Selling and Distribution: some perspectives

K. Dasaratharaman

Urban Rural divide

An Urban town is defined as: 1. All places with a municipality, corporation, cantonment board etc. Or 2. a) Popn. > 5000 b) 75 % of Popn. engaged in Non - agri activities c) Popn. density > 400/ sq km

India: the land of dispersion.

Population Range
Urban
> 10 million 1 -10 million 100K 1million 3 50 415

No of Towns

% Population

22%

< 100 K
Total Urban

5698
6166 ~ 630,000

10%
32 % 68%

Rural

Census Of India : 2011

India the land of shopkeepers

Country No. of Retail outlets (millions)
0.30 0.95 1.00

No. of Retail outlets / million Popn.

4900 3150 7300

UK USA Japan

Brazil
Indonesia China India

1.20
2.70 4.50 Estd.15.0

6200
11500 3500 12000

Source: Euromonitor, 2007 with extrapolation

.Infrastructure bottlenecks
Road density (Km/ 000 people) India: 2.75 World Avg: 6.70 : 60 % : 2% : 40 % : 14% : 1%

% of Rural Popn within 2 Kms of a motorable road National Highways as % to Total roads % Traffic in National highways % of National Highways which are 4 laned % of State highways which are 4 laned

Availability is not automatic, but needs to be created. Physical distribution beyond the top 468 big towns is a challenge that requires planning and proper design. Rural distribution is another ballgame....esp. given the density of demand ! In smaller markets : Supply side economics works!

Retail environment challenges

Traditional Retail environment is sub optimal:
Buying patterns are haphazard Inventory holding is low / inconsistent SKU range is low / inconsistent Storage conditions are poor Display is poor Stock rotation is poor Advocacy is absent

Modern Retail is in its infancy but growing..

Channel partnership..
Trade channels can be your best friend or your worst enemy depending on how you partner them A good S & D system can deliver huge competitive advantage..

The not so dark side of the moon..

Marketing creates demand. S &D fulfils demand. S &D also
creates trials develops new consumers and markets.. retains consumers introduces new products.. delivers share and growth

S & D Tasks
Task of Sustained Availability + Visibility + Advocacy : strategic + operational.. Direct + Indirect Availability = Total Availability
(> 630,000 markets; 15 mln retailers; >500 K wslrs)

Design of the Channel structure + Tasks + Remuneration structures are Strategic Smooth running of system : operational excellence.
Results in sustained availability + trade advocacy Results in competitive advantage = share + growth = sustained profits

Areas of learning
Strategic: Design of the S & D system:
Distribution footprint Channel footprint and structure Channel Tasks and Margins Trade Servicing Supply Chain, Logistics and Inventory planning Distributor mgt: selection, training, motivation Sales force: structures, selection, training, performance mgt systems Modern Retail: TOT, Supply Chain, Servicing, Activation, CRM, category / SKU mgt.

Areas of learning
Operational:
Channel mgt: collaboration + conflict Servicing and Inventory optimization Trade Pricing, discounts and trade offer mgt Territory mgt Sales planning, targets and performance mgt Sales force mgt

Influences / Competencies.
Contributions from:
Business Economics Behavioral sciences Optimization techniques Data analytics and CRM HR and people management

Leadership practice school: planning, communication, performance mgt, environment mgt, partnership mgt

 S&D is both a science and an art

.enjoy