Managing Indian Market

A Report
on
Supply Chain MANAGEMENT
Submitted to:
Mr. R.R.Parida
[Course Facilitator]
Submitted by:
Group No. : 02
1. Aditya Narayan
2. Asha Mahto
3. Jyoti Mekap
4. Jagdish Padhy
5. Mamata Rani Sahu
Self Help Groups:

G r o u p N o.
02

C S R E M,
Paralakhem
undi

PGDM2009
-11

Social
Perspective of
Management
 CERTIFICATE

THIS is to certify that Mr. Aditya Narayan (S0901), Mr. Bhabani

Shankar Mishra(S0916), Mr. Jyoti Mekap(S0926) and Mr. Pratush
Patnaik (S09), Mr. Simadri Nani Babu (S09) has successfully
completed the report entitled “Self Help Groups”.
I appreciate their skill, diligence and sense of commitment in
preparation of the project. The Project Work has been submitted as
partial fulfillment of the PGDM degree of Centurion School of Rural
Enterprise Management, Paralakhemundi. This project has been
prepared exclusively for the academic purpose hence it shall not be
used for any kind of non – academic purpose.

Signature of Project Supervisor

 DECLARATION

We do hereby declare that the project report entitled “Self Help Groups” submitted to the
Centurion School of Rural Enterprise Management, Paralakhemundi, for the partial
fulfillment of the degree of PGDM, is an authentic piece of work under the guidance of Prof.
Lopa Mudra Tripathy (Faculty, CSREM). This project has not been submitted for the award
of any other degree from any other institution neither in full nor as a part and has not been
published anywhere else before.

Signature
Aditya Narayan (Roll no.S0901)
Bhabani Shanker Mishra (Roll no.S09)
Jyoti Mekap (Roll no.S0926)
Pratyush Patnaik (Roll no.S09)
Simadri Nani Babu (Roll no.S09)
 ACKNOWLEDGEMENT

We would like to use this opportunity to thank Dr.G.C.Patro (Director CSREM) who has
given us the opportunity to undertake this project at Paralakhemundi. We would also like to
thank Prof. Umakanta Nayak (PGP Coordinator) to initiate this project work and give us a
better scope to enhance our professional attitude and skills.
We acknowledge our gratitude and indebtedness to our project guide Prof. Lopa Mudra
Tripathy (Faculty CSREM) for her enlighten guidance and valuable suggestions and
comments in preparing of the report.
We express our gratitude to all the respondents who has shared their valuable time in
answering different type of questions given to them.
Last but not the least, heart filled thanks to all our friends and also everyone else whose
name we were not able to incorporate in the acknowledgement but whose help and
support has been vital in the completion of this project work.

Signature
Aditya Narayan (Roll no.S0901)
Bhabani Shanker Mishra (Roll no.S09)
Jyoti Mekap (Roll no.S0926)
Pratyush Patnaik (Roll no.S09)
Simadri Nani Babu (Roll no.S09)
 This report is a output of study done on distribution channel of FMCG multinational. These studies
will give a brief idea about the business of a Coca Cola distributor operating in Gajapati district of
Orissa. This case identifies the key activities that lead in generating ideas about the stocking,
merchandising and display practices of this particular company. It focuses not only on the profit that is
generated from this business but also how this person ensures the sustainability of his business in a
remote place. It also provides information about the initial investment, cost structure, inventory
maintenance, means and sources of finance, credit policies, types of business losses, segmentation of
customers, profile of important clients, rotation of money etc. This study was carried out in two phases;
first phase was preliminary study and then secondary study. The purpose of preliminary study was to
gather information from the distributor about his business, which is done with the help of a
checklist. The secondary study was done to understand the industry and brand with which the
distributor is involved. So the following case will enable the readers in understanding the functional
or operational levels of a company including the channel partners and the role of the distributor for
managing his as well as company’s business.

M
r. Hrudananda Sahukar, owner of
Devi agency, a 47 years old person,
is an inhabitant of
Paralakhemundi. By
profession he is a businessman,
working as a distributor of Coca
Cola Company. He has started this
business 23 years before when he
was at Visakhapatnam. After about
12 years he shifted to Orissa, and
continued as a distributor in this
place. His sales territory comprises a
range from Mohana to Gunpur
covering near about 180 km, which
shows he is the distributor of Coca
cola Company of around both 50
towns and villages. Other than his
store, there is no more same brand
store in Paralakhemundi. But the
town has got several same
category stores like Pepsi, Shakti
etc. He has taken a rented shop
of about 2000 sqft near the
new bus stand
of Paralakhemundi. It
serves both as store and
warehouse. As it is not a very
big shop, decorative items and
furniture are not used.
The Soft drink
Industry
Nearly three decades ago the
competitive environment of the
carbonated soft drink (CSD) industry
was based on recognition of inherent
acceptance to the dominance of the
Coca-Cola Company. Beginning in
the 1960s Coca-Cola's dominance
had been increasingly challenged
particularly by Pepsi. The
new competitive
environment is well publicized
and intense. The Cola wars
were declared and the battle
continues. Pepsi and Coca- Cola are
widely recognized as being two of
the premier marketing companies in
the world. A great variety of new
products and package types have been
introduced. Coca-Cola and further
developments in the CSD industry came
about from major changes in strategy by
Pepsi and Coca-Cola. To some extent these
strategic changes arise from Pepsi's
challenge to Coke's dominance of the
industry. However, there are several
factors external and internal to the
industry have been important catalysts
for these changes. Rather than simply
reacting to a changing competitive
environment Pepsi and Coca-Cola
Company have created and implemented
strategies that turned the new
environment to their advantage.
The Coca Cola Company
The coca cola company is a beverage
company and the world leader in soft
drink sales. Coca-Cola produces and
distributes several brands globally.
However, they are leading manufacturer,
distributor and marketer of soft drink
concentrates and syrups, juice and juice-
drink products. The company is a
profitable company that trades on the
New York Stock Exchange. The original
product was formulated and based in
1886 by john Pemberton, a pharmacist in
Atlanta Georgia. Coca-Cola includes its
flagship product Coca-Cola which is
popularly known as Limca, Sprite, Fanta,
Maaza, Thumps up. Coca-Cola became
incorporated in 1919, Today it markets
and connects with consumers using a
portfolio of nearly 400 brands in over
200 different countries. Coca-Cola has
five strategic business units: North
America, Africa, Asia, Latin America,
Europe and the Middle East. Coca-Cola
and Pepsi products occupied nine of the
top ten spots in the U.S. soft drink
market. Coca-Cola ranked first in soft
drink sales globally and the company
earned almost 80 percent of its profits
from international sales. The goal of the
company is simple and effective. The
goal is to produce growth for the
company, not only intends to strengthen
the company but inspire the people
working for them.
Outreach
He is basically covering a geographical
area of about 180 km as his sales
territory which is defined
by the company itself. He has got
five spokes at places like
Ranipentha, Gumma, Kashinagar,
Gurandi and Rayagada. He hasgot
seven staff members for
distributing the goods, collecting
payments etc. The ordering cycle of his
customers varies from one day to one
week. Generally the ordering cycle is
one day for local customers and one
week for others. The frequency of his or
his staff member’s visit also ranges from
one day to one week. The distributor or
his staff members used to visit the local
customers everyday. Within a range of
30 km they visit once in three days, and
once in a week for the rest of the
customer. The delivery is done in a door
to door basis. Customers need not to
come to his store and take the goods.
They use vehicles like two autos and one
truck to visit their customers. One auto
moves everyday in Paralakhemundi. The
other auto moves within a range of 30
km once in three days, and the truck
visits seven blocks once in a week in a
rotation basis. Individual deliveries are
only possible with reachable resources he faces many
customers mainly the local problems in reaching his
customers. The other customers.
customers do not get
Sometimes due to tyre
individual
puncture and other problems
deliveries.
related to vehicle, bad weather,
he could not able to deliver the
goods to his customers in time.
This makes his
customers
unhappy and
dissatisfied.
Some retailers are reluctant to
purchase empty bottles. So Mr.
Sahukar fails to have business
deals with them.
Sometimes his staff
Picture no. 01: Loaded
delivery auto members start
quarreling with each other or
Devi Agencies they starts quarreling with the
customers. Managing these
issues becomes difficult for
him. Because of these quarrels
there exists a higher threat of
losing valuable
customers.
Another problem

i
n

f
i
e
l
d
 faced by
Spokes Devi
Age
Direct ncies is
supply
conflict
situation.

Retailer
Ranip
anta
Means before
Kasi n
agar the reach of its delivery team
some other rival productsor
G
urandi supplementary
Guma products supply takes away
the cash flow from
Raya
gada
prospective customers. So
it leads sometime
Although the
sales deficit situation for that
area week. Also creates
difficulties in
in which he is working is fulfilling targets.
convenient, and he has
required workforce and
Table 01: Bran ds of Coca Cola gained in last 28 years. It is operating
under the area known as highly alcohol
Thumps-up penetrating circle. The ace product in
Limca product mix is Thumps up with multiple
Aerated Soft sales to other products. The preference
Sprite
Drink of consumers and sales varies area wise.
Coca Cola Coca Cola is only sold in
Paralakhemundi and no demand exists
Fanta
for it elsewhere.
Mango Juice Maaza
rebuild.
Packaged
Kinley
Water P
r
He always tries to o
minimize these d
problems by negotiating with u
customers. A good c
businessman will never t
s
attempt to lose loyal
customers and will always Devi Agencies distributes
look for prospective all seven
customers. So Mr. Sahukar brands (Refer Table no. 1) of
always tries to maintain Coca Cola in its territory.
good relationship with his The product mix is based
loyal customers by providing upon consumer preferences,
them higher margin and retailer’s feedback and the
credit facilities. He anyway experience it has
manages to pass the benefits
of HVOs to loyal customers
by doing some manipulations
in billing.
The staff member who
quarrels with the customer,
Mr. Sahukar transfers that
particular staff to other area,
and assigns the distribution
work to another staff member
so that the relation can be
The packaging of product Devi Agencies. Kinley and
is done in three ways glass Maaza contributes only 4%
bottles, plastic bottles and of total sales which is almost
metal cannes. The comes from town locality.
size in all
category varies from each
other. For example in glass
category standard size of
bottle is 200 ml and 300 ml
whereas in plastic bottling
the range starts from
500 ml and ends on 2 litres.
Cannes comes in a universal
size of 300 ml.
Glass bottles are delivered in
carats, whereas plastic
bottles and cannes are
packed in cartoons and
convenient to handle. The
carats are very difficult to
manage and are highly
expensive in term of
maintenance but are crucial
to show the presence and
are

important for acquiring sales

and display space.
Mainly the company is
known for its carbonated
beverages but
also have mango
juice called
“Maaza” and packaged
water named “Kinley”. The
sales of these products in
urban areas are much higher
than in the areas operated by
Coke and its rivals strategy
The main competitors for Coca Cola are
Pepsi and the Local cola which was
introduced to compete against Coca-
cola. Local cola has slightly more
advantage over both Pepsi and Coca-cola
because of its cheaper price (Rs.5) and
higher dealer margin. Here in Gajapati
district, coca-cola has one distributor
point covering one lacs fifty thousand of
customers operating in the area from
Mohana to Gunupur. From this point of
view, Coca-cola is in a better position in
local area of Paralakhemundi to make
good relations with the distributors as
well as retailers in a cost effective way
since Pepsi is operating from
Berhampur.
If we consider the marketing strategy of
both Pepsi and Coca-cola, a lot of
similarity can be found. In the 1990s
both the companies followed a value
pricing policy but in 2001/02 both
entered in to premium categories
targeting both rural and urban population
because of change in affordability of the
Indian consumers due to the economic
growth.
Coke has been leading the competition
from 1998-2002 in terms of higher
market capitalization, gross margin and
net income. The market for carbonated
beverages was slowing down and other
newer segments were growing. Water
and Sports beverages grew at 26% and
15%. Pepsi’s growth was because of
acquisitions that it had made and
introductions of various new products.
Pepsi acquired Gatorade and gained 81%
market share in sports beverage segment.
Pepsi’s Lipton was outperforming
Coke’s Nestea. Pepsi’s Tropicana
defeated Coke’s Minute Maid in every
market.
Despite India’s complexity, Coca-Cola
followed two major points on which to
build the marketing strategy. First, there
is a love for both cricket and movies in
India, Coca-Cola targeted the celebrity
and the cricket greats to promote its
product. Second, Coca-cola officials
learned that soft drinks were seen as a
luxury item, only consumed for special
occasions. One another significant fact
about soft drink industry showed that the
price value equation is no more existing
as mentioned earlier. Coca-Cola
communicated directly to the consumers
through its same product promoter
Aamir Khan, noting that they should
only expect to pay 5 rupees for the
product.
Since consumer patterns of India varies
because of cultural diversity and rural
consumers behave differently from the
urban. Realizing this fact, to reach out to
rural India, Coke started out by drawing
up a hit list of high potential villages
from various districts. To ensure full
loads, large distributors were appointed,
and they were supplied from the
company's depot in large towns and
cities.
At another level, the problem of low
working capital of the small retailer was
addressed through smaller drop sizes.
Smaller drop size was quite appropriate
decision because of because of the
higher service frequency of the hub and
spoke mode
Coke realized that the communication
media used in cities and urban areas
would not work in villages because of
low penetration of conventional media.
So Coke decided to concentrate on
various haats (weekly markets) & melas
melas (fairs) held annually in various
parts of the country to reach the rural
customers.
Targeting the rural consumers Coca cola
launched Chota Coke in 2002 priced at
Rs. 5, it bought out a commercial
featuring Bollywood actor Aamir Khan
to communicate the message of the price
cut and the launch of 200 ml bottles to
the rural consumers. It was proved as
one of the most successful strategy to
reach rural consumers.
By seeing this success, PepsiCo too had
started focusing on the rural market, due
to the flat volumes in urban areas. Like
Coca Cola, PepsiCo too launched 200 ml
bottles priced at Rs. 5. To challenge
Coca Cola’s strategy, PepsiCo launched
another product of 300 ml priced at Rs.6.
Segmentation
Segmentation is done for better
understanding the needs of consumer so
that it can be fulfilled. Devi Agencies
has segmented its total territory in
different segments. And they have
identified the consumer preferences over
there. The different segments they have
classified are alcoholic persons, adult
students, young students, households and
acidity suffering people. The distribution
of product is done on these segments
locality. For example Thumps-up is
available inside all beer bars and nearby
all wine shops. Fanta and Coca Cola is
available at all school and colleges and
so on. Other strategy is to sale any
product at a point where other product is
not available.
Sales
Sales is managed by effective workforce
of seven people. Coca Cola India
appoints one Sales Executive at each
Distributor’s office and under him/her
every spoke has a Market Developer on
companies’ payroll. All MD reports to
Sales Executive and sales executive
reports to Area Sales Manager, who
handles eight territories in by his
Berhampur office. Sales executive are
responsible for formation of Hubs and
Spokes in their territories. As spoke has
a direct impact on profits of a distributor
so Sales Executive has to take consent of
distributor also.
Devi Agencies manages its sales by
aiming “Availability at Arm’s Reach”.
Sales in the town and nearby areas are
managed by effective and experienced
team of two members with help of a
auto. Other areas are managed by Spokes are responsible for maintaining
another two teams using auto and a mini their target provided by Sales Executive
truck. with help of Market Developers. Spokes
Sales figures varies from product to also have discriminative consumer
product. As Thumps-up is known as its preferences in its territory (Refer Table
ace product so it is the leader in sales no. 02). The targets for spokes are
Table 02: Spoke wise Beverage determined on the basis of market
preferences development expectations, experience of
the spoke and market developer and on
Spoke Area Preferred Brand
the last year’s performance (Refer Table
Ranipanta Fanta no. 03) and sales quota is decided for
Guma Fanta next year and is reviewed on quarter

Kasinagar Limca
Gurandi Thumps-up & Sprite
Rayagada Thumps-up & Sprite
(Refer Chart no. 01) with a annual sales
of 58590 carats in year 2007-08. The
second is Limca with a contribution of
17% and the rest contributes 15% in
which 8% is the part of Fanta.

basis.
Spoke Model
Coca Cola initiated its rural campaign by
adapting Hub and Spoke Model to tap
rural market because it understood the
geographical differences in India. There
is a vast difference in the urban and rural
market in almost all parameters like
consumption pattern, preferences, credit,
margins structure and personal relations.
Spoke are designed by Sales Executive shops, hanging bucket for medium shops
appointed at distributor’s office with and big boards and bottle stands for
consent of distributor. The need analysis HVO’s and other big outlets (Refer
is done by SE and report is sent to Area Picture no. 03). The soft drink
Sales Manager at regional office, the companies are bearing huge losses by
company allows the spoke by verifying using glass bottles and carats but it plays
the status of the distributor and size of a crucial role in acquiring display space.
the territory. As cola purchase is known as impulse
purchase so the spontaneous display has
Spoke are in direct connection with
a crucial role in end sale.
distributors, they sends their orders to
and pays to distributors. The credit can
be provided based on the relationship
they are maintaining. In case of Devi
Agencies they are providing credit of 3
days to spoke. Another condition here is
that a spoke has to order full load of a
truck so that it directly delivers the
company supply to save loading and
unloading cost.
Spoke receives a margin of Rs. 8/- per
carat which can be increased by
receiving some volume scheme revised
by company time to time. Distributor
also offers volume discount especially in Picture no.02: Display board for small shops
off season to fulfill its targets.
Another stunt for acquiring display is to
Display provide refrigerators to high volume
There is always a strong fight between Outlets and other outlets giving high
the cola players for display space at sales. By providing the cooling system
retailer’s place. Coca Cola has came up company makes people barred from
with some innovation to acquire those storing other than its line of cola in its
spaces. Like small hanging boards shop. A person visits on a month basis to
(Refer Picture no.02)for very small ensure the guidelines are followed.
 Devi Agencies has some problems in
handling these issues:
• Demand for display unit is much
more than supply from company
• Maintenance of lighting board is
an issue
• Company is interested
providing cooling system in
urban areas
• Maintenance and service
cooling system
• Improper monitoring of cooling
system guidelines
Pricing
Pricing is done at company level and varies
for spoke, HVO and retailer (Refer Table
no. 04). Distributor is doing some
manipulation to pass HVO benefits to its
loyal customers.
Maaza comes in a pack of 200 ml and
250 ml size where 200 ml price is
same as other 200 ml brands and 250
ml is priced at par other 300 ml
brands.
in
of
Price for plastic bottle is same for the
package but quantity varies according to
volume of the product. For example the
price for 1.5 litre cartoon is same as the
price of 500 ml bottle cartoon but the
quantity of bottle in 1.5 litre is 12bottles
and 500 ml is 36 bottles.
Products in the form of tin can be priced
differently and some premium is levied
on this category due to high packaging
expenses.
Margins
Margin for a distributor associated with
Coca Cola is very high in the industry.
Even in FMCG segment it is one of the
highest paying company to its channel
arms. The margin for a distributor per
carat can be as high as Rs. 20/- per carat
depends on the reseller. It has to allow a
discount of Rs. 5/- per carat to HVO,
which is reimbursed at month closing,
the same procedure is followed for a
spoke who gets Rs. 8/- per carat discount
on the retailers price. The retailers also
make good money out of Coke business.
Schemes
Company announces schemes and
incentive plans for distributor, retailer as
well as for spokes associated with
distributor. Schemes for distributors are
mainly related to volume of sales they
are making. It is mostly in form of non
cash benefits. Few examples are trip to
Bangkok, Gold coins, Refrigerators,
Free empty Carats and these gifts cannot
be en-cashed. For retailers company
comes with plans like volume discount
on quarter basis and incentives for
pushing non pulling brands like Sprite
and Kinley. These incentives are given
in form of discount coupons, empty
carats or credit to their account. For
spokes the schemes are based on their
performance in terms of sales and the
reach they made in remote places. They
are incentivized by providing free empty
carats, cooling systems, gold coins based
on their competencies.
Interesting fact of these plans is that only
retailers are entertained for schemes in
seasonal time to make extra money. In
case of distributor and spoke associates
the plans are announced in off season
time i.e. November to January, which is
very tough task to achieve.
Credit
The business of Devi Agencies is highly
profit making business but they adapted
a policy of not providing credit since
inception of its business. Company does
not conditions distributor to provide
credit to retailers, HVO, hubs and
spokes. CCI is only interested in
fulfilling the target and outreach made
by a distributor. It is the headache of
distributor to capture markets by any
instruments. So Devi Agencies decided
not to provide credit and was able to
settle because of first mover advantage.
They believes in maintaining good
relation by providing quality service, on
time delivery and discounts. In some
cases to loyal customers it provides a
credit of three days. Another form of
credit is provided to spokes which is on
a condition that if they will order for full
truck load they can avail credit of three
to four days. A retailers and HVO’s in HVO

Paralakhemundi gets a running a/c

facility with the distributor. On an
average they are benefitted by 4-5 days
credit and the a/c are refreshed in every
three months.
Finance
As the financial of Devi Agencies is
considered, they are able fulfill their
targets, are efficiently managing funds
but are not able to grow in terms of
profits. As the sales have gone up by
almost 12% and they have pulled back
the cash discount from many areas but
are not able to increase their profits but a
negative growth they are registering.

As the CCI is in full support with Devi

Agencies as far as it enters in new
markets and tap new consumers. Another
critical issue for Devi Agencies is to face
a prospective challenge from a direct
competitor in form of sub dealer of to
Berhampur dealer of Pepsi Co.. The cost
of outreaching is shooting as the fuel rate
hikes day by day. So it is in a dilemma of
whether to expand and to sustain the
current position or to come tie up with
another product line to share its
distribution infrastructure and outreach.
HVO

Bibliography
http://www.coca-colaindia.com/
http://www.rediff.com/money/2006/feb/03inter.htm (September 18, 2009)
http://knowledge.emory.edu/article.cfm?articleid=822 (September 17,
2009)
http://projectinfoline.com/Coca%20Cola%20India%E2%80%99s%20Thirs t
%20for%20the%20Rural%20Market.html (September 17, 2009)
http://www.oppapers.com/essays/coca-cola-overview/67411 (September
19, 2009)

Some Snapshots!!!