PROCTER & GAMBLE

Final Report

Date: 16/09/2019
Janhavi Bapat B18087
Swaminathan Iyer B18091
Rahhel Kadri B18100
Rishab Modi B18102
Contents
INTRODUCTION AND P&G STRUCTURE .................................................................................................. 2
A. COMPANY OVERVIEW ................................................................................................................. 2
B. DISTRIBUTION STRUCTURE ......................................................................................................... 2
RESEARCH ............................................................................................................................................... 3
A. PROBLEM STATEMENT ................................................................................................................ 3
B. APPROACH .................................................................................................................................. 3
C. RESEARCH AREA .......................................................................................................................... 3
D. SECONDARY DATA COLLECTION ................................................................................................. 3
E. RESEARCH DESIGN ...................................................................................................................... 3
F. QUALITATIVE BENCHMARKING............................................................................................... 3
SECONDARY DATA................................................................................................................................... 4
A. DATA FROM ASM AND OTHER SECONDARY SOURCES ............................................................... 4
B. ANALYSIS ..................................................................................................................................... 5
OBSERVATIONS MADE ............................................................................................................................ 5
A. ANALYSIS BASIS SKUs & COMPETITION: ..................................................................................... 5
B. ANALYSIS TYPICAL CONSUMER BEHAVIOUR IN SPECIFIC AREAS: ............................................... 5
INTERVIEW .............................................................................................................................................. 5
A. ANALYSIS OF RETAIL STORE ........................................................................................................ 5
B. ANALYSIS BASIS SALES PERSON/PROMOTER .............................................................................. 6
RESULTS, DELIVERABLES AND RECOMMENDATION ............................................................................... 6
A. GTM STRATEGY ANALYSIS ........................................................................................................... 6
1. P&G Current GTM Strategy ..................................................................................................... 7
2. Problems in Strategy Implementation .................................................................................... 7
3. GTM Strategy of Competitors ................................................................................................. 8
B. KEY BUSINESS DRIVERS OF RETAILING BUSINESS ..................................................................... 10
C. OTHER ISSUES ........................................................................................................................... 14
D. SHORT TERM ACTION PLAN ...................................................................................................... 14
E. LONG TERM STRATEGY BEST IN CLASS PRACTICES ................................................................... 16
ANNEXURE ............................................................................................................................................ 18
INTRODUCTION AND P&G STRUCTURE

A. COMPANY OVERVIEW

P&G is one of the India’s largest and one of the fastest growing consumer goods companies. It has a
base of over 650 million consumers across India. It is present across segments like Beauty & Grooming,
Household Care and Health & Well Being. Several of the company’s trusted brands have achieved
household names across India- Vicks, Ariel, Tide, Whisper, Olay, Gillette, Ambipur, Pampers, Pantene,
Oral-B, Head & Shoulders, Wella and Duracell.

P&G India currently operates five plants in the country and has over nine contract manufacturing sites.
It all together employs a workforce of 26,000 people. It operates in India under three legal entities -
two listed ones ‘Procter & Gamble Hygiene and Health Care Limited’ and ‘Gillette India Limited’, and
one 100% subsidiary of the parent company listed in the U.S. called ‘Procter & Gamble Home
Products’.

P&G India has a presence in approximately 7 million stores across the country. The company has
penetrated the rural market of the country with close to 40% of the business of some of its brands
coming from rural India.

B. DISTRIBUTION STRUCTURE

P&G’s Distribution Structure is summarised in the image given below:

Retailers
•Hyper stores
Manufacturers Distributor •Supermarkets Customer
•Mini markets 1
•Mini markets 2

The classification of the stores is based on the volumes of P&G products which are sold in them
RESEARCH

A. PROBLEM STATEMENT
The Objective of the Project as per company guidelines was-

To recommend an action plan to turnaround Top Channel retailing business in Jamshedpur.

From the discussion with the company ASM, it was identified that the growth in the Top Channel of
the company for the Jamshedpur circle has been flat for the last 3-4 quarters whereas the other
channels in the same circle have shown expected growth rates.

The research exercise was conducted at a broad level across different categories offered in Top retail
channel in Jamshedpur as instructed.

B. APPROACH
To understand the reasons underlying the slow growth of the Top-Channel, we undertook the
following approach

C. RESEARCH AREA
Top-Channel in Jamshedpur Area

D. SECONDARY DATA COLLECTION

1. Detailed discussion with the RM and ASM to establish the broad GTM strategy
2. Understood the local P&G sales methodology basis discussions with the ASM and the sales
team heads

E. RESEARCH DESIGN
Chalked out an action plan to investigate the issues in the various specified locations

F. QUALITATIVE BENCHMARKING
1. OBSERVATIONAL-
a. Visit to the retail stores across 3 assigned areas and make observations related to
the store operations
b. Shadowed sales representatives of multiple companies to contrast their sales plan
across various stores

2. INTERVIEWS
Conduct interviews with

a. The Purchase in-charge at these stores (usually the owner)

b. The Promoters
c. The Customers

3. BENCHMARKING
Qualitative benchmarking according to GTM Strategy and Competition
 c. Store layout
d. Visual merchandizing
e. Out-store and instore branding
f. Visibility based pay-out and other pay-out schemes
g. Preferential product placement etc.
h. Consumer Promotions
i. Credit Cycle Offered
j. Retailers View of Brands
k. Salesforce Targets/Motivations
l. Recognition Schemes for Outperforming Retailers

SECONDARY DATA
A. DATA FROM ASM AND OTHER SECONDARY SOURCES

The company ASM stated that during the last 3-4 quarters, the sales in the top channel of the
company, for the Jamshedpur circle, has remained flat. In contrast, the other channels have grown as
expected. The ASM wanted us to establish the underlying reasons for the same and to figure out if
P&G was lagging behind in terms of trade schemes, incentives, visual merchandizing or any other
mechanism that its competitors were engaged in.

We got access to the trade book that the sales team uses. It consists of many sheets like these, with a
showcased product. It was created for each month, with the promoted products at the front.

Such a book would be used to show the show owner how much profits he would get by stocking a
particular product, the margins and incentives offered, and the promotional schemes buy purchasing
more. For example, purchasing Rs 2000 worth of Tide would lead to added benefits for the retailer.
B. ANALYSIS

Based on conversations with the sales team, and our own observations made while shadowing them,
we found that the retailers did not pay much attention to the numbers in the book. The sale, or lack
thereof, boiled down to the relationship that the salesperson enjoyed with the retailer and his ability
to sell those numbers effectively. A more tangible way for the salesperson to showcase the potential
gains to the retailer, would allow the products to be commercialized far more effectively.

OBSERVATIONS MADE

A. ANALYSIS BASIS SKUs & COMPETITION:

Areas SKUs Competition

LUP (Lower Unit Purchases) are high, Higher
Mango Wheel, HUL dominates
dominance of sachets
500 GMs pack, Sachets are lesser as higher
Bistupur P&G dominates
number of standalone stores
LUP (Lower Unit Purchases) are high, Higher
Sakchi Wheel, HUL dominates
dominance of sachets

B. ANALYSIS TYPICAL CONSUMER BEHAVIOUR IN SPECIFIC AREAS:

Areas CONSUMER BEHAVIOUR

Mango Focused on regular purchases, buying cycle: >2 times/ week

Bistupur Focused on stocking, buying cycle: 1-2 weeks

Sakchi Focused on regular purchases, buying cycle: 2 times/ week

INTERVIEW
A. ANALYSIS OF RETAIL STORE

Areas Convenience Price

Lesser Significance, Free movement in stores
Mango Cost Conscious Consumer
was lesser
 Consumer can move easily around and take Consumer was relatively low on
Bistupur
decision themselves price conscious
Cost Conscious Consumer/
Free movement in stores was less, Shops were
Sakchi Heavy competition from other
smaller and closer to each other
retailers

B. ANALYSIS BASIS SALES PERSON

Basis our conversation with salespersons of P&G, Lakme’ and Nestle, we were able to garner few more
insights.

They felt that the primary reason for the lack of growth in the top channel was due to the opening of
malls and the expansion of modern trade in Jamshedpur. They were of the opinion that the opening
of the Big Bazaar and Reliance fresh were affecting the sales from these stores. The customers buy a
much larger SKU from modern trade, as they get a much better deal. As a consequence, they do not
buy from places like the mini market.

Additionally, Reliance itself was delivering to supermarkets and top channel stores, at better margins
than what the distributors were offering, further eroding the volumes from them.

There is also an issue of products lying in stores, not being sold and taking up valuable shelf space.
This is primarily of concern in product lines like Olay. While the products are replaced by P&G on
expiry, this leads to a deeper issue. Some products are left on the store shelves, without being sold,
pretty close to expiry. (~6 months). These products don't sell, as the customer does not want to invest
a lot of money into a product about to expire. At the same time, the shopkeeper doesn't order more,
as the shelf space remains blocked. This hurts the sales in this sector.

There also seems to be dearth in the feedback gathering mechanism in the salesforce. Most of the
inputs from the salesmen comes in a heuristic manner, with no formal reporting system. The absence
of a robust data gathering system and reporting tool can lead to a significant lag in the implementation
of new ideas and P&G’s reaction to moves by the competition.

RESULTS, DELIVERABLES AND RECOMMENDATION

A. GTM STRATEGY ANALYSIS

The GTM Strategy pf the company identifies the action plan a top how will the company reach its
target customers and achieve competitive advantage. We therefore tried to understand the GTM
Strategy for P&G and a few other competitor companies and the related activities they undertake to
maintain a sustainable Competitive Advantage above the competitors.

Further, we tried to identify the current status of the strategy from ground above and tried identifying
the gaps between the planned strategy and actual implementation.
1. P&G Current GTM Strategy

P&G has classified retail stores into channels, based on the volumes of the products sold and the
type of customers handled. They are split into three segments, large, medium and small. The scope
of this analysis is restricted to large stores.

Another mechanism of classifying them is based the amounts:

• Hyper stores
• Supermarkets
• Mini Markets 1
• Mini Markets 2

The segment under analysis is effectively departmental stores and large pharma like stores, who do
a business of more than Rs 20000 in P&G products. They primarily sell larger SKUs and the
customers on average have a higher basket size than in other channels.

P&G has broadly classified its customers. It has defined two kinds of customers,

• Loyalty driven, those who look for a particular product and will not compromise on what they
want. If it the product is not available in the store, they will go to another store to look for it
• Availability drive, those who use the visibility of the products to make the purchase. They are
not too brand loyal, and will choose products based on those which are easily accessible to
them, the ones which have the highest visual appeal etc.

For mini markets 1&2, P&G has a certain number of programs to incentivize availability and visibility.
The visibility is tied to the trade discounts given. Smart spots are identified in each of the stores, those
which are prominently visible, at eye level, easily accessible to the average customer.

For example, for three shelves, in a prominent spot in a store, showcasing six brands of P&G, a 4%
discount is given. On hitting the targeted sales, another 1% is given.

Another key tool is the floor stack unit. The products are stacked on the store floor in a highly visible
location, usually showcasing the focus brand for that month. For example, the one for the previous
month was Pantene bottles. This is usually in stores that exceed Rs 40000-50000 a month. A five
percent incentive is given for the unit and crossing a minimum sell amount. This is split as, 3% for the
unit, 1% for visual merchandizing and an additional 1% for crossing the target.

2. Problems in Strategy Implementation

The 5% is not provided on the same invoice. It's on the next month's bill. This delay is a potential pain
point. P&G is unable to work around it, as it's a third-party audit which prevents same month credits.

Expired and close-to-expiry products, take a long time to replace, taking up valuable shelf space.

Store owners do not have complete visibility of what their targets are, their incentive schemes, how
much money they are making off incentives, how much more they stand to make if they stock and sell
more of a product line etc.
3. GTM Strategy of Competitors

I. HUL

Types of RS:
✓ Urban RS:
o GTM(Lean) (3rd Party Logistics)- TLP and few FLP, category ASMs. RS with T/O >2 Crores
o Non GTM:
▪ 3rd Party Logistics -50K and above, category ASMs. RS with T/O <2 Crores
▪ Non-3rd Party Logistics -50K and above, category ASMs. RS with T/O <2 Crores
o Rural RS (Non-3rd Party Logistics): - 5K to 50K, 1 ASM for all categories, select SKUs,
common salesman
o Hot Tea stall RS - Exclusive distributors in South (T/O-TN-10 Cr, AP-2 Cr)
▪ Services Tea Shops/Kiosks
▪ Sell only 1kg-2kg packs (Not small packs)
▪ Margin-4.76% (directly in invoice)
o MT RS - RS with T/O >20 Lacs are made MT RS, Services the MT format stores
o OOH RS - HoReCa and Institutional distributors for these channels
o Rurban RS - Basis T/O, market potential, implementation of systems etc. Rural RS are
converted to Rurban

II. Nestle

Cash Distributor:
✓ DS salary is paid by CD
✓ No K4 is given
✓ DS incentive is given by Nestle

Super Stockist:
✓ 1.88% on all categories
✓ (additional pre-tax 1% reimbursed by company)
✓ Freight Charge of Rs. 9-15 per CFC
✓ Calculated basis average distance b/w SS and all RDs (No freight charges for RD<16 KM)
✓ Average NSR = Rs. 1750

Rural Distributor:
✓ RD is responsible for servicing a particular rural market
✓ May/May not have DS, Depends on size of market
✓ All infrastructure costs to be borne by RD
✓ PSM visits RD at a frequency of once a week, twice in some exceptional cases
✓ SS extends one week credit to RDà Maximum one bill outstanding
✓ Invoicing from SS to RD done once a week on a fixed day
✓ Stock replenishment done on the basis on certain “NORMS”
✓ RD’s usually have a monthly target of 5-15 Lakhs
 Pop group Market Representation
> 5 Lakhs Distributor or super Stockist
1 Lakh – 5 Lakh Distributor or Super Stockist
50k – 1 Lakh Cash Distributor
30k – 50k Cash Distributor
5k – 30k Rural Distributor
< 5k No representation

III. Britannia
Urban AW:
✓ AW services the town market directly with it’s sales and delivery infra
✓ No concept of supervisors, Territory Sales In-charge manages the AW points
✓ Mostly have separate salesman for S1 and S2 product categories
✓ Institutional sales is handled by the Urban AW’s
✓ For Institution SKUs WD get mark markdown of 27%

Rural AW
✓ It services the village markets directly with its sales and delivery infrastructure (mostly rented)
✓ No concept of supervisors, Territory Sales In-charge manages the RAW points
✓ Salesman handles both the categories
✓ In case a RAW has a turnover of above 30 lacs & 3 Ds, (2 salesman are subsidized by Britannia,<
3 Ds on Co-assessment)

Super-stockist
✓ RPD’s are appointed in rural markets to cover small village outlets
✓ Serve RPD’s directly within a distance of 60-75 km; min. of 10 RPDs under him but it can go up
to 20-25 as well
✓ The RPD’s have been divided into four segments i.e. Small, Medium, Large and Extra Large
basis expected turnover
✓ Tier Slab (Rs.) Small - S 25,000 – 1,00,000, Medium – M 1,00,000 – 2,00,000, Large – L 2,00,000
– 3,00,000, Extra Large - XL 3,00,000 – 8,00,000
✓ PSM (Pilot Sales Man ) appointed by Britannia on third party payroll does routes with RPDs
and brings their orders to the SS
✓ PSM is responsible for ensuring distribution to RPD’s from SS, he reports to Rural TSI
An RPD is set up if there are more than 22 serviceable outlets in his commanding area and minimum
monthly billing of Rs. 400 needs to be done at these outlets
B. KEY BUSINESS DRIVERS OF RETAILING BUSINESS

From our visits to the various retail shops of Top Retailing Business, we tried to identify which factors
influenced the sale at the Top-retail channel apart from the market pull created by the Marketing
Activities of the Brand.

We identified a few factors where a few of them were in play in almost all stores whereas some of the
drivers were more pronounced or present in only a few of the stores in the Top Channel category
given the different layout of each store.

1. Margins
The major driver for the sale of any product was the availability of the product in the store. And for
that to happen, the shop owner must be willing to stock the product. Margins thus play an important
role for the stocking of products.

i. Distributors- The product with a higher margin is focused on more and pushed to the retailers.
Also, the status of the distributor decided the leverage that the distributor has over the
retailers as well as the relation with the company.

ii. Retailers- The higher the margins for the retailers, the more prominent was the positioning of
the product display within the store and the push by the retailers.

Analysis of Margins Across the Competitive Landscape

The margins constituted the fixed margins on any product vis-à-vis the variable incentive payoffs to
the retailer (on meeting specified targets). The margin bonus structure of P&G was 3% (New stock) +
1(or 2) % (Target Pay-out) + 1% (Visibility Margin).

As per the data collected from the market, the effective margins offered across the competitive
landscape was similar and thus did not play a differentiating role.

However, some additional incentives for the retailers like recognition programs, trips and luncheon
meetings at premium restaurants were said to be pronounced more in case of Godrej and IndiaGate.

On top of the pay-out to the retailer, an important driver is the understanding of the benefits earned
by the retailers. The retailers exhibit a greater motivation for the brand that they assumed offered
them a greater margin. Therefore, they sought simplified and direct margins from the retailer’s
perspective.

The Incentive and Scheme Sheet was showed to the owner/manager at the beginning of the month
or new scheme launch. Thus, the retailers in most cases didn’t have much knowledge about it.

2. Brand Pull
When going through the customers Decision Journey Map, the customer has an awareness set out of
which he/she further creates a consideration set. Since most of the products offered by P&G are low
involvement, communication and visibility are important to enter consideration set.
Analysis of Promotion Activities within the store

In most cases, we observed that 8 out of 10 customers already had a brand name in their mind when
they come to the store to buy the product. In case, they don’t find the relevant product, they may
choose a brand which is in their consideration set or may be even open to try another brand which is
being recommended by the retailer.

Therefore, recall and recognition is an important driver for sales apart from the availability in store.

Analysis

From our visits, we identified that the customers had a good knowledge about the offering by P&G
and the products were on top of their mind in respective categories. P&G has invested heavily into
brand building and focus is more on brand pull.

3. Availability

The consumer has a consideration set before buying an FMCG product. On visiting the store, the brand
should be available in the store as these products are low-involvement and hence, if unavailable
switching will take place. After entering the consideration set, availability is the next step for sale.

Analysis

The products available with the retailers and were restocked pro-actively. Thus, availability did not
come out as the issue specially with the larger store. However, in a few smaller stores of the Top-
Channel with business INR ~20,000 per month, old products (it was clear from the condition of SKU
that it was quite old) not moving out of the shelf occupied the shelf space for new products.

4. Visibility
On reaching the store for purchase, the customer may be influenced to alter his/her decision based
on out-store/in-store promotion activities like headers, banners, posters, fixtures, demo, figurines etc.

Visibility at the time of making the purchase plays 2 important roles namely, recall or recognition of
the brand and helps enter new brands enter evoked set at the time of purchase.

Another important visibility driver is the stock display share. The more the product is in display, the
more it has the probability of being noticed by the customer. Further, it signals the popularity of the
brand. Thus, priority shelf space, fixtures etc requires additional payoffs to the retailers and act as a
major driver for the sales to occur.

Analysis

P&G has invested heavily in-store promotion, but we had to strain ourselves to locate the products
and promotion in many stores (Especially among traditional format stores in Mango and Sakchi)

5. Influencers/Experts

In store Promoters/Experts act as an enabler for the sale to occur in many cases. They show the
product to the customer, pitch about its functional/core attributes.
In any pre-sale activity, they become a major source of knowledge for the customer/buyer. They also
show the demo to the customer in certain cases for products like cosmetics. The main factors for the
promoter are-

I. The Knowledge of the promoter

II. The sales pitch and training for servicing the customer
III. The incentives offered on sale made

Analysis

The promoters in the store were found to be properly trained and efficient. In fact, the promoters
were better equipped and formally dressed as compared to the competitors.

6. Affordability/Finance

Another major driver which although doesn’t generate sales but acts as an enabler or support activity
for the completion of sales is the affordability structure or finance.

The various forms of financial drivers identified as per the visits were –

A. Payment support- Card payment/Paytm/UPI

B. Credit

Analysis

When there are multiple forms of payment available at the retail shop, the customer doesn’t have to
worry about the payment method and can shop freely. Thus, the basket size is not limited by the
amount of cash or balance in wallet alone.

In addition, it is a natural habit observed in majority of stores to have an account in their name which
essentially represents the credit line extended by the retailer to the customers. In such cases, it was
observed that the customer normally didn’t keep exact track of the balance with the shop keeper and
normally followed a fixed duration to clear the dues.

This habit enabled a higher purchase per customer as compared to upfront payment.

7. Trial

In certain product categories, the customer wants to try the product before making the final purchase.
This habit was seen to be more pronounced in case of cosmetics (certain products) and specially in
case of a modified repurchase or a completely new purchase.

The trial sets (demo pieces) are thus kept at the counter to be showcased to the customer to enable
the purchase.

Analysis
The trial behaviour was seen to be dominant in the cosmetic products. The trial behaviour was also
seen to be influenced by the promoter (Their knowledge, clothing and pro-activeness)

8. Investment

The main driver for sales under investment is the weeks of stock that the retailer can hold. It
represents the investment made by the retailer to ensure the availability of the products at the store
and to ensure a product doesn’t run out of stock.

To enable product availability at the retailer, the distributor supports the retailers by offering

i. Timely Stock Delivery- Ensured by optimizing the beat schedule for the salesperson
ii. Credit Policy of the company/distributor- The number of days the retailer can delay the
payment of the stock bought. The more the number of days, the higher is the stock that the
retailer is inclined to take.

The retailer is also motivated by ensuring support for upgradation of the category of dealer thus

i. Dealer Category Upgradation Support- Different category of dealers receive different margins.
Thus, upgradation into a batter category ensures better margins and better focus on the dealer.
ii. Visibility Support- The various forms of visibility fixtures provided at the shop enables sales at
the shop. The retailer wants specific types of visibility fixtures at their store for the extra
incentive and additional sales. The support extended by the distributor in this regard helps
motivate the dealer.

9. Return Policy

The return policy for the expired or damaged goods also act as an enabler for sales. The return policy
motivated not only the retailer to do business with the company but also reduces the risk for the
consumer especially in high cost category of products.

If the product is expired due to low sales in the category, the product needs to be replaced timely for
the capital stuck to be free to invest in fresh stock for better sell out.

Analysis

It was seen in many cases that the old out of market products were still in stock with the retailer which
had not expired. This was blocking the shelf space as well as the capital for the retailer.

The toll-free number which was provided on the product label, especially in cosmetics enabled a
higher trial rate by the customer. The reduction of the risk of trial and the speed of replacement of
defective products stimulated purchase of costlier products.

However, the replacement speed of Nestle and Mondelez was said to be superior to both P&G and
HUL. However, HUL had more of lower ticket sized items and thus relatively was better off than P&G
 10. Returns

A major driver for the sales from a retail store is the visibility of products and how fast the products
moved from the shelves. Thu, the retailers calculate their returns based on per unit inventory
investment or per unit footage in case of shelf space. Thus, GMROII or even sometimes GMROF are
seen as the drivers for retailers to stock and push the products to the customers.

Analysis

Visibility and different forms of sales support which helped in faster movement of goods helped
generate better returns for the retailers and were in general preferred by the retailers.

C. OTHER ISSUES

In the past few months, the economy has not performed well, particularly so in the automobile sector.
40% of the population here is dependent on the automobile sector. There have been massive layoffs
of temporary workers. Tata steel has not even given the regular bonus. There has been a general
slowdown in Jamshedpur not particular for P&G. Out of around 2500 SMEs in Jamshedpur,
approximately 700 have closed down due to the slowdown. This has disproportionately affected sales
in the top channels, as most of the customers would have purchased goods from these stores.

D. SHORT TERM RECOMMENDATIONS

1. Sales force tools

The sales force needs better tools to commercialize the products and the incentive schemes that
have been conceptualized. The retailer doesn’t pay attention to a bunch of numbers in a book. The
primary driver of sales is the relationship that the salesperson has with the retailer and his ability to
sell. However, tools that provide instant gratification to the retailer could help increase the volumes
of sales.

This can be done on the tab that each salesperson carries today. He can just show the increase in
profit percentage, or the change in profits earned buy buying 20 units instead of ten to the retailer.
Such elements would be quite effective in helping the salesperson convince the retailer of the
efficacy of the scheme.

2. Inventory monitoring

The salesperson needs to actively monitor the quantity, the state and condition of the stock himself.
He can walk up to the shelf and observe all these parameters. Is the visibility promised present in the
store? Are the containers showcased neatly, or are they spread in a haphazard manner? He ought to
rearrange and align the products themselves, to ensure that their appeal is maintained. Additionally,
he should also enter the current stock of the products into his tab. This data point would be
significantly helpful in generating reports on a salesperson, store and regional level, while also acting
as a tool to deliver incentives to retailers. The entire exercise would take 15-20 minutes at the
maximum per store, but should provide a significant uptick in the sales.

3. Emphasis on capturing key locations in stores

In a lot of stores, we visited, we found that the location, visual merchandizing, accessibility of P&G
products was quite inferior compared to the competitors. For example, in the Saligram store, we
found that Head and Shoulders was in an upstairs location, reachable only by a hard to climb flight of
stairs. Even there, it had a bottom corner shelf, completely out of the view of the customer. It was
hard to find it, even when we were actively looking for it. Therefore, a series of best practices need
to be conveyed to the salesperson, like target the shelves at eye level, accessible locations,
prominent store branding etc. The salespeople in turn ought to ensure that these locations are
reserved for P&G, by leveraging their relationship with shopkeepers/incentives.

4. Conveying incentives to retailers

Retailers often have a poor understanding of their targets and schemes. While they have a general
idea, they rarely seem to know how the targets are set, how much more they need to sell of a
particular product etc. With the salesperson monitoring the inventory, this can be automated. Post
the sales visit, an automated message can be sent to the retailers’ cell phones, conveying how much
more they would have to sell. To enhance this, adding information about the percentages and
amounts would be even more helpful, encouraging them to push P&G products to their customers.
A message would look like “As per the scheme, you have sold 12 bottles of Pantene this month. You
need to sell another 8 to avail your bonus of 5%, leading to a profit of Rs 2312 for you!”, translated
into the local language of course.

5. Reporting and margin evaluation for retailers

A comprehensive reporting structure would help retailers get more visibility on where and how they
are making money. A message to their phones at the end of the month, highlighting their net
volumes, their profits and the amount of money they made by selling P&G products would help
retailers get far more clarity on why it’s a good idea to sell these products. Additionally, it further
increases the brand image as a company of transparency, delivering value to the retailers.
Furthermore, top level targets can be offered to them, offering better margins if they are able to
cross thresholds for overall sales, further driving their incentive to sell more of P&G’s products.
 E. LONG TERM RECCOMENDATIONS

1. Formal feedback mechanism

The massive salesforce can act as the eyes and ears of P&G and conduct much better market
research than anyone else. There is an absence of an established formal mechanism for feedback
collection and reporting from salespersons. There are a lot of insights that could be missed out due
to this. P&G might also lag in responding to actions by competitors, or be delayed in deploying some
innovative solutions. The reporting could take the form of a simple survey filled out every month by
the salespersons. This would then be collated at the sales lead level, who would generate a report to
be presented to the ASM. The ASM now has a set of reports to analyse and take actions. Even the
Sales lead can take some actions at his level. A tentative questionnaire would look like

• What do you think went well this month?

• What do you think did not go well this month?
• What are the new things that our competitors are doing?
• Do you see any change in the market environment?
• Do you have any ideas on how things can be improved?

2. Same month incentives

This was a concern raised in many stores, who were worried that they got their incentives too late.
With the constant inventory monitoring by the salesforce, live data on stock positions can be
generated about the various stores. This data can be passed on to the external auditors, satisfying
the compliance requirements, and thereby delivering the incentives as soon as possible.

3. Expedited replacement policy

The current replacement policy is leading to a lot of products taking up valuable shelf space, and
thereby reducing volumes. For example, a cream of Olay which is due to expire in the next six
months would not be purchased by the customer, however, P&G also does not withdraw it.
Therefore, the item lies idle on the shelf, and neither does the retailer buy something else to replace
it. Once the inventory tracking mechanism in place, analytics tools can be used to determine
whether a product can be recalled early, to make way for a faster moving product in its place.

4. In store promotion

Currently, promoters are given to stores that sell above a certain volume of cosmetic products. Every
store that sells more than Rs 50000 in cosmetics should have a dedicated in store promoter for P&G.
However, this still excludes a large volume of stores from their presence. Therefore, a rolling
promoter, who splits her time share across 4-5 stores, spending a few days in each store would go a
long way in educating the shopkeeper and assistants help drive sales even when they are not
present.
 5. Builder stronger brand loyalty with retailers

In almost every shop we visited, we found that one of the biggest drivers was the relationship that
the owner had with the salesperson. Therefore, it is important that this relationship be cultivated,
not just with the salesperson, but also with the brand. Retailer conclaves can be conducted, where
the retailers in the Jamshedpur meet, socialize, interact all under the P&G brand. Additionally, small
things like sending them text messages, wishing them on festivals, thanking them for their loyalty
etc, would significantly help garner loyalty for P&G. All this could be completely automated, at
minimal additional cost.
ANNEXURE

NUMBER OF MARKET VISITS: 7

ROUGH NUMBER OF STORES VISITED FOR DATA: 24
THE QUESTIONS AND ANSWERS ARE A GENERAL SUMMARY OF THE
CONVERSATIONS THAT WE HAVE HAD OVER THE COURSE OF OUR STUDY

NOTE: Introduced ourselves as XLRI students. Care was taken to not mention any affiliation with
any company. We asked the owner if we could investigate his store and ask him a few questions.
Questions here do not indicate a single question, but a general theme of conversation

ORDER PLACING PROCESS AND WHAT GOES BEHIND IT?

Question How do you place orders for your store?
Heuristic orders – Based on need – No set pattern - Don't prefer new products - Will take if there's
Answer a scheme. - New customers have issues. - Don't want to stock goods - In case of a very good
scheme, they would still take the product
Question What are the volumes and margins like?

8 lakhs. - 7-8% at the lowest – average around 10-12 - new products have better margins on
Answer promotion – tied to meeting a certain target sale volume – something like 10% for the product +
4% for reaching a volume - Incentives On the bill. - No company gives benefits on tax.

Question How is your relationship with salespersons?

Salesperson tracks stock -Fixes, verifies visibility of product placements - If they have permission,
they fix it themselves - Visits store 2-3 times a month. - 30 odd stores per salesperson. - Few folks
Answer
show books. – just talk about the margins/ values – don’t show anything tangible – notes down
current stock, orders, placements etc on an app on his phone

Question How are items placed on store shelves

Companies pay for branding - Nestlé pays for branding. - 6 % L’Oréal for potential branding. – Rs
Answer 3000 per month for preferential store - Bronze, silver, gold and platinum classification for
promotional schemes - Location for P&G is bad. – Products are almost invisible

Question How are items placed on store shelves

36 grand a year for high visibility. Maybelline. - Display unit only if there's an in-store promoter –
Answer
promoter given for all stores with volumes over 1 lakh a month

Question How are items ordered

Answer Heavy focus on relationships. - Recession in effect for the last few months – Orders placed weekly

Question How are products sold?

 Shopkeepers prefer to sell high margin products – Olay of P&G offer better margins than Lakme
(12% to 7%) – but customers already know what they want – shopkeepers do not attempt to
convince at the risk of losing the sale - There's some level of education about the product with the
Answer
shopkeepers. – Few products are assured by the company and sell on their own - Complaints are
handled seamlessly. - Few companies offer a cashback policy. – very relevant in a high price
category like beauty - On expiry, company takes the product back.

DEEP DIVE INTO THE SELLING LANDSCAPE:

Question Which brands to do know about that you sell in the store?
The Owner of the store said about HUL, P&G, Nestle, Fortune and Godrej. He gave some
Answer
examples for products from each brand
Question What did you think is the most preferred brand among the customers? Why?
The owner replied that as HUL. He said- “HUL has a large variety of products across multiple
Answer
product categories. The variety of products at the lower price level is also high
Question What is the problem with P&G? Why do the customers not prefer P&G
- He replied- “HUL has a much better variety than P&G. Also, P&G doesn’t have products
Answer like soaps in its portfolio which is a high selling item at the store. Even for the product like
washing powder, there are cheaper variants available from other brands
What sort of margins do the companies offer to the retailers? How does it compare to
Question
P&G?

Answer Variable margin only on sell out of min 12 pieces. In some categories it is as high as 24 pcs

Question How long is the credit period offered to the retailers? How does it compare with P&G?
The credit period offered was 7 days across the different competitors. P&G however
Answer
offered 15 days credit period
Question What is the pay-out offered for the various visibility attachments in the store
(The store had only Godrej and Nestle visibility attachments Godrej- Rs 2000 (One time).
Answer Minimum Period for pay-out is 3 months, Nestle- Rs 2000/3 month. However, the store not
having large display space said they don’t
Question What are the additional incentives offered?

Some of the brands like Godrej and India Gate offered additional incentives to the retailers
Answer
in the form of recognition programs, trips and luncheon meetings at premium restaurants

Question How do you decide the product placement in your store?

Generally, the product placement is decided by them according to the margins offered to
them and the type of product (fast moving/slow moving). Also, many a times the placement
Answer is changed by the sales rep coming at the store (especially in the stores in the modern retail
format). But the core position of the products is not changed repeatedly as it becomes a
hassle and difficult to service the customer in time
Question How much do you(retailer) play the role in influencing purchase decisions of consumers?
 Generally, the consumers are much more aware than before as most of the brands invest
Answer in TV and social media platforms and hence our role has decreased from before. Unless
asked, in most cases we do not influence them.
Question Which companies have a recognition program and what is your take on it?
Brands like Fortune and Marico have recognition programs wherein the retailers
achieving/overachieving a target for a quarter or usually a year are called to Five-Star
Answer Hotels and felicitated. The program usually has close to 100% attendance and receives
positive reception from the trader community. Being part of the overachieving club, it also
helps to boost the motivation to achieve sales.
Question How has the retailer-brands relationship changed over the years?

The relationship in terms of loyalty was certainly stronger a decade or two back as the
Answer number of brands were less and traders exhibited loyalty to only a certain brand. With
increasing competition from Modern Trade outlets and new shops along with more brands.

Question What are the expectations of retailer from brands?

In beauty care or personal care, Brands like Loreal provide a toll-free number to resolve the
complaints/issues of the consumer. This eases out the post-sales service of the retailer and
he can rely on the support system provided by the brand. Salesforce deployed by brands
Answer
within the store (selling cosmetics and beauty products) help in easing out the day-day
customer interaction and become a source of additional revenue. P&G can look at
exploring this strategy to sell its product Olay