2010

Study of Sales and Distribution of

L’Oreal in Bhubaneswar and its
comparison with CavinKare

Submitted By
Group 4
U109067 Hemant Sharm
U109068 Juhi Agrawal
U109075 Niyant Vijay Pallan
U109077 Priyabrata Das
U109080 Ramanjit Singh
U109081 Rani Jain
U109085 Sameer Ajit Sawant
U109089 Saurabh Pandey
U109176 Aarshdeep
Table of Contents
Table of Contents....................................................................................................................................................................... 2
Brands under L’Oreal India: ..................................................................................................................................................... 4
Retail Store Classification .........................................................................................................................................................6
Sales Force Compensation & Incentives .................................................................................................................................. 7
Modern Trade: Compensation structure for Surya Trading ............................................................................................. 7
General Trade: Compensation structure for Mahabinayak Trading ................................................................................ 7
Sales Force Training .................................................................................................................................................................. 7
Sales Beat Plan .......................................................................................................................................................................8
Modern Trade: Beat Plan of Surya Trading ....................................................................................................................8
General Trade: Beat Plan of Mahabinayak Trading .......................................................................................................9
Corporate Vision of CavinKare: .............................................................................................................................................. 10
Major Brands:....................................................................................................................................................................... 10
Product Categories of CavinKare: ...................................................................................................................................... 10
Manufacturing facilities: ..................................................................................................................................................... 10
Employee Information: ........................................................................................................................................................ 11
CavinKare .................................................................................................................................................................................. 11
Sales Force-Organisation ..................................................................................................................................................... 11
An Alternate Channel- Modern Trade Outlets .................................................................................................................12
Distribution...........................................................................................................................................................................12
Target Setting ....................................................................................................................................................................... 13
Measurement of Sales force productivity .............................................................................................................................. 14
Compensation Structure..................................................................................................................................................... 14
Incentive structure .............................................................................................................................................................. 14
Sales Force Management .........................................................................................................................................................15
Use of Technology in managing Sales and distribution ...................................................................................................15
Training ................................................................................................................................................................................ 16
Sales and Marketing: ........................................................................................................................................................... 16
Distribution Issues....................................................................................................................................................................17
Comparison- L’oreal and Cavin Kare ......................................................................................................................................17
Annexure A1 ..........................................................................................................................................................................21
Annexure B1: Beat Plan ....................................................................................................................................................... 22
Annexure B2 ......................................................................................................................................................................... 23
Introduction to L’Oreal
L’Oreal was founded in the year 1909 by Eugene Schueller, a French chemist who developed an
innovative hair color formula. Today, the L’Oreal Group is the world's largest cosmetics and
beauty company and is headquartered in the Paris suburb of Clichy, France. It got its start from
the hair color business but soon it developed activities in the field of cosmetics, concentrating
on skin care, sun protection, make up, perfumes and hair care. L'Oreal is active in the
dermatological and pharmaceutical fields. Its portfolio of brands includes the cosmetics range of
L'Oreal Paris and Maybelline NY, shampoo range Garnier, luxury products such as Lancóme and
active cosmetics such as Vichy. Its closest global competitor in the premium make-up segment is
Revlon.

L’Oreal started its operations in India thirteen years ago in 1991 in Mumbai. The share of the
Indian market to L'Oreal's turnover of 15.8 billion is small, but is growing. It operates in India
through its wholly owned subsidiary, L’Oreal India and has four divisions — consumer products,
professional products, active cosmetics and luxury products. The biggest contributor to its
revenue in India is the consumer products division led by its strongest brand in terms of sales -
Garnier. L’Oreal India has recently setup its own manufacturing plant in Pune. It imports most
of its products from its facilities abroad and manufactures the rest in Pune. The Indian
subsidiary headed by Chief Operating Officer Dinesh Dayal, who has been with the company for
20 years, is one of the key officials responsible for the formation and operations of L'Oreal India.
The operations in India are conducted through a judicial mix of global and local methods of
advertising to appeal to the Indian consumers.

When L'Oreal's Professional Products Division entered India in 1997, there wasn't a sniff of
structure in the hairdressing industry. Organized education was absent, training considered
redundant and hairdressers content with dubious domestic brands and prohibitively expensive
foreign ones. L'Oreal had the vision to realize all that would change and invested heavily in
hairdressing education and training. Today, the hair care industry is pegged at Rs 200 crore (Rs 2
billion), growing in double digits, and L'Oreal Professional Products -- Professionnel and
Kerastase -- are market leaders.
Brands under L’Oreal India:

Consumer Professional Luxury Active

Products Products Products Cosmetics
• L'oreal Paris • L'oreal • Lancome • Vichy
• Maybelline Professional • Ralph Lauren • La roche posay
• Garnier • Kerastase • Biotherm
• Matrix • Giorgo Armani
• Diesel

The following categories of brands currently exist under L’oreal.

L’Oreal India has discovered over the years, the behaviour of the Indian consumers and has
realized that the Indian consumer is not as price conscious as is portrayed. The brand is more
expensive than the average FMCG, but offers a true value for money. The company’s growth in
India can be attributed to its innovation of new products, supply chain management, systems
and structure. Being the world’s second largest cosmetics major, L’Oreal is planning to foray into
the Rs 1,000-crore Indian herbal and ayurvedic cosmetics industry. After identifying its targets,
L’Oreal India is in advanced talks with Biotique and VLCC to acquire herbal/ayurvedic cosmetics
brands. The group is taking the acquisition route to enter this niche sector. L’Oreal has thus
identified India as one of its top five growing businesses globally. L'Oréal's research facilities in
France, the USA, and Japan bring together more than 3,000 scientists and research staff. Their
discoveries are published in leading scientific journals. L’Oréal’s innovations are patented,
creating some 586 patents in 2004 alone. L’Oreal’s methodologies for evaluating the safety and
efficacy of ingredients and finished products, product evaluation and claim substantiation are
recognized by the international scientific community.
L'Oréal Distribution Network
L'Oréal, like many other FMCG companies in India, follows a distribution network that comprises of a
number of layers. The players in L’Oreal’s distribution in India are the Clearing and Forwarding Agents
(CFA), distributor, sub-distributors, super-stockist and finally the Modern Trade retailers (referred to as
MTs) & the General Trade Retailers (referred to as GTs).

As a part of this project, we have studied the distribution channel present in and around the city of
Bhubaneswar.

The Eastern part of India is served by Clearing and Forwarding Agents (CFA) situated at two different
locations that are:

Clearing and Forwarding Agent, Kolkata

Clearing and Forwarding Agent, Nagpur

Bhubaneswar territory was initially catered to by the CFA, Kolkata. However, due to limited capacity,
CFA Kolkata discontinued to serve Bhubaneswar. Hence, it is now served by the CFA situated at Nagpur.

The distribution network for the Bhubaneswar territory is shown below:

Surya Trading
Modern Trade Outlets like
(Distributor for Biz Bazaar and Pantaloons
Modern Trade)

Clearing and
Forwarding Mahabinayak
Agent Trading Traditional Retail
(Nagpur) (Distributor for Stores
General Trade)

Smaller retail outlets

Super Stockist Sub-Distributors on the out-skirts of
Bhubaneswar

Figure: L'Oréal Distribution Network in Bhubaneswar

CFA supplies goods to the following:

Surya Trading Company

Surya Trading Company is responsible for supplying L'Oréal products to all the modern retail
outlets in Bhubaneswar like Big Bazaar, Pantaloons etc. The margin given to these big stores
varies from 7 to 8%.
Mahabinayak Trading Company
Mahabinayak Trading Company is a distributor to the traditional retail outlets in Bhubaneswar.
The margin offered to the general trade (or traditional stores) is slightly lower than the margins
offered to the modern trade. However, based on the performance of the retail store, distributors
may offer a cash discount of up to 1.5%. These cash discounts are entirely up to the discretion of
the distributor and are not driven by L'Oréal.
Super Stockist
Apart from the distributors, there is also a super stockist operational in the territory. The super-
stockist is in-turn responsible for supplying L'Oréal products to the smaller retail stores located at
the suburbs of the city.

Retail Store Classification

The retails stores in Bhubaneswar are classified under four categories based on their sales value. They are
as follows:

Platinum Stores
Stores classified as ‘Platinum Stores’ are amongst the highest selling stores in the territory as far as
L'Oréal products are concerned. Any store that achieves the annual sales target of Rs. 1.5 Lacs is
considered a Platinum Store.
Gold Stores
The stores that achieve sales of Rs. 1 to 1.5 Lakhs/year on L'Oréal products are categorized as the
‘Gold Stores’.
Silver Stores
The stores generating annual sales of Rs. 0.5 to 1 Lakh on L'Oréal products are put under the
category called ‘Silver Stores’.
Bronze Stores
The remaining retail stores i.e. those generating revenues below 0.5 Lakh per year are the ‘Bronze
Stores’.

Each of the above mentioned categories receives different treatment from the distributors in terms of the
following factors:

Margins
The margins given to the four categories mentioned above ranges from 5 to 10%.
Sales-persons’ Visit Frequency
 The visit frequency increases as we move from a ‘bronze store’ to a ‘platinum store’. The lower
selling stores are serviced once in a month whereas the ones on the top are serviced once in a
week.
Credit Allowed
The credit-worthiness of a Platinum Store is many times higher than the credit-worthiness of a
‘bronze store’

Sales Force Compensation & Incentives

The compensation structures of both “Mahabinayak Trading” and “Surya Trading” were studied and
found to be similar in terms of the compensation. However, “Surya Trading” had in place a documented
incentives plan for the salesmen who performed well and achieved their modern trade targets.
“Mahabinayak Trading” was an old organization and had all its salesmen working there for over 10 years.
There were no incentives for performance here.

Modern Trade: Compensation structure for Surya Trading

Surya Trading, the distributor who catered to the organized retail segment employed 2
salesmen. The targets for these salesmen were decided on a monthly basis. The salary consisted
of two components, the fixed pay and the variable pay. Both the salesmen received a fixed salary
of Rs.6000 per month.

The overall sales targets are decided based on the number of bills raised per stocking of SKU’s in
the different outlets and incentives are accordingly determined. Based on the percentage of
targets achieved the sales men received an incentive as shown below:

95% Sales targets achieved Incentive of Rs.500

97% Sales targets achieved Incentive of Rs.750
100% Sales targets achieved Incentive of Rs.1000

General Trade: Compensation structure for Mahabinayak Trading

Mahabinayak Trading, the distributor who catered to the unorganized retail segment employed
8 salesmen. The salary for these salesmen was fixed and they were attached to this distributor for
over 10 years. The current salary of the salesmen was Rs.7000 per month.

Sales Force Training

Success in sales for any organization is dependent on tremendous knowledge of the products, the market
that is served and precise application of professional selling skills. However, the focus on training was
seen lacking. There was no formal process in place. Any new salesperson was only given the knowledge
about the products he was supposed to be dealing with. On joining, in a day or two, the salesmen was
brought up to speed regarding the type of product, its utility, price, available variants, SKU. After this
information was shared, the new recruit would accompany an experienced salesperson into the field and
was expected to learn the process on the job. There was no emphasis given on measuring the
effectiveness of this training process.

Sales Beat Plan

The field visits were planned in case of both, the Modern Trade and the General Trade distributors and
they varied in terms of the frequency of visits, the number of outlets visited, the time devoted per outlet
and the activities carried out by the salesmen during the visit.

Modern Trade: Beat Plan of Surya Trading

Following are the salient features of the field visit plan for each salesman at Surya Trading:

No. of Salesmen: 2
No. of outlets covered per visit : 15-20 outlets
Frequency of visit: The sales men of this enterprise are expected to visit the field 5 days of
the week. The visits cover all the modern retail stores. Some “Platinum Retailers” are
visited even twice a week.
Time allocated for each visit: Each field visit is planned to be completed in 300 minutes.
This time is further divided among the different store categories as follows:
Platinum Store Not less than 45 mins
Gold Store 25 – 30 mins
Silver Store 15 – 20 mins
Bronze Store Not more than 10 mins

Activities Performed: While on a field visit, the salesman are expected to perform
following activities:
o Order Booking
o Collection (15 day credit period is provided in most cases)
o Gather Information regarding sales and available stock

Apart from these visits, in order to check the distributor’s performance, company officials visit the
Platinum and Gold Stores on a monthly basis to check the following:

Availability: The SKUs of L’Oréal available at that moment and the supply frequency
Visibility: The shelf space allocated to L’Oréal products vis-a-vis competitors
Stock Weight: The ratio of availability of L’Oréal’s products to that of its competitors
Rate Control: The amount of discount offered by the distributor. This discount is part of
the agreement between the distributor and the store. However, the company would like to
keep tabs on the amount of discount that is given.
 General Trade: Beat Plan of Mahabinayak Trading
Following are the salient features of the field visit plan for each salesman at Mahabinayak
Trading:

No. of Salesmen: 8
No. of outlets covered per visit : 30-40 outlets
Frequency of visit: The retailers (small and medium) are visited 6 days a week. However,
some fringe retailers are visited only once in a fortnight.
Time allocated for each visit: There is no fixed time for completion of the sales beat. More
importance in given on being able to complete all the planned outlets.
Activities Performed: While on a field visit, the salesman are expected to perform
following activities:
o Order Booking
o Collection
o Check arrangement of goods in the shop and negotiate with shop keeper for better
visibility

ANNEXURE A1: Meeting with L’Oreal BDE at Surya Traders Office

ANNEXURE A1: Sales Dashboard at L’Oreal Office, Month on Month Sales Figures and small jot downs
Introduction to CavinKare
CavinKare started in 1983 with a single product under the brand name of “Chik”.Gradually it entered into
various segments like Personal care, Foods, Dairy etc.CavinKare Group has crossed a turnover of 7000
million INR in 2008-2009 & it rose to 8819 million INR in 2009-2010.

Corporate Vision of CavinKare:

"We shall achieve growth by continuously offering unique products and services that would give
customers utmost satisfaction and thereby be a role model"

Major Brands:
Major Brands under CavinKare are: Chik, Meera, Indica, Ruchi, Chinni etc.

Product Categories of CavinKare:

Personal Foods Beverages Dairy

Care • Pickles Product
• Hair Care • Vermicelli • Standardised
• Fruit Juice
• Ethinic Care • Food Mix Milk
• Flavoured
• Skin Care • Coconut Oil • Toned Milk
Milk
• Home Care • Full Cream
Milk

Manufacturing facilities:
CavinKare manufactures its entire portfolio of products through in-house Plant at Haridwar
(Uttaranchal) and as well through Contract Manufacturing by outsourcing it to Third Party
Manufacturing Units. The Third party units are located across India in places like Pondicherry, Noida,
Assam and Faridabad. These units produce and pack various products under the different CavinKare
brands. CavinKare makes sure that quality and consistency is maintained in all of these units as per the
R&D specifications and manufacturing standards.
Employee Information:
The Company has employee strength of 1520, an all India network of 1300 Stockists catering to about 25
lakh outlets nationally. CavinKare astute professionalism, innovative products and consistent quality are
results of its significant corporate practice.

Introduction to S&D CavinKare

For any given market, the go-to market organisation and methodology varies for various companies. This
is because the sales and distribution structure and processes depend on the parameters such as
organisation size, reach, market perception, etc. These variables mainly determine an organization’s Sales
and Distribution Management (SDM). We consider the case of two companies’ SDM, Lo’real and
CavinKare.

CavinKare
CavinKare has emerged in recent years as one of India’s fastest growing FMCG companies. To obtain
insight into their SDM strategies, we interviewed two sales officers of the company Mr. Matri Prasad
Parija, ASM, Orissa and Mr. Govind Kumar Aggarwal, Territory Sales Officer. To understand the Sales
Force, we need to understand their distribution structure first.

Sales Force-Organisation
The sales force organisation is as shown in the diagram below:

VP-Sales at HQs

RSM

AM

TSO

Sales Officers

The Vice President (VP) at headquarters guides and leads the national sales force for the company. He
sets broad growth plans for the company as well as individual targets for the Regional Sales Managers
(RSM). The entire region is divided into several territories on the basis of volume and competition.
According to those targets, the RSM coordinates all sales activities within his region. The Regional/Zonal
Sales Manager controls all the Area Sales Managers in his/her region. Each area sales manager has one or
many Territory Sales Officers (TSO) to co-ordinate the sales within a territory.
As an example we provide the role of Mr. Govind Kumar Aggarwal, TSO. He leads a group of Sales
Officers and is responsible for sales in Bhubaneswar, Cuttack and Jagatsinghpur. In this matter, for
Cuttack itself, he works with sub-stockists covering 24 towns.

A sales officer, working under the TSO forms the frontline sales force of the company. He covers all
retailers under his assigned area. All retailers, based on billing values are classified as Class A (bill value
more than Rs. 1000), Class B (bill value between Rs. 250 to 1000) and Class C (bill value less than Rs. 250).
The daily beat covered by a SO is called the Route Coverage Plan. A sample Daily Route Coverage Plan as
well as the Journey Cycle under a TSO is attached in Annexure. The SO is responsible for order
generation at the retailer end. The SO and the TSO in turn ensure that the orders are met by monitoring
stock levels at the stockists. Based on existing stock levels after daily despatches, orders are automatically
generated for upstream levels.

All Area Managers also have a discretionary Sales Promotion budget sanctioned by the RSM to take care
of any competitor sales activity. While these are below the line, all above the line activity are co-
ordinated with the marketing team in headquarters.

An Alternate Channel- Modern Trade Outlets

CavinKare also has an alternate Sales Channels for MTOs. As MTOs purchase in bulk, each MTO is
handled by a Key Account Manager who takes care of sales to MTOs. The company offers flat margins to
MTOs and they ensure availability and visibility at all MTOs. The Retail Performance Standards (RPS)
have been established which are continuously benchmarked against the competition and are revised
every quarter based on trade inputs.

Orissa circle as of now has no key account because the modern retail is still in nascent stage and the
major sales happen through traditional retail. Retailers like Big Bazaar and Reliance Fresh are recently
started and they are serviced by the normal distributor’s only. Due to the lack of pull of CavinKare
products, the employees in Modern Retail chains are brought into the loop in order to provide push for
the products. The salesperson in the Big Bazaar are brought into the loop in the form of trade promotion
by giving them gifts depending on certain sales target which are set. Reliance fresh is the only outlet
present in Orissa which is served at the national level and where the sales force of Orissa do not have any
role to play.

Distribution
Distribution refers to the modes through which products of a company reach its final customers from
their factory.

Products from CavinKare’s factory (either own or Third party manufacturer) are moved to its national
depot. From there, the goods are transferred to the many regional depots also called the mother depot.
Generally, within a state, goods reach distributors via C&F agent of that state. The above transfer of goods
is under Company ownership. Beyond the C& F agent, the company has a three tiered distribution set-up
as shown below, the figure in brackets are their margins respectively.
 Redistribution Stockist or Super
Stockist- Primary Tier (6% in urban
areas , 3% for Rural Stockists

Wholesaler or Sub-stockist -
Secondary Tier (5%)

Retailer- Tertiary Tier. (10%)

This structure varies depending on whether the market is a rural or an urban market and the
performance of CavinKare in that region. For example, CavinKare directly supplies retailers, bypassing
the distributors, in Tamil Nadu and some smaller cities. In an urban market like Bhubaneswar, for
example, where the sales are not impressive, CavinKare supplies goods to the Stockist who then sells it to
the retailer. There is an additional tier of the wholesaler in rural areas. Some observations are relevant
here. The company has a target of 200 outlets per lakh of population and a stockist is serviced by the
company for all places with a one lakh and more population. This entire distribution structure is serviced
by the company’s sales force.

Target Setting
Sales target is done on a yearly budget. In this process the sales department comes up with their own
sales figure depending on the market scenario. Also CavinKare has a system in which everyone from the
RM, ASM, TSO and SO follow a Journey Cycle (JC) which is a 4 weeks calendar and not monthly and they
are given targets accordingly. In the negotiation table with the management they fix the target in
alignment of their objective to company’s growth expectations.

FINAL
TARGET

Target by sales
department Target By
management
Cavinkare is currently planning to expand its business to Rs.5000 crores by 2012.

Measurement of Sales force productivity

The basic marketing strategy of CavinKare is to push the products because there is hardly any pull. Thus
their main focus is to increase penetration in the market by reaching the interior areas by large number
of distributors. Therefore the productivity of the sales force is mainly measured on the basis of two
parameters. They are

1. Target Achievement in terms of numbers

2. Retail performance standard (RPS)

The retail performance standard is a comparative measure where the company evaluates its position by
benchmarking it against the market leader .This comparison is done product wise depending on market
leader in each product category.

For example if Sunsilk is the market leader and is available in 35 stores in a region, and Chic shampoo is
available in 20 stores, then the RPS is (20/35).RSP of the products is fixed depending on the region and
market potential.

Compensation Structure
In the organizational structure, all the grades higher than the TSO follow the fixed plus Variable
compensation method.

The variable component can be as high as 20% of the final CTC, which is further dependent on many
parameters. One among them is KRAs.

The SRs have a fixed salary (Inclusive of Basic, HRA etc.) plus benefits of Medical claims.

Each member on Payroll (Including SRs) has a reimbursement for the Telephone bills, Internet bills as
per the level he belongs to.

SR’s get a DA and TA for their daily field work other than the salary, which is dependent on the territory
they are looking after and the costs incurred in servicing them. There is a limit to the TA and DA
applicable on the basis of the position of SR and area in which he is working.

Incentive structure
The incentive plan is designed in such a manner that it is the primary motivator for the sales force. The
incentive is dependent on many parameters such as

 The overall sales target

 Outlet coverage(the RPS ratio)

 The sale of the focus brands

  Audit team feedback report

SRs: For the SRs the incentive depends on important parameters such as Productive calls, achievement of
targets, achievement of targets for Focus brands which are decided every 3 JC (journey Cycle). Each target
has its own incentive attached, and depending on the level of achievement, the incentive of SRs adds on.
Also, extra Incentive plans exists for every JC in case of specific brands. It can actually be up to 60%-100%
depending on the JC schemes.

TSO onwards: For TSO level and above, the incentives are designed on various parameters such as
targets, plus achievement of priorities, and KRAs. Each JC, the concerned person (TSO, AM n so on) have
to create their own priorities for the JC .These are personal targets in various areas such as
infrastructure/design/Financials etc. In addition, the priorities may also include the priorities set by the
superiors and also, the summation of the priorities of the sub-ordinates. As such, this reflects the team
efforts and collective responsibility. This may be up to 50-60% of CTC. Apart from it, occasional
competitions are also organized on an inflated growth target, for which the rewards are high .In the last
JC itself a TSO was, awarded a trip to Thailand as appreciation of his achievement.

Sales Force Management

CavinKare is a sales driven company hence the Sales force management is of the utmost importance. The
Sales force starting from the Sales officer is under full time employee payroll of the company unlike other
business houses where they are generally hired in a contractual basis. Because of this the employees are
eligible for the Provident fund, medical insurance and other facility.

The employees are provided with positive reinforcement such as public praising by the senior, on the
spot reward, date with Asin, the brand ambassador of CavinKare etc.

In a few regions, the distributor partners with CavinKare to hire and train the sales force. Part of the sales
force salary is paid by the distributor and remaining is paid by CavinKare. CavinKare gives hands the
distributor a Credit Note which is used to pay the salary for the sales force. In return the distributor gets a
share of the revenues.

Use of Technology in managing Sales and distribution

CavinKare uses software to monitor and strategize the sales and distribution of the company. They use
software called as RSConnect. This software is available with the RS, which via a broadband is directly
connected to the company server. The RS punches in the daily sales bills and some other data, which
keeps the server updated for the company. It's a 2 way process where in the company and RS share data,
from which in depth trend analysis can be done at the minutes levels and also, reduces the chances of
schemes not being passed on to the market. The sample of the auto generated report is given in annexure
3 and 4.
This software can be used by any member of the company but the domain is defined as per the position.
For example the TSO will be eligible to see the data of his region only where as the ASM can see the data
from entire state.

Training
Training is conducted in a regular basis in case of CavinKare. The company basically takes a top-down
approach in case of design of training programme for various levels. Training module is designed based
upon the organization’s objective for a particular financial year. For lower levels i.e. below the TSO level
the company focuses on the job training. It is the responsibility of the ASM along with the TSO to ensure
that the SOs and SRs are able to perform their responsibilities skilled manner and to ensure their
productivity.

Sales and Marketing:

In case of Cavinkare sales is the main driving force of the organization. Marketing works as a support
function only. At the current situation especially in Orissa, the company is relying more on push strategy
of sales rather than the pull of marketing.

Annexure B1 – Route Coverage Plan of CavinKare

Annexure B2 – Sales Order Report of CavinKare

Distribution Issues
There are many issues faced by FMCG companies in their distribution due to the very nature of
distribution channels in a country like India, which has a highly fragmented market and the channel
members often need to ensure delivery to places which lack in even basic infrastructural facilities. Highly
competitive nature of the FMGD sector along with non-judicious and myopic use of trade promotion
schemes often leads t issues like undercutting and territory poaching by distributors and wholesalers.

In case of L’Oreal / Garnier, no such distribution issues were reported. There are 2 distributors in
Bhubaneswar for L’Oreal / Garnier catering to Modern Trade (MT) and General Trade (GT) respectively.
Their boundaries are clearly demarcated and they cater to their assigned market segments. No issues of
poaching were reported. Frequent visits and inspections by company personnel and rational discounts to
the wholesalers keep undesirable activities like undercutting in check.

A reasonably good level of infrastructure facilities i.e. adequate road network and motorized distribution
vehicles has lead to a satisfactory level of service quality. Any delays in supply was not reported.

In case of L’Oreal, the supply came from the C/F Agent in Nagpur. It used to be from C/F Agent from
Kolkata but since the Kolkata Depots had to handle a lot of orders due to the growing Bengal Market and
because a new depot was built at Nagpur, the company decided to cater to Orissa orders from the Nagpur
C/F Agent. They could have optimized in a better way but they now have to incur greater cost on the
logistics.

Comparison- L’oreal and CavinKare

Attrition
No issue of attrition at L’oreal. The GT Sales Reps exhibit likely attrition of 10% but the MT Sales Reps
exhibit no attrition. They have been with the company for the past 11 years.

In case of Cavin Kare, there is a higher attrition rates are there. This might be due to the compensation
structure or aggressive penetration policy of Cavin kare which makes set very high targets for the Sales
Reps.

Beat Plan
In L’oreal since it deals with a lot of brands in Bhubaneswar than Cavin Kare does, the General Trade
Beats ( trad retail) cover around 30 outlets. In case of Cavin Kare, it is around 40 outlets. In case of
modern retail, they have 300 mins per beat plan which covers around 10 modern format outlets. While
Cavin Kare does not have any MTO Alternate Distribution Channel in Orissa ( considers Orissa to be at a
nascent stage for a separate modern retail), it might be just more efficient in that it saves cost while being
heavy on a single channel.

We see that since most L’Oreal products are upmarket products, they have significant footfall and
exposure and sales from Modern Retail format outlets, where as Cavin Kare caters to the lower or middle
class market, most of which buy from small retails to the extent of Pan Shops.
So, it focuses more on those stores.

Compensation Plan
L’Oreal Distributors pay a fixed fee + incentives to the Sales Reps depending on the % sales target met.
Whereas, CavinKare has a fixed 80% + variable 20% compensation plan. So, it might well be the case that
sales representatives of Cavin Kare cover a lot more number of outlets than the L’Oreal’s while being paid
less as fixed salary.

Training
On the go training in both the cases while product knowledge and training is given to the new recruits or
to the existing ones for new products if any.

Territory Allocation and Sales Target Planning

In case of L’Oreal, the territory is allocated to the various channels according to the type of retail they
cover and the various reps are assigned shops according to a fixed pattern. Though there is no hard and
fast rule and the sales reps more or less work in sound cooperation and collaborate to meet their targets.
This could be the case that Sales Reps in L’Oreal have greater amount as fixed and less as variable. We got
no reports of any kind of conflict. In case of Cavin Kare, the final target is set after negotiation between
sales department and management after sales department comes up with their own targets keeping in
mind the market scenario. So the sales process becomes a two-way process.

Sales Force Organization

L’Oreal

VP Sales
(HQ)

RSM

ZSM

ASM

BusinessDev. Exec.

Sales Officer
Cavinkare

VP Sales
(HQ)

RSM

AM

TSO

Sales Officer

Distribution Channels

L’Oreal
 Significant presence in both MT (Modern Trade) and GT (General Trade) segments.

 Separate channel partners for each segment with clearly demarcated boundaries

 Supply comes from CFA from Nagpur, as Kolkata CFA has operational issues

Cavinkare
 Significant presence in GT. Modern trade is not yet fully tapped into.

 A single distributor caters to both MT and GT

Target Setting

L’Oreal

Sales Head Regional Zonal

Break-up Allocation Area Wise
at Allocation
HQ

Cavinkare

Target by FINAL Target By

sales
management
department TARGET

Measurements of productivity

L’Oreal

Target
ICOFR*
Achievment

On Time New
Delivery Outlets

Volume
Growth

* ICOFR = initial customer order fill rate

Cavinkare

Target Retail
Achievement in performance
terms of numbers standard (RPS)
Annexure A1

Figure 1: Meeting with Mr. Omkar Nayak, BDE L'Oreal at Surya

Traders

Figure 3: Dashboard at MT
Distributor
Figure 2: Growth figures: Monthly Sales
Data Prints on Dashboard
Annexure B1: Beat Plan

Figure 4: Route Coverage Plan -Cavin Kare

Figure 5: Route Coverage Plan

Annexure B2

Figure 6: Sales Order Report -Cavin Kare

Figure 7: The System Reports