About Cadbury

1st Factory setup in 1947 Today 3 factories Name synonymous to Chocolates Major brands include Dairy Milk, Gems, 5 Star, Bournvita and Perk Newer products like Celebrations, Bytes, McSwirl, Chocki, Delite and Temptations

Life full of Cadbury

Brand Personality
Vibrant Fun and Energizing Robust and Alive

Strategic Plan
Setting stretched financial objectives. Adopting Value Based Management for major strategic and operational decisions and business systems. Creating an outstanding leadership capability within management. Sharpening company culture to reflect accountability, aggressiveness and adaptability. Aligning our management rewards structure with the interests of employees & shareowners.

Cadbury Today

Technologically Advanced Customer Oriented Internal Customer Satisfaction

Infotech@Cadbury
Effective communication and availability information 'at the right time and the right place' Awards: of

SAP Star Customer Award in 1998 for successful implementation of SAP R/3 for the invaluable support SAP Star Installation Award 2001 for innovative use of BW in sales analysis.

IT Infrastructure
Wide Area Network of VSATs, Leased Lines & Virtual Private Network (VPN) connects 41 sites across the country, including HO, Sales Regional offices, factories, depots and cocoa operation office.

SAP R/3 as an Enterprise Resource Planning tool, Business Information Warehousing (BW) as a Data Warehousing tool and Lotus Notes as a corporate collaborative package.
Data Center set up maintained by IBM Global Services India Pvt Ltd

Benefits
Centralization of Data - Flexible Sales & Logistics team Forward Integration - Access to secondary (Distributor-to-outlet) sales data every week Transparency - Free flow of communication, as well as provides higher-end services Efficient Supply Chain Master Schedule Planning Better Forecasting - Effective & faster planning Promotions Need for localized promotions and bursts be tracked easily

Business Model

Cadbury India Ltd.

Base Business

Mass Market

Base Business

Base Business

Base Chocolate (BC)

All Drinks

Mass Market
Mass Market

All Sugar

EP

Chocki

Sales Structure
National Sales Manager (NSM)

Regional Sales Managers (RSM) East

Regional Sales Managers (RSM) North

Regional Sales Managers (RSM) South

Regional Sales Managers (RSM) West

Branch Sales Manager (BSM) Base Business

Branch Sales Manager (BSM) Base Business

Branch Sales Manager (BSM) Mass Market

6 Area Sales Managers (ASM)

Distribution Network
Factory
Mother Warehouse Depots Distributor Warehouse Retailers Diamond Stores

Primary Sales
Super Stockists Retailers

Secondary Sales

Channel Partners
Factory 3 Factories at Malanpur, Thane, Induri. Responsible for production of different products Mother-warehouse Exists at the Mumbai. Finished products from each of the factories are sent to this warehouse from where there is direct dispatch to the depots. Depots Around 24 depots throughout the country with an average of one in each state. Responsible for dispatches to all the distributors or super stockists of that particular state.

Intermediaries
Distributors and Super Stockists Points of primary sales Have their own sales people Retailers Come in direct contact with the customers responsible for converting secondary sales to tertiary sales. More than 30 lakh retail stores being covered throughout the country.

Classification of Retail Outlets

Based upon Coverage

Based on products being sold Based on Size

A. Based upon Coverage

Coverage

Direct

Indirect

Direct vs Indirect
Direct Retailers Covered by the distributors or the super-stockists of the Company Are visited directly by the representatives of the distributor. Get benefits and are eligible for the schemes undertaken by the Company, including Cash Discounts (CD), as all the sales to them are on cash basis. Indirect Retailers Ones which are not on the coverage list of the distributor. Catered by the wholesalers. For the Base Business category the number of such outlets is very low. But for Mass Market products the number is very high. Exist more in Class D and Class E places. Benefit that these retail outlets get is that they do not need to pay in cash always. Can also get sales in credit.

B. Based on products being sold

Groceries Confectionary Cosmetic Shops Department Stores Variety Stores Kitchenware Stores Plastic Products Shops Paan-wala

C. Based on Size

Normal Outlets

Size-based Classificatio n

Diamond Stores

Diamond Stores
Organized Retail Sector Big Stores like Nanz, Big Bazaar, etc., Getting the shelf-space is the main objective of each company here Special treatment to such stores in terms of certain discounts and offers due to the bulk buying Economies of scale lead to advantage in terms of the bargaining capacity. Direct delivery of products from the depot of the state.

Personal Selling & E - Channel

No Personal Selling E- Channel exists in International Countries

Territory Management
Personal selling and advertisi ng efforts

Control selling expenses

Sales force morale

Evaluatin g sales personne l

Proper market coverage

Method of Territory Management

Basic Geographical unit

Sales Potential in control units

Control units in tentative territories

Coverage difficulty and redistricting tentative territories

Outcome
Division of the country into major cities, town, pin codes, metropolitan statistical areas, trading areas Identifying the urban centers of these geographical units Measuring the capacity of sales in each of these initially through tentative estimation and then establishing them and using them futures forecasting and suitably redistricting tentative territories.

Territory Classification
Class A (Top 23 towns by ORG report) Class E (below 0.5 lakhs) India Class B (5 lakhs above busines s)

Class D (0.5-2.5 lakhs)

Class C (2.5-5 lakhs)

City based Sales

Class of cities Class A Cities New Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad, Pune, Chandigarh, Lucknow, Bhopal, Nagpur, Coimbatore, Trivandrum, Bhubaneswar, Jaipur, Kochi Allahabad, Nagpur, Guhwati, Surat, Vijayawada Sales Items All base products, Mass market items, all drinks. All base products, selected drinks, mass market items Selected drinks, selected mass market items, all base products Selected drinks, mass market & base products Limited base products, mass market & drinks

Class B

Class C

Class D

Agartala, Srinagar, Ludhiana, Vadodra, Kanpur

Class E

Durgapur, Meerut, Kakinada

Sales Forecast
Top-down approach

Uses Quantitative Technique of Forecasting 3-year Moving Average Method is implemented Year divided into 12 periods Seasonality also taken into account Major Emphasis on last years data

Statistical Tools being used

SAP integration Promotional Offers according to Sales Forecast

Sales Administration
National Sales Manager
operate on Certain work force & resources

Regional Sales Manager

Collect information on sales amount and quantity sold

Information collected for a year over 12 periods

Branch Sales Manager

Software used SAP Reports to Branch Sales manager

Area Sales Manager

Sales Administration
National Sales Manager
3 Branch manager per region

Regional Sales Manager

Collect information on sales amount and quantity sold for different products Information collected for a year over 12 periods considering seasonality effect

Branch Sales Manager

Reports to Regional Sales manager

Area Sales Manager

Sales Administration
National Sales Manager
4 Regional managers

Regional Sales Manager

Collect information on total sale expenses

Information collected for a year over 12 periods considering seasonality effect

Branch Sales Manager

Reports to National Sales manager

Area Sales Manager

Sales Administration
National Sales Manager Regional Sales Manager

Collect information on expenses of sales, sale amount & quantity sold from 4 regions Information collected for a year over 12 periods considering seasonality effect

Branch Sales Manager

Area Sales Manager

Top Down Vs Bottom - Up

National Sales Manager
Information Flow Decision Flow

Regional Sales Manager

Branch Sales Manager

Area Sales Manager

Selection of Channel Members

Distributor / Super Stockists

Key aspects to ponder while selecting for a distributor. Market segment - the distributor must be familiar with your target consumer and segment. Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores. Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'. Qualification assessment - Establishes the experience and track record of your intermediary. How much training and support will your distributor require?

Distributor / Super Stockists

Analysis of the distributors & super stockist: Exclusive Partner Cadbury India tries to look for distributors that are exclusive to it. The Company officials feel that if that does not happen then the partner might not be in a position to do justice to Cadbury. But in small places, especially rural areas, it is not possible. So the super stockists appointed there are the ones that do not carry brands of competitors. Proper Storing Capacity After the worm infestation incident, the Company has made a point to go in for the partners that can provide proper hygienic storing to the product. Well-defined Territory The areas of the distributors are geographically well defined so that no clash of interests takes place.

Retailers
Importance Have a much stronger personal relationship with the consumer. Hold several other brands and products. A consumer will expect to be exposed to many products. Offer credit to the customer. Products and services are promoted and merchandised by the retailer. Give the final selling to the product.

Retailers
Products are stocked at different outlets depending upon: Type of store This not only includes the type of products being sold at the outlet but also the size of the store is kept in consideration. Based on this criterion it is decided as in what all products could be sold at the outlet. Proper Infrastructure Need to analyze the storing capability of the store. A store in Jodhpur cannot store chocolates if there is no provision for cooling. Proper Storing Capabilities Must have a safe and hygienic place to store the products. This clause is kept in mind considering the worm infestation issue.

As far as the selecting criterion is concerned for the diamond outlets, no condition is laid because at all these stores the bare minimum requirements are automatically met in the process of giving better ambience to the customers.

Motivation
Monetary Margins / Profits
Visi-coolers Retail outlets are given Cadbury visicoolers to stock the chocolates. Available to the shopkeepers on various schemes and agreements like EMI, cost-sharing. Discounts At different times of the year, the Company gives discounts to the outlets on purchase. Retailers get Cash Discounts of around 2% for cash sales.

Motivation
Competitions Various contests are run for the retailers in for decorating the shop with the banners, hangers or other below-the-line promotions. The Company gets exposure for its products and an opportunity to satisfy the retailers. Re-purchase Expired or spoiled goods, by no fault of the partner, there is a provision to replace the goods. This value proposition has been introduced by the Company only after the incident of worm infestation as a part of Project Vishwas. This is yet another way of establishing trust among the intermediaries.

Monetary
Channel Intermediary Margin

Distributor / Super Stockist

Retail Outlet Diamond Outlet

5-6%
10-12% 12-13%

Evaluation: Project Vishwas

Project initiated by the Company after the controversy of worm infestation. An outcome of the discussion conducted with the customers, channel partners and Food & Drug administration in Maharashtra. Internationally accepted HACCP (Hazard Analysis and Critical Control Points) is also followed to ensure the quality of products. Periodic checks are made to different distributors as well as the retailers to ensure that proper storing standards are being followed. Any questionable stock is immediately replaced and any guilty partner is black-listed. Harsh measures are not to harass the partners but a step to keep the end-consumer healthy. No other check is required due to the transparency in the entire system. Evaluation means to praise and reward the intermediaries.

Channel Conflict
At best, channel conflict can result in tension among trading partners. At worst, retailers, wholesalers, and even the internal sales force can retaliate, using such tactics as: Reducing the manufacturer's retail shelf space Decreasing marketing support for the manufacturer's products Providing additional shelf space or marketing support for a competing brand Promoting the retailer's or wholesaler's own privatelabel brand Dropping the manufacturer's product line

Conflicts
No major conflict in Cadbury India Lack of multi-channel in case of the Indian subsidiary No sales through electronic means in India Minor tussle exists between the two retail types. Organized vs Unorganized retail stores. Reasons Benefits given to the organized stores in terms of better margins and bargaining power of these diamond stores.

Resolving Conflict
Proper measures by compensating traditional partners by providing benefits in the form of Visi-coolers Discounts Competitions & Rewards Re-purchase Cash Discounts

Cadbury has so far been very successful in striking the equilibrium and keeping the interests of both the types of partners.

Thank You