A REPORT ON

EXPANDING THE DISTRIBUTION NETWORK IN RURAL AND UNTAPPED MARKET OF DELHI

IN

DABUR INDIA LIMITED

By KunalKapoor 11BSPHH010422
IBS, Hyderabad

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A PROJECT REPORT ON EXPANDING THE DISTRIBUTION NETWORK IN RURAL AND UNTAPPED MARKET OF DELHI By KunalKapoor (11BSPHH010422) A Report submitted in partial fulfillment of the requirements of MBA program of IBS, Hyderabad Submitted To: Mr. TanmayThaker Regional Sales Manager DABUR INDIA (Company Guide) & Mr. Raja shekhar Reddy IBS, HYDERABAD (Faculty Guide) In DABUR INDIA

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INTERNSHIP CERTIFICATE

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AUTHORIZATION The project report titled as expanding the distribution network in rural and untapped market of Delhi has been authorized by DABUR INDIA LTD as a part of the evaluation for Summer Internship Program. The project has been submitted as a partial fulfillment of the requirement of Masters of Business Administration (MBA) program of IBS, Hyderabad.

Submitted By: KunalKapoor (11BSPHH010422)

Submitted To: Mr. TanmayThaker Regional Sales Manager DABUR INDIA

Mr. Raja Shekhar Reddy Faculty Guide IBS, Hyderabad

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ACKNOWLEDGEMENT Summer Internship Program(SIP) aims to provide every student with an opportunity to apply theoretical concepts to the real business scenarios. The wealth of knowledge and experiences shared by all involved in completion of successful internship is valuable. I feel privileged to be associated with DABUR INDIA. I would like to put on record my deep sense of gratitude towards the organization for providing me with this unique learning experience and the requisite infrastructure. I express sincere gratitude to my company guide and mentor Mr. TANMAY THAKER for his encouragement, support and valuable guidance throughout the project duration. At this point of time, I would also like to thank all members including Regional heads, Territory heads, Sales officer DABUR INDIA, my faculty guide Mr. Raja Shekhar Reddy, friends and my family who provided me valuable insights and has been very supportive and friendly in providing an environment for learning.

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TABLE OF CONTENTS
Internship Certificate ............................................................................................................................................................. 3 AUTHORIZATION ................................................................................................................................................................. 4 ACKNOWLEDGEMENT ...................................................................................................................................................... 5 EXECUIVE SUMMARY ....................................................................................................................................................... 8 Methodology ......................................................................................................................................................................... 8 Findings .................................................................................................................................................................................. 9 Conclusions ........................................................................................................................................................................... 9 List of illustrations ................................................................................................................................................................ 10 Introduction ............................................................................................................................................................................... 12 Purpose and scope of the report: ............................................................................................................................... 12 Limitations........................................................................................................................................................................... 13 Industry Analysis of FMCG Sector ................................................................................................................................... 14 FMCG Industry Economy ............................................................................................................................................... 14 Structural Analysis Of FMCG Industry....................................................................................................................... 14 Distinguishing features of Indian FMCG Business: ................................................................................................ 15 Market potentiality of FMCG industry ........................................................................................................................ 17 Major segments of FMCG industry .............................................................................................................................. 18 The Top 10 companies in FMCG sector: .................................................................................................................. 19 Comparison of few consumer goods across different companies ....................................................................... 20 SWOT ANALYSIS ............................................................................................................................................................... 22 Growth drivers for FMCG sector .................................................................................................................................. 23 FMCG Growth Story ......................................................................................................................................................... 23 Following is the table summarizes pre and post liberalization scenario ........................................................... 24 Indian Consumer Spending Pattern .............................................................................................................................. 24 Sales Promotion Introductory Ideas .............................................................................................................................. 25 CHALLENGES .................................................................................................................................................................. 26 One big Opportunity and advantage ............................................................................................................................. 27 Company Analysis DABUR INDIA.............................................................................................................................. 28 Dabur Overview .................................................................................................................................................................. 28 Organizational Structure of DABUR INDIA ............................................................................................................ 28 Presence in FMCG categories ........................................................................................................................................ 29 Distribution Network......................................................................................................................................................... 30 Business Structure .............................................................................................................................................................. 31 Summer Internship Report Page 6

On Site Project ......................................................................................................................................................................... 36 Name of the project- Lakshya .................................................................................................................................... 36 Penetration level sufficient headroom.......................................................................................................................... 37 Project in detail.................................................................................................................................................................... 39 Mapping of villages and forming of clusters ............................................................................................................. 41 Collection of information ................................................................................................................................................. 47 Recording of information ................................................................................................................................................. 48 Findings ..................................................................................................................................................................................... 52 Findings from the questionnaire ........................................................................................................................... 52 Conclusion and recommendation ....................................................................................................................................... 57 Classification of villages stockiest vise ....................................................................................................................... 58 Learning fROM THE PROJECT .......................................................................................................................................... 61 References ................................................................................................................................................................................ 62 ANNEXURES............................................................................................................................................................................. 63 Questionnaire 1 ................................................................................................................................................................. 63 Questionnaire 2 ................................................................................................................................................................. 64

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EXECUIVE SUMMARY Title of the project- Expanding the distribution network in the rural and untapped market of Delhi Objective of the project- To tap potential new rural markets in the outskirts of Delhi and setting up sustainable distribution network Description of the report in brief:First part of the report talks about industry analysis of FMCG sector giving details about the structural analysis of FMCG sector along with few distinguishing features of the FMCG sector it also talks about market potential of FMCG sector and its future. Leaving this there is a list of top 10 FMCG players in India. There are bar graphs showing leading firms and their contribution in few specific consumer goods. Followed by SWOT analysis of FMCG sectors its growth drivers and its growth story. There is also pre and post liberalization scenario showing new companies entering after the liberalization into different consumer goods category. Second part of the report talk about company analysis of Dabur India limited starting with background about the company its organizational structure its market share in different consumer goods. It also talks about the importance of distribution along with the distribution network followed of Dabur Company. Detail about the business structure of the company, its three basic units there description and there revenue share. The third part of the report talks about the onsite project which basically was to tap new potential rural market in the outskirts of Delhi after studying about their growth, distance from the nearby distributor and their FMCG turnover. METHODOLOGY Visit to different markets were made to understand the working. How the distribution of goods take place from the company to carry forward agents (CFA) to the distributors/stockiest to the retailers and ultimate consumers. A list of villages was provided by the company, which was divided according to sub district they fall under, and detail about village population and number of household was given. The project started by analyzing the census data. After which mapping of villages took place with respect to the distributor they lie under and there distance from the distributor was recorded. The market/village was surveyed by administering a questionnaire from the retail outlets in that very village. Knowing about the distance from the stockiest, growth and FMCG turnover of the village it was easy to say if the village was good enough to be tapped or not.
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Finally how to cover the potential market either through existing stockiest, sub-stockiest or through ready stock was suggested. FINDINGS

It was noticed that retailers were quite satisfied with the present services provided by Dabur Company they were happy with once a week visit and had no complaints against the company. In few areas where there was twice a month visit retailers of that area wanted the visit to increase to once a week. Retailers had one issue which they wanted to be solved as soon as possible that is discount for window display ( window display is when a retailer reserves a particular section in his store for a particular company only ) Talking about retail outlets where there was no services provided by the company, retailers of that area wanted the salesmen to visit them at least twice a month but there were few retailers who were quite satisfied purchasing products from nearby wholesale shops as they have the following benefits from there: Purchase as and when required Cheaper than the company price Pay as and when comfortable CONCLUSIONS The project has helped to gain insights into the FMCG sector and different distribution channels adopted by different companies for example P&G has only one distributor in the whole of Delhi Bharat Distributor where as Dabur has 9 distributor for entire Delhi. After the completion of the project it was noted that there is great potential in the rural market and should be tapped by the companies which have still not entered the rural segment. Companies like Parle, Ghadi have a good level of penetration in the rural market, Britania has also started to expand its distribution in the rural market. With increasing income and awareness in the rural areas people are demanding branded products they are ready to spend more for better satisfaction. There is better sale of small sachets in rural area than packing of 50ml 100ml. Another finding was that drug store has better sale for products relating to health category than a retail outlet.

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LIST OF ILLUSTRATIONS

List of figures Figure 1-Pie Chart: Major segments of FMCG Industry Figure 2-Table: Top 10 FMCG companies in India Figure3: Comparison of few consumer goods across different industry Chart 1: Hair oil Chart 2: Shampoo Chart 3: Oral Care Chart 4: Skin Care

Figure 4-Table: SWOT Analysis of FMCG Industry Figure 5-Chart: Growth drivers of FMCG sector Figure 6-Chart: FMCG growth story Figure 7-Table: Pre and post liberalization scenario Figure 8-Pie Chart: Indian consumer spending pattern Figure 9- Types of sales promotion Figure 10-Chart: Challenges faced by FMCG sector Figure 11-Bar graph: Labor cost in different countries Figure 12-Chart: Porters five forces model Figure 13-Hierachial chart: Organizational structure of DABUR India Figure 14-Chart: Presence of DABUR in different FMCG categories Figure 15-Chart: Distribution network of DABUR Figure 16-Chart: Business structure of DABUR Figure 17-Bar graph: Consumer care division overview Figure 18-Bar graph: Consumer care sales Figure 19-Table: Key Brands under consumer care division Figure 20- Table: Consumer health division
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Figure 21- Process Chart: International business division Figure 22-Bar graph: Penetration level sufficient headroom Figure 23-maps: Mapping of villages Figure 24-Graphs: Finding from questionnaire Figure 25-Graphs: Finding from questionnaire Figure 26-Graphs: Finding from questionnaire Figure 27-Graphs: Finding from questionnaire Figure 28-Graphs: Finding from questionnaire Figure 29Graphs: Number of villages range vise Figure 30-Pie chart: Number of villages stockiest vise Figure 31-Table: Name of villages stockiest vise

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INTRODUCTION

FMCG stands for fast moving consumer goods these goods have quick turnover and relatively low cost these gets replaced within an year few example of FMCG are toiletries, soap, cosmetics, detergents etc. This sector is the fourth largest sector in the economy and gives employment to three million people in downstream activity. Any FMCG firms can have an edge over the other if it is able to expand its distribution network and by reducing cost of production. The FMCG industry is volume driven and is characterized by low profits but the products are branded and backed by heavy advertising and marketing. FMCG segment can be classified under two segments premium and popular premium catering to upper middle class who are not price sensitive but are brand conscious. People who are sensitive to price and are not brand conscious are the one who fall under semi urban and rural segments prices of goods for popular category are less than that of premium one. Definition of FMCG may vary, but in generalthe terms FMCG is used for branded products which are: Used directly by end consumer Non durable in nature Sold in packaged form Used at least once a month

PURPOSE AND SCOPE OF THE REPORT: The basic purpose of the report is to provide insight into the FMCG sector how this sector accounts for the development of the nation by providing jobs to lakhs of people. This sector has a continuous growth; high growth rate was accounted in fiscal year 2006 to 2010. This report also helps in analyzing the percentage share of different FMCG companies in different consumer goods by checking the data it is easier to conclude which FMCG firm is dominating in different consumer goods. By a thorough study of the report companies can work on the areas or fields they lag. It also throws light on consumer spending pattern which can help companies to focus on areas which have more demand. Discussing about the challenges faced by the FMCG sector companies can work on weak areas before they have to face one such situation.

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LIMITATIONS Long distances of rural areas was one basic limitation few of the villages which were to be surveyed were 40 to 45 km away from the maim city. And there were times when travelling 40 km was of no use as there was no retail outlet from where information could be collected. One basic limitation of FMCG sector is that no exact conclusion about the dominating firm could be made as one firm can have a good market coverage in urban areas whereas the other firm may have good market coverage in rural areas. For example Parle has a good tap in the rural market but Britania has a better tap in urban market than rural now which firm is dominating under the biscuit category cannot be concluded. One big limitation while collection information was lack of cooperation by the retailers they didnt provide information for few questions like sale per month? From where do you purchase? Talking about language used by people living in villages also acted as a limitation while collecting information. Travelling kilometers away from the main city when company car was not available was also a task as it was not easy to cover villages on foot or by public transport.

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INDUSTRY ANALYSIS OF FMCG SECTOR

FMCG industry, alternatively called as CPG (Consumer packaged goods) industry primarily deals with the production, distribution and marketing of consumer packaged goods. The Fast Moving Consumer Goods (FMCG) is those consumables which are normally consumed by the consumers at a regular interval. Right product at the right place, right price and at the right time is the number one business imperative of all consumer goods companies. Regardless of geography, as markets become more complex and consumers become more demanding, consumer goods need to adapt fast to put in place processes and systems that are able to handle all the emerging challenges and also exploit market opportunities as they come up.

FMCG INDUSTRY ECONOMY FMCG industry provides a wide range of consumables and accordingly the amount of money circulated against FMCG products is also very high. The competition among FMCG manufacturers is also growing and as a result of this, investment in FMCG industry is also increasing, specifically in India, where FMCG industry is regarded as the fourth largest sector. Of the entire FMCG sector food is 52% non food 45% and OTC is 3%. Of the 7.8 million retail outlets for FMCG, grocers are the dominant format. Modern trade accounts for 6% of the FMCG sales.

STRUCTURAL ANALYSIS OF FMCG INDUSTRY Typically, a consumer buys these goods at least once a month. The sector covers a wide gamut of products such as detergents, toilet soaps, toothpaste, shampoos, creams, powders, food products, confectioneries, beverages, and cigarettes. Typical characteristics of FMCG products are: 1. The products often cater to 3 very distinct but usually wanted for aspects - necessity, comfort, luxury. They meet the demands of the entire cross section of population. Price and income elasticity of demand varies across products and consumers. 2. Individual items are of small value (small SKU's) although all FMCG products put together account for a significant part of the consumer's budget.

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3. The consumer spends little time on the purchase decision. He seldom over looks at the technical specifications. Brand loyalties or recommendations of reliable retailer/ dealer drive purchase decisions. 4. Limited inventory of these products (many of which are perishable) are kept by consumer and prefers to purchase them frequently, as and when required. 5. Brand switching is often induced by heavy advertisement, recommendation of the retailer or word of mouth.

DISTINGUISHING FEATURES OF INDIAN FMCG BUSINESS: FMCG companies sell their products directly to consumers. Major features that distinguish this sector from the others include the following: A. Design and Manufacturing 1. Low Capital Intensity - Most product categories in FMCG require relatively minor investment in plant and machinery and other fixed assets. Also, the business has low working capital intensity as bulk of sales from manufacturing take place on a cash basis. 2. Technology - Basic technology for manufacturing is easily available. Also, technology for most products has been fairly stable. Modifications and improvements rarely change the basic process. 3. Third-party Manufacturing - Manufacturing of products by third party vendors is quite common. Benefits associated with third party manufacturing include (1) flexibility in production and inventory planning; (2) flexibility in controlling labor costs; and (3) logistics - sometimes its essential to get certain products manufactured near the market. B. Marketing and Distribution Marketing function is sacrosanct in case of FMCG companies. Major features of the marketing function include the following: 1. High Initial Launch Cost - New products require a large front-ended investment in product development, market research, test marketing and launch. Creating awareness and develop franchise for a new brand requires enormous initial expenditure on launch advertisements, free
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samples and product promotions. Launch costs are as high as 50-100% of revenue in the first year. For established brands, advertisement expenditure varies from 5 - 12% depending on the categories. 2. Limited Mass Media Options - The challenge associated with the launch and/or brandbuilding initiatives is that few no mass media options. TV reaches 67% of urban consumers and 35% of rural consumers. Alternatives like wall paintings, theatres, video vehicles, special packaging and consumer promotions become an expensive but required activity associated with a successful FMCG. 3. Huge Distribution Network - India is home to six million retail outlets, including 2 million in5,160 towns and four million in 627,000 villages. Super markets virtually do not exist in India. Thismakes logistics particularly for new players extremely difficult. It also makes new product launchesdifficult since retailers are reluctant to allocate resources and time to slow moving products. Criticalfactors for success are the ability to build, develop, and maintain a robust distribution network. C. Competition Significant Presence of Unorganized Sector - Factors that enable small, unorganized players with local presence to flourish include the following: 1. Basic technology for most products is fairly simple and easily available. 2. The small-scale sector in India enjoys exemption/ lower rates of excise duty, sales tax etc. This makes them more price competitive vis--vis the organized sector. 3. A highly scattered market and poor transport infrastructure limits the ability of MNCs and national players to reach out to remote rural areas and small towns. 4. Low brand awareness enables local players to market their spurious look-alike brands. Common FMCG products: Some common FMCG product categories include food and dairy products, glassware, paper products, pharmaceuticals, consumer electronics, packaged food products, plastic goods, printing and stationery, household products, photography, drinks etc. and some of the examples of FMCG products are coffee, tea, dry cells, greeting cards, gifts, detergents, tobacco and cigarettes, watches, soaps etc.

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MARKET POTENTIALITY OF FMCG INDUSTRY Some of the merits of FMCG industry, which made this industry as a potential one, are low operational cost, strong distribution networks, presence of renowned FMCG companies. Population growth is another factor which is responsible behind the success of this industry. Growth is also likely to come from consumer 'upgrading' in the matured product categories. With 200 million people expected to shift to processed and packaged food by 2012, India needs around US$ 28 billion of investment in the food-processing industry. It has a strong MNC presence and is characterized by a well-established distribution network, intense competition between the organized and unorganized segments and low operational cost. Availability of key raw materials, cheaper labour costs and presence across the entire value chain gives India a competitive advantage. The future of FMCG: It has been estimated that the FMCG industry will grow at least 12 per cent annually to become Rs 400,000 crore in size by 2020. Additionally, if some of the factors play out favorably, say, GDP grows a little faster, the government removes bottlenecks such as the goods and services tax (GST), infrastructure investments pick up, there is more efficient spending on government subsidy and so on, growth can be significantly higher. It could be as high as 17 per cent, leading to an overall industry size of Rs 620,000 crore by 2020. Based on research on industry evolutions in other markets and discussions with industry experts and practitioners, Booz & Company has identified some important trends that will change the face of the industry over the next ten years. Some key ones related to evolution of consumer segments are as follows:
Decentralization

Evolving categories

Accelerating Premiumisation Value at the bottom

Increasing Globalisation

Growing Modern Trade

Focus on Sustainability

Technology as a Game Changer

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MAJOR SEGMENTS OF FMCG INDUSTRY

FMCG Industry
Household care Personal Care Lighting Tobacco 2% 15% 20% 53% 10% Food and Beverages

Household care: With rapid urbanization, emergence of small pack size and sachets, the demand for the household care products is booming. HUL is the leader with ~38 per cent of market share. Other major players are Nirma, and Proctor & Gamble. Personal care: Personal care segment includes personal wash products, hair care products, oral care products, cosmetics etc. The Indian skin care and cosmetics market is valued at $274 million and is dominated by HUL, Colgate Palmolive, Gillette India and Godrej. The skin care market is at a primary stage in India. With the change in life styles, increase in disposable incomes, greater product choice and availability, people are becoming more alert about personal grooming. The oral care market can be segmented into toothpaste - 60 per cent; toothpowder - 23 per cent; toothbrushes - 17 per cent. This segment is dominated by Colgate-Palmolive with market share of ~49 per cent, while HUL occupies second position with market share of ~30 per cent. In toothpowders market, Colgate and Dabur are the major players.

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Food and Beverages: This segment comprises of the food processing industry, health beverage industry, bread and biscuits, chocolates & confectionery, Mineral Water and ice creams. The three largest consumed categories of packaged foods are packed tea, biscuits and soft drinks. Indian hot beverage market is a tea dominant market. The major share of tea market is dominated by unorganized players. Leading branded tea players are HUL and Tata Tea. Major players in food segment are HUL, ITC, Godrej, Nestle and Amul.

THE TOP 10 COMPANIES IN FMCG SECTOR:

SR.NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Company Hindustan Unilever Ltd. I.T.C ( Indian Tobacco Company ) Nestle India Amul Dabur India Asian Paints India Cadbury India Britannia Industries P&G Hygiene And Health Care Marico Industries

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COMPARISON OF FEW CONSUMER GOODS ACROSS DIFFERENT COMPANIES

Hair oil
45% 40% 35% 30% 25% 20% 15% 10% 5% 0% SHARE

Market Share

Bajaj 8%

Dabur 15%

Marico 42%

Emani 5%

Others 30%

Shampoo
50% 45% 40% 35% Market Share 30% 25% 20% 15% 10% 5% 0% Shampoo Cavinkare 10% Dabur 6% HUL 46% P&G 24% Others 14%

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Oral Care
60% 50% Market Share 40% 30% 20% 10% 0% Oral Care

Colgate 50%

HUL 23%

Dabur 13%

Others 14%

Skin Care
70.00% 60.00% 50.00% Market Share 40.00% 30.00% 20.00% 10.00% 0.00% Hindustan Lever 58.90%

Emani 6.80%

Dabur 6.60%

Loreal 6.40%

Cavin Care 3.20%

Others 18%

Skin Care

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SWOT ANALYSIS

Strenghts: Low operational cost. Presence of established distribution network in both urban and rural market.

Weaknesses: Lower scope of investing in technologies. Less scope of achieving economies of scale. Low exports levels.

Presence of well known brands in FMCG sector.

Favorable government policies. Foreign direct investment. Opportunities: Threats: Removal of import restriction resulting in replacing of domestic brands. Tax and regulatory structure.

Untapped rural market changing lifestyle. Rising income level.

Rising population. High consumer goods spending. Rise in awareness among consumers. India is under penetrated in many FMCG categories.

Rural demand is cyclic in nature.

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GROWTH DRIVERS FOR FMCG SECTOR

FMCG GROWTH STORY

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FOLLOWING IS THE TABLE SUMMARIZES PRE AND POST LIBERALIZATION SCENARIO

FMCG SECTOR Soaps Creams and Lotions Detergents Processed food Beverages Cigarettes

MAJOR BRANDS 1970s-1980s Lifeboy , Liril , Cinthol , Lux , Rexona Fair and lovely , ponds Surf , Nirma , Wheel Maggie, Kisaan , Parle, Britania Nescafe , campa ,Thumsup Wills , India Kings

NEW BRAND 1990s ( Indian Brands) Nirma Beauty Soap Dabur Himalaya Fena MTR , Ashirwad , Haldiram Haldiram , Tata tea ,Bisleri Menthol

INDIAN CONSUMER SPENDING PATTERN

2% 10% 7% 7% 4%

2% 1% 5% 8%

Accessories Books and Music Grocery Personal care 40% Home textile Saving and Investment

4%

8%

Clothing Consumer Durables

2%

Vacations Eating out

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SALES PROMOTION INTRODUCTORY IDEAS A typical sales promotion budget covers almost 70% of the total consumer sales promotional budget. It is also considered as a brand differentiator by many big players like Coca-Cola, Pepsi, Heinz and many more. For many business experts and academics, sales promotion is regarded as typical marketing techniques that add value to a product in order to achieve specific marketing goals. The primary purpose of sales promotion is to induce the consumers to make a quick buying-decision in order to create increases sales. Typical example of sales promotion is to offer customers to take chance of winning a prize or offering some extra products with the same price. Sales promotion and marketing are inter-related but not have the similar purpose. It is advertising which makes a platform for sales promotion where customers can see the direct added value of buying your product. On the other hand, advertising is an intangible promotion of your products to send the marketing message to the customer-base

Trade sales promotion Consumer sales promotion B2B and Industrial sales promotion

Type of sales promotion

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CHALLENGES Some of the top of mind challenges faced by the CPG industry today is illustrated in the following:

In addition, increasing customer identification with Health and Wellness and resultant affinity towards brands that portray such traits is a trend that CPG firms have to integrate into their entire product innovation, marketing and advertising processes. Market reach and diverse consumption patterns across the globe are other significant issues that consumes much top management time & attention today.

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ONE BIG OPPORTUNITY AND ADVANTAGE Labour cost in India is amongst the lowest in emerging Asian countries. Easy raw material availability and low labor costs have resulted in a lower cost of production. Many multi-nationals have set up large low cost production bases in India to outsource for domestic as well as export markets.

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COMPANY ANALYSIS DABUR INDIA

DABUR OVERVIEW Established in 1884- more than 125 years of trust and excellence. Among top 5 FMCG companies in India. Worlds largest in Ayurveda and Natural Healthcare. Revenue of Rs.41.1 billion and profit of Rs.5.7 billion in fiscal year 2010-11. Wide distribution network covering 2.8 million retailers across the country. Strong brand equity. Dabur ranked 200 in the fortune 500 list. Dabur ranked most trusted brands in India, according to brand trust report, India study 2011. Dabur ranked as an organization that offers the best return to investors by the 6th social and corporate governance awards, presented by the Bombay Stock Exchange. ORGANIZATIONAL STRUCTURE OF DABUR INDIA

Chairman-Anand Burman

Vice chairman- Amit Burman

Whole time director PD Narang

Whole time director Sunil Duggal

Non whole time promoter Mr. Mohit Burman

Non whole time promoter Mr. Saket Burman

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PRESENCE IN FMCG CATEGORIES

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DISTRIBUTION NETWORK

Distribution channel helps in moving products and services from business to other businesses and consumers. Channels of distribution consist of the following members wholesalers, retailer and sales agents who help in delivering the final good to the consumer for consumption. In a distribution channel major work of mangers is to decide how much to order and when to order depending upon inventory consideration and internal purchasing. Channel structure ranges from two to five levels: Two level structure- goods move directly from provider or manufacturer to the consumer. Three level structure- in three level structure retailer acts as middle men between manufacturers to the consumer. The retailer order directly from the manufacturer and sells to the consumer. Four level structure- in this structure between manufacturer and retailer wholesaler act a middlemen retailer orders to the wholesaler and then sells to the consumers. Five level structure-In this structure there is manufacturer, wholesaler, retailer, jobber and consumer. Here jobber service small retailers whom wholesalers cannot reach.

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BUSINESS STRUCTURE

Dabur operates through three focused strategic business units.

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Consumer care division(CCD) overview:

30 25 Percentage Share 20 15 10 5 0 Food Category wise share in % 15 Health Hair care Oral care suppleme Digestive Skin care nts 28 17 20 8 6 Home care 6

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Key brands under consumer care categories:

Hair Oil

Shampoo

Oral Care

Health Supplements
Honey

Food

Dabur Amla

Dabur Vatika

Dabur Red

Dabur Real

Dabur Vatika

Dabur Babool

Glucose

Real Active

Dabur Anmol

Meswak

Chyanwanpash

Skin Care

Digestives

Home Care Odonil Odomos Sani Fresh

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Fem Bleach
Uveda Dabur Gulabari
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Dabur Hajmola
Hajmola Candy

Consumer Health Division

CHD

OTC 64%

ETHICAL 36%

Repository of Dabur healthcare knowledge. Range of over 260 products. Focusing on multiple therapeutic areas. Distribution coverage of 200000 chemists, 12000 vaidyas and 12000 ayurvedic pharmacies. Focus on growing the OTC healthcare portfolio aggressively.

Products: Honitus Pudinhara Dabur Ayurveda

International business division: 1990-Set up franchisee in dubai,leading to setting up of manufacturing 2003-Renamed franchisee as dabur international limited

1980-Started as an exporter

Today-Builiding scale 22% of overall dabur sales.

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Focus markets: Egypt Nigeria Turkey Bangladesh Nepal U.S

Dabur overseas business contributes 22% to consolidated sales led by CAGR of 32% in last 6 years. New products contribute significantly to overseas sales.

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ON S ITE PROJECT

NAME OF THE PROJECT- LAKSHYA With the presence of 12.2% of the world population in the villages of India, the Indian rural FMCG market is something no one can overlook. Increased focus on farm sector will boost rural incomes, hence providing better growth prospects to the FMCG companies. Better infrastructure facilities will improve their supply chain. FMCG sector is also likely to benefit from growing demand in the market. Because of the low per capita consumption for almost all the products in the country, FMCG companies have immense possibilities for growth. And if the companies are able to change the mindset of the consumers, i.e. if they are able to take the consumers to branded products and offer new generation products, they would be able to generate higher growth in the near future. It is observed that the rural income has grown, boosting purchasing power in the countryside. Rural marketing could open the doors of paradise, but the path is paved with thorns. One major limitation here is this: most FMCG players just do not have the critical size for going all out for rural marketing. That is why most FMCG players are expected to concentrate both on rural and urban marketing: focus on urban markets for value and focus on rural markets for volumes. One result-oriented marketing strategy here is this: offer value-additions to existing lines to lure the urban consumer and alongside offer the rural consumer wide-ranging choices within a single product category in a bid to generate high volumes.

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PENETRATION LEVEL SUFFICIENT HEADROOM

Talking about the urban and rural penetration in most basic consumer goods like toothpaste, shampoo, hair oil etc. there is a huge gap to bridge. This gap is one good opportunity for the existing players to increase their profits by tapping this untapped market. Seeing the above table it is clear that there is a minimum gap of 15 % between urban and rural penetration in all basic consumer good excluding hair dyes.

Objective of the project To tap potential new rural markets in the outskirts of Delhi. Setting up of distribution network in these areas. To increase the portfolio of Dabur products.

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Methodology Analyzing the census data of 252 villages in Delhi. A study was done on this data in terms number of people living there and number of households in that area. Mapping of villages- after the analysis of the census data the villages were mapped in order to form clusters. Visit to the market and collection of data- after the villages were marked and clusters were formed, market was visited and information was collected from the retail outlets in that respective village. Checking of potential- after the collection of data potential of the villages was noted in terms of total FMCG turnover. Comparison with existing market- after noting the potential of the market comparison was done with the market which is already tapped by the company. Implementation of the distribution channel- after seeing the growth and potential of the market, implementation of the distribution channel was done whether to be distributed from the existing stockiest or through any other mean.

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PROJECT IN DETAIL A list of 252 villages in Delhi was provided along with their: Population. Number of households. District name. Sub district name. Stockiest they fall under.

Following is a snapshot of the excel file so received:

This data was first analyzed and studied and the list of 252 was brought down to 193 as the data had few villages which were lying in UP and few were not applicable.

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Total Number Of Villages Not Applicable Gross Villages Not Found In Uttar Pradesh Other Errors Net Villages to be surveyed

252 34 218 22 1 2 193

Not applicable- these were the villages which were named as DMC , NDMC and were there under each stockiest. Not found- these were the villages which were not identified on the maps and were not known by the residents of the sub district it was coming under. Other errors- these were the villages which were repeated or were coming under a particular sub district but not under the given stockiest. To start with, one stockiest was selected and villages lying under his area were mapped. Mapping was done to see which villages form clusters and to see the distance of villages from the existing stockiest. Villages which were already tapped by the existing stockiest were marked as covered and which were not were marked as to be surveyed this information was taken from the stockiest itself. A different set of information was required for both: Particulars Already covered by the stockiest Market to be surveyed Information required Last month secondary sales data + the area had to be surveyed to see if there is full coverage. FMCG turnover, growth and potential.

* Secondary sales- sale of goods from distributor to the wholesalers and retailers. To get data from the already covered markets, software named Dhrishti had to be on the computers of stockiest. This software has been provided to them by Dabur India. Once secondary sales data was collected the market was visited and a sample of retail outlets were selected and following questionnaire was filled with the help of the retailers In this way 64 villages out of 193 villages were there which were covered by one of the 9 stockiest and data for these 64 were collected.

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For collecting data for the untapped market the first step was mapping of villages with respect to the stockiest they fall under: MAPPING OF VILLAGES AND FORMING OF CLUSTERS

Jyoti prasad

The above map is of stockiest Jyoti Prasad and villages coming under his area. The blue colour indicator is where the stockiest sits and the green colour indicators are the villages coming under his area. Each of the green colour indicator had to be covered these were the villages which were easily found and were to be surveyed in order to get the information regarding the growth and potential of the village so concerned,

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RBGK

Pal and Co

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Murti - Satvik

Radhika

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Laxmi Ent

Satvik -Ishika

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SA Trading

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Vijay Laxmi

With the help of the above maps it was easy to form clusters of villages and start with the survey. It even helped to check the distance of different villages from the existing stockiest. Distance is one factor out of the many, which help the distributor in deciding whether to tap the market or not as more the distance more the cost. If a distributor is having an income which is less that the cost which he has to bear to cover the market it is not logical for the distributor to tap that market. My project focused around one such factor which helps the distributor to decide whether to tap the market which was distance hence the mapping played a very important role. Along with distance also the total FMCG turnover of that particular village played an important role to check the potential of that market.

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COLLECTION OF INFORMATION After the mapping of villages, stockiest wise area was surveyed and information was collected and recorded. Each village had different number of retail outlets for villages having retail outlets between 10 15 were tried to be surveyed fully but for villages having retail outlets above 15 were not surveyed fully but a sample of retail outlets were selected and surveyed. Information was collected by filling a questionnaire with the help retailers. I am conducting a survey distribution of Dabur Products and would like to know your views and opinions. Kindly spare a few minutes helping us by completing this questionnaire. The data entered will be highly confidential and will be limited to the use of completion of the objective of this survey. Your support will be highly appreciated.

The basic purpose of survey was to check the FMCG turnover of these untapped retail outlets. Growth and potential was also to be checked which was done with the help of other questions in the questionnaire. For example if other companies are providing services on continuous basis there is some potential in the market or they would have also stopped sending salesmen if they were not able to cover their expenses. By asking how often do you visit the nearby mandi to get goods multiplied by purchase per visit can give an idea of the FMCG turnover in a month so the authenticity of the answer given by the retailer on sales per month could also be verified .

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RECORDING OF INFORMATION Once the information of all retail outlets or sample of retail outlets was collected an excel file was prepared for that particular village in the given format. Following is a snapshot of the excel file so prepared:

In the above excel sheet village name zindpur was surveyed having a population of 5057 and its distance from the stockiest Vijay Laxmi was 1 km. A total of 15 outlets were surveyed in this village and an FMCG turnover of 14, 25,000 was recorded in this market. This village was covered by other companies likes P&G, Britani, Everyday, HUL, Parle but not by Dabur. This was one village out of the list where Dabur could easily expand its distribution from the existing stockiest after seeing the growth, potential and distance.

In similar way remaining 129 villages (193 64 covered by the existing stockiest) were surveyed and data was collected in terms of: Growth Potential Dabur basket
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FMCG turnover Other companies visiting Current portfolio of products. Nearest wholesale mandi

A sum total of 1922 retail outlets were surveyed from 129 villages located in the outskirts of Delhi. And a final excel was prepared which showed the following information: Village name Sub district name Total population Stockiest area Surveyed Covered by stockiest Total counters Outlets surveyed Distance from stockiest FMCG turnover Coverage by other companies Other information

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Following is a snapshot of the excel file so prepared:

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FINDINGS FINDINGS FROM THE QUESTIONNAIRE From questionnaire 1 which was filled with the help of the retailers of shops where there was continuous supply of Dabur products through the distributor a sample of 25 retail outlets were selected to check the satisfaction of retailers in respect of services provided to them by Dabur company.

20 15 Retailers 10 5 0 Series 1

Satisfied 19

Not Satisfied 6

Interpretation From the above chart it was concluded that maximum retailer are satisfied with the services provided to them. On asking reason from the not satisfied retailers maximum said they face a problem during exchange of expiry of goods and also when it comes to cut discount for window setting.

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To check if there is good coverage by the distributor a sample of 25 retail outlets were selected to see if there is a visit by the Dabur salesmen and following result was out.

18 16 14 12 Retailers 10 8 6 4 2 0 Series 1 Yes 18 No 7

Interpretation From the above chart it was concluded that there is good coverage by the distributor in the areas which are under him. The retail outlets which gave answer as no were small counters and thats why were ignored by the distributor these small counters do not have much demand of goods and keep very limited stock.

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To check if the salesmen visits twice a month or 4 times a month another sample of 25 was collected and checked and the following result was out.

16 14 12 Retailers 10 8 6 4 2 0 Series 1 Twice a Month 10 Four Times a Month 15

Interpretation From the above result it was concluded that areas with twice a month visit and four times a month visit were more or less the same. Areas which were having twice a month wanted the visit to increase to once in a week. This could be one suggestion for the company to check with the distributor why is he providing services twice a month and not four times in a month.

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From questionnaire 2 which was filled with the help of the retailers of the area which was not tapped by the company. Out of 1922 retail outlets which were visited a sample of 25 was collected to see which company has the maximum presence in rural areas. A chart was prepared to compare the presence of different companies.

30 25 20 Outlets 15 10 5 0 Parle Ghadi HUL Colgate P&G Comapnies Britania Marico Nestle Reckit

Interpretation From the above chart it was clearly visible that Ghadi Company has the maximum coverage in rural areas followed by Parle. Whereas companies like Marico Nestle Reckit have the least coverage in these areas this could be because products of these companies are not consumed much by people living in rural. But due to rising income in rural market leading to an increase in demand of goods, companies which have still not tapped the rural market should start with it to increase their sale and profits. Companies which tap rural market first can have the first mover advantage.

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Another sample of 25 was selected to see what the approx monthly sales in rural market are and the following results were out

12 10 8 Retailers 6 4 2 0 Series 1

1-10000 2

10000-20000 7

20000-40000 11

40000-80000 5

Interpretation From the following graph it could be seen that maximum retail outlets have a sale within the range of 20000-40000 this means if Dabur tap these outlets taking the average 30000 and Dabur sale as 4% of the total FMCG turnover Dabur could increase their sale of 1200 pm per outlet.

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CONC LUS ION AND RECOMMENDATION

After the collection and recording of the information a final conclusion in order to set up distribution network in new rural and untapped market having good potential and growth, following table and chart was prepared. Note- Dabur sales were taken to be 4% of the total FMCG turnover. A range for the FMCG turnover was created and villages lying within that range were classified accordingly. FMCG Turnover Range Number of villages Classification

1-99999 100000-400000

66 41

400001-600000

600001 and above

Should not be tapped as there is not much potential Should be tapped either through ready stock or existing stockiest. Twice a month. Should be tapped through existing stockiest, sub stockiest or ready stock twice a month Should be tapped through existing stockiest, sub stockiest or ready stock four times a month.

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number of villages 66

41

1-99999

100000-400000 400001-600000

600001 and above

CLASSIFICATION OF VILLAGES STOCKIEST VISE

Amit Traders, 1

Vijay Laxmi, 15 jyoti pershad vijay kumar, 19 S.V, 2 Murti Traders Pal & ,5 comp, 6

RBGK, 3 Radhika sales, 3

Laxmi Ent, 1

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Following is the excel file giving detail about: Stockiest. Number of villages to be tapped by him. Name of the village. Number of villages 1 19 Village name Ghandhinagar ghummanhera JharodaKalan MundhelaKhurd Mitraon Paprawat ShikarPur Isa Pur Malik Purzer-Najafgarh NangliSakrawati Raota DichaonKalan GoylaKhurd Hastsal Ujwa Roshanpura Dhansa JaffarPurKalan Chhawala Surera Gharoli TajPul MithePur PulPehlad Molar Band village Aali Ghoga JaffarPur alias HiranKudna TilangPurKotla Gheora ShafiPurRanhola Nilothi
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Stockiest Amit Traders Jyoti Pershad Vijay Kumar

LaxmiEnt Murti Traders

1 5

Pal & comp

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Radhika sales

RBGK

S.V Vijay Laxmi

2 15

Malik PurKohi alias Rang Puri FatehPurBeri Dera MadanPurDabas Rani Khera Punjab Khor JonaPur Deoli MukandPur JagatPurilaqa Delhi Bhalswa Jahangir Pur Shah PurGarhi Darya PurKalan NangalThakran Nangli Poona Kamal PurMajraBurari MamoorPur TikriKhurd PehladPurBangar PoothKalan Palla Singhu ZindPur

From the above results stockiest named Vijay Laxmi and Jyoti Pershad Vijay Kumar has the maximum number of villages coming under them which have good potential and growth. The following list of villages has a total FMCG turnover of Rs18089900

Another Recommendation for the company is that it should not use push strategy which is being currently followed by the company while dealing with the distributors in this case the company makes it mandatory for the distributors to maintain a minimum stock of a certain amount which keeps increasing once the target is achieved. They should follow pull strategy that is the distributor decides how much amount of stock they want to keep.

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LEARNING FROM THE PROJECT

The motive behind choosing this project and FMCG industry was to gain insight about how this sector works and to understand the concept of distribution how from the manufacturers goods are delivered to the ultimate consumers with no time. This whole duration of the project has been a wonderful experience working in the corporate field and getting to know new trends and developments in the market. There has been a lot of knowledge enhancement and there exists a basket full of new concepts and theories learnt and practical observation during this time , visiting the vendors helped to gain more knowledge about the market as they provided with the first hand information. Retailers are the one which are in contact with the customers hence knows what exactly a customer demand for. These days companies have started using tablets while taking orders from vendors, during my first few days I was involved in learning the use of tablets. Another Learning during my SIP was how to operate the software which was installed in every computer being used by the distributor which helps in checking the stock left in the store house, orders placement, and billing process.

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REFERENCES

http://www.business-standard.com/india/news/dabur-uses-astra-to-boost-ruralsales/327802/ http://www.dabur.com/default.aspx http://delhigovt.nic.in/WorkingReport2007/Rural%2520Delhi.pdf&pli=1 http://info.shine.com/ListofCompany/FMCG/780.aspx http://www.business-standard.com/india/news/a-mixed-baggoodies-for-fmcgplayers/468019/ http://economictimes.indiatimes.com/news/news-by-industry/cons-products/fmcg/fmcgcompanies-like-hul-dabur-godrej-marico-continue-to-achieve-consumption-drivengrowth/articleshow/13368922.cms

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ANNEXURES
QUESTIONNAIRE 1 I am conducting a survey on distribution of Dabur Products and would like to know your views and opinions. Kindly spare a few minutes helping us by completing this questionnaire. The data entered will be highly confidential and will be limited to the use of completion of the objective of this survey. Your support will be highly appreciated. Retail outlet name __________ Area ____________ Q1. Does a Dabur salesman visit your place? Yes ______ no______ Q2. If yes how often does he visit? Once a week _____ twice a week ______ Q3. If no from where have you purchased the existing Dabur products kept in your outlet? ________ Q4. Are you satisfied with the existing services provided to you by Dabur Company? Yes _____ no_____ Q5. If no. what are you not satisfied with? ________________ Q6. Any suggestions or recommendation for the company? __________________

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QUESTIONNAIRE 2 I am conducting a survey distribution of Dabur Products and would like to know your views and opinions. Kindly spare a few minutes helping us by completing this questionnaire. The data entered will be highly confidential and will be limited to the use of completion of the objective of this survey. Your support will be highly appreciated. Name of the village: _______________ Sub district: ____________________ Population: ____________ Q.1 Do you keep Dabur products? Yes ___ No ____ Q.2 From which nearby market do you buy the goods? ______________ Q.3 How often do you buy from the nearby mandi ? Once a week ___ twice a week ____ More than twice a week ___ Q.4 Approx of how much do you purchase per visit? ( ) 1 to 5000 ( ) 5001 to 10,000 ( ) 10,001 to 20,000 ( ) 20,001 to 40,000 ( ) 40,000 to 80,000

( ) Above 80,001 Q.5 Salesmen of which other FMCG companies are visiting you? ____________________ Q.6 How many times in a week does the salesmen visit? ____________________ Q.7 what are your approx. monthly sales? ( ) 1 to 5000 ( ) 5001 to 10,000 ( ) 10,001 to 20,000 ( ) 20,001 to 40,000 ( ) 40,000 to 80,000( ) Above 80,001

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