SYMBIOSIS INSTITUTE OF OPERATIONS MANAGEMENT

Coca Cola: Sales and Distribution Project

SUBMITTED BY Arunima Singh (018) Ashutosh Sharma (022 Gagandeep Jindal (037) Harsh Antani (040) Pratyush Das (062) Vivek Mehta (099)

Coca Cola: Sales and Distribution Project

Table of Content

Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Content HCCBPL Introduction Organisation Structure Distribution Network Distribution Routes Distribution System Departments involved in the distribution Competitors Competitor analysis Consumer Preference Coke Vs Pepsi Questions asked to the retailers Conclusion Recommendation Annexure I Annexure II Annexure III References

Page No. 3 5 7 8 8 9 10 12 13 15 18 19 20 22 23 24
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HINDUSTAN COCA-COLA BEVERAGES Pvt. Ltd. (HCCBPL)

ABOUT THE COMPANY
Coca-Cola was the leading soft drink brand in India until 1977 when it left rather than reveals its formula to the Government and reduces its equity stake as required under the Foreign Regulation Act (FERA) which governed the operations of foreign companies in India. CocaCola re-entered the Indian market on 26th October 1993 after a gap of 16 years, with its launch in Agra. An agreement with the Parle Group gave the Company instant ownership of the top soft drink brands of the nation. With access to 53 of Parles plants and a well set bottling network, an excellent base for rapid introduction of the Companys international brand was formed. The Coca-Cola Company acquired soft drink brands like Thumps Up, Limca, Maaza, which were floated by Parle, as these products had achieved a strong consumer base and formed a strong brand image in Indian market during the re-entry of Coca-Cola in 1993.Thus these products became a part of range of products of the Coca-Cola Company. In the new liberalized and deregulated environment in 1993, Coca-Cola made its re-entry into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the Coca-Cola Company. However, this was based on numerous commitments and stipulations which the Company agreed to implement in due course. One such major commitment was that, the Hindustan Coca-Cola Holdings would divest 49% of its shareholding in favour of resident shareholders by June 2002.Coca-Cola is made up of 7000 local employees, 500 managers, over 60 manufacturing locations, 27 Company Owned Bottling Operations (COBO), 17 Franchisee Owned Bottling Operations (FOBO) and a network of 29 Contract Packers that facilitate the manufacture process of a range of products for the company. It also has a supporting distribution network consisting of 700,000 retail outlets and 8000 distributors. Almost all goods and services required to cater to the Indian market are made locally, with help of technology and skills within the Company. The complexity of the Indian market is reflected in the distribution fleet which includes different modes of distribution, from 10-tonne trucks to open-bay three wheelers that can navigate through narrow alleyways of Indian cities and trademarked tricycles and pushcarts. Think local, act local, is the mantra that Coca Cola follows, with punch lines like Life ho to Aisi for Urban India and Thanda Matlab Coca Cola for Rural India. This resulted in a 37% growth rate in rural India visa-vie 24% growth seen in urban India. Between 2001 and 2003, the per capita consumption of cold drinks doubled due to the launch of the new packaging of 200 ml returnable glass bottles which were made available at a price of Rs.5 per bottle. This new market accounted for over 80% of Indias new Coca-Cola drinkers. At Coca-Cola, they have a long standing belief that everyone who touches their business should benefit, thereby inducing them to uphold these values, enabling the Company to achieve success, recognition and loyalty worldwide.

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FIGURE 1: LOCATIONS OF COBO, FOBO & CONTRACT PACKAGING IN INDIA

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ORGANIZATION STRUCTURE OF COCA-COLA

ORGANIZATION STRUCTURE IN COCA-COLA, India

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ORGANIZATION STRUCTURE IN COCA-COLA, INDIA

ORGANIZATION STRUCTURE OF THE SALES DEPARTMENT

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DISTRIBUTION NETWORK
HCCBPL has a wide and well managed network of salesmen appointed for taking up the responsibility of distribution of products to diverse parts of the cities. The distribution channels are constructed in such a way that the demand of customers is fulfilled at the right place and the right time when it is needed by them. A typical distribution chain at HCCBPL would be: Production---Plant Warehouse---Depot Warehouse---Distribution Warehouse---Retail Stock---Retail Shelf ---Consume The customers of the Company are divided into different categories and different routes, and every salesman is assigned to one particular route, which is to be followed by him on a daily basis. A detailed and well organized distribution system contributes to the efficiency of the salesmen. It also leads to low costs, higher sales and higher efficiency thereby leading to higher profits to the firm.

Distribution Chain at HCCBPL

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DISTRIBUTION ROUTES
The various routes formulated by HCCBPL for distribution of products are as follows: 1) Key Accounts: The customers in this category collectively contribute a large chunk of the total sales of the Company. It basically consists of organizations that buy large quantities of a product in one single transaction. The Company provides goods to these customers on credit, payments being made by them after a certain period of time i.e. either a month of half a month. Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc. 2) Future Consumption: This route consists of outlets of Coca-Cola products, where in a considerable amount of stock is kept in order to use for future consumption. The stock does not exhaust within a day or two, instead as and when required stocks are stacked up by them so as to avoid shortage or non-availability of the product. Examples: Departmental stores, Super markets etc. 3) Immediate Consumption: The outlets in this route are those which require stocks on a daily basis. The stocks of products in these outlets are not stored for future use instead, are exhausted on the same day and might run a little into the next day i.e. the products are consumed at a fast pace. Examples: Small sized bars and restaurants, educational institutions etc. 4) General: Under this route, all the outlets that come in a particular area or an area along with its neighbouring areas are catered to. The consumption period is not taken into consideration in this particular route.

DISTRIBUTION SYSTEM
Direct distribution: In direct distribution, the bottling unit or the bottler partner hasdirect control over the activities of sales, delivery, and merchandising and localaccount management at the store level. Indirect distribution: In indirect distribution, an organization which is not part of theCoca-Cola system has control on one or more of the distribution elements (Sales,delivery, merchandising and local account management) Merchandising: Merchandising means communication with the consumer at thepoint of purchase to convey product benefit, value and Quality. Sales people anddelivery personnel both have this responsibility. In certain locations special teamswho go into business locations to specifically merchandise our products.
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DEPARTMENTS INVOLVED IN THE DISTRIBUTION PROCESS

The Distribution process mainly consists of three departments: 1) Distribution Department: It appoints distributors and establishes a distributionnetwork, processes approved sale orders and prepares invoices, arranges logistics andship products, co-ordinates with distributors for collections and monitors distributionstocks and their set-up. 2) Finance Department: It checks credit limits and approves sales orders in compliancewith the credit policy followed by the firm, records collections from distributors,periodically reconciles outstanding balances from distributors, obtains balanceconfirmation from distributors and follows up outstanding balances. 3) Shipping or Warehousing Department: It dispatches goods as per approved by order, ensures that stocks are dispatched on a FIFO basis, ensures physical control over load out area and updates warehouse stock records in a timely manner.

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COMPETITORS TO HCCBPL
The competitors to the products of the company mainly lie in the non-alcoholic beverage industry consisting of juices and soft drinks. The key competitors in the industry are as follows:

PepsiCo: The PepsiCo challenge, to keep up with archrival, the Coca-Cola Company never ends for the World's # 2, carbonated soft drink maker. The company's soft drinks include Pepsi, Mountain Dew, and Slice. Cola is not the company's only beverage; PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices and Lipton ready-to-drink tea. PepsiCo and Coca-Cola hold together, a market share of 95% out of which 60.8% is held by Coca-Cola and the rest belongs to Pepsi.

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Distribution Network of PepsiCo

Nestl: Nestle does not give that tough a competition to Coca-Cola as it mainly deals with milk products, Baby foods and Chocolates. But the iced tea that is Nestea which has been introduced into the market by Nestle provides a considerable amount of competition to the products of the Company. Iced tea is one of the closest substitutes to the Colas as it is a thirst quencher and it is healthier when compared to fizz drinks. The flavoured milk products also have become substitutes to the products of the company due to growing health awareness among people. Dabur: Dabur in India, is one of the most trusted brands as it has been operating ever since times and people have laid all their trust in the Company and the products of the Company. Apart from food products, Dabur has introduced into the market Real Juice which is packaged fresh fruit juice. These products give a strong competition to Maaza and the latest product Minute Maid Pulpy Orange.

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COMPETITOR ANALYSIS

Parameter Distribution Strategy Available in Tie ups Products (Soft Drinks)

Coca-Cola Intensive 200ml, 300 ml, 500 ml, 1 lt., 1.5 lt., 2 lit. McDonald's, Cinemax Coke, Thums Up, Maaza, Sprite, Fanta, Limca

Pepsi Intensive 200ml, 300 ml, 500 ml, 1 lt., 1.5 lt., 2 lit. Pizza Hut, Kailash Parbat, Big Cinemas Pepsi, 7Up, Mirinda, Mountain Dew, Nimbooz, Slice

Sales promotion schemes for retailers

Free bottles on crate, Monopoly discount, Brands display scheme

Free bottles on crate, Monopoly discount, Brands display scheme

Credit policy

Two to three days

Two to three days

Average order size

Depends on demand/ stock

Depends on demand/ stock Distributor to company: Telephone/ direct ordering through representative, Retailer to distributor: Telephone/ direct ordering through representative 3 Days

How are orders placed Transit time Unsold/damaged merchandise Modes of transportation

Direct ordering through representative 2 Days

Replaced Company truck, autorickshaw, Mahindra mini truck More quick in replacing damaged bottles

Not replaced after shipment Company truck, autorickshaw, Mahindra mini truck Not very much committed in replacements

Complaints handling

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Consumer Preference Coca Cola vs.Pepsi-Cola

We made a questionnaire and conducted a survey and collected 50 samples to gauge consumer preference. Here are our findings.

1) Soft Drink Preference

Yes 42 No

Figure 1 : Cola Soft drink Preference

2) ConsumptionTrend

3
<=1 1-3 4-6

18 12

7-9 >=10

Figure 2 : Consumption glasses/week

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Coca Cola: Sales and Distribution Project 3) Cola Brand Preference

13
Coca Cola Pepsi

29

Figure 3: Cola Brand Preference

4)Preference of soft drinks on major parameters

11
Taste Availability Brand Name

24

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Questions asked to the retailers regarding Coca-Cola distribution:

Scope: 25 retailers in CIDCO Area, Nashik

1. Which companys soft drinks do you sell?

6, 24%

Pepsi Coca Cola

19, 76%

2. From whom do you order Coca-Cola Products?

0, 0%

Distributor HCCBPL

25, 100%

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Coca Cola: Sales and Distribution Project 3. How often does company person come to take order?

1, 4% 2, 8% 0, 0%

Twice a Week Weekly Fortnightly Monthly

22, 88%

4. Are any schemes provided by the company?

12, 48%

11, 44%

Yes No Occasionly

2, 8%

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Coca Cola: Sales and Distribution Project 5. When and how do you pay for the order?

6, 24%

At the Time of Delivery After the Delivery

19, 76%

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CONCLUSION
The conclusions drawn from the project study are as follows: There were total 50 outlets surveyed for checking the service provided by the distributor in the Cidco region of Nasik.Of these, monopoly outlets details are as under:

Sr.No 1 2 3 4

Particulars Coke Pepsi Shared other Total

Number 23 5 19 3 50

The sales for Coca-Cola products exceed the same for those of Pepsi products. Majority of the retail outlets receive sufficient display facility & merchandise. 42% of the outlets receive order as per required, whereas 40% of them do not receiveorders as per required.There is a good potential scope of improvement by the distributor in the areasof uncovered outlets (18%) as well as those outlets which do not get the order as perrequirement (40%). 31% of them do not receive any schemes, and 30% receive the schemes occasionally.Only 21% of the retail outlets fetch Coca-cola the majority of the business.Hence, there is a tremendous scope for the company to progress in this area. The frequency of service for majority of the retail outlets is very good with covering 22 of 50 outlets. Majority of the retail outlets in the Cidco area of Nasik (approx.43%) are filled with Coca-Cola stock twice every week.However, the number of uncovered outlets is 9, which constitute 18% of the entire Cidco region. This is quite a large number, which the distributor will haveto take into account inorder to improve his business. 28% of the retailers feel that the quality of service provided by the pre-seller is average. Also, approx. 30% of the retailers are not satisfied by the service provided by the retailers. Around 18% of the retail outlets form a part of either Pepsi monopoly or that are not served at all, from a part of the pre-sellers duty to convert them into cocacola monopoly or shared outlet.

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RECOMMENDATION
We can sum the recommendations in brief as follows: Communications should be improved by fulfilling the demand of product by company. In the field, sales persons work independently and away from the office. Good communication requires interaction between those preparing and those receiving reports. Company should make plans and impart training to the salesperson for better their performance. Aggressive Marketing by market developer for increasing the sales volume. Regular visit to distributors for better co-ordination. Improve the market share by: providing efficient & effective distribution catering to busy retailers atleast 3 times a week widening the region(i.e. area of sales)

a) b) c)

Company should adhere to and implement the customerssuggestions and complaintsabout products, service policies, price changes, advertising, etc. Provide better schemes & services inorder to gain market share

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Coca Cola: Sales and Distribution Project

ANNEXURE I
Questions asked to the retailers regarding Coca-Cola distribution:

1. Which companys soft drinks do you sell? a. Coca-Cola b. Pepsi c. Both 2. From whom do you order Coca-Cola Products? a. Distributor b. Company (HCCBPL) 3. How often does company person come to take order? a. Twice a week b. Weekly c. Fortnightly d. Infrequent 4. Are any schemes provided by the distributor? a. Yes b. No c. Occasionally 5. Are any schemes provided by the company? a. Yes b. No c. Occasionally 6. Who provides better service quality (HCCBPL or PepsiCo.)? a. HCCBPL b. PepsiCo

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Coca Cola: Sales and Distribution Project 7. When and how do you pay for the order? a. Cash at the time of delivery b. Cash after few days of delivery

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ANNEXURE II Consumer Preference Coca Cola Vs Pepsi-Cola

Question 1: Do you drink cola-soft drinks? a) Yes b) No Question 2: How many glasses do you drink per week? 1) 2) 3) 4) 5) <=1 1-3 4-6 7-9 >=10

Question 3: Which brand of cola do you prefer? a) Coca Cola b) Pepsi Question 4: Why do you prefer this product? Rank according to your own opinion:

1 Taste Availability Brand Name/Brand Recall

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References www.pepsiindia.com www.coca-colaindia.com Ministry of Food Processing Industries Business Magazine

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