailer will allow the ANI sales team to put up visual merchandising at the outlet. (ex: counter tops, FSUs, posters, shelf strips, etc). 4. Sales Constructs The sales objective of the SHOWCASE program is to incentivize the efforts of retailers in generating more sales for ANI products. The construct is broken into the following a) Target Setting Purchase targets needs to be given to the retailers at the start of each quarter which would be broken down monthly. These targets would be communicated at the start of the quarter. b) Target Achievement There would a tracking of target vs achievement monthly. However, as the targets are being taken up at a quarter level, the achievement incentive would be for a quarter, giving the outlet time for covering up for any month they do not achieve their target. c) Achievement Parameters The target achievement parameter would be sales only. However, there would be 2 levels to achievement. The levels would be at 100% & 125% with different payout attached to different level of achievement.

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Any outlets not achieving their quarterly target would not be given any incentive for that quarter. 5. Qualification Criteria - Any outlet who agrees to be a part of the SHOWCASE program, needs to do the following for receiving the benefits of the program a) Providing space in the primary shelf with atleast 2 face-ups. b) Providing and maintaining a separate visibility window in all months during the SHOWCASE program. c) Purchase from ANI distributors in all the month of a particular Quarter. A lack of billing in any month of a Quarter will lead to disqualification for payout for the quarter. d) Maintaining elements (as provided by ANI over time like counter top, FSUs, etc) inside the outlet at appropriate place basis availability and best fit for the element. The above 4 parameters are essential to be achieved for outlets to qualify for the visibility payout under the SHOWCASE program. e) Achievement of a minimum of 100% of the targets given at the start of the quarter is necessary for the outlet to qualify for the incentive for the sales parameter. 6. Payouts - Basis these parameters, the payouts would be as follows a) A payout or Rs. 300 will be made to the outlet wherein the payment would be maid per month for the visibility window as part of the SHOWCASE program.

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b) Target incentive Target needs to be given at the start of each quarter as in the booklet. The payout is as follows On achievement of 100%+ of the quarter targets as given at the start of the quarter, the outlet will get a total payout of 1.5% of the total purchase in the quarter. On achievement of 125%+ of the quarter targets as given at the start of the quarter, the outlet will get a total payout of 3% of the total purchase in the quarter. The payouts has to be made as per the payout forms as signed with by the retailer at the start of the program.

6.2 EMT (Emerging Modern Trade)

The aim of the program is to create best in class visibility for ANI products thereby rewarding the partners in helping to make the program a success. The details of the program are given below 1. Program Duration EMT would be an annual calendar program for retailers, i.e. 1 st January 2011 31st December 2012 a) Further the period is divided into 4 Quarters ; Quarter I: Quarter II: Quarter III: Jan Mar12 Apr - Jun 12 July Sep12

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Quarter IV:

Oct Dec12

2. Program Objectives The program has been divided into 2 parts a) Visibility related The first objective of the program is to deliver Best In Class visibility at the stores which would help in supporting the efforts of sales team and retailers in generating awareness and trials with the consumers. b) Sales related The second objective of the program is to incentivize higher sales from the stores. The program intends to deliver greater sales from the stores and reward their efforts to sell more of ANI products in the form of greater margins.

3. Visibility Construct The visibility in EMT is broken down into the following parts

Primary Shelf Primary shelf is being defined as the window in which the Health Foods Drinks category is stocked in an outlet. Hence, our presence would be among other players like Horlicks, Bournvita, Complan, etc. The stores needs to put up the primary visibility kit as provided by ANI, and display ANI brands in the category.

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Secondary Visibility Element Secondary visibility element would provide exclusive separate visibility to ANI. The store needs to give an exclusive secondary visibility which could be in the form of an FSU or Parasite, branding space, etc.

4. Sales Constructs The sales objective of the EMT program is to incentivize the efforts of retailers in generating more sales for ANI products. The construct is broken into the following a) Target Setting Purchase targets needs to be given to the stores at the start of each quarter which would be broken down monthly. These targets would be communicated at the start of the quarter. b) Target Achievement There would a tracking of target vs achievement monthly. However, as the targets are being taken up at a quarter level, the achievement incentive would be for a quarter, giving the store time for covering up for any month they do not achieve their target.

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c) Achievement Parameters The target achievement parameter would be sales only. Target based payouts will be made on achievement of a minimum of 100% of the targets. Any store not achieving their quarterly target would not be given any incentive on this parameter for that quarter.

5. Qualification Criteria - Any outlet who agrees to be a part of the EMT program, needs to do the following for receiving the benefits of the program a) Providing space in the primary shelf for the primary kit. b) Providing and maintaining a separate secondary visibility in all months during the EMT program. c) Achievement of a minimum of 100% of the targets given at the start of the quarter is necessary for the outlet to qualify for the incentive for the sales parameter.

6. Payouts - Basis these parameters, the payouts would be as follows a) A payout of 100% of the total sales will be made to the outlet for primary visibility kit, wherein the payment would be maid per month as part of the EMT program.

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b) A payout of 125% of the total sales will be made to the outlet for secondary visibility, wherein the payment would be maid per month as part of the EMT program. c) A payout of 150% of the total sales will be made to the outlet for achieving a minimum of 100% of the targets on a monthly basis. The payouts has to be made as per the payout forms as signed by the retailer/store at the start of the program.

6.3 Connect
The aim of the program is to create best in class primary sales for ANI products thereby rewarding the partners in helping to make the program a success. The details of the program are given below 1. Program Duration Connect would be an annual calendar program for retailers, i.e. 1st January 2011 31st December 2012 a) Further the period is divided into 4 Quarters ; Quarter I: Quarter II: Quarter III: Quarter IV: Jan Mar12 Apr - Jun 12 July Sep12 Oct Dec12

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2. Program Objectives Sales related The primary and sole objective of the program is to incentivize higher sales from the stores. The program intends to deliver greater sales from the stores and reward their efforts to sell more of ANI products in the form of greater margins.

3. Sales Constructs The sales objective of the Connect program is to incentivize the efforts of retailers in generating more sales for ANI products. The construct is broken into the following a) Target Setting Purchase targets needs to be given to the stores at the start of each quarter which would be broken down monthly. These targets would be communicated at the start of the quarter. b) Target Achievement There would a tracking of target vs achievement monthly. However, as the targets are being taken up at a quarter level, the achievement incentive would be for a quarter, giving the store time for covering up for any month they do not achieve their target. c) Achievement Parameters The target achievement parameter would be sales only. Target based payouts will be made on achievement of a minimum of 100% of the targets.

Any store not achieving their quarterly target would not be given any incentive on this parameter for that quarter.
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4. Payouts - Basis these parameters, the payouts would be as follows a) A payout of 100% of the total sales will be made to the outlet for primary visibility kit, wherein the payment would be maid per month. b) A payout of 125% of the total sales will be made to the outlet for secondary visibility, wherein the payment would be maid per month. c) A payout of 150% of the total sales will be made to the outlet for achieving a minimum of 100% of the targets on a monthly basis.

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6.4 Khiladi
The aim of the program is to build a culture of merchandising across outlets by DBSMs. Also to develop an objective audit when the DBSM TSE and ASM do the market together. The details of the program are given below 1. Program Duration Connect would be an annual calendar program for retailers, i.e. 1st January 2011 31st December 2012 a) Further the period is divided into 4 Quarters ; Quarter I: Quarter II: Quarter III: Quarter IV: Jan Mar12 Apr - Jun 12 July Sep12 Oct Dec12

2. Program Objectives Sales related The primary and sole objective of the program is to incentivize higher sales from the stores. The program intends to deliver greater sales from the stores and reward their efforts to sell more of ANI products in the form of greater margins. Merchandising related- so that the ANI products are well visible in the visited outlets

3. Sales Constructs The sales objective of the Khiladi program is to incentivize the efforts of DBSMs in generating more sales for ANI products.

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4. PayoutsAre aptly denoted by the following brochure published by ANI

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7. Latest Developments- MIS in Supply Chain

Of late, ANI has been mulling over installation of a Distribution software in order to automate the supply chain. As of now the various processes like of the SC are manual. They include Order taking, Billing, Claims management, Schemes management etc. With the advent of a proper Distribution Software, as in the other companies, these processes become more efficient and accountable.

7.1 Need for Supply Chain Automation

Since the time of its inception in 2009, ANI has expanded near- exponentially. The same is shown in the chart below:

2010 No of SKUs No. of DBSMs No of outlets (000) No of TSEs No of Distributors Business value (Cr) 9 80 39 73 220 139

2011 13 211 74 118 360 241

2012 17 310 120 170 475 360

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It hence is obvious that the growth of ANI has been tremendous, as is the the case with any new, successful business. However, due to the excessive load, the growing business of ANI has encountered certain difficulties as far as the Supply Chain function is concerned. These are: Planning/ Target setting- Every DBSM needs to be given targets, monthly as well as weekly. Due to the growth in sales volume as well as in the number of DBSMs, manually specifying targets is very difficult. Tracking- The sales need to be tracked on a periodic basis to keep a note of the growth. Manually tracking the sales and other parameters door to door is extremely tedious. Reporting efficiency- Reporting of sales calls and other processes becomes difficult manually. Accountability is hampered due to the ever expanding size of the sales force translating into inefficiency creeping in to the sales force. Sales force operations visibility- cases of false reports or mismanagement by sales people becomes difficult to track and correct if the superiors have to manually sit and track the whereabouts of their team members. Sales force automation maintaining call logs, maintaining the call records on booklets is a tall ask from the field force keeping in mind the sheer size of business to be handled.

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7.2 Solution
A solution to the challenges would be implementation of a Distribution Software at the distributor level. A Distribution Software is a system that seamlessly integrates organizations systems with its supply chain partners. It manages a holistic overview from order processing to inventory control to
accounting, supply chain management, purchasing and customer service, finance management, sales and customer relationship management.

More sophisticated but rarely used solutions additionally can cover areas such as advanced forecasting & replenishment, warehouse management, pick, pack & shipping, EDI or Electronic Data Interchange and Trade Spend Management. Distribution software helps companies to manage internal and external resources efficiently by minimizing stock outs but ensuring overstocking doesn't occur as well. Numerous ERP vendors such as Botree, Sifycorp, Panomtech, DAV etc. offer distribution software as part of their ERP system.

7.3 Objective behind implementing a DS

Better visibility in Stock and Sales in the distribution chain Better Distribution Management Comprehensive and complete MIS from Distributor Improved service to retailers Improved efficiency of Distributor

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An enabler for better planning at company level

7.4 Components of a Distribution Software

1. Centralized web application implemented at Corporate level for Company user login 2. Stand alone Application implemented at Distributors / Stockists / Dealers etc Mobile device application for booking order at outlets

7.4.1 Working of the Distribution Software

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7.4.2 Benefits from Distribution Software

For Retailer- Efficient retailing, Enables range selling, An efficient interface with Distributor For Distributor- Quick and Accurate automated Operations, Clear visibility of DBSM performance, Improved Return on Investment For ANI- Complete data capture at distributor level, Clear visibility of various aspects of distributor business, Decision making tool for Sales and Promotional activities.

7.4.3 Modules and Functions covered by DS

System

This will be master module of sorts containing all the master data from the distributors point of view. Also records like purchase receipt, purchase payment, purchase return, credit and debit note can be found here
Configuration

This module allows the distributor to make changes in the software ie. Additions, deletions, modification etc. The functions present in this module should be the various stakeholders in the distributorship i.e. TSE record, DBSM record, Vehicle maintenance, godown maintenance, retailer record, beat configuration etc.
Salesforce management

This module will be important from the companys as well as distributors point of view Apart from this other parameters like productivity, coverage, outlets billed/ DBSM, bills cut/DBSM, new outlets added, Blaze reporting etc. can be tracked and recorded.

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Retailer management

This module would provide TSEs with daily sales data outlet-wise, Item-wise, Channel-wise, Program-wise etc. functions providing information on focus brand, focus activity etc can also be included here
Planning

Here is where we can put functions like Targets, DBSM-wise target break-up, target analysis, Connect status etc.
Reports

The most important module for the company. Key reports that we need to have will be Outlet-wise sales, SKU-wise sales, Channel-wise sales, Program-wise sales, DBSM KPIs reports Daily sales reports (should include the above mentioned reports under one umbrella), Stock details reports, MIS reports (including market credit register, company credit register, avg stock holding, investment in claims etc)
Inventory management

This module will contain all functions related to the current status of the stock Functions should be Stock master, location master, batch transfer, location transfer, leakages and damages etc
Financial management

The most important module for the distributor- Can track bank master, accounts master etc.
Also cheque payments, cheque disbursal, cheque bounce etc. can have a different function

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7.5 Alternative approaches towards SC automation

Online Billing Model

This is an online billing model where a Direct login is provided for every distributor to the ANI application. This Application contains basic modules for Planning and Tracking purposes Pros Low on investment- a prime reason- will provide the same benefits as a proper Distribution software at lower costs Since the current volumes at ANI are pretty low, this option would be ideal Simplifies the billing process for the distributors since it is equivalent to entering data into any other ordinary website Cons Implementation will be time-consuming- initiation will take approximately 2-3 months Smooth running might be a problem especially in areas with irregular internet connectivity Since this option is not extensively exercised, it might face resistance from distributors as far as the initial implementation is concerned

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Patch Model

A patch picks up relevant data from the Distributors accounting software and dumps it on the ANI application. Application contains basic modules for Planning and Tracking purposes Pros Minimal intervention with the current, regular working of the distributor since data will be extracted from the distributors own accounting software The interface will not be directly controlled by the distributor to a large extent (unlike in the case of the software where the distributor will have to punch in billing data daily) giving complete control to ANI A low cost alternative to a full-fledged distribution software Ideal for our current low-volume business Cons With the kind of volume expansion anticipated in the coming years, an interface would find it difficult to handle the data load, making the implementation of a distribution software inevitable Since there is a huge variation in the types of accounting software used by the distributors, customising the patch to collaborate with each of them is nearly impossible By the looks of it this option is not extensively exercised by companies in the industry, making it a risk bearing alternative
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 Loads of resistance can be expected from distributors to have an interface installed on their own software Extraction from Registered Tally version possible because tie-up with Sify.

7.6 Comparison of various automation models

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7.7 Vendor quotes

ANI approached various prominent vendors to provide them the best fit solution out of the three mentioned. Quotes were obtained at various prices and functionalities from the following vendors: Distribution Software function- Botree, Sifycorp, Heera Software Online billing model- Heera Software, UBQ technologies Patch Model- Celusion Technologies, Sifycorp, Panomtech Technologies, WisdomInfotech, MiracleCartes

7.8 Final recommendation

Interim solution

Patch Model- Standalone On 100 Distributors- These will be the next top 100 DBs than those currently tapped in the Blaze project; Implementation- August, 2013 Subsequently, Patch model- Integrated with Blaze All the 200 Distributors will be brought under a common roof Tapping the 200 Distributors will help tap aprox. 80% of the business Integration starts- August, 2013

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Final solution

Distribution Software A permanent, one-time solution for Sales force automation Implementation- May, 2014

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8. References

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