Professional Documents
Culture Documents
By Manoharlal Bundhel (RB09020), Asokendu Samanta (RB09035) Shuchi Kumar (RB09050), Renu Shetty (RB09121) Arif Khan (RB09168)
Group No. 20
Centre: Powai and Juhu, Mumbai August 16, 2009
Contents
Contents Abstract 1.0 Introduction 2.0 The Company 2.1 Product Category 3.0 Sales 3.1 Sales Organization 3.2 Sales Strategy 3.3 Sales Force 3.4 Recruitment and Induction Process 3.5 Territory Allocation Process and Strategy 3.6 Reporting Structure and Systems 3.7 Compensation Structure 3.8 System of Evaluation 3.9 Training and Development 4.0 Channel and Distribution Strategy 4.1 Channel Environment 4.2 Channel Strategy 4.3 Channel Design 4.4 Managing the Channel Members and Conflict 4.5 Appraisal and Evaluation of Channel Members 4.6 Analysis of marketing channel structures 5.0 Conclusions References Acknowledgement Appendix: Interview With Manager (Sales) of Bayer Crop Science 1 2 2 2 3 5 5 5 6 7 8 8 8 9 9 10 11 11 11 12 15 15 17 17 17 18
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
(Project of Sales and Distribution Management) Manoharlal Bundhel (RB09020), Asokendu Samanta (RB09035) Shuchi Kumar (RB09050), Renu Shetty (RB09121) Arif Khan (RB09168) Group No. 20, PGCBM 15, XLRI, Center: Powai and Juhu, Mumbai August 16, 2009
Abstract: Go-to-market systems, with multiple marketing channels that link suppliers with their
customers, have radically evolved beyond simple advertising or salesperson marketing channels. The present report discusses on the sales and distribution management of Bayer Crop Science Limited, who has been producing various products in the filed of crop protection for more than a century. Data on sales and distribution of Bayer are collected through a face to face interview (shown in Appendix) with the Manager, Sales and Support of Bayer. The pros and cons of the system are discussed, critically analyzed and findings are listed in conclusions.
1. INTRODUCTION
The tactical goal of the marketing is to get people to buy the companys products or services and make sure that they are available in the market. Here is where Sales and Distribution play a significant role in a company. Sales represent a major investment for many companies with huge amount of money are being spent on sales staff salaries, incentives, information systems, and other sales-related expenses. Improving the productivity of the sales will help companies increase its financial performance. To support the products and services availability, go-to-market strategy should be formulated and distribution channels should be managed carefully.
2. THE COMPANY
Bayer, one of the world leaders in Healthcare, Crop Science and Material Science, was originally established in Germany in 1863 by Friedrich Bayer and Johann Friedrich Weskott. The objective of the company was to manufacture and sale of synthetic dyestuffs. Subsequently Farbenfabriken Bayer and Co. Ltd. was set-up in Mumbai in 1896 and heralded the beginning of the history of Bayer in India (Fig. 1). Bayer has mainly three divisions, i) ii) iii) Bayer Health Care Bayer Crop Science and Bayer Material Science.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Fig. 1 Bayer House located at Powai, Mumbai is the head office of Bayer Crop Science in India The acquisition of Aventis CropScience has helped catapult Bayer CropScience to one of the premier organizations in the world in the areas of crop protection, seeds biotechnology and nonagricultural pest control. Bayer plans to attain leadership position in these areas in the years to come. With a sizeable existence in 122 countries and 22,000 dedicated employees, Bayer CropScience is never too far from its customers. Bayer Crop Science Limited constitutes the core cropscience company and has production facilities at the Bayer sites in Thane, Himatnagar and Ankleshwar. With the acquisition of Aventis Cropscience Limited worldwide, Bayer is the undisputed leader in the Crop Protection business in India.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Products
Insecticides
Fungicides
Herbicides
Confidor
(Cotton, Mango)
Fame
(Rice, Cotton)
TopStar (Rice)
WhipSuper (Soybean)
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
3. SALES
Sale is an important activity in an organization. Strategic sales management involves effective and efficient handling of systems and processes towards successful sales. An effective sales process is key for closing more sales and generating more repeat business. For this careful management, following is required. Sales force - An efficient and effective salesforce is required for enhancing the sales productivity of an organization. Sales territories These are important to get good customer coverage, more sales, lower costs and performance evaluation. Sales accounts - Key account management would involve nurturing and cultivation of strong customer relations in turn building customer loyalty with time. The mission statement for Bayer CropScience is concise: Bayer: Science for a better life Bayer wants to enable access to improved agricultural tools for farmers who cannot currently obtain them through commercial channels.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
CEO at HO in Germany
Europe
North America
Asia
Latin America
Africa
North Zone
South Zone
East Zone
Central Zone
Andhra Zone
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Bayer CropScience respects and values the ethnic and cultural diversity of their sales workforce and understands that success is founded on their skills and their commitment. They are supported in both their professional and their personal development. Sales force blends their knowledge and experience across ethnic and geographical boundaries and provide for a unique mixture of approaches and backgrounds. Bayer Crop Science places great value on their qualification, and also commitment to company values.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Bayer CropScience gives a large fixed salary with less variable pay (fixed: variable = 70:30 ratio). Also, it does not believe in giving any bonus or sales incentives. However to motivate its sales force rewards are given in form of promotions and sponsored foreign trip.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
Summary: An effective sale teams can be built that pays its own way, enhances the company sales and increases the value of any business. Bayer CropScience has an effective hiring method, evaluation technique and training program for the sales people to motivate and retain them. However, in terms of incentives as a way of motivation is lacking. Also, the appraisal is only once a year and only through the supervisor. This probably needs to be modified into a bi-yearly appraisal or an in-formal appraisal during the year.
CHANNEL NETWORK
Dealer 1
Dealer 2
Retailer 1
Retailer 2
Consumer Consumer
Consumer
Consumer
Consumer
Consumer
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4.3.1 Strategy
The three main strategies on which Bayers Channel design are based on are Relationship with channel members How should the marketing mix be used Evaluation and Motivation of the Channel members.
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Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
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Low distribution cost Inter branch transfers whenever one branch has excess products than required. Stock replenishment - The Company is well integrated through one of the best IT solutions and SAP ERP. Bayer Cropsciences crop protection products are marketed either via wholesalers or directly through retailers by means of a two- or three-step distribution system, depending on local market conditions. The products of the Environmental Science Business Group are addressed to both professional users and consumers in the non-agricultural segment and are distributed through different channels. Bayer Cropscience green industry, pest control and vector control products are marketed directly to professional users, while home and garden products are sold to consumers through specialized retailers. Duplicate safety stock at branch locations Company calculates the demand (which is seasonal based) in advance based on past experience and accordingly distributes the product to the regions. They do not keep any safety stock at branch location. However, if there is an additional demand of a particular product in a particular region and the same is available in excess in nearby region, product may be redistributed from the nearby region.
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Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
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Such a competition can lead to decline in the performance of both the channel members. The indicators of channel conflict would be Low channel productivity Deterioration of channel relationships Poor customer relationships Competition for sale in the same geographical area. To avoid such situations Bayer follows two basic principles Territory in charge looks after any issue By maintaining clear boundaries for authority and operation
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The channel structure is managed by the territory incharge of the company. The territory is the lowest subdivision of sales and distribution organization. The framework behind the design of the Channel Structure is based on Customer Segmentation and Sales Distribution. Demand from customers plays a very vital role on channel selection. Bayers follows a multiple vertical integrated distribution channel for it product distribution.
11% 9%
BAYER
7%
73%
Fig 6. Market share of Bayer The company has only 11 % market share (Fig 6) and there is a scope of vast improvement and growth of the channel structure to command a larger market share. This can be achieved through initiatives channel participation in organizing the gathering, educating the farmers and students even in the agricultural colleges. The company should reach out to zones and regions which do not perform well as compared to other to break the barriers of traditional thinking, educate those farmers of the benefits of using the company products, quantifying the losses incurred due to avoidance of pest control, the need for quality products in the market and opportunity to avail better prices and export destinations for quality crop.
Summary: Many companies drive their channel strategies based solely on financial criteria, namely cost of selling, not treating their sales channels as investments which are expected to produce a reasonable return. However, Bayer CropScience realizes the ability of the channel to reach the right customers at the right time with the right solutions. It has also realized that channel partnership and maintaining relationships with channel partners are key to growing and sustenance. Bayer CropScience has also invested in two main areas to provide the value proposition to the consumers/customers. One is launch of new innovative products every year and second is educating the consumer and providing after sales service. Bayer CropScience is a customer oriented company, committed to a partnership approach, through products and services that provide clear benefits to the customers. However, Bayer Cropscience needs to bring out a process for Channel conflict management. Although they have not faced any major problems yet, however since they have a multi-channel and multi-product-same distribution channel, they are at a high risk of channel conflicts.
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5. CONCLUSIONS
i) Market Leader - Bayer Crop Science is the market leader and one of worlds major suppliers of crop protection products, seeds and plant technology. To maintain its position, Bayer constantly innovates new products through its research. ii) Well-defined Sales and Distribution Channel - Bayer has a well defined sales and distribution department for each of the 120 countries the company operates in. For each country they have a country head, zonal head, regional head and the territory in charge. They have a rich channel network comprising of distributors, dealers and the retailers being mainly looked after by the territory in-charge at the lowest level. iii) Sales-force - The salesforces are mainly procured from the agricultural colleges and through the job portals and the consultancies. The product manager and the research team provide product based training to the sales force. Training is also imparted in soft skill and IT systems. The company arranges trainings from experienced faculty of agricultural colleges on need basis. iv) Compensation - The company provides a high fixed salary component comprising 70% of emoluments and low variable components (30%). Bonuses and rewards are given in the form of promotion and sponsored foreign trips. However, in terms of incentives in order to motivate salesforce is lacking. v) Appraisal System - The appraisal system is only once in a year and only through the supervisor. This probably needs to be modified into a bi-yearly appraisal or an in-formal appraisal during the year. v) Product Awareness - The company arranges product awareness programs among poorly educated farmers who do not use modern methods and techniques of crop protection and seeds by organizing gatherings and demonstrations. The company creates a repeat experience for the farmers through keeping in touch with them, collecting their feedback and reusing it in research to server the customer better and to satisfaction. vi) Managing Channel Conflicts - Bayer Cropscience needs to bring out a process for Channel conflict management. Although they have not faced any major problems yet, however since they have a multi-channel and multi-product-same distribution channel, they are at a high risk of channel conflicts.
References
[1] [2] [3] Class Note on Sales and Distribution Management, by Prof. Sanjeev Varshney, XLRI, Jamshedpur, 2009. Venugopal P., Sales and Distribution Management, Response, New Delhi, 2008. Official website of Bayer [http://www.bayer.co.in, http://www.bayercropscience.com]
Acknowledgement: The authors would like to acknowledge Mr. Sourav Banerjee, Manager,
Sales Support of Bayer Crop Science Limited, Powai, Mumbai, for his help in giving suggestion and providing information on sales and distribution.
Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai
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Appendix
Interview with Manager (Sales) of Bayer Crop Science
[These information on sales and distribution of Bayer Crop Science Limited are collected through face to face personal interview with the Manager - Sales Support of Bayer, Mr. Sourav Banerjee on 4 August 2009 (10:45 a.m. to 12:00 noon) at Bayer head office, Hiranandani Garden, Powai, Mumbai.]
A. Introductory Information
1. Name of the Organization: Bayer Crop Science 2. Year of Inception: 1863 3. Ownership of the Organization (Please tick the appropriate): i) Public Sector iii) Joint Venture (public & private) v) Public Limited Company 4. Locations of Business: i) Single location ii) Private Sector iv) Joint venture (private & private) ii) Multi location ix) Hospitality x) IT xi) ITES xii) Petrochemicals xiii) Power xiv) Processing xv) Retail xvi) Textiles xvii) Others (Pesticides)
5. Nature of Business (tick the appropriate): i) Automobiles ii) Banking iii) Cement iv) Chemicals & Fertilizers v) Electronics & Telecommunications vi) Engineering vii) Pharmaceutical viii) FMCG 6. Main Product Category:
i) Insecticides (Confidor/ Admire, Calypso, Decis, Temik, Oberon) ii) Fungicides (Antracol, Baycor, Folicur, Monceren) iii) Herbicides (Atlantis, Basta, Topstar, Whip Super)
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B. Sales Management
1. Sales Organization Please give the hierarchy of the sales organization i) CEO at Head Office in Germany ii) Whole world is divided into five Segments (Europe, North America, Latin America, Asia, and Africa) iii) Each segment comprises of a few countries. iii) Every country is headed by a Country Head iv) Each country is divided into Zone and is headed by Zonal Manager (i.e., India is divided into six zones, East, West, North, South, Central and Andhra zone) v) Each zone is subdivided into Region and is headed by Regional Manager (i.e., Maharashtra is divided into three region, North Maharashtra, South Maharashtra and Western Maharashtra). vi) Each region is sub divided into Territory and is headed by Territory in-charge. 2. Recruitment and Induction Process a) How is the requirement for new sales person captured? i) Inputs from the country head, zonal and regional managers ii) As a result of planned expansion iii) As per the need based on employee status available by the HR department b) What is expected from the Sales Person who wants to join the company? i) To achieve sales as per target set by superior ii) Good teamwork and team spirit iii) Local language proficiency iv) Good communication skills c) What are the sources for recruitment? i) Campus recruitments from agricultural colleges of India ii) Advertisement in the newspapers iii) Scanning from internet by HR department iv) Through company website (interested candidates apply directly through Bayers website) d) Is the selection just based on only interview, or are there any other set of evaluations? The candidates are filtered by HR as per company policy of recruiting for particular position and selections are bases on interviews organized by the HR department. e) How many rounds of interview happen?
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Three rounds. i) One with subject matter expert ii) Next with Country Head or Zonal Head or Regional Head depending on position. iii) The last one with the HR department f) What is he judged on? What qualities? (Ex. Past experience, communication skills, education etc). Please give the order. i) Candidate should have technical knowledge in agricultural science ii) Local language proficiency iii) Must possess good communication skills g) After joining, what is the procedure of induction? Any training imparted to new joinee? Company arranges the following training sessions i) Induction training (3-4 days) at regional or zonal level ii) Familiarization sessions with product manager and development teams 3. Territory Allocation Process and Strategy a) How is a territory designed (population size, area wise, ability to serve market etc)? One territory consists of a few districts (1-2 districts). This depends on i) Agricultural market survey conducted by the team ii) Expert forecast b) What method is used for deciding sales territories (i.e., Breakdown method, Geographical, Workload etc.) Sales territories are divided using the workload method. Based on agricultural economy of the country, a country is subdivided into zones which may comprise of one or more states. Zones are further subdivided into regions comprising of many districts. Regions are further subdivided into territories comprising of a few districts as per convenience. c) How are these territories allocated? Territories are allocated based on infrastructure and ease of access, availability of distributors, dealers and retailers. d) What territory mapping process do they follow? Company maintains Bottom-up process. 4. Reporting Structure and Systems Hierarchical, with a flat style of working.
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5. Compensation Structure a) What is the framework for designing the compensation package? (i.e., Fixed salary, incentive based or territory, variable salary etc.) Large fixed salary with less variable component (70% fixed salary + 30% variable). b) Are any monetary benefits given outside salary? Bonuses and rewards are given in the form of promotion and sponsored foreign trips. 6. System of Evaluation a) How does the appraisal of the sales force happen? Appraisal is done once in a year by the supervisor. Bayer does not follow 360 degree appraisal. b) Are any targets set for the sales force each year/month/half year/quarterly etc? Yes, targets are set for individual sales force. c) What are the criteria for setting the targets? i) Territory potential ii) Past market performance and growth trends iii) Introduction of new product brands in same channel d) What are the evaluation criteria? Is it result oriented completely or product wise or territory wise etc? Or is it based on where the product is in as per Product lifecycle? i) Sales performance (both quantitative and qualitative) ii) Assigned targets achievement 7. Training and Development a) What trainings are given to sales force? i) Training on product knowledge ii) On job training by senior sales persons to enhance selling skills, communication skill and to build confidence level. b) Are the trainings based on evaluation? Yes they are based on evaluation too. c) What motivational activities are taken by the department for motivating the sales force? Promotion and sponsored foreign trips.
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d) How is the exceptional sales force personnel further developed? i) Extensive on the job training ii) Training by product managers iii) Training by expert faculty from reputed agricultural colleges iv) Training on soft skills, product knowledge
C. Channel Management
1. Channel Environment a) What are the channels for this product category? Distributors - Dealers - Retailer 2. Channel Strategy a) What is the strategy? Distributors have some target to achieve. 3. Channel Design and Structure a) What is the process of designing/deciding a new channel? Channel partner is selected mainly based on i) Product knowledge ii) Willingness iii) Financial capability However if a person is not so solvent financially, but has knowledge in product and willingness, Bayer may still choose him/her a channel partner with limited product stock. b) What is the channel structure and how many for each level? Bayers channel structure is three tiers i) Distributors (approximate number: 3000) ii) Dealers (approximate number: 18,000-20,000) and iii) Retailer (approximate number: more than lakh) c) What is the framework to design the Channel Structure? (Buyer need, Customer segmentation, distribution etc) Customer Segmentation and Sales Distribution
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4. What Is The Basis Of Channel Selection? i) Demand from customers ii) Variable cost involved iii) Competitors 5. What Is The Design Of Distribution Channel? i) Single ii) Multiple 6. If Multiple Distribution Channel Exits, Which Of The Below Does The Company Follow? i) Vertical Integrated ii) Horizontal Integrated 7. Are There Multiple Products Distributed Through The Same Channel? i) Yes ii) No 8. Which Of The Marketing Mix Is More Relevant To Them? i) Price ii) Place iii) Product iv) Package 9. Does The Company Believe In Maintaining Duplicate Safety Stock At Branch Locations? Company calculates the demand (which is seasonal based) in advance based on past experience and accordingly distributes the product to the regions. They do not keep any safety stock at branch location. However, if there is an additional demand of a particular product in a particular region and the same is available in excess in nearby region, product may be redistributed from the nearby region. 10. Incase Of Multiple Product Distributed Through Same Channel, How Does The Company Maintain Stock Balance For All Products? i) Low distribution cost ii) Inter branch transfers - This is possible if one branch has excess products than required. iii) Stock replenishment - The Company is well integrated through one of the best IT solutions and SAP ERP. 11. Managing The Channel Members And Conflict How are channel members conflicts resolved? i) Territory in charge looks after any issue ii) By maintaining clear boundaries for authority and operation
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12. Appraisal And Evaluation Of Channel Members. a) What are evaluation criteria of channel members? i) Based on qualitative and quantitative ii) Sales and target achievement iii) Distribution reach iv) Cooperative nature v) Whether helpful and supportive b) Are there any channel motivation schemes? (Customer oriented, goodwill, margins, alliance based, trainings etc) i) Schemes made available especially in peak season, ii) Provide training and counseling if needed
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