Indian Institute of Management Rohtak

Sales and Distribution Management Project Report

Submitted By Submitted To
Group 6 (Section C) Prof. Prantosh Banerjee
Sujata Kothavade (PGP09196)
Nasreen Rahat (PGP09206)
Neeta Kumari (PGP09208)
Neha Sheenam (PGP09211)
Nidhi Agarwal (PGP09213)
Tushar Chugh (PGP09243)

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Table of Contents

1. Executive Summary 3
2. Automobile
2.1 About Maruti Suzuki India Limited 4
2.2 Distribution system in Rohtak 4
2.3 Order placement process 5
2.4 Logistics 5
2.5 Inventory management 6
2.6 Vehicle selling process 6
2.7 Allotment of vehicles 6
2.8 Sales 7
2.9 Vehicle category 7
2.10 Value added services 7
2.11 Territory management 8
2.12 Promotional strategies 8
2.13 Lead generation 8
2.14 Sales-force management 9
2.15 Efforts for improving sale 10
3. FMCG
3.1 About Parle Products Private Limited 11
3.2 Distribution network of Parle 11
3.3 Product segments 12
3.4 Distribution network in Rohtak 13
3.5 Distributors 13
3.6 Retailers 13
3.7 Selection criteria for channel members 14
3.8 Profit margin for channel members 15
3.9 Return policies for channel members 15
3.10 Territory management 15
3.11 Sales promotion strategies 16
3.12 Sales-force management 17
4. References 18
5. Work division 18

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Executive Summary

We are glad to present this report for the course Sales & Distribution Management to Mr. Prantosh
Banerjee. Through this report we have tried to explore the sales and distribution system of two
companies – Maruti Suzuki India Limited and Parle Products Private Limited operating in the
automobile and fast moving consumer goods (FMCG) categories.

We have tried to understand their distribution system by talking to the various intermediaries. We
have taken one product from economy, value-for-money and premium category and also tried to
get a grasp of their margins and the various operational as well as promotional processes involved.

We have also tried to understand their sales processes and the ways in which the companies do
territory management, sales-force management and personal selling.

For Maruti Suzuki India Limited, we have obtained information from their Area Sales Manager
Mr. Kashif Ahmad as well as from their sales manager and relationship manager in Rohtak’s
Jagmohan Motors dealership.

For Parle Products Private Limited, we have obtained information from a few mom & pop/kirana
stores along with a distributor Mr. Rajiv and the Area Sales Manager.

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Automobile – Maruti India Private Limited

About Maruti India Private Limited

Maruti Suzuki India Limited (MSIL) is a publicly listed automobile manufacturer in India. It is a
subsidiary of the Japanese car and motorcycle manufacturer Suzuki Motor Corporation. It
primarily manufactures cars and has been the most favorite automobile brand among Indians since
its inception in 1982.Maruti Suzuki is a leader in the passenger vehicles segment and it had a
market share of 51% in 2018. The major competitors are Hyundai Motor India (16.2%), Mahindra
& Mahindra (7.3%), Tata Motors (7%), etc.
Maruti Suzuki has manufacturing plants at three locations in India, namely Gurgaon, Manesar and
Gujarat. The total units produced for March 2019 was 1,36,201 while the total sales for the year
2018-19 was about 1,862,449. There are a total of around 2,940 showrooms across 1,860 towns
and cities.
Maruti Suzuki sells cars through four dealership formats namely Maruti Suzuki Arena, Nexa, True
Value and Commercial. The Arena outlets use digital integration as a key differentiator and
focusses on providing a warm and friendly atmosphere for the customers. The Nexa outlets is a
format designed for selling premium cars while the Commercial outlets are involved in selling
commercial vehicles. The True Value outlets deal with pre-owned cars and offers buying, selling
and exchange of certified pre-owned cars.

The distribution system in Rohtak

Maruti Suzuki India Limited (MSIL) has only one dealership in Rohtak, Haryana which is
Jagmohan Motors. It has two branches in Rohtak. One is an ARENA showroom and the other
branch is Nexa showroom.
MSIL has a single direct channel distribution system in which the vehicles are delivered directly
to the dealership by MSIL’s 3rd party logistics partner. There are no other intermediaries/sub-
dealerships involved in the distribution channel.

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 Manufacturer
(MSIL)

Dealerships
1. Commercial
2. ARENA
3. Nexa
4. TrueValue

Customer

Fig. 1: Maruti’s distribution channel

Order placement process – From dealers to MSIL

The order placing process for new vehicles is carried out through a portal called Dealer Extranet
in which dealers place an order request for new vehicles with MSIL. The dealers have to order in
lot sizes of 5 or 7 vehicles. They have to make full payment in advance for the order. MSIL does
not have any credit policy for the dealerships. The order fulfillment is done depending on the
availability of the ordered vehicle in MSIL’s inventory:
1. If the ordered lot is available then it is dispatched immediately and the dealer can receive
the order as soon as the next day itself. Thus lead time in this case is very less (one day on
an average).
2. If the ordered lot is not available, then the order request is registered and the manufacturing
process is initiated. The delivery time hence depends on the production of the vehicles.
Hence, the lead time is not fixed in this case.

Logistics
Maruti uses third-party logistics service for the transport of automobiles from the manufacturing
plants to the dealers. It is not assigned to a single agency but the decision for the choice of the
agency lies with a union delegated by MSIL.

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Inventory
Jagmohan Motors has two inventories – Vehicles inventory and Credit inventory
The vehicle inventory is maintained at 250 cars. They do not have a minimum threshold for
inventory.
Credit inventory includes the cash credit limit (CC Limit) set by the bank for the dealer. This CC
limit is set by the banks after analyzing the dealer profile.

Vehicle selling process

All the MSIL dealerships use an end-to-end software called the Dealer Management System
(DMS). DMS is an important entity of the distribution system of Maruti which is used for recording
all the data for a customer from vehicle enquiry to vehicle servicing. All this data is accessible to
both Maruti and the dealer. Following is a step-by-step process flow of the sale process and its
interaction with DMS:
Step 1 Whenever there is an enquiry, it is entered in the DMS which generates a unique
enquiry number for it.
Step 2 This enquiry number is then used for all the further follow-up processes.
Step 3 The customer places the order for a vehicle and hence a booking order is recorded.
Step 4 The vehicle is handed over to the customer after all the proper documentation like
vehicle registration, number plate etc., billings and payments.
Step 5 This step involves the post purchase processes which include interaction with the
customer for their feedback of the vehicle as well as the purchase experience through
the customer care.
Step 6 This step involves all the future servicing for the vehicle. This information is also
recorded in the DMS.

.
Allotment of vehicles to different dealers
Dealers cannot place an order request for any number of vehicles with MSIL. MSIL decides the
number of vehicles to be sent to the different dealerships based on their criteria of the dealership’s
performance and sales patterns and the region’s sales pattern.

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Sales
Sales for MSIL is done directly through the dealers to the end customers. There are no other
intermediaries involved as shown in Figure 1. The customers have to pay the full amount in
advance if they are not availing credit facility. Of the full payment, a maximum amount of INR
1.99 Lacs can be done in cash as down payment and the rest has to be done through a bank
transaction.

Vehicle Category
MSIL offers vehicles in three segments which are as follows:
1. Economy Segment
Models: Alto, Wagon R, Alto 800, Alto K10, Celerio, Eeco, Ignis, Omni
2. Mid-range Segment
Models: Swift VDI, Swift Dzire, Baleno, Gypsy
3. Premium Segment
Models: Brezza, Ertiga, Ciaz, S-Cross
Margin of the dealer depends on the category of the vehicle sold as well as the price of that vehicle.
Typically the margins is between INR 20,000 – INR 25,000 for the economy models, between
INR 25,000 - INR 45,000 for the mid-range models and between INR 50,000 – INR 60,000 for
the premium models.
As of now Maruti Suzuki Alto K10 in the economy segment, Maruti Suzuki Swift Dzire in the
mid-range segment and Maruti Suzuki Brezza in the premium segment are the highest selling
models.

Value Added Services

The margin from the sale of vehicles is not as high as the margin from the various value added
services (VAS) provided by the dealers to the customers. The various VAS are as follows:
1. Maruti Genuine Accessories – These are the authentic spare parts from MSIL.
2. Anti-rust paint
3. Maruti Insurance
4. Vehicle Servicing – Highest margin

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Territory Management
Sales target for the dealers is decided by the company itself based on the market size, the customer
profiles, the seasonality and the historical sales data of the dealer. MSIL sets target for the dealers
which is 10% - 20% upwards of last year’s sales. In the state of Haryana there are 16 dealers out
of which there is only one in Rohtak having 2 outlets.

Promotional Strategies
Any kind of prizes, schemes or offers that the dealers offer to the end customers are decided by
MSIL itself on the first working day of every month. Dealers do not receive any incentives from
the company if they provide any kind of offer on their own. However in case of corporate deals
wherein a corporate client/customer buys in bulk then dealers along with MSIL may provide
custom offers. Dealers however collaborate with banks and other companies that provide credit
financing to the customers to ease the process for the customer who can avail this service at the
time of vehicle purchase hassle free.

Lead Generation
According to our conversation with the relationship manager of a Maruti dealership in Rohtak, the
leads are generated typically through the following two ways:
1. Through existing Maruti customers
2. Through Maruti’s True Value showrooms

Lead generation through existing Maruti customers

As per the comments of the sales executives at Maruti, an existing customer may generate up to
3-4 leads after the vehicle purchase. The dealership maintains customer relationship by staying in
touch with the customer especially on festive occasions like Holi, Diwali etc. during which they
enquire about any potential leads from the customer. Due to good relations with the existing
customer, these leads have a high probability through recommendations and good word of mouth.

Lead generation through Maruti’s True Value showrooms

True Value is India's most used online portal to buy, sell or exchange used cars. 70% of its
customers are youth between 22 years to 35 years. Many-a-times lead generation is done through

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the customers who enquire at True Value. When a customer enquire about selling his or her pre-
owned vehicle, it is assumed that he or she would probably buy a new one. Customer’s details are
recorded at True Value and it is used for lead generation by the sales team of Maruti’s dealers.
Sales team contacts such prospective leads directly for conversion.

Apart from the above two ways, many-a-times it is also done through service centers. A True
Value representative is present at every service center. When a customer comes for vehicle
servicing, the True Value representative proposes alternative options to the customer after
assessing his/her vehicle condition which is then treated as a potential lead.

Sales-force management

Maruti has a rigorous recruitment and selection process to hire sales executives who are motivated.
Knowledge and expertise are also highly valued along with diversity to explore new opportunities
for the company. They have a 5 step process for recruitment and selection of new sales employees.

Fig. 2: Recruitment & selection process at MSIL

MSIL has a comprehensive training and development for its sales-force which includes induction,
product programs, selling skills, customer care and Advisor for Life program to help the sales
person to become a customer’s ‘single window interface’. Moreover they have a different set of
programs for relationship managers/branch heads like Dealership Management, Sales
Manager/Team Leader Program and Branch Manager Program. Maruti has a remuneration system
which is 100 percent performance based for cutting costs and improving productivity of the sales-
force. The company has a 360 degree appraisal system for all the employees.

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Efforts for improving sale

Maruti has been taking various initiatives for improving its sales and change its positioning.
Technical Advancements
According to the details obtained by us, Maruti is at present testing its electric vehicle. Moreover
the company is also making constant efforts to stay ahead of its major competitors Hyundai & Tata
by introducing advanced technology in their vehicles. They were the pioneers in introducing
vehicles with BS 4 standards in 2012 and have launched vehicles with BS 6 standard in June 2019.

Transformation of Maruti Suzuki Showrooms

It is well known that customer experience is the most important factor to be considered for
customer retention and hence Maruti decided to leverage the importance of customer experience.
They transformed their showrooms to Maruti Suzuki Arena and Nexa wherein the whole
infrastructure and interior of the showroom have been upgraded to make it more classy and digital
for the tech-savvy and image conscious youth. Even the designation of the employees have been
renamed to provide a sense of belongingness to the customers. Sales executive is now termed as
Relationship Manager whereas an Accessory Manager is termed as a Car Stylist among others.
The whole transformation is done for the revival of consumer experience at Maruti Suzuki
showrooms to change its positioning from the car for the masses to a premium brand catering to
the changing society. The pros and cons of this transformation are as follows:
 Pro:
Purchasing a car is a complex buying behavior (Figure 3) as the product offerings from
different brands are different on many levels ranging from brand perception to the
functionality as well as models. Moreover it is a high involvement purchase since it is a
huge and long-time investment. The experience which a consumer gets at these new
showrooms is premium, so consumer tends to feel more confident in trusting the brand
making thus increasing the conversion probability. Moreover they tend to bargain less.
 Con:
The documentation process has become lengthy now because of digitalization. The
registration of the vehicle as well as its number plate has to be provided by the dealer
making the process more hectic for them.

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FMCG – Parle Products Private Limited

About Parle
Parle Products Private Limited is an Indian food products company owned by Chauhan family
since its establishment in 1929. It is headquartered in Vile parle, Mumbai. The company owns
various famous brands like Parle-G, 20-20, Hide&Seek, Milano, Monaco, Kismi, Melody, Mango
Bite, Frooti, Appy, etc. It has a total of 14 manufacturing plants and is one of the largest such
plants in India.
Parle has products in all the categories viz. Economy, value for money and premium category. For
economy products like Parle-G, it appeals to the masses and does not cater only to a specific group
of people, whereas, for premium products like Milano, it serves the Millennials with higher
income.
Distribution network of Parle

Fig. 3: Buying behavior of consumers

Products of Parle have low customer involvement and there is a difference between the products
of various brands. Hence, we can consider that consumers have impulsive and variety-seeking
purchase behavior. Having an intensive distribution system for maximum market coverage is the
best strategy for such products and Parle has made an intensive multi-channel distribution network
their major strength over the years of experience. Economy products of Parle like Parle-G are
available to the customers in remote villages with less than 1500 population. It sends its products

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from manufacturing plants to the Parle Depots from where the C&F agents supply the goods to the
wide distribution network. Distributors of Parle then supply the products to the retailers. Parle does
not hold any inventory in the plant. Production depends on the corporate target rather than demand
from the market or distributors. This shows that Parle has sophisticated demand estimation
techniques in place and hence can have more bargaining power over its distributors.

Fig. 4: Distribution channels of Parle Products Private Limited

Product segments based on distribution

Parle has distributed its products in four classes mainly A, B, C, and D, based upon the
distribution and perspective of consumers of the products.
Premium products: Products like Milano and Hide and Seek are premium products and are
categorized in segment A. These products are found generally in MTOs and very rarely in GTOs.
Economy products: Economy products like Parle-G and Parle-G Gold are present anywhere
and almost everywhere in the market. These products can be found in GTOs & MTOs (small mom

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and pop stores as well as in departmental and high-end retail stores). Hence they are present in all
four categories of distribution (A, B, C, and D).
Value for money products: Value for money products like Monaco are found in GTOs as well
as in mid-sized departmental stores. Hence they are categorized in A and B segment.
Parle also has an overseas business and hence has three levels of distribution. Level 1 and level 2
take care of domestic distribution whereas level 3 looks into the distribution of the overseas market.

Distribution Network in Rohtak

Parle has a manufacturing plant in Bahadurgarh, Haryana which is also one of the largest plants of
the company in India. The final goods from this plant are supplied to company-owned depots. The
company has a company owned depot in Rohtak which supplies goods to the distributors in the
city.

Distributors
There are a total of 3 distributors in Rohtak which supply Parle Products to retailers &
wholesalers in the city. The 3 distributors have been allocated area by the company to supply
the goods to the next member of the distribution channel. These distributors place an order on the
7th, 14th, 21st & 28th of every month. The average lead time is 1 day. The inbound logistics
expenses are borne by the company itself, the outbound logistics expenses are borne by the
distributors. The distributors maintain an inventory of 1 week on an average. Any product which
gets damaged/ expired is returned to the company by the distributor and a certain amount is
deducted for the same.
The company provides goods to these distributors on a 3-day credit basis against the security
amount of 5 lakhs deposited by the distributors to the company. In the case of a payment default,
the company charges penalty against the security amount deposited. Every distributor in the city
supplies products to 500 retailers & wholesalers on an average.

Retailers
The retailers place an order to the distributors on a weekly basis and average lead time of orders
is 1 day. The payment to the distributors is in the form of cash only. In terms of incentives, the

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retailers are offered 1 free quantity of the product on a purchase of 1 carton of the product.
However, the frequency of such incentives offered is also very low.

Selection Criteria of Channel Members

Parle takes into consideration a lot of factors while selecting the channel members. Some of the
factors are mentioned below:
 Details of storage space and refrigeration system
 Details of delivery vehicles
 Number of salesmen present in the field
 Details of other companies’ products that the distributor keeps along with annual sales and
details of product lines
 Geographic coverage and outlets per market area
 Advertising and sales initiative taken by them on behalf of the company
Although these factors are stated in policies of Parle, it is difficult for area sales manager and
distributors to actually work according to these policies. Parle has its customers spread across
the country, even in rural areas. Hence, it becomes really difficult to implement these policies in
such areas.
When these selection criteria are overlooked wherever necessary, there have to be some measures
to track the performance of the channel members and monitor their sales. For this, channel
members are given some monthly and yearly targets. These targets are decided upon strategies
decided by the upper-level management of Parle. A percentage is given to ASM and distributors
by which they have to increase the sales. Based on this, the channel members push those products
to the retailer. Usually, this is 15% yearly, based on last year's sales performance. But this can
be customized according to the sales performance, customer base, and geographical area of
the retailer and distributor. Based on this, Parle has come-up with a policy wherein retailers and
distributors are allowed to stock their inventory for 10 days. This inventory is tracked using the
internal software used by Parle. Every distributor maintains the in and out of all the inventory
that he is accountable for using this software. When the distributor updates the figures, the same
as reflected in the systems of Parle and in this way they can track the performance of their channel
members.

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Profit margin for channel members
The ballpark figures of retailer margin that Parle has is as follows-
 Parle G- 10%
 Monaco, Hide & Seek, Milano- 12%
The distributor & wholesaler GST margin in 5%. The calculation of the margins and landing cost
for any of the channel members is as follows-
For Example - MRP of Glucose biscuit- INR 10
Margin for glucose- 10%
Profit for the retailer = INR. [10- (10/1.10)] = INR 0.91

Return Policy for channel members

In case of expiry or where the company is not liable for the returns of products, Parle does not take
the responsibility. It takes liability for only 1% of the total products sold. If in any case there is
some incident where the goods received by the retailer are expired or have been destroyed before
they reach the channel members, Parle takes the complete liability of the goods. Examples of such
incidents are an accident of truck carrying the goods, etc.

Territory Management

Categorization of Retailers & Distributors

Retailers have been categorized depending on their influence and size. GTO (aka Kirana stores)
are serviced by the distributors appointed by Parle while MTO like Big Bazaar, Reliance Fresh
etc. are serviced from the company office through their depots directly. The bulk of premium
category products such as Milano and Hide & Seek are usually sold to MTOs as demand is for
these is low at GTO. There are over 1500 GTOs in Rohtak while MTOs are limited to 8-10 in
number.
Grouping of distributors is done as ‘A’ or ‘B’ based on the depth of SKUs carried by them or the
area of territory covered.

Conditions of Sale
Conditions of sale for distributors of Parle products were necessary to build business in early
stages. Since Parle became a household name and its distributor network expanded, it removed the

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condition that its distributors can carry only Parle’s SKUs. Usually the number of SKUs carried
by each of its distributor is over 200 in number; hence they themselves are not willing to carry
competitors’ products. However, details of other company’s products have to be shared by the
distributors to qualify as a member of Parle’s distribution network.

Capturing the sales data

Primary sales data is available to Parle and secondary sales data is captured by an inventory
management software whose data is tracked by Parle. As such, no tertiary data is captured unless
marketing department carries out market research to understand the territory better.

Challenge in territory management

One of the biggest challenges for the sales managers of Parle has been undercutting of sales by
distributors. This has been identified as a point of conflict among channel members and has been
a downturn for the company’s marketing efforts. Although the territories have been marked on
paper but they are not followed by distributors in practice.

Sales Promotion Strategies

Parle runs special schemes for the Modern Trade Outlets & Certain Retail stores that stock
up a great variety of the products of the company & frequently place orders. Depending on the
scale of the orders, these stores are given price discounts of 2-3%.

The company carries out market study on a regular basis to understand market share of the products
and the reason behind the figures. Unlike HUL and P&G, Parle doesn’t have any specific team
that works for its premium category products or high selling retailers. The company however
pushes its sales of premium products by setting up canopy at MTOs & hanging up eye-
catching posters. The company realises that the competition is rising day by day and therefore
any sort of price offers to attract the customers isn’t much impactful. However, these sales
promotion activities have been very impactful in pushing sales from one channel member to the
other. These sales promotion strategies devised by Parle are floated keeping in mind the strategies
followed by its competitors.

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The company also realizes the importance of promotional schemes despite its products being
already liked by consumers. Since, the number of SKUs for Parle are 216 (that varies with
company’s strategies) & the competition is high, the company engages on sales promotional
activities on a timely basis. The sales promotional activities undertaken by the company are a
mix of price off discounts & quantity gifts based on the kind of retailer & product category). In
order to make sure whether the benefits of sales promotional activities are actually being passed
on to the retailers, the Area Sales Managers take feedback from the retailers on a timely basis.

Sales Force Management

The Area Sales Managers of the company are accountable for their areas and have a say in devising
sales strategies decided for their area in the meeting with the senior management of the company.
The monthly & yearly targets set by the company is based on the forecasts & goal of the
company for the coming years. This forecast & objective is communicated to the ASMs who take
the responsibility of setting targets for the individual channel members to achieve the final
goal.

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References
1. https://www.financialexpress.com/auto/car-news/maruti-suzuki-cuts-vehicle-production-
by-around-21-in-march-2019/1538812/
2. https://www.marutisuzuki.com/corporate/media/press-releases/2019/maruti-suzuki-sales-
in-march-2019-and-2018-19
3. https://www.marutisuzuki.com/
4. https://www.autocarindia.com/car-news/maruti-suzuki-arena-dealership-network-
reaches-400-outlets-412741

Work division
The automobile part was taken up by Nasreen Rahat, Neha Sheenam and Neeta Kumari who
have contacted the different personnel together and have prepared the automobile part of the
report.
The FMCG part was taken up by Sujata Kothavade, Nidhi Agarwal and Tushar Chugh who have
contacted the different personnel together and prepared the FMCG part of the report.

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