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Marketing Management at COLGATE PALMOLIVE

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Marketing Management
Distribution is basically making goods available to valuable customers. In distribution we have emphasized that what actually is the distribution, and what are different distribution related concepts, how distribution strategies have an impact on the overall performance of the all selected companies. Basically we have divided the report into two sections

First Section
Firstly, the concept of strategic storage, the definition of distribution center and its difference with the warehouse is presented. Secondly, the significance, the functions, and the benefits of distribution center are examined. Thirdly, the location and number of distribution center, its types and the designing of distribution center is presented. Fourthly, the value added services and customer service provided by the distribution center and achieving customer service consistency is discussed. Fifthly, the need for customer relationship management and to reduce the redundancies in the supply chain is presented. Finally, the product value addition by the distribution center is discussed in detail.

Second section
In the second section of the report we have explained the distribution strategies of the four selected companies. Now we will examine first section.

THE CONCEPT OF STRATEGIC STORAGE Storage has always been an important aspect of economic development. In the early stages of economic expansion, the consumers performed storage and accepted the attendant risks. Meats were stored in the smokehouses, and perishable goods were protected in underground food cellars. As transportation capability developed, it became possible to engage in economic specialization. Product storage was shifted from households to retailers, wholesalers, and manufacturers. Initially, the warehouse was viewed as a storage facility that was necessary to accomplish basic marketing processes. Storage was necessary to match products in timing with consumers. So warehousing provided product storage until market demand required distribution. This view of storage resulted in a tendency to consider warehouse a necessary evil

that added cost to the distribution process. The warehouse served as a static unit in the product pipeline. The warehouse's capability to group products into an assortment desired by customers was given little emphasis. Besides it internal control and maximum inventory turnover received little managerial attention. On the outbound side of manufacturing, warehouse opened the door for direct shipment of mixed products to the customer. The capability to provide mixed product shipments was appealing to marketing, because it enhanced service capability. For the intermediaries, direct mixed shipments have two distinct advantages. First, logistical cost is reduced as a result of consolidated transportation of a full product assortment. Second, inventory of slow turnover products can be reduced as a result of their availability as part of a consolidated shipment. So, the manufacturer capable of rapidly providing direct, mixed shipments gained the competitive advantage. DEFINING THE DISTRIBUTION CENTER Basically, the distribution centers are planned around markets rather than transportation requirements. And the idea is to develop under one roof an efficient, fully integrated system for the flow of products - taking orders, filling them, and preparing them for delivery to customers. So, here the term distribution center can be defined as: "A distribution center is a large, centralized warehouse that receives goods from factories and suppliers, regroups them into orders, and ships them to customers (wholesalers and retailers) quickly, with the focus being on active movement of goods rather than passive storage." The definition puts the concept of distribution center into the following context:

Distribution center must be large enough to serve the needs of a large geographic area. So, it must be situated at some central location to distribute the goods quickly. The distribution center is entitled to receive goods from manufacturers or suppliers. The distribution center is supposed to provide the variety of products to meet the assortment needs of retailers and wholesalers. The emphasis is on the shipment of delivery of orders quickly so that the inventory level and lead times can be reduced. Finally, the main function of the distribution center is the active movement of the goods to provide fast inventory turnover rather than inactive inventory storage.

The Difference Between A Warehouse And A Distribution Center Now the discussion will be directed to understand and make clear the difference between a warehouse and a distribution center, in order to proceed further. A warehouse is so named, because, as a building its original purpose was to store wares or goods. But the new ideas and techniques like "just in time" are significantly reducing the storage task, which warehouse managers considered as the primary function of the warehouses. While the distribution centers are established to facilitate in the quick and efficient movement of inventory from the manufacturer till the end user. Therefore it is needed to build an image of a facility where goods are constantly moving towards their ultimate destination, thereby minimizing its storage

and related costs. Hence, it is an important part of our thinking to do away with the concept of static storage in a warehouse and to move towards the concept of a distribution center. Following points will help to clear the difference between a distribution center and a warehouse:

The prime function of a warehouse is to store goods while of a distribution center is to move and process goods quickly. Distribution centers are established near the markets while warehouses are developed near the suppliers or manufacturers. Distribution centers are planned to serve the markets intensively while warehouses are required to make availability of the product over the year. Distribution centers are intended to provide the variety of products while the warehouses are generally engaged in to serve only a few products.

SIGNIFICANCE OF DISTRIBUTION CENTER The distribution center plays a key role in an organization's logistical strategy. It is usually the point at which the organization succeeds or fails in fulfilling the sales and marketing promise. Whereas sophisticated management and technology have been freely applied in manufacturing, marketing, and finance; warehousing and distribution is considered as the last frontier for opportunity to make improvement significantly. Properly designed, planned, organized, and managed, a distribution center can offer high levels of service with lower inventory and lower costs. This not only improves profitability and increases the competitive edge, it also allows an organization to win market share by offering an improved level of service. Distribution centers offer several benefits, some of which are stated below:

Foremost among them is the better and enhanced customer service, because distribution center ensures product availability by maintaining full product lines. The speed of the operations of a distribution center cuts delivery time to a minimum. Consequently, lower inventories are required to carry by the retailers or wholesalers. In addition to it, the inventory turnover is increased for them.

Furthermore rapid turnover of inventory lessens the need for warehouses and cuts the inventory storage and carrying costs for retailers, and wholesalers. By minimizing out of stock occurrences through an improved performance, sales lost by the retailers and wholesalers can be reduced. In addition to it such performance will help to maintain goodwill and to retain customers.

The distribution centers also reduce the costs for the manufacturers and suppliers. So, instead of making many smaller shipments to scattered warehouses and customers, factories can ship large quantities of goods directly to the distribution centers at bulk-load rates, which lower transport costs.

Some distribution centers also facilitate production by providing final assembly of some products like computers, furniture, and the like.

Distribution centers are able to provide many value-added services to the retailers, and wholesalers.

FUNCTIONS OF A DISTRIBUTION CENTER In addition to inventory storage and efficient movement of these products, the distribution centers also perform some other functions. When distribution centers receive goods by bulk loads, they break into smaller quantities for individual customers; when goods arrive in small lots, the distribution centers assemble the lots into bulk loads that can be shipped out more economically. Distribution centers perform some basic distribution functions that are discussed below: RECEIVING GOODS Upon the arrival of goods the distribution center unloads the goods from the vehicle. The unloading function may be manual or automated. The merchandise is accepted, and the distribution center assumes responsibility for the products. This function also includes the quality and quantity checks for the incoming goods. IDENTIFYING GOODS The appropriate stock keeping units (SKUs) are recorded, along with the quantity of each item received. The item may be marked with a physical code, tag, or other label, or it may be identified by an item code (a code on the carrier or container) or by its physical properties. SORTING GOODS From the bulk deliveries the merchandise is sorted out into different categories for storage in appropriate areas. Some pharmaceutical and confectionary products may require cool areas or even cold storage to store it for later use. So such products must be sorted at the time the deliveries are received by the distribution center. DISPATCHING GOODS TO STORAGE This function includes the attendant task of moving goods from receiving to storage location. The merchandise is put away for later retrieval when necessary. This function also includes the stacking of the products to form a unit load for distribution center's handling. HOLDING GOODS The merchandise is kept in storage and properly protected until needed. It also includes the care for temperature maintenance and other such measure to protect the products during the storage time. Although the primary emphasis is upon the quick flow of the products but the goods are to be stored for at least a very short time. RECALLING AND PICKING GOODS Items customers have ordered are efficiently retrieved from storage and prepared for the next step. It calls for the transportation from storage to an order picking location and the selection function to group products into customer orders. Some other tasks like checking the products and packing them for delivery to the customers are also included.

DISPATCHING THE SHIPMENT The consolidated order is packaged suitably and directed to right transport vehicle. This function includes the checking and loading of the product to the vehicle. Proper care is taken at this stage because, the ownership is to be changed at this step to the customers. So, necessary shipping and accounting documents are also prepared in this regard. BENEFITS OF DISTRIBUTION CENTER The benefits realized from strategic warehousing are classified on the basis of economics and service. At a conceptual level no distribution center should be included in a logistical system unless fully justified on a cost/benefit basis. The basic benefits that distribution center provide are such as economic benefits, consolidation, break bulk and processing and many service benefits which include assortment, mixing and spot stock. THE LOCATION AND THE NUMBER OF DISTRIBUTION CENTER Certainly, there are conflicting demands from different departments, which are to be resolved, while selecting the location of the distribution center and the total number of distribution centers. Clearly, there are benefits in having the distribution centers adjacent to each of the principal markets. However, the purchasing cost and the cost of receiving goods may well be significantly lowered if they are located nearer to the source or sources of supply. As the number of distribution centers required to service a given number of markets is increased, so is the cost of inventory - and the overall cost of the distribution centers escalates.

TYPES OF DISTRIBUTION CENTER OR WAREHOUSE A company's choice of distribution facilities is an important strategic consideration. By using the right warehouse or distribution center, a company can reduce the transport and inventory costs or improve its customer service; the wrong distribution center may drain company resources. Besides deciding how many facilities to operate and where to locate them, a company must determine which type of distribution center will be the most appropriate. On the basis of ownership, three alternatives are available:

PRIVATE WAREHOUSE "A private warehouse facility is one operated and managed by the enterprise that owns the merchandise handled and stored at the facility." A private warehouse may be owned, leased, or rented by the company. The decision as to which best fits an individual enterprise's requirements is essentially financial. Often it is not possible to find a warehouse facility for lease, which satisfies exact requirements. If a considerable amount of product handling is planned for a distribution center, an available building may not be favorable for efficient handling. As a general rule, an efficient distribution center should be designed around a product handling system in order to achieve maximum efficiency of product flow.

PUBLIC WAREHOUSE "A public warehouse, in contrast, is operated as an independent business offering a range of services on a contract or fee basis." Public warehouses are used extensively in physical distribution or outbound logistics system. Almost any combination of services can be arranged with the operator of a public warehouse. The services can be arranged for a short-term or may be contracted over a long-term duration. In physical distribution, a great many firms utilize public warehouses because of the range of services available and the flexibility. COMBINATION SYSTEMS Many enterprises utilize a combination of public and private distribution warehouses. A private facility may be used to cover basic year round requirements, and public facilities to handle peak requirements. In other situations central warehouses may be private, with market area warehouses being public. The second form of combined warehousing may result from market requirements. A firm may find that private warehousing is justified at specific locations based upon sales volume. In other markets public facilities may cost least. Here the primary objective is to determine, which combination most economically satisfies customer service objectives. value-added services PERFORMED BY THE DISTRIBUTION CENTER Besides responding to corporate cost-cutting and revenue-generating initiatives within the four walls of their facilities, distribution center managers these days are competing for, securing and maintaining business in the dynamic market. One of the ways warehouses attract and keep customers is by offering services in addition to storing and simply moving product. Such functions or services save customers' time and money. These are called as value-added services (VAS). Such services can take many forms, like partial assembly, specialized labeling or increased customer service. They are so importantto customers and to the providersthat the services are becoming a necessity for warehousing operations to reach success. customer service and DISTRIBUTION CENTER Its often tempting to think of customer service as something that happens outside the warehouse, but experts say thats a mistake. Take the example of the morning paper. Every one expects to find the paper on the doorstep. If its raining, youll be looking for it to be neatly slipped into a plastic sleeve. The entire process may seem like a simple expectation on your part, but its actually the result of a long chain of events, often starting at the distribution center. Many distribution center managers tend to think of customer service as something that happens after the merchandise leaves their hands. Yet supervisors who focus on satisfying clients will begin to see that customer service exists on many different levels. The managers need to understand how they want to differentiate services for their customers. For example, some clients might be willing to pay for same-day service, while 48-hour service will be acceptable for others. Customer Relationship Management strategy In addition to improving their relations with the participants of the supply chain, many distributors want to develop stronger relationships with the customers. In the past, such companies took their customers for granted because, there were little or no alternative sources of supply, all the suppliers were equally efficient

regarding service, and the market was growing fast so the distributors did not care for customers. 1] But now the situation has been changed over the time. So, the distributors have to strive hard in order to satisfy their customers, as many of them leave, because they feel they have received inadequate care. To cope with such drastic situations customer relationship management (CRM) has become an essential strategy for distributors to retain and nurture current customers, develop new business and enhance internal procedures. Customers will return to suppliers who are listening, who are supporting them effectively, and meeting commitments. Customer Relationship Management has become a survival strategy. "Customer Relationship Management" actually introduces the technology or automation into the field of "Customer Relationship Marketing". Such strategy is intended to convert first time customers to repeat customers, and repeat customers to brand loyal customers by applying the above-mentioned techniques. PRODUCT VALUE ADDITION BY DISTRIBUTION CENTER This section will present the analysis of the activities, functions and services of a distribution center to add value to the product. In the previous chapter the value of a product has been defined as: "The value of any product or service is the result of its ability to meet a customer's priorities. Customer priorities are simply the things that are so important to customers that they will pay a premium for them or, when they can't get them, they will switch suppliers." Reducing the distribution cost The importance of distribution center to reduce the distribution cost can be best described by the example stated below: A company earns a dollar of profit for every $10 of sales. If the distribution center's efficiency can save a dollar without changing sales figures, then in effect the company just went out and earned another $10 in sales. So an efficient supply chain management (Distribution Center) can deliver the value of another entire business division without even making one additional sale. A distribution center can save the cost of distribution through reducing the inventory level, by increasing working capital, by reducing lead-time, warehouse costs, and through direct delivery to retailers

SECOND SECTION

COLGATE PALMOLIVE
INTRODUCTION

Colgate-Palmolive (Pakistan) Limited (CP). The Company's principal activities are to manufacture and sell detergents, personal and other products. The Company owns a number of global brands including Colgate toothpaste, Tooth [

Brushes, Palmolive Soaps and Shampoos. The Company has products in four core categories: Oral Care, Fabric Care, Household Surface Care and Personal Care. The Company operations are carried out in Pakistan.
Colgate Palmolive has divided themselves into two branches i)Colgate-Palmolive Pakistan Limited ii)Clover Pakistan Limited Products of Colgate Palmolive limited Fabric Care
Brite, Bonus regular,Bonus tristar, express power.

Personal Care Palmolive, natural soap, Daunch soap, protect soap, Azadi bath soap, Qilopatara soap Surface Care Lemon max bar, Lemon max wash powder, Lemon max liquid, Azadi dish wash bar Oral care Tooth pastes: colgate, Brito total, colgate whitening, sparkle 2 good, Sparkle cologne, Colgate herbal(newly launched) Tooth Brushes: colgate, colgate active, colgate flexible. Products of Clover Pakistan limited Clover Pakistan limited is currently deals only with food items, like tang, Maxwell house coffee, toboran chocolate, flavored milk, craft crme cheese Compeititors of Colgate Colgate Palmolive have different competitors such as, Lever brothers, Reckit & Benkiser Procter & Gamble And different small local companies. The competition of different brands lies within different companies. Brite total Express power Bonus Lemon max Colgate Natural soap Departments Departments of the colgate Palmolive are the followings Marketing department, Finance department Distribution & logistic department Ariel and surf excel Sunlight Wheel Vim, tide, Rex close up, forheans, sensodine and many others Tibet

Production department Human resource department(newly established) Distribution Zones The company is divided into 8 zones on the basis of distribution

Karachi 1 Karachi 2 Lahore Hyder abad Rawalpindi Multan Gujranwala Faisal abad

Belts Belt is the area on which the distribution centers are divided. These distributors deal with retailers and wholesalers. Each zone has its own belts. Multan zone has nine belts. Selection of distributors Colgate Palmolive is very sensitive for selecting its distributors. They have tod that distribution is the main part of the company, and we treat distributors as our business partner. The criteria to choose the distributor is very selective. First they check the financial position of the distributor. Than they check their professional attitudes and good will. After the selection of distributors they take five to ten thousands rupees as security. They mostly deals in business with distributors in cash terms. Order processing The distributor give the order to the zonal distribution center one day before, than zonal office takes action on it. If the zonal office have inventory in their own warehouses than deliver at once, but if they dont have than they have to contact with head office of the company. Lead-time The inventory takes three to four days to reach from national ware house to the zonal distribution offices. Duties of the zonal office The zonal distributors perform the following duties.

Provide inventory at distributors need Check the distributors either they are working well or not Provide facilities to other distributors Check about their competitors that what are they doig Go to the retailers and customers and describing them the features of the products

Monitoring penetration report to check the market

Duties of the distributors

Provide inventory to retailers at once at their own spot Give credit to the customer on advice of zonal office

Distribution Area Colgate Palmolive Pakistan limited has a wide network of distribution. Normally each town has its own distributor. There are many order takers in each distribution center and normally each order taker takes order from seventy to eighty shops. But the sales executive of the company told us that each order taker should take fifty to fifty five orders. Distribution and Buyer behavior Buying behavior is the main factor that have great influence on whole of the distribution net work. They chek that market and devide it into different segments, and than check that which segment have which type of needs. Just as Azadi dish wash bar is targeted to rural areas. While on the other have lemon max bar and powder are targeted towards urban areas. The main target of Colgate Palmolive Pakistan limited are the urban areas due to product features which they are offering. But they also doing well in rural areas. Relationship between distributors and wholesalers Distributors are on wheel out of four wheel of the company. But due to wide area of distribution network the role of wholesalers are going to be minimized. And now the company is focusing itself more to retailers. The utmost advantage of this strategy to distributors is that they dont have to give wholesalers discount to retailers. Physical distribution strategy The company uses indirect channel for the physical distribution of the products. They have some contract with different transport companies to deliver its products to different channel members. How inventory reaches from producer to consumer From factory it reaches to national warehouse of the company. Than it moves to zonal offices and than from zonal offices to the distributor premises. After this at final stage the inventory goes wholesalers/retailer. And now it is retailer, which sells the products to end consumer.

PROCTER & GAMBLE INTRODUCTION OF THE COMPANY Procter and gamble of Pakistan is a subsidiary of Procter and Gamble USA established in1990 and started production in 1991.The P&G Company were founded in 1837 in Cincinnati, Ohio and from the very beginning have been a leading manufacturer and marketer of the consumer goods. Company sells more than 250 brands in more than 130 countries and its operations are in more than 70 countries. It is therefore also rated in the top 25 of the FORTUNE 500 companies.

Procter and Gamble is actually the name of two persons William Procter and James Gamble. Both of them wives were sisters and their father in-law asked them to become partners. In the start Procters business was candle making and Gambles business was soap making. The Partnership year 1837 was a difficult time to start the business although Cincinnati was a bustling market place; the nation was gripped by financial panic. Hundreds of banks were closing around the country. In the 1850s, despite rumors of an impeding civil war in the US, they built a new plant to sustain their growing business. Later they pioneered one of the nations profit sharing programs and were among the first in American industry to invest in the research laboratory. By 1890, the fledgling partnership between the Procter and Gamble had grown into multi million Dollar Corporation. PROCTER AND GAMBLE IN PAKISTAN: P&G STARTED ITs operations in Pakistan in 1991. First it introduces its brand of Head& Shoulder After that it gave brand of Vicks and Olay oil. Now company has eleven brands in Pakistan .The yearly sales consistently doubled during the past three years. P&G Pakistan establish local manufacturing base. BRANDS IN PAKISTAN: Head & Shoulder Pert Plus Vicks Pentene Rejoice Camay Safeguard Pampers Always Ariel

Compeititors of Procter & Gamble


P&G has different competitors such as,

Uni-Lever Pakistan Limited, Reckit & Benkiser Colgate-Palmolive Pakistan limited

And different small local companies. The competition of different brands lies within different companies. Ariel Pantene Camay Safeguard Brite and surf excel Sunsilk Lux, Rexona Lifebuoy Gold, Dettol Soap

Departments

Departments of P&G are the followings Marketing department, Finance department Distribution & logistic department Production department Human resource department Customer Services department Customer Business Development Information Technology Brand Department Corporate Marketing Department

Distribution of the firm comes under the two departments

customer services department: which is responsible for stocks maintenance


Customer Business Development: This department is responsible for market volume and trade. Actually making the products is not sufficient rather making products available to customer is more important. So distribution serves as back bone of any firm. MARKET SHARE OF THE COMPANY

As for as market share of the firm is concerned, it is leading the Pakistani market. For instance if we take examples of shampoos Pantene Head & Shoulder 35% 42%

And slightly close to the market share of head & shoulder is the Sun silk offered by Uni-lever Pakistan limited
DISTRIBUTION CHANNEL Distribution channel of a company is a very important for its survival, and especially in soap industry, they have to make it excellent, because if they will not make it easily available to the consumer, all is useless. So providing needs, satisfying goods at the right place is very important. P&G itself has no distribution channel for their products rather they are distributing the products through International Brands Limited (IBL), which is a renowned distribution company in Pakistan and they have their distribution network in all major cities of the country. DISTRIBUTION CENTERS (IBL) The company has seventy one distribution centers throughout the country. And each distribution center the hierarchy level of working employees differs.

Selection of distributors P&G is very sensitive for selecting its distributors. They have told that distribution is the main part of the company, and we treat distributors as our valuable partner. The criteria to choose the distributor are very selective. First they check the financial position of the distributor. Than they check their professional attitudes and good will. They mostly deals in business with distributors in cash terms. Order processing The national ware house of the company is in Karachi. Most of the products comes from abroad, so the shipment is received at Karachi. They allocate their products to different distribution centers and than each distribution center process the order of the respective customers{wholesalers and retailers). Lead-time The inventory takes three to four days to reach from national ware house to the zonal distribution offices. If demand of some products are in emergency the company also delivers product by air. Duties of the DISTRIBUTION CENTERS The distribution center performs the following duties.

Check about their competitors that what are they doing Go to the retailers and customers and describing them the features of the products Monitoring penetration report to check the market Provide inventory to retailers at once at their own spot Distribution centers provide market information to respective head office

Distribution and Buyer behavior Buying behavior is the main factors that have great influence on whole of the distribution network. They check that market and divide it into different segments, and than check that which segment has which type of needs. Such as head & shoulder is also being targeted to rural areas of the country. doing well in rural areas. Relationship between distributors and wholesalers The operation manager of the P&G told us that until the wholesalers are not satisfied with the company policy, it is harder to achieve the targets set by the top management of the company. So the distributors and wholesalers have to coordinate with each and other. Distributors are one wheel out of four wheel of the company. But due to wide area of distribution network the role of wholesalers are going to be minimized. And now the company is focusing itself more to retailers. The utmost advantage of this strategy to distributors is that they dont have to give wholesalers discount to retailers. Physical distribution strategy The company uses indirect channel for the physical distribution of the products. They have some contract with different transport companies to deliver its products to different channel members. The company also makes the physical distribution of products available by air and through courier services in time of emergence. The main target of P&G Pakistan limited is the urban areas due to product features which they are offering. But they also are

How inventory reaches from producer to consumer After receiving the shipments from abroad the it moves to national warehouse. And in case of local manufacturing it also moves from factory to national warehouse, which is located at Karachi. Than the product moves from national warehouse to distribution centers (IBL offices). Than from IBL offices to the respective distributors. And from distributors to end consumer through various wholesalers and retailers.