Chapter : 1

INTRODUCTION

INTRODUCTION OF CHANNEL OF DISTRIBUTION

Channel of distribution
A channel of distribution or trade channel is the path or route along which goods move from producers to ultimate consumers or industrial users. In other words, it is the distribution network through which a producer puts his product in the hands of actual users. The channel of distribution includes the original producer, the final buyer and any middlemen-either wholesaler or retailer. The term middleman refers to any institution or individual in the channel which either acquires title to the goods or negotiates or sells in the capacity of an agent or broker. But facilitating agencies that perform or assist in marketing function are not included as middlemen in the channel of distribution. This is because they neither acquire title to the goods nor negotiate purchase or sale. Such facilitating agencies include banks, railways, roadways, warehouses, insurance companies, advertising agencies, etc.

Product distribution (or place) is one of the four elements of the marketing mix. An organization or set of organizations (go-between) involved in the process of making a product or service available for use or consumption by a consumer or business user.

The other three parts of the marketing mix are product, pricing, and promotion. Distribution is also a very important component of Logistics & Supply chain management. Distribution in supply chain management refers to the distribution of a good from one business to another. It can be factory to supplier, supplier to retailer, or retailer to end customer. It is defined as a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel. Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

Channels
A number of alternative 'channels' of distribution may be available: Distributor, who sells to retailers via direct marketing, or brokers can also be used, Retailer (also called dealer or reseller), who sells to end customers Direct Distribution (Direct Marketing), where an organization sells its products directly to the end customer. For example in case of online purchases (Internet Marketing and E-commerce) there will be the seller and customer. For this the seller and the customer may depend on various shipping providers. Advertisement typically used for the consumption goods i.e. direct selling Distribution channels may not be restricted to physical products from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc. process of transfer the products or services from Producer to Customer or end user. There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

Channel decisions
Channel Sales is nothing but a chain for to market a product through different sources. Channel strategy Gravity & adventure Push and Pull strategy Product (or service) Cost Consumer location

Type of marketing channel

Intensive distribution - Where the majority of resellers stock the 'product' with convenience products, for example, and particularly the brand leaders in

consumer goods markets (price competition may be evident). Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product. Exclusive distribution - Only Lombard specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'. INFLUENCES ON DISTRIBUTION CHANNEL AND THEIR EFFECTS

Influence Market factors

Comments An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Another important factor is buyer needs for product information, installation and servicing. Which channels are best served to provide the customer with the information they need before buying? Does the product need specific technical assistance either to install or service a product? Intermediaries are often best placed to provide servicing rather than the original producer - for example in the case of motor cars. The willingness of channel intermediaries to market product is also a factor. Retailers in particular invest heavily in properties, shop fitting etc. They may decide not to support a particular product if it requires too much investment (e.g. training, display equipment, warehousing). Another important factor is intermediary cost. Intermediaries typically charge a "mark-up" or "commission" for participating in the channel. This might be deemed unacceptably high for the ultimate producer business.

Producer factors

A key question is whether the producer has the resources to perform the functions of the channel? For example a producer may not have the resources to recruit, train and equip a sales team. If so, the only option may be to use agents and/or other distributors. Producers may also feel that they do not possess the customer-based skills to distribute their products. Many channel intermediaries focus heavily on the customer interface as a way of creating competitive advantage and cementing the relationship with their supplying producers. Another factor is the extent to which producers want to maintain control over how, to whom and at what price a product is sold. If a manufacturer sells via a retailer, they effective lose control over the final consumer price, since the retailer sets the price and any relevant discounts or promotional offers. Similarly, there is no guarantee for a producer that their product/(s) are actually been stocked by the retailer. Direct distribution gives a producer much more control over these issues.

Product factors

Large complex products are often supplied direct to customers (e.g. complex medical equipment sold to hospitals). By contrast perishable products (such as frozen food, meat, bread) require relatively short distribution channels - ideally suited to using intermediaries such as retailers.

Information Gathering and distributing market research and intelligence - important for marketing planning Promotion Developing and spreading communications about offers

Contact

Finding and communicating with prospective buyers

Matching

Adjusting the offer to fit a buyer's needs, including grading, assembling and packaging

Negotiation Reaching agreement on price and other terms of the offer

Physical distribution Financing

Transporting and storing goods

Acquiring and using funds to cover the costs of the distribution channel

A channel of distribution consists of three types of flows: Downward flow of goods from producers to consumers Upward flow of cash payments for goods from consumers to producers Flow of marketing information in both downward and upward direction i.e. Flow of information on new products, new uses of existing products, etc from producers to consumers. And flow of information in the form of feedback on the wants, suggestions, complaints, etc from consumers/users to producers. An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short and directly link producers with customers. Whereas other channels are long and indirectly link the two through one or more middlemen.

These channels of distribution are broadly divided into four types: Producer-Customer: - This is the simplest and shortest channel in which no middlemen is involved and producers directly sell their products to the consumers. It is fast and economical channel of distribution. Under it, the producer or entrepreneur performs all the marketing activities himself and has full control over distribution. A producer may sell directly to consumers through door-to-door salesmen, direct mail or through his own retail stores. Big firms adopt this channel to cut distribution costs and to sell industrial products of high value. Small producers and producers of perishable commodities also sell directly to local consumers.

 Producer-Retailer-Customer: - This channel of distribution involves only one middleman called 'retailer'. Under it, the producer sells his product to big retailers (or retailers who buy goods in large quantities) who in turn sell to the ultimate consumers. This channel relieves the manufacturer from burden of selling the goods himself and at the same time gives him control over the process of distribution. This is often suited for distribution of consumer durables and products of high value.

Producer-Wholesaler-Retailer-Customer: - This is the most common and traditional channel of distribution. Under it, two middlemen i.e. wholesalers and retailers are involved. Here, the producer sells his product to wholesalers, who in turn sell it to retailers. And retailers finally sell the product to the ultimate consumers. This channel is suitable for the producers having limited finance, narrow product line and who needed expert services and promotional support of wholesalers. This is mostly used for the products with widely scattered market.

Producer-Agent-Wholesaler-Retailer-Customer:- This is the longest channel of distribution in which three middlemen are involved. This is used when the producer wants to be fully relieved of the problem of distribution and thus hands over his entire output to the selling agents. The agents distribute the product among a few wholesalers. Each wholesaler distributes the product among a number of retailers who finally sell it to the ultimate consumers. This channel is suitable for wider distribution of various industrial products. An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is flexible, effective and consistent with the declared marketing policies and programmes of the firm. While selecting a distribution channel, the entrepreneur should compare the costs, sales volume and profits expected from alternative channels of distribution and take into account the following factors:-

1) Product Consideration: - The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. The major product related factors are:a) Products of low unit value and of common use are generally sold through middlemen. Whereas, expensive consumer goods and industrial products are sold directly by the producer himself. b) Perishable products; products subjected to frequent changes in fashion or style as well as heavy and bulky products follow relatively shorter routes and are generally distributed directly to minimize costs. c) Industrial products requiring demonstration, installation and after sales service are often sold directly to the consumers. While the consumer products of technical nature are generally sold through retailers. d) An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow range of products may their products distribute through wholesalers and retailers. e) A new product needs greater promotional efforts in the initial stages and hence few middlemen may be required. 2) Market Consideration: - Another important factor influencing the choice of distribution channel is the nature of the target market. Some of the important features in this respect are:a) If the market for the product is meant for industrial users, the channel of distribution will not need any middlemen because they buy the product in large quantities. Short one and may as they buy in a large quantity. While in the case of the goods meant for domestic consumers, middlemen may have to be involved. b) If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable. While in case of a large number of potential customers, use of middlemen becomes necessary. c) If the customers place order for the product in big lots, direct selling is preferred. But, if the product is sold in small quantities, middlemen are used to distribute such products.

3) Other Considerations: - There are several other factors that an entrepreneur must take into account while choosing a distribution channel. Some of these are as follows:a) A new business firm may need to involve one or more middlemen in order to promote its product, while a well established firm with a good market standing may sell its product directly to the consumers. b) A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. On the other hand, a large firm can establish its own retail outlets. c) The distribution cost of each channel is also an important factor because it affects the price of the final product. Generally, a less expensive channel is preferred. But sometimes, a channel which is more convenient to the customers is preferred even if it is more expensive. d) If the demand for the product is high, more number of channels may be used to profitably distribute the product to maximum number of customers. But, if the demand is low only a few channels would be sufficient. e) The nature and the type of the middlemen required by the firm and its availability also affect the choice of the distribution channel. A company prefers a middleman who can maximize the volume of sales of their product and also offers other services like storage, promotion as well as after sale services. When the desired types of middlemen are not available, the manufacturer will have to establish his own distribution network.

4) All these factors or considerations affecting the choice of a distribution channel are interrelated and interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of distribution by taking into account all these factors as a whole in the light of the prevailing economic conditions. Such a decision is very important for a business to sustain long term profitability.

ROLE OF MIDDLEMEN IN THE DISTRIBUTION OF GOODS

The middlemen perform the following marketing functions which are listed in sequence. Searching out buyers and sellers (contacting & Merchandising), matching goods to the requirements of market. Offering goods in the form of assortments or packages. Persuading and influencing the prospective buyers to favour a certain product and its maker (personal selling/sales promotion). Implementing pricing policies in such a manner that would be acceptable to buyers and ensure effective distribution. Providing feedback information, marketing intelligence and sales forecasting services for the regions to their suppliers. Looking after the process of distribution where necessary. Participating actively in the creation and establishment of a market for a new product. Offering pre and after sale services to consumers. Communicating the use of technique of the product to the users. Offering credit to retailers and consumers. Risk bearing with reference to stock hoarding/transport. Desirability of eliminating the middlemen

DISADVANTAGES OF HAVING MIDDLEMEN

We have already learnt the role of middlemen above, which indicates the significance of middlemen in the channel of distribution. Indeed without the existence of middlemen goods produced on a mass scale could not have reached the consumers at right time and place. However the existence of middlemen may lead to several short comings. The elimination of middlemen is based on the following grounds. Excessive number: Often there are too many middlemen between the manufacturers and consumers. As every middleman charges some commission or profit, the ultimate consumer has to pay a very high price for goods. They are social parasites thriving at the cost of the consumer and their ultimate elimination will reduce prices and burden on consumers. Superfluous: Most middlemen do not render any useful service in lieu of profit or commission. They act as only transfer agents and unnecessarily cause delay in the flow of goods. Their elimination will result in quick and smooth flow of goods. Limited risk taking: Middlemen do not bear the producers risk such as loss due to strikes, lockouts, depression and change in fashions and habits, etc. Anti-social activities: They take undue advantage of adverse conditions in business. Some businessmen (middlemen) indulge in anti-social activities like hoarding and adulteration to earn huge amount to profits. Limiting consumers choice: The middlemen often promote products which are inferior in quality and get high margin of profit. Thus they exploit consumers and limit their choice.

ROLE OF WHOLESALER AS AN INTERMEDIATE:

Wholesaler acts as middlemen in the channel of distribution as he buys goods in large quantity from the manufacturer and sells these to retailers in small quantities. His role in distribution of goods is discussed below: Buying and assembling: A wholesaler forecasts the demand for goods and assembles different varieties of goods from several manufacturers. Some wholesalers also import goods from foreign countries. Selling and dispersing: A wholesaler breaks the bulk so that retailers and users can buy them in small lots. His representatives regularly call on retailers and industrial users/buyers to distribute the goods among widely scattered people. Transportation: A wholesaler arranges transportation of goods from producers to his godowns and from there to retailers. Storage: He holds large stocks and serves as a reservoir and supplies to retailers. He helps in stabilizing prices by adjusting supply of goods to their demand. Packing and grading: A wholesaler packs and repacks goods in convenient lots. He sorts out goods in different grades. He also gives brand names to the products packed and graded by him. Advertising and sales promotion: A wholesaler performs advertising and sales promotion activities to increase the sale of products. He also takes the services of experts for this purpose. Financing: Sometimes the wholesaler buys goods on cash basis from manufacturers and sells them on credit to retailers. In this way he provides financial help both to the producers and retailers. If necessary, the wholesaler also provides financial help by way of advance payment to producers. Risk-taking: A wholesaler bears risks of changes in demand and prices, bad debts and damage to goods in the course of transportation and storage. By undertaking various risks he simplifies the process of distribution.

ROLE OF RETAILERS:
Retailers buy goods from wholesaler and sell them directly to consumers. Thus he acts as a direct link between the wholesaler and consumers. His role in distribution of goods is enumerated below: Wide choice to consumers: The retailer anticipates needs of consumers. He

assembles goods from different sources and stocks different varieties of products. Thus, he offers a wide choice to consumers. They can buy according to their purchasing power and requirements. Availability of goods in small quantities and at convenient locations: A retailer provides ready supply of goods so that consumers can buy conveniently and quickly in small lots without Channels of Distribution any inconvenience of placing advance orders and waiting for supplies. By ensuring uninterrupted and fresh supply of goods, he saves consumers from the botheration of buying goods in bulk and storing them. Home delivery: A retailer transports goods from wholesalers to ultimate consumers. Some retailers provide free home delivery service to their consumers. Thus they create place utility. Assurance of regular supply: He maintains adequate supply of goods so that consumers are sure of getting regular supply at the time of their need. Credit facility: Although retailers mostly sell goods for cash, they also supply goods on credit to their regular customers. Close interaction with customers: A retailer brings new products to the notice of customers and educates them in their uses. A retailer thus, acts as a friend and guide to his customers. Indeed his interaction with customers is of intimate personal nature and thus he is able to provide feedback to wholesalers and manufacturers about consumers' preferences.

INSTITUTIONAL RETAILERS
A retailer is the final link in the distribution channel between a manufacturer and the consumers. He is directly and continuously in touch with people of varied tastes and preferences. Retailers may be divided into two categories, namely institutional and noninstitutional. The institutional retailers (retail outlets) include departmental stores, multiple shops and mail order houses. Non-institutional retailers include the floating population of street sellers, peddlers, and hawkers. Departmental Stores: A departmental Store is a big retail store with many departments under one roof. It offers a wide range of products so as to suit different consumer tastes and preferences. All the departments are centrally controlled but each department forms a complete sales unit in itself. The examples of such stores in metropolitan cities are Akbarallys and Sahakari Bhandar in Bombay and Spencers in Madras. Multiple shops or chain stores: Manufacturers often use their own retail shops for direct sale of their products to consumers. These retail shops are established as multiple shops operating in the same city or different parts of the country. These shops have identical product display. Bata India Ltd and DCM provide typical examples of multiple shops system. In this type of retail selling manufacturers have control over distribution channel and have first hand information regarding customers' preferences. Mail-order business: These are retail outlets which sell goods by mail only. The mail order house centrally procures products, advertises them and expects perspective buyers to send offers/ orders. The products are sent through value-payable post. Mail Order Sales Ltd, Bombay, the seller of Bull worker health aid, is a typical example of such mail order business in India. It is through these retail outlets that manufacturers often by pass the wholesalers in trade route or path.

THE IMPORTANCE OF DISTRIBUTION:

Most producers use intermediaries to bring their products to market. They try to develop a distribution channel (marketing channel) to do this. A distribution channel is a set of interdependent organizations that help make a product available for use or consumption by the consumer or business user. Channel intermediaries are firms or individuals such as wholesalers, agents, brokers, or retailers who help move a product from the producer to the consumer or business user. A companys channel decisions directly affect every other marketing decision. Place decisions, for example, affect pricing. Marketers that distribute products through mass merchandisers such as Wal-Mart will have different pricing objectives and strategies than will those that sell to specialty stores. Distribution decisions can sometimes give a product a distinct position in the market. The choice of retailers and other intermediaries is strongly tied to the product itself. Manufacturers select mass merchandisers to sell mid-price-range products while they distribute top-of-the-line products through high-end department and specialty stores. The firms sales force and communications decisions depend on how much persuasion, training, motivation, and support its channel partners need. Whether a company develops or acquires certain new products may depend on how well those products fit the capabilities of its channel members.

Some companies pay too little attention to their distribution channels. Others, such as FedEx, Dell Computer, and Charles Schwab have used imaginative distribution systems to gain a competitive advantage.

FUNCTIONS OF DISTRIBUTION CHANNELS

Distribution channels perform a number of functions that make possible the flow of goods from the producer to the customer. These functions must be handled by someone in the channel. Though the type of organization that performs the different functions can vary from channel to channel, the functions themselves cannot be eliminated. Channels provide time, place, and ownership utility. They make products available when, where, and in the sizes and quantities that customers want. Distribution channels provide a number of logistics or physical distribution functions that increase the efficiency of the flow of goods from producer to customer. Distribution channels create efficiencies by reducing the number of transactions necessary for goods to flow from many different manufacturers to large numbers of customers. This occurs in two ways. The first is called breaking bulk. Wholesalers and retailers purchase large quantities of goods from manufacturers but sell only one or a few at a time to many different customers. Second, channel intermediaries reduce the number of transactions by creating assortmentsproviding a variety of products in one locationso that customers can conveniently buy many different items from one seller at one time. Channels are efficient. The transportation and storage of goods is another type of physical distribution function. Retailers and other channel members move the goods from the production site to other locations where they are held until they are wanted by customers. Channel intermediaries also perform a number of facilitating functions, functions that make the purchase process easier for customers and manufacturers. Intermediaries often provide customer services such as offering credit to buyers and accepting customer returns. Customer services are oftentimes more important in B2B markets in which customers purchase larger quantities of higher-priced products. Some wholesalers and retailers assist the manufacturer by providing repair and maintenance service for products they handle. Channel members also perform a risk-taking function. If a retailer buys a product from a manufacturer and it doesnt sell, it is stuck with the item and will lose money. Last, channel members perform a variety of communication and transaction functions. Wholesalers buy products to make them available for retailers and sell products to other channel members. Retailers handle transactions with final consumers. Channel members can provide two-way communication for manufacturers. They may supply the sales force, advertising, and other marketing communications necessary to inform consumers and persuade them to buy. And the channel members can be invaluable sources of information on consumer complaints, changing tastes, and new competitors in the market.

CHANNELS
A number of alternate channels of distribution may be available: Selling direct, such as via mail order, Internet and telephone sales Agent, who typically sells direct on behalf of the producer Distributor (also called wholesaler), who sells to retailers Retailer (also called dealer or reseller), who sells to end customers Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

CHANNEL MEMBERS
Distribution channels can have a number of levels. Kotler defined the simplest level that of direct contact with no intermediaries involved, as the zero-level channel. The next level, the one-level channel, features just one intermediary; in consumer goods a retailer, for industrial goods a distributor. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels. In large markets (such as larger countries) a second level, a wholesaler for example, is now mainly used to extend distribution to the large number of small, neighborhood retailers.

WHOLESALING
Wholesaling is all activities involved in selling products to those buying for resale or business use. Wholesaling intermediaries are firms that handle the flow of products from the manufacturer to the retailer or business user. Wholesaling intermediaries add value by performing one or more of the following channel functions: Selling and Promoting Buying and Assortment Building Bulk-Breaking Warehousing Transportation Financing Risk Bearing Market Information giving information to suppliers and customers about competitors, new products, and price developments Management Services and Advice helping retailers train their sales clerks, improving store layouts and displays, and setting up accounting and inventory control systems.

INDEPENDENT INTERMEDIARIES
Independent intermediaries do business with many different manufacturers and many different customers. Because they are not owned or controlled by any manufacturer, they make it possible for many manufacturers to serve customers throughout the world while keeping prices low.

MERCHANT WHOLESALERS
Merchant wholesalers are independent intermediaries that buy goods from manufacturers and sell to retailers and other B2B customers. Because merchant wholesalers take title to the goods, they assume certain risks and can suffer losses if products get damaged, become outof-date or obsolete, are stolen, or just dont sell. At the same time, because they own the products, they are free to develop their own marketing strategies including setting prices. Merchant wholesalers include full-service merchant wholesalers and limited-service wholesalers. Limited-service wholesalers are comprised of cash-and-carry wholesalers, truck jobbers, drop shippers, mail-order wholesalers, and rack jobbers.

MERCHANDISE AGENTS OR BROKERS

Merchandise agents or brokers are a second major type of independent intermediary. Agents and brokers provide services in exchange for commissions. They may or may not take possession of the product, but they never take title; that is, they do not accept legal ownership of the product. Agents normally represent buyers or sellers on an ongoing basis, whereas brokers are employed by clients for a short period of time. Merchandise agents or brokers include manufacturers agents (manufacturers reps), selling agents, commission merchants, and merchandise brokers.

MANUFACTURER-OWNED INTERMEDIARIES
Manufacturer-owned intermediaries are set up by manufacturers in order to have separate business units that perform all of the functions of independent intermediaries, while at the same time maintaining complete control over the channel. Manufacturer-owned intermediaries include sales branches, sales offices, and manufacturers showrooms. Sales branches carry inventory and provide sales and service to customers in a specific geographic area. Sales offices do not carry inventory but provide selling functions for the manufacturer in a specific geographic area. Because they allow members of the sales force to be located close to customers, they reduce selling costs and provide better customer service. Manufacturers showrooms permanently display products for customers to visit. They are often located in or near large merchandise marts, such as the furniture market in High Point, North Carolina.

VERTICAL MARKETING SYSTEMS

A vertical marketing system (VMS) is a distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate. A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. A vertical marketing system, on the other hand, provides a way to resolve the channel conflict that can occur in a conventional distribution channel where channel members are separate businesses seeking to maximize their own profitseven at the expense sometimes of the system as a whole. The VMS can be dominated by the producer, wholesaler, or retailer. There are three major types of vertical marketing

systems: corporate, contractual, and administered.

 A corporate VMS is a vertical marketing system that combines successive stages of production and distribution under single ownershipchannel leadership is established through common ownership. A little-known Italian eyewear maker, Luxottica, sells its many famous eyewear brandsincluding Giorgio, Armani, Yves Saint Laurent, and Ray-Banthrough the worlds largest optical chain, Lens Crafters, which it also owns.

 A contractual VMS is a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone. Coordination and conflict management are attained through contractual agreements among channel members. The franchise organization is the most common type of contractual relationship. There are three types of franchises: manufacturer-sponsored retailer franchise system (Ford Motor Co.), manufacturer-sponsored wholesaler franchise system (Coca-Cola bottlers), and service-firm-sponsored retailer franchise system (McDonalds). The fact that most consumers cannot tell the difference between contractual and corporate VMSs shows how successfully the contractual organizations compete with corporate chains. An administered VMS is a vertical marketing system that coordinates successive stages of production and distribution, not through common ownership or contractual ties, but through the size and power of one of the parties. Manufacturers of a top brand can obtain strong trade cooperation and support from resellers (P&G). Large retailers such as Wal-Mart can exert strong influence on the manufacturers that supply the products they sell.

Chapter: 2
COMPANY PROFLIE

Introduction

Type

Public NYSE: PEP

Traded as

NASDAQ: PEP S&P 500 Component

Industry Founded Founder(s) Headquarters Area served Key people Products Revenue Operating income Net income Employees

Foods, Beverages North Carolina, U.S. (1965) Donald Kendall, Herman Lay Purchase, New York, U.S. Worldwide Indra Nooyi (Chairman & CEO) See list of PepsiCo products US$ 57.838 billion (2010) US$ 8.332 billion (2010) US$ 6.338 billion (2010) 294,000 (2010)

PepsiCo Inc. (NYSE: PEP) is an American multinational corporation headquartered in Purchase, New York, United States, with interests in the manufacturing, marketing and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which include an acquisition of Tropicana in 1998 and a merger with Quaker Oats in 2001 which added the Gatorade brand to its portfolio as well. As of 2009, 19 of PepsiCo's product lines generated retail sales of more than $1 billion each, and the companys products were distributed across more than 200 countries, resulting in annual net revenues of $43.3 billion. Based on net revenue, PepsiCo is the second largest food & beverage business in the world. Within North America, PepsiCo is ranked (by net revenue) as the largest food and beverage business. Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006, and the company employed approximately 285,000 people worldwide as of 2010. The companys beverage distribution and bottling is conducted by PepsiCo as well as by licensed bottlers in certain regions. PepsiCo is a SIC 2080 (beverage) company.

ORIGIN
The recipe for Pepsi, the soft drink, was first developed in the 1890s by a New Bern, North Carolina pharmacist and industrialist, Caleb Bradham, who named it "Pepsi-Cola" in 1898. As the cola developed in popularity, he created the Pepsi-Cola Company in 1902 and registered a patent for his recipe in 1903.The Pepsi-Cola Company was first incorporated in the state of Delaware in 1919.[4] The company went bankrupt in 1931 and on June 8 of that year the trademark and syrup recipe was bought by Charles Guth who owned a syrup manufacturing business in Baltimore, Maryland. Guth was also the president of Loft, Incorporated, a leading candy manufacturer and used the company's labs and chemists to reformulate the syrup. He further contracted to stock the soda in Loft's large chain of candy shops and restaurants, which were known for their soda fountains, used Loft resources to promote Pepsi, and moved the soda company to a location close by Loft's own facilities in New York City. In 1935 the shareholders of Loft sued Guth for his 91% stake of PepsiCo in the landmark Guth v. Loft Inc.. Loft won the suit and on May 29, 1941 formally absorbed Pepsi into Loft, which was then rebranded as PepsiCo. (Loft restaurants and candy stores were spun off at this time.) In the early 1960s the company product line expanded with the creation of Diet Pepsi and purchase of Mountain Dew. Separately, the Frito Company and H.W. Lay & Company two American potato and corn chip snack manufacturers began working together in 1945 with a licensing agreement allowing H.W. Lay to distribute Fritos in the Southeastern United States. The companies merged to become Frito-Lay, Inc. in 1961. In 1965, the Pepsi-Cola Company merged with Frito-Lay, Inc. to become PepsiCo, Inc., the company it is known as at present. At the time of its foundation, PepsiCo was incorporated in the state of Delaware and headquartered in Manhattan, New York. The company's headquarters were relocated to its still-current location of Purchase, New York in 1970, and in 1986 PepsiCo was reincorporated in the state of North Carolina.

PRODUCT RANGE
Pepsi Mountain Dew Lay's potato chips Gatorade Diet Pepsi Tropicana beverages 7UP Doritos tortilla chips Lipton teas (PepsiCo/Unilever partnership) Quaker foods and snacks Cheetos Mirinda Ruffles potato chips Aquafina bottled water Tostitos tortilla chips Sierra Mist Fritos corn chips Walkers potato crisps

Chapter: 3
INTRODUCTION OF KURKURE SNACKS MARKET

INTRODUCTION TO SNACKS MARKET IN INDIA

The Indian snacks market is worth around US$ 3 billion .The unorganized snacks market is worth US$ 1.56 billion .Potato chips and potato-based items from 85 per cent of the Market. Haldirams and ITC are some of the leading players. Frito Lay, with a market share of 45 percent (US $550 million) dominates the market.

PepsiCo is also a dominant player in the snack food segment in India. PepsiCo's snack food company Frito-Lay is the leader in the branded potato chip market. It manufactures Lay's Potato Chips; Cheetos extruded snacks, Uncle Chips; traditional namkeen snacks under the Kurkure and Lehar brands; and Quaker Oats. Launched in 1999, this perfect 'namkeen' snack, fully developed in India, has become the torch bearer of fun and lovable human quirks. It developed an even stronger identity through celebrity associations with Juhi Chawla [2003] and Kareena Kapoor [2008], well-known actors in Indian Cinema.

Named after the Hindi word for "crunchy", Kurkure is a cheeto-like snack and is the flagship of Frito Lay's Indian division. It is marketed by Hirani Industries Corp. (USA incorporated company) in Kenya. It is one of the most popular food products in India today. The snack comes in 4 flavors. They are Masala Munch (orange pack), Green Chutney Rajasthani Style (light green pack), Chilli Chatka (dark green pack) and Tamatar Hydrabadi Style (brown pack). There are two new flavors too. One is the Kurkure Xtreme Electric Nimbu and the other is Kurkure Xtreme Risky Chilli. A Special Edition flavour, Jaljhalo Hit has been released as a Pujo Special for Durga Puja, 2007.

Snacks are of two types extruded & potato chips, Kurkure is the extruded snack item. In November 2006, Frito Lay announced plans to release Kurkure to American markets sometime in 2007. This decision was made after analysts showed increasing interest in Indian spices in the USA. Also the introduction in other markets with a non-resident Indian population such as the UK is planned.

Kurkure was Frito Lay's first big hit in India and succeeded by making a host of Indian flavours possible and popular in a finger snack. Kurkure is a crunchy new age namkeen snack brand which symbolizes light hearted fun. Embodying the spirit of India, Kurkure has found a home in the hearts & minds of all and enjoys the position of a strong Lovemark brand in India.

The spirit and twinkle of Juhi's personality complements and embodies what Kurkure stands for. Over the years, Kurkure has journeyed effortlessly from being a snack with a twist to being an integral part of the tea time menu to being an embodiment of lovable human 'imperfections' or 'tedhapan'

PRODUCT STRATEGY
FEATURES
Building trust and connection by informing the consumers of the authentic ingredients that go into the product. Kurkure is a new age Namkeen and made of edible ingredients including rice meal, corn meal, gram meal, edible oil, seasonings, salt, spices and condiments and flavours. Its Snack Smart initiative to cut out trans-fat from its products by using rice bran oil which cuts saturated fat by 40 per cent. Kurkure has 40% less Saturated Fat, Zero Trans Fats and No Added MSG .All the raw materials used in Kurkure comply with the Prevention of Food Adulteration Act and Rules that govern the manufacture, distribution and sale of Kurkure. All ingredients are such that are used daily in all households today for preparation of various edible items. Kurkure is a very popular and easy making product. They are manufactured by extruding heated dough through a die that forms the particular shape. They may be ball-shaped, curly, straight, or irregularly shaped. In India, it was called "Kurkure". Most popular were the corn curl kurkure.

 Pricing
Competitive pricing Strategy was adopted by the company in order to establish the brand in Indian markets. Introduction of smaller packs targeted towards small quantity consumers and Middle/ low income customers. Price Range Small Rs 5/Medium Rs 10/Large Rs 20/-

Quality Standards
Kurkure is made in automated plants in three locations. These are in Channo (Punjab), Kolkata and Pune. These plants are also audited and certified by various external agencies. These certifications include HACCP (Hazard analysis and critical control point) certification by TQCSI (Australia), which confirms that products are manufactured in Food safety environment and manufacturing has adequate controls to ensure product tracking, American Institute of Baking (USA), one of the best auditing body which confirms process and product safety. Our Plants are ISO 14000 certified which confirms that the manufacturing process ensures environmental safety. The plants are also certified to ensure that the product, process, environment and people safety have been maintained at very high level and this certification is issued by OHSAS 18001-(Occupational Health and safety assessment series) - (USA).

Ingredients
While concerning the ingredients, it contains major mixture of Rice Meal, Edible Oil, Corn Meal, Gram Meal, Salt, Spices and Condiments and converted them to snack like eating crisp sticks that has never introduced before.

 Usage Kurkure is also positioning itself on the basis of its usage. Its promotional campaigns urge Consumers to use it on. Daily basis At lunch Dinner Anytime, anywhere

Servings With Chaat With tea With Raita With drinks

Occasions Parties and celebrations

USP
Desi brand name. Easy to idnetify with. Kurkure is a synonym of crunchy food stuff. InFact a brand by the name TakaTak tried to imitate it but failed miserably. Launching its product in indian flavours, which differentiated it from their competitor its unique advertisements which features the bubbly Juhi Chawla. Innovative flavor, affordable price and continuous communication to consumers.

Each Indian region has special snacks. Snacks some time consumed along with meals or tea, coffee and other beverages. Banana wafers, chaklis, samosas, namkeens are few examples of large list of Indian snacks. The change in the family structure is also changing the food habits in India. Increase in the nuclear families and working women enhanced the market potential of ready to eat products and branded snacks. Though the Indian snack market is highly fragmented with market dominated by home snacks or those sold by local vendors, changing consumer lifestyle and health concern made them to look for hygienic, easy to carry and nutritious branded snacks. Biscuits, potato wafers and papads are already branded and well received by the consumers.

Pepsi, the late entrant in the Indian snack market decided to find niche market. In the Year 1999,the company launched Kurkure in the Indian Market. The product is developed in a way that it is having local taste and western chips. Kurkure is big success in Indian market. This made Pepsi to take this snack food to other global markets. Kurkure is already available in the Indian stores in the US and UK and Pepsi want to expand it to more stores in the existing global markets as well as expand it to other potential markets. According to the company, Kurkure will retain its basic flavor but will be adjusted to suit the local requirements. Kurkures success in the Indian market is mainly for three reasons namely innovative flavor, affordable price and continuous communication to consumer. To meet the regional requirements Kurkure is launched in various flavors like Masala, chilli, green chutney etc

Varities
Masala Munch (Original) Solid masti masala twist Green Chutney Rajasthani Style Chilly Chatka Tamatar Hyderabadi Style Malabar Masala Style Masala Twists(Solid Masti) Desi Beats Naughty Tomatoes Hyderabadi hangama

Market Share
KURKURE, 45% ITC, 16% HALDIRAM, 24% OTHERS, 15%

SALES OF TOP SNACKS Special (Limited) Edition Pujo Special:Jhajhalo Hit - Released in West Bengal for Durga Puja, 2007 Ganeshotsav Special:Usal Pao - Relesed in Maharashtera for Ganesh Utsav,2011

Packaging
Style and design matter a lot on the outcome and response of the product. Kurkure as the product (inside the pack and outside wrapper) has much attractive and catchy colors style and design which attracts the customers a lot. Kurkure is available in the market in 3 different packing. Kurkure comes in the air tight packing and packing material of Kurkure is of high quality so that product will remain fresh and its taste keeps secure up to more than four months. Kurkure has different flavors in the market so the each flavor has its own unique packaging color combination according to its taste. Basic color combinations are in green and red colors which all are eye catching.

Kurkure is available to the consumer only in primary packing. No secondary packing is using. However they are delivered in container packing from production plant to shopkeepers or retailers, which carries 48 packs. Kurkure is available in three different sizes 19 gm 38 gm 75 gm

Promotion Strategy
Kurkure - Tedha Hai Par Mera Hai Slogan: Chai time masti time

Named after the Hindi word for "crunchy", Kurkure is a cheeto-like snack and is the flagship of Frito Lay's Indian division. It is marketed by Hirani Industries Corp. (USA incorporated company) in Kenya. It is one of the most popular food products in India today.

In November 2006, Frito Lay announced plans to release Kurkure to American markets sometime in 2007. This decision was made after analysts showed increasing interest in Indian spices in the USA. Also the introduction in other markets with a non-resident Indian population such as the UK was planned.

In India, actor-celebrity Juhi Chawla advertises Kurkure. KURKURE FLAVORS Masala Munch Naughty Tomato Chilli Chatka Green Chutney Rajasthani Style Hyderabadi Hungama

KURKURE DESI BEATS Deewana Tamatar Dildaar Masala Flirty Lime

KURKURE SOLID MASTI Masala Twists Nimbu Masala Style

To mark 10 years of its existence, Kurkure, FritoLay's Indian innovation in the salted snack market, is changing tracks, says Sayantani Kar. It came out in December with a print campaign which told readers how Kurkure is made from what can be found in any Indian kitchen, underlining that the ingredients are as wholesome as what goes into home-made food. Kurkure now on will be less about flavours and more about ingredients.

The product contains rajma and ragi, staple Punjabi food, apart from the usual rice, corn, spices and lentil. What started off as an attempt to understand the infrequent Kurkure consumer, or those who are not aficionados, has become a tool that the company intends to use over the long term. FritoLay Marketing Director Deepika Warrier says: "We wanted to demystify Kurkure for the consumers. That meant building trust and connection by informing them of the authentic ingredients that go into the product. We will have more surprising and untried ingredients in our product this year." She says the print ad has already generated a positive response, and expects sales to go up 20 per cent.

Marketing on the basis of ingredients will also help Kurkure stave off competition from a growing tribe of roasted snacks, including FritoLay's own Aliva, Parle Product's Monaco Smart Chips and Parle Agro's Hippo. Stressing on ingredients that echo wholesomeness would consolidate its stand. FritoLay, the snack food division of PepsiCo, has been active in addressing the need for healthier snacking habits not just through its roasted snack brand. Its Snack Smart initiative has cut out transfat from its products and changed the oil used for Kurkure to rice bran which cuts saturated fat by 40 per cent. An attempt to control portions consumed by users has seen it launch Rs-3 packs of brands such as Kurkure.

In order to add further zing to its product portfolio, in January 2008, the company launched Kurkure Xtreme, a limited edition variant in two flavorsRisky Chilli and Electric Nimbu (lime). This was perhaps a move to outdo competition from ITCs snack brand Bingo, which was launched in March 2007, in Indianized flavors like Tandoori Paneer Tikka (spiced cottage cheese) and Chatkila Nimbu Achaar (tangy lime pickle).

However, ITC, the Kolkata-based FMCG major, threw down the gauntlet in 2007 when it used its extensive distribution network and attractive display shelves to launch and popularize its snack brand called Bingo at places where packaged snacks had not gone before and in flavours that took Kurkure's strategy a notch higher. Kurkure reacted by launching new flavours and a variant that looked similar to Bingo called Desi Beats. It also upped its distribution by going to cyber cafes and telephone booths. Kurkure's move to highlight its ingredients could be a departure from what other brands are doing and would refresh its brand recall in a category driven by impulse purchases. The"Kurkure Chai Time Achievers" campaign:

This was the first of its kind campaign in India, launched in May 2007 aiming at promoting versatile usage of Kurkure. Powered by an exciting commercial showcasing crazy consumers trying to grab the 'Kurkure frame' - their ticket to famedom, this campaign truly gives consumers a taste of Kurkure in the most innovative way!! Leading to replacement of Juhi on the Kurkure packs with pictures of their own and their near and dear ones, it gave the consumers chance to become celebrity overnight by printing their photographs and recipes on a million Kurkure packs. The company claims to have received an overwhelming response, with over 100,000 recipes pouring in, within just 6 weeks. For a brand holding out the reward of instant fame to its consumers, Kurkure has indeed delivered on its promise. Volumes shot by 20% in just one month. Sales have increased by 19% over last year.

Introduction of Fritolay

Frito-Lay is the division of PepsiCo that manufactures markets and sells corn chips, potato chips and other snack foods. The primary snack food brands produced under the Frito-Lay name include Fritoscorn chips, Cheetos cheese-flavored snacks, Doritos and Tostitos tortilla chips, Lay's potato chips, Ruffles chips and Walkers potato crisps (Europe)each of which generated annual worldwide sales over $1 billion in 2009. Frito-Lay began in the early 1930s as two separate companies, The Frito Company and H.W. Lay & Company. The two merged in 1961 to form Frito-Lay, Inc. Four years later, in 1965, Frito-Lay, Inc. merged with the Pepsi-Cola Company, resulting in the formation of PepsiCo, Inc. Since that time, Frito-Lay has operated as a wholly owned subsidiary of PepsiCo. Through Frito-Lay, PepsiCo is the largest globally distributed snack food company in the world, with sales of its products in 2009 comprising 40 percent of all "savory snacks" sold in theUnited States and 30 percent of the non-U.S. market. Frito-Lay North America accounts for 31 percent of PepsiCo's annual sales.

History
The Frito Company

In 1932, Charles Elmer Doolin, manager of the Highland Park Confectionery in San Antonio, purchased a corn chip recipe, a handheld potato ricer and 19 retail accounts from a corn chip manufacturer for $100, which he borrowed from his mother. Doolin established a new corn chip business, The Frito Company, in his mother's kitchen. Doolin and his mother and brother produced the corn chips, named Fritos, and had a production capacity of approximately 10 pounds per day. Doolin distributed the Fritos in 5 bags. Daily sales totaled $8 to $10 and profits averaged about $2 per day. In 1933, the production of Fritos increased from 10 pounds to nearly 100 pounds due to the development of a "hammer" press. By the end of the year, production lines were operating in Houston and Dallas. The Frito Company headquarters also moved to Dallas to capitalize on the city's central location and better availability of raw materials. In 1937, The Frito Company opened its Research and Development lab and introduced new products, including Fritos Peanut Butter Sandwiches and Fritos Peanuts, to supplement Fritos and Fritatos Potato Chips, which had been introduced in 1935.

In 1941, the company opened its Western Division in Los Angeles with two sales routes, which would become the prototype for The Frito Company's distribution system. In 1945, The Frito Sales Company was established to separate sales from production activities. Expansion continued with the issue of six franchises through the Frito National Company in the same year. In 1950, Fritos were sold in all 48 states. The Frito Company issued its first public stock offering in 1954. At the time of Doolin's death in 1959, The Frito Company produced over forty products, had plants in eighteen cities, employed over 3,000 people and had sales in 1958 in excess of $50 million. By 1962, Fritos would be sold in 48 countries. Through Frito-Lay, PepsiCo is the largest globally distributed snack food company in the world, with sales of its products in 2009 comprising 40 percent of all "savory snacks" sold in the United States and 30 percent of the non-U.S. market.

While the product catalog varies significantly by country, PepsiCo divides its snack products into two primary brand categories: those produced within North America, and those produced outside of North America. In certain regions of the world, the company's snack food products are produced under regionally specific names such as Sabritas and Walkers. The primary snack food brands and products produced under the Frito-Lay name include Fritos corn chips, Cheetos cheese-flavored snacks,Doritos and Tostitos tortilla chips, Lay's potato

chips, Ruffles chips and Walker's potato crisps (Europe)each of which generated annual worldwide sales over $1 billion in 2009. Frito-Lay also comprises multiple brands outside of the chip category, including Rold Gold pretzels, Cracker Jack popcorn snacks and TrueNorth nut clusters and nut crisps. In India, Frito-Lay uses its international brands as well as Uncle Chipps, a homegrown brand that it bought out in 2000.

MARKET STRUCTURE

Market Leader Market Challenger Market Follower Market Nicher

Fritolay (45 percent cumulative share consisting of Lays, Kurkure, Uncle Chipps, Cheetos and Leher)

ITCs Bingo (16%) posing a threat to Lays through its direct frontal attack

Balaji and local players such as Yellow diamonds. Also included are unorganized offerings, aimed at the price-sensitive, less loyal audience.

Parle Monacos Smart Chips which has identified itself a niche of the more health conscious section of the audience by offering them a baked variant of chips.

COMPETITION FOR FRITOLAY

Lays Kurkure Lehar Namkeen, Cheetos Uncle Chipps

Frito-lay
ITC

Bingo

Parle Snacks
Other Players

Musst Bites & Stix Smart Chips Cheeslings

Balaji Wafers Haldiram Yellow Diamond among other local players.

Chapter: 4

Aim & Objectives

AIM: Analyzing and evaluating the distribution channel of Fritolay with respect to Kurkure

OBJECTIVE:-

Analyzing the various distribution channels adopted by Fritolay. Effects of distribution channel on the sales volume i.e. total turnover. The work of middle-men in distribution of goods. The role of specialized retail outlets such as departmental stores, multiple shops.

Chapter: 5
RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research:

Generally research is considered, as an endeavor to arrive at the answers intellectual and practical problems through the application of scientific methods to knowledge universe. It is movement from known to unknown. According to Clifford woody Research comprises defining and redefining problems, formulating hypothesis or suggested solutions, organizing and evaluating data, making deductions and reaching conclusions to determine whether they fit to the formulating hypothesis.

METHODS OF DATA COLLECTION:

Collection of data refers to a purposive gathering of information relevant to the subject matter under study and the methods used depend mainly on the nature, purpose and scope of the enquiry to be undertaken, as well as on the availability of resources and time.

The data collected can be grouped under two types Primary Data Secondary Data

 PRIMARY DATA: Primary data are those, which are collected by the researcher for the first time for his own use. The sources of primary data include: Interview Drafting questionnaire

INTERVIEW METHOD: Every interview has got its own balance of revelation and has withheld information. An interview can be effective verbal or nonverbal conversation initiated for the specific purpose and focused on certain planned content areas. The interview and the investigation was done of varied counters of Kurkure in the Nagpur urban region. The interview was specified on the topic of channel of distribution and the relevant regions or areas.

QUESTIONNAIRE METHOD: Another method of data collection is a survey that consists of asking questions intended to cover a cross section of population. A questionnaire is generally mailed or handled to cover to the respondent and filled by him without the help of the interviewer. The researcher has to ensure that the questionnaire is relevant both to the studys goal and to the respondent. Questionnaire is not ambiguous. The level of wording the questions should match the education level of the respondent but the questions should generally kept simple. Open ended questionnaire are other type of mailed questionnaires. Open ended questions can be used when all the possible answer categories are not known or where the investigator wish to know the respondents opinion. The respondents are expected to answers adequately, in detail or clarify/quantify answers.

This research method forced the researcher to prepare a close ended questionnaire so as to get the specific and relevant information for the project.

SECONDARY DATA: Secondary data are those, which have already been collected by others. When it is not possible to collect data in primary form the researcher may take the help of secondary data. They are those, which have already been collected with some view in mind. They are collected for serving the objectives other than what the researcher might have in his mind. The sources of secondary data include: Magazines Websites Journals

MAGAZINES: A magazine is a periodical publication containing a variety of article, generally financed by advertising, purchased by reader, or both. In practical, magazines are a subset of periodicals. Distinct from those periodicals produced by scientific, artistic, academic or special interest publishers. There were varied magazines used to get data by the researcher. WEBSITES: A website may be the work of an individual, a business or other organization and is typically dedicated to some particular topic or purpose any website can contain a hyperlink to any other website, so the distinction between individual sites, as perceived by the user, may sometimes be blurred. Websites are written in, or dynamically converted to, HTML (hyper text markup language) and are accessed using a software program called a web browser, also known as an HTTP client.

Chapter: 6

Hypothesis

HYPOTHESIS

This hypothesis is a preliminary explanation by the researcher of the channel of distribution adopted by Pepsi Co. by the researcher that considers the outcome of the investigation on the basis of primary data. The data is collected through the sales people and counters where the product was sold. It indicates the effectiveness and lacking in the distribution channel by varied considerations that are being made by the researcher the on the following assumptions: Distribution channel increase the sales. Distribution channel are a source or medium of communication between the manufacturer and the consumer. The sales force can be effective if they are properly motivated.

Sales force is one of the major reasons for inefficient distribution of the product.

The method used in this project is RESEARCH HYPOTHESIS as it indicates the direct
relationship between the variables. It is a relationship between variables and indicates the nature of the relationship.

Chapter: 7
(DATA ANALYSIS)

Q1. Reason for Selling Kurkure? Margin Promotional schemes Demand Dealer relationship Credit Policy Other Reasons 15 7 21 3 4 4

4 4 15 3 Margin Promotional Schemes Demand Dealer relationship Credit Policy 7 21 Other Reasons

Q2. How much time does it take for delivery of Kurkure after ordering? Time for delivery 6-12 hours 1-2 days 2-7 days more than 7 days Frequency 0 29 21 0

Frequency
00

21

6-12 hours 1-2 days 2-7 days 29 more than 7 days

Q3. How do you rate the schemes of the company? Rating of scheme Feedback Good Average Bad 19 23 8

Feedback
8 19

Good Average Bad

23

4. How do you rate the Margin of the company?

Margin on the product Good Average Bad Feedback 27 20 3

Feedback
3

Good 20 Average 27 Bad

Q5. How do you rate the Supply norms of the company?

Supply norms of the company Good Average Bad Feedback 19 18 13

0 13

19 Supply norms of the company Good Average 18 Bad

Q6. Are you satisfied with the distribution channel of Kurkure?

Satisfaction Feedback Yes No 33 17

Feedback
17

Yes 33 No

Q7. How do you rate the Damage Policy ? Damage policy Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied 1 Feedback 39 7 3

Feedback
3 1 7 Highly Satisfied Satisfied Dissatisfied Highly Dissatisfied 39

Chapter: 8
(DATA INTERPRETATION)

SALES OF KURKURE AS PER THE TERRITORY

Distributors Varsha Abhinav Krutika

Annual Turnover 16.03 11.9 14.07

Annul Turnover
18 16 14 12 10 8 6 4 2 0 Varsha Abhinav Krutika Varsha Abhinav Krutika

The above graph shows the monthly turnover of the distributors.

SALES AS PER BUSINESS

Area of sales Modern Trade(Varsha) Instea Shivaji

Sales 6.64 12 9.36

Sales
14 12 12

10

9.36

8 6.64 6 Modern Trade(Varsha) Instea Shivaji 4

0 Modern Trade(Varsha) Instea Shivaji

The different areas of business that are being distributed among the distributors as per the sales.

COMPARISION BETWEEN THE SALES AND THE SALES FORCE APPLIED

Distributor Varsha Abhinav Krutika Instea Shivaji

Total sales 22.67 11.9 14.07 12 9.36

No of salesmen 10 5 7 7 5

25

20

15 Total sales 10 No of salesmen

0 Varsha Abhinav Krutika Instea Shivaji

Above table signifies the comparison between sales and the salesforce.

Chapter: 9

SUGGESTIONS

SUGGESTIONS

As the market is growing at 30 percent annually, new entrants may consider it a profitable venture. As branded players are priced similarly, new players might penetrate by adopting a lower price or by offering more gram mage at the same price. This strategy can be adopted by Frito-Lay. Example:- (Balaji-strategy)

Unorganized players still account for half of the total wafer segment, thereby discouraging market entry. This can be overcome by the pricing strategy and the economies of scale. Low Quality differences among branded players makes the market volatile and thus there should be subtle and frequent changes made to the product As similar to I.T. C. scheme of e-choupal there should be some strategy adopted by Pepsi. It can utilize make profit by the unorganized distribution channels or inefficient distribution channels by other competitors. The relationship between the retailers, distributors and the carry and forward agents should be managed by the company by the company by giving schemes or having a media of communication such as fliers or direct contact with them. Being first in the market through its acquisition of Uncle Chips, Fritolay already has a well-established network of distributors and retailers pan-India. The brand loyalty enjoyed by Lays was leveraged during the launch of Kurkure, Cheetos and the recently launched Aliva. This can be used to launch new products to gain competitive boost to the product in well established distribution channel.

Chapter: 10
LIMITATIONS

LIMITATIONS

This project mainly emphasis on the distribution channel. Here basically the distributor and the retailers were kept in the prime focus. Therefore consumers were ignored. And thus the project had excluded some major issues such as consumers behavior, advertisement and other such promotion campaigns.

The study that is being done in the project is showing the stats of the urban region of the Nagpur as the location was confined to the urban Nagpur.

Chapter: 11
(CONCLUSION)

The distribution channel adopted by Pepsico and its competitors is the same. Hence we can come to the inference that this is the most effective distribution channel.he re The channel helps to keep simple relationship between the salesmen and the retailers.

Chapter: 12
BIBLIOGRAPHY

BIBLIOGRAPHY

INFORMATION FROM INTERNET Udell.edu 15 Channels & Wholesaling Class know this.com Distribution Systems: Indirect pierce college.edu PDF, Product Distribution entrepreneur.com www.slideshare.net bizhelp24.com www.marketingmo.com www.tutor.net http://www.imagesretail.com/support_jan_suplychain.htm http://www.televisionpoint.com/news2009/newsfullstory.php?id=1244814371

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