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ITC ~ Touching your life. everyday. A study on the Channel Distribution. By: Radhika Gupta- 91041 Shivi Aggarwal – 91051 Madhusudan partani - 91029. What is ITC.

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Itc touching your life everyday

ITC~Touching your life. everyday

A study on the Channel Distribution

By:

Radhika Gupta- 91041

ShiviAggarwal – 91051

Madhusudan partani- 91029


What is itc
What is ITC

  • ITC is one of India's foremost private sector companies with a market capitalisation of nearly US $ 19 billion and a turnover of over US $ 5 billion

  • ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products

  • ITC's diversified status originates from its corporate strategy aimed at creating multiple drivers of growth anchored on its time-tested core competencies: unmatched distribution reach, superior brand-building capabilities, effective supply chain management and acknowledged service skills in hoteliering


The product mix
The Product-Mix

  • FMCG

    • Cigarettes

    • Foods

    • Lifestyle retailing

    • Personal Care

    • Stationery

    • Safety Matches

    • Agarbatti

  • Hotels

  • Agri-business

  • Paperboard and Packaging

  • Information Technology


O verview
Overview


The composition
The Composition

  • Manufacturing Unit

    • Separate for each product line

    • Contract Manufacturing

    • Backward Integration

    • E-Chaupal

  • Storage Hubs

    • Stores all the products


Cont…

  • Distributors

    • Exclusive based on population

    • Needs to stock all FMCG products( Except Stationery)

  • Wholesalers

  • Retailers

  • Paanwalas

    • Deepest penetration possible


Suitability
Suitability

  • Perishable

    • Short Span

    • Customers prefer fresh products

  • Lot Size

    • Smaller Lot sizes

  • Convenience

  • Waiting Time

  • Product Assortment


C hannel o bjectives
ChannelObjectives

  • Consumer Behavior

    • Quality Conscious

    • Convenience goods, Needs Intensive distribution

    • Demands variety

    • Very less waiting time

  • Company Objectives

    • Reach masses

    • Rural penetration

    • Diversification

    • Competitive advantage

  • Alternatives

    • Sell ready to eat products through sweet shops like bikanerwala

    • Showrooms for High-End products

    • E-Chaupal


F eatures
Features

  • Selection

    • Distributor is selected based on

      • Infrastructures, Delivery Van, Computer, Warehouse, Sales Force

      • Population based ( 1 Distributor per 20-25 thousand)

  • Control

    • Uses Coercive power

    • To deal in Cigarettes, it is must to deal in Other goods

  • Terms and Conditions

    • Price, Selling Condition, Godown Condition etc…


F unctions
Functions

  • Manpower

  • Promotion

  • Credit

  • Infrastructure

  • Stocking


B enefits
Benefits

  • No Benefits 

  • Higher margins

  • No Credit- Only Cash Payments

  • No Freebies, Paid Vacations Gifts etc..

  • Very rarely Cash gifts (linked with performance)


O thers
Others

  • Order

    • Distributors- Weekly

    • Retailers- Twice a week

    • Paanwalas- daily

    • Online order is placed by distributor

    • The periodical order from wholeseller , retailer, paanwalas is collected by staff of distributor.

  • Payment

    • Mostly on Cash-Basis; sometimes post dated cheques

    • Very rarely Credit is allowed on cigarettes


Cont…

  • Transportation

    • Uses delivery van, Rickshaw, Cycles, Autos

  • Conflicts

    • No Conflicts

    • Some tiffs raise between distributor and retailer due to under supply from distributor

  • Problems


A nalysis
Analysis

  • ITC has the most popular brands of cigarettes in India.

    • The sale takes place from the largest of retailers like Big Bazaar, Spencers to the smallest of paanwalas at every nook and corner in India.

    • Thus ITC has deeply penetrated the Indian cigarette market.

  • With an already established distribution channel for cigarettes, ITC is also selling safety matches, which is complementary to both the cigarettes and agarbattis.

  • The retailers and paanwalas are also ready to stock ITC’s candies, potato chips and finger snacks because of the higher margin as compared to Frito lays, which is its biggest rival in potato chips and finger snacks segment.


A nalysis1
Analysis

  • By entering into the branded Indian biscuit industry there was a business synergy.

    • ITC was already value-adding to wheat with its branded atta presence. By entering the biscuits segment, it improved its bottom-line further.

    • The company used its existing network of convenience stores -- the company’s name for the hole-in-the-wall pan-beedi shops-- for Sunfeast.

    • The company says the brand is now available in nearly 1.8 million outlets.

    • Sunfeast captured around 7% in mere 3 years since its launch in 2003



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