bhushan maggo(1042. comparative analysis of john players with other apparel brands & its supply...
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FOOTWEAR DESIGN AND DEVELOPMENT INSTITUTEA - 10 / A, Sector - 24
NOIDA - 201 301 Gautam Budh Nagar, Uttar Pradesh, INDIA
COMPARATIVE ANALYSIS OF JOHN PLAYERS WITH OTHER APPAREL BRANDS & ITS SUPPLY CHAIN MANAGEMENT
This dissertation work was completed in partial fulfillment of the requirements for the
Under Graduate Diploma in Retail ManagementFootwear Design & Development Institute
Presented By:BHUSHAN MAGGO
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ACKNOWLEDGEMENT
This project would not have been possible without the guidance and cooperation of
number of people. I wish to extend my gratitude to all those who facilitated the
completion of my project.
At the very outset, I would like to give sincere thanks to my faculty guide Mr. Satyendra
Sir for his guidance and help in planning, executing and accomplishing the research
project successfully.
I would also like to thank all those people whom I have interviewed who helped me in
reaching to a conclusion.
BHUSHAN MAGGODFMRM-03
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Executive Summary/Abstract
Objective:
The objective of my project involved comparative analysis of John Players, brand of ITC-LRBD (Life Style Business Division) with other brands like Zodiac, Excalibur, Peter England, Indigo Nation, etc. Also study its logistics and supply chain management. Methodology:
The methodology used for this project report includes:
Personal interaction (with employees of ITC and other brands) Spending time in the different John players stores and in CSA warehouse (Consignee
Sales Agent) of ITC in Western U.P. Observation
I have gathered information through primary sources, that is, staff of ITC. I have interacted with the merchandise controllers, supervisor, logistic & supply chain head, accountant and director of CSA’s warehouse and area sales executive of ITC Mr. DHRUV CHAUDHRY. I also communicated with store managers and sales staff at store level.
Surveys.
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TABLE OF CONTENTS
Executive Summary/Abstract
1. Introduction--------------------------------------------------------
2. ITC Profile---------------------------------------------------------
a. John Players
b. Miss Players
3. UP-MARKET Distributors-------------------------------------
4. Merchandise Planning-------------------------------------------
5. Product Trapping-------------------------------------------------
6. Logistics & Supply Chain---------------------------------------
a. Distribution Channel of John Players(ITC-LRBD)
7. Booking Process---------------------------------------------------
8. Comparative Analysis with Zodiac---------------------------
9. Comparative Analysis with other Apparel Brands--------
10.Promotional Strategies------------------------------------------
11.Conclusion & Recommendations-----------------------------
12.Findings & Analysis---------------------------------------------
13.Annexure----------------------------------------------------------
a. Questionnaire
14. Bibliography & References-----------------------------------
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Introduction
This two month summer internship period (May-June) was fully invested to know
the retail management of JOHN PLAYERS, a well known apparel brand of ITC,
its merchandise planning, importance of product trapping, process and concept of
logistic and supply chain and effectiveness of promotional strategy. For smooth
completion of this project, I have divided it into four parts. First part spending
time in different store to understand the front –end operation, then moved to
understanding the concept and process of retail management and logistics and
supply chain that helped me to do the comparative analysis . In the third part I
studied the movement of goods in the Malls and studied effectiveness of
promotional strategy. In the final phase I did comparative analysis of John
Players. In order to make the research most authentic and most reliable, references
have been taken from various sources like ITC-LRBD (Life Style Business
Division).
I am very thankful to Mr. Ajay Sharma and Mr. Dhruv Chaudhry for
providing an opportunity to understand the concept and process and help me
accomplish the project.
I have tried my best to make this project most effective.
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ITC is one of India's foremost private sector companies with a market capitalization of nearly US $ 18 billion and a turnover of over US $ 4.75 billion. ITC is rated among the World's Best Big Companies, Asia's 'Fab 50' and the World's Most Reputable Companies by Forbes magazine, among India's Most Respected Companies by Business World and among India's Most Valuable Companies by Business Today. ITC also ranks among India's top 10 `Most Valuable (Company) Brands', in a study conducted by Brand Finance and published by the Economic Times.
ITC has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, Packaged Foods & Confectionery, Information Technology, Branded Apparel, Personal Care, Stationery, Safety Matches and other FMCG products. While ITC is an outstanding market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent businesses of Packaged Foods & Confectionery, Branded Apparel, Personal Care and Stationery.
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As one of India's most valuable and respected corporations, ITC is widely perceived to be dedicatedly nation-oriented. Chairman Y. C . Deveshwar calls this source of inspiration "a commitment beyond the market". In his own words: "ITC believes that its aspiration to create enduring value for the nation provides the motive force to sustain growing shareholder value. ITC practices this philosophy by not only driving each of its businesses towards international competitiveness but by also consciously contributing to enhancing the competitiveness of the larger value chain of which it is a part."
ITC employs over 21,000 people at more than 60 locations across India. The Company continuously endeavors to enhance its wealth generating capabilities in a globalizing environment to consistently reward more than 3, 71,000 shareholders, fulfill the aspirations of its stakeholders and meet societal expectations. This over-arching vision of the company is expressively captured in its corporate positioning statement: "Enduring Value. For the nation. For the Shareholder."
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]
ITC forayed into the youth fashion segment with the launch of John Players in December 2002 and is committed to be the No. 1 fashion brand for the youth. This foray leverages ITC’s proven competencies in understanding consumer insights, brand building and design capabilities.
Hrithik Roshan, with his innate style, best personifies the core attributes of the brand as its ambassador.
John Players offers a complete and vibrant wardrobe of Casual wear, Party wear, Work wear, Denims, Outer wear and Suits & Jackets and Accessories incorporating the most contemporary trends, an exciting mix of colors, playful styling, trendy textures and comfortable fits.
The brand is available across the country through a nation-wide network of over 250 exclusive stores and over 1300 multi-brand outlets.
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The launch of Miss Players has added to ITC’s youthful portfolio. The range which spans trendy tops, funky denims, smart trousers and stylish dresses along with a whole range of cool fashion accessories has been designed keeping in mind the tastes of the young Indian woman.
Female Actor Amrita Rao, with her vibrant and youthful personality, is the face of the brand.
Miss Players is currently available at select exclusive stores and at leading John Players stores in key cities. The availability of the brand will be rapidly enhanced to reach exclusive stores and multi-brand outlets in malls & high-street locations in the key consumption centres of the country.
ITC-LRBD, from its immense presence has made a permanent impression in the mind of people. It has big company name and effective supply chain. It has created a fashion fever in the youth and establish it self as a youth icon. LRBD has won several Images Fashion Awards over the years:
2007: Most Admired Fashion Campaign – John Players 2005: Most Admired Shirt Brand of the Year - John Players
2004: Rising Star Brand of the Year - John Players
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UP MARKET DISTRIBUTORS
DISTRIBUTION + RETAIL PIONEERS
Upmarket Distributors is a company owned by group of professionals, having a complete sales & marketing team with back up office of sales / accounts & warehousing facility at Noida & Lucknow having a comprehensive dealer network of more than 70 retailers (shop in shop, EBOs, MBOs) in all the major cities of Eastern U.P. like Lucknow, Kanpur, Noida, Agra, Merrut, Bareilly, Allahabad, Varanasi, Gorakhpur , Moradabad, Faizabad, Bahraich, Lakhimpur, Jhansi etc. In retail term it is called CSA (Consignee Sales Agent). I was there in Noida warehouse of Upmarket distributors. Company basically facilitates the work of distribution. ITC bear the transportation cost till Noida warehouse. From Noida warehouse Upmarket distributors provide merchandise to dealers. Every thing then handled by Upmarket distributors. Company keeps real time information of its dealer, it also book the orders of respective dealers and give real time information to RDC (regional distribution center), Mandoli. RDC, Mandoli is a mother warehouse of ITC. Upmarket helps in smooth movement of merchandise and also try to reduce lead time as much as possible. This function as a intermediaries between company and dealers.
Upmarket distributors handle the marketing & distribution of following Major Brands: Lee Cooper Belmonte John Players Miss Players GAS Giovani Wills Lifestyle ZAPP.
In addition to the above marketing network, company has also diversified itself into Retail segment by opening Exclusive Branded Outlets in U.P.
Upmarket distributors not only provide merchandise to dealers but also shoulder the responsibilities of many other functions. These are as follows:
A. Sales: - Sales is entirely a complete department. This include plethora of responsibilities. a. To Identify and set up a retailing network for the brand in all the above mentioned areas / any new and upcoming market / town. b. Train staff for representing the Brand and setting up the consolidated sales Team exclusively for the brand and the entire territory. c. Reporting system of the sales staff. d. To ensure the sales team achieve their target. e. To forecast sales in line with production at the retail level.
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f. To set up and freeze stock base + Stock Statement system with the Shop in Shop / retailers. g. Involvement with Business plan with key Retail outlets.
B. Visual Merchandising Responsibility It is a way to present merchandise to increase sale. To take on the responsibility of correct representation of brand at all the leading multibrand stores / Shop in Shop outlets / Franchise store visual merchandise is very important. Visual merchandise includes the following functions: a. Product Display b. Exclusive window display c. Designing Shop Modules. This is mainly to create the desired ambience in synergy with the corporate identity of the brand. C. Development of shop in shop outlets in multi brand store. Company also looks after of shop in shop outlets in multi brand store. Management of shop in shop involves the following factors: Brand Visibility (P.O.S. Material /Windows) Permanent Branding (Max Area) In store Promotion
Competition Analysis & Reports To set up the exclusive Retail network across the territory so as to provide the sales
and service to its best potential Maintain Branding P.O.S. Support Merchandise Support
COMMUNICATION Research Feed Back Information
Merchandise Planning
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ASSORTMENT PLANNING
Assortment planning is one of the crucial factors of sale. Retailers can not anticipate their customer’s needs and demands, so in this case it is very important to keep assortment according to their customer choice. A well- planned merchandise assortment not only reflects the customers’ needs, but also projects the store’s image. A planned assortment planning leads to control the inventory investment, uses the store’s space profitability, increase sale and generate profits. Balanced merchandise assortment enables retailers to attain their goals while satisfying their targeted customers. This is achieved through assortment planning and its continual review, analysis and adjustment to meet the ever changing needs and wants of customers. An effective merchandise assortment or mix is the ideal combination of merchandise that meets the needs of the targeted group at the right time. There are three types of merchandise assortments:1. The underweight assortment2. The overweight assortment3. The ideal weight assortment
THE UNDER WEIGHT ASSORTMENT
The underweight assortment makes a poor merchandise presentation. Shelves and fixtures are sparsely stocked. Basis stock is missing resulting dissatisfied customers and falling sales.
THE OVER WEIGHT ASSORTMENT
The overweight assortments are so much stocked that leads to poor visibility. The fixtures are bulging, usually with merchandise that becomes shopworn and dirty. This condition reduces profits because of unnecessarily tied up merchandise.
THE IDEAL WEIGHT ASSORTMENT
This is the perfect mix of merchandise that meets the five golden rules of merchandising. Which are:1. The right merchandise2. At the right time3. In the right place4. At the right price5. In the right stock quantity
MERCHANDISE GROUPING
All the merchandise that a store keeps are logically organized into departments containing related merchandise groups. These specific merchandise assortment groups
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are defined as merchandise classifications or categories. Within each class, assortment may be broken into subclass to define the merchandise by style, by fabrication, color, size and so forth.Example:
S. no Department Class Subclass Subcategory
1 Men’s formal Shirt Full shirt Cotton
2 Women’s casual Lower Capri Denim
Class Subclass SubcategoryShirt Full shirt Cotton
Half shirt Lenin
CONSIDERATION OF STOCK FACTORS
Specific stock assortment groupings defined further through consideration of factors that influence sales volume. They defined the basis mix of ideal assortment. This help in increasing walk ins and conversion rate. These six factors are:1. Basic stock list2. Best sellers3. Seasonal merchandise4. Promotional merchandise5. Volume price points6. Merchandise life span
BASIC STOCK LISTS
Merchandise within each classification that has a consistent customer demand comprises basic stock lists. Staple basic are considered ‘never outs’ and are in stock 12 month a year. In John Players it is called “NOOS” category. This means “never out of stock”. “NOOS” forms the general merchandise within any store. It is very crucial to maintain this constant demand of customer their by giving competitive advantage in the industry. “NOOS” collections of John Players within casual are as follows:
SHIRTS
Office Basics Merchandise Cotton
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Premium Fill-A-Fill Classic Chambray Royal Oxford Imperial Cotton
TROUSERS
Casual Twills Cotton Twills Twills On Vacation Anti Crush Comfy Twills
BEST SELLERS
Items that produce the greatest sales volume are referred to as ‘best sellers’ or ‘key items’. Select products that the customers must have. Through product trapping retailers come to know which its ‘best sellers’. It is best to buy in depth after identifying a ‘best sellers’ to prevent out-of-stocks and broken sizes (out-of-stock within offered size range). On this analysis key items are watched and reorders are reduced as popularity wanes. In John Players store in GIP (great India Place), best sellers was poster color shirt, that was worn by Hrithik Roshan.
SEASONAL MERCHANDISE
A broad assortment of merchandise purchased for a specific season or holiday is defined as ‘seasonal merchandise’. The merchandise mix offers arrange of items, not in depth, except for specific best sellers. Seasonal merchandise sales are closely monitored to ensure that remainder are reduced and cleared out before the end of the season. In John Players stores, Linen shirt was the seasonal merchandise.
PROMOTIONAL MERCHANDISE
Promotional merchandise includes select products purchased to promote ‘values’ to customers, increase store traffic and generate additional sales volume. These items are not to be confused with clearance merchandise-the goods that the customer did not want. There was no promotional merchandise during that period.
VOLUME PRICE
Within each sub classification, it is possible to capitalize on retail pricing structure. For example, for all season offers formal shirts between Rs.595 to Rs.995. Through unit stock
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control, the records show that the majority of regular priced sales are at Rs.995. Therefore, Rs.995 becomes the volume price point and purchases are concentrated here.
MERCHANDISE LIFE SPAN
All merchandise has an identifiable sales timetable or merchandise life span. Greater sales and profits are produced by the proper timing of incoming merchandise and the correct timing of reducing or eliminating stock items as their popularity declines. As John players has merchandise planning on seasonal basic. So last season stock has to remove as new season merchandise are stacked in the store. INDENT PLACING
Indent is a copy of store ledger for availability of material/stock. Indent is a document specifying the type, quantity and MRP of the products that are required on the floor. It states the base stock (the minimum stock required to be stocked on the floor), stock position (what is available on thefloor), and order requisition.
During my first three weeks, I monitored material flow or did product trapping. As two weeks passed by, I made the refilling order for John Players and Miss Players. Generally in John players they follow 1:2:2:1 ratio for merchandise placing within a store, i.e. size for formal trousers starts from-39, 40, 42 and 44. Stores keep merchandise in the above mention ratio. After making refilling order, it is being sent to Noida CSA’s (consignee sales agent) warehouse. From that warehouse, stock dump is asked from ITC RDC (Regional Distribution Centre), Delhi. After getting stock dump, indent is placed against available material.
STOCK DUMPIt is a list of available merchandise in the RDC (Regional Distribution Centre) consists of category wise, item wise, color wise distribution and so forth.
Wh Wh Name
Item No. Product Moo. Fabric Mr Style Item Code Season Size Color Net Allo.
Noida
060 Jp rdc, Mandoli
JWNFS011A803
SHIRT NOSS J6 695 FSOC NOSS F/SLV SHIRT OXFORD
111 39 Peach 7 2
060 Jp rdc, Mandoli
JWNFS011B684
SHIRT NOSS J6 695 FSOC NOSS F/SLV SHIRT OXFORD
111 42 Scarlet 5 5
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FLOW CHART OF DOCUMENT
Re-fill list, in the store
Send to Noida, CSA’s warehouse
Warehouse ask for stock dump from RDC, Mandoli If merchandise not available at CSA’s warehouse
Indent placing
Delivery to CSA’s warehouse, Noida From RDC, Mandoli
Send to stores
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Product Trapping
I spent five weeks in the John Players’ stores, situated in GIP (Great India Place),CSM(Centre Stage Mall) and Shopprix Mall, Noida. I monitored the material flow of John Players and Miss Players.
Available price Range of John Players:
PRODUCT FROM(Rs) TO(Rs)SHIRT 595 1045PARTY WEAR 995 1395SIGNATURE LINE 995 1195TROUSER 595 1395DENIM 695 1595CARGO 995 1795T-SHIRT 245 845
SWOT Analysis of John Players, at GIP (Great India Place), Noida
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STRENGTHS
1. Assortment is inclined towards youth
2. Effective store interior (lighting, walking space, scent, hygiene etc.)
3. Located in semi established mall, provided with other wall facilities (parking, food court, securities, wash room etc.)
WEAKNESSES
1. Wrong positioning of the store, leads to less foot fall
2. Brand image is not in tandem with punch line
3. Strength of advertisements and promotional activity is less
4. Wrong mix of SKU (STOCK KEEPUNG UNIT)
5. Visual merchandising is not effective
6. Lack of motivation in the staff
OPPORTUNITIES
1. Increasing retail experience of Indian consumer $
2. Experience of Double income or pooled income in the family
3. Brand consciousness (customer)4. Brand positioning match with
merchandise mix5. Introduction of Miss players gives a
complement6. Big brand name as ITC is attached
THREATS
1. More number of retail out let2. Government policies and laws 3. Volatility in product life cycle4. Introduction of new
technology(design/trend)5. Effective logistic (outsourcing)with
real time information(AITS/RFID)
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Logistics and Supply Chain
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INTRODUCTION
A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasing organizations along with the supply chain are operated independently. These organizations have their own objectives and these are often conflicting. Marketing's objective of high customer service and maximum sales dollars conflict with manufacturing and distribution goals. Many manufacturing operations are designed to maximize throughput and lower costs with little consideration for the impact on inventory levels and distribution capabilities. Purchasing contracts are often negotiated with very little information beyond historical buying patterns. The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism through which these different functions can be integrated together. Supply chain management is a strategy through which such integration can be achieved.
THE OBJECTIVE OF SUPPLY CHAIN.
The objective of supply chain can be summarized into following heads: -
- Maximize the overall value
- Maximize the supply chain Profitability
- Customer Satisfaction (the sole source of revenue)
- Effective Management of product, funds and Information
CONFLICTING OBJECTIVES IN SUPPLY CHAIN
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1. PURCHASING
- flexible delivery time- little variation in mix
2. MANUFACTURING
- Long run production- Low production cost- High Quality
3. WAREHOUSING
- Low Inventory- Reduced Transportation Cost
4. CUSTOMER
- Short Order Lead Time- High in Stock- Low Prices
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SCMObjectiv
es
TACTICAL OBJECTIVES:1. SOURCING AND
PURCHASING 2. INVENTORY
MANAGEMENT3. TRANSPORTATION
STARTEGIC OBJECTIVES:1. NETWORK
OPTIMIZATION2. STRATEGIC
PARTNERSHIP3. INFORMATION
TECHNOLOGY
OPERATIONAL OBEJCTIVES:1. DISTRIBUTION
OPTIMIZATION2. INBOUND OPERATIONS3. OUTBOUND
OPERATIONS4. CUSTOMER5. PRODUCTION
OPERATIONS
IMPORTANCE OF SUPPLY CHAIN .
Why is SCM Important?
• Strategic Advantage – It Can Drive Strategy- Manufacturing is becoming more efficient- CM offers opportunity for differentiation (Dell) or Cost Reduction (Wal-
Mart or Big Bazaar)
• Globalization – It Covers The World- Requires greater coordination of production and distribution- Increased risk of supply chain interruption- Increases need for robust and flexible supply chains.
• At the company level, supply chain management impacts- COST- SERVICE
There is a close connection between the design and management of supply chain flows (product, information and flows) and the success of supply chain. All the big retailing companies such as Wal-Mart, Dell computer, big bazaar etc…, have built their success on superior design, planning and operation of their supply chain.
It is important because all the companies are leader in using supply chain design, planning, and operation to achieve success. From its beginning, the companies invested heavily in transportation and information infrastructure facilitates the effective information and collaborating with suppliers to bring down costs and improve product availability.
Some companies bypass distributors and retailers and sell directly to customers. Close contacts with customers and their needs makes them to develop better forecasts.
Talking about other aspects of any companies supply chain success is that it is facilitated by sophisticated information exchange. It provides real time data to suppliers on the current state of demand. Suppliers are able to access their components’ inventory levels at the factories along with daily production requirements. They create customised Web pages for its major suppliers to view demand forecasts and other customer-sensitive information, thus helping suppliers to get a better idea of customer demand and better match their production schedules to that of the companies.
Clearly, any companies supply chain design and management of product, information and cash flows play a very a key role in the companies success.
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DRIVERS OF SUPPLY CHAIN PERFORMANCE
To understand how a company can improve supply chain performance in terms of responsiveness and efficiency, we must examine the logistical and cross- functional drivers of supply chain performances: facilities, inventory, transportation, information, sourcing and pricing. These drivers interact with each other to determine the supply chain’s performance in terms of responsiveness and efficiency.
FACILITIES are the actual physical locations in the supply chain network where product is stord, assembled, or fabricated. The two major types of facilities are production sites and storage sites. Decisions regarding the role, location, capacity, and flexibility of facilities have a significant impact in the supply chain’s performance.
INVENTORY encompasses all raw materials, work in process, and finished goods within a supply chain. Changing inventory policies can dramatically alter the supply chain’s efficiency and responsiveness. A large inventory, however, increases the retailer’s cost, thereby making it less efficient. Reducing inventory makes the retailer more efficient but hurts its responsiveness.
TRANSPORTATION entails moving inventory from point to point in the supply chain. Transportation can take the form of many combinations of modes and routes, each with its own performance characteristics. Transportation choices have a large impact on supply chain responsiveness and efficiency.
INFORMATION consists of data and analysis concerning facilities, inventory, transportation, costs, prices and customers throughout the supply chain. Information is potentially the biggest driver of performance in the supply chain because it directly affects each of the other drivers. Information presents management with the opportunity to make supply chains more responsive and more efficent.
SOURCING is the choice of who will perform a particular supply chain activity such as production, storage, transportation, or the management of information. At the strategic level, these decisions determine what functions a firm performs and what functions the firm out sources. Sourcing decisions affect both the responsiveness and efficiency of a supply chain.
PRICING determines how much a firm will charge for goods and services that it makes available in the supply chain. Pricing affects the behavior of the buyer of the good or service, thus affecting supply chain performance.
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GLOBALIZATION DRIVERS
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SUPPLY
CHAIN
MANAGEMENT
MARKET DRIVERS
CO
ST
D
RIV
ER
S
PO
LIC
Y
DR
IVE
RS
COMPETITIVE DRIVERS
Converging customer needsTransferable MarketingHigh Imports and Exports
Integrative Trade PoliciesGovt. RegulationCompatible Technical Standards
Mergers & AcquisitionFlexible Structures.Competition
Transportation CostScale EconomiesProduct Development Cost
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ACHIEVING STRATEGIC FIT
For any company to be successful, its supply chain strategy and competitive strategy must fit together. Strategic fit means that both the competive and supply chain strategies have aligned goals. It refers to consistency between the customer priorities that the competitive strategy hopes to satisfy and the supply chain capabilities that the supply chain strategy aims to build.
All processes and functions that are part of a company’s value chain contribute to its success or failure. These processes and functions do not operate in isolation; no one process or function can ensure the chain’s success. Failure at any one process or function, however, may lead to failure of the overall chain. A company’s success or failure is thus closely linked to the following keys:
1. The competive strategy and all functional strategies must fit together to form a coordinated overall strategy. Each strategy must support other, and help a firm reach its competitive strategy goal.
2. The different functions in a company must appropriately structure their process and resources to be able to execute these strategies successfully
3. The design of the overall supply chain and the role of each stage must aligned to support the supply chain strategy.
HOW STRATEGIC FIT IS IS ACHIEVED?
What does a company need to do to achieve that all important strategic fit between the supply chain and competitive strategies? A competitive strategy will specify, either explicitly or implicitly, one or more customer segments that a company hopes to satisfy. To achieve strategic fit, a company must ensure that its supply chain capabilities support its ability to satisfy the targeted customer segments. There are three basic steps to achieving this strategic fit, which we are discussing here:
1. Under standing the customer and supply chain uncertainty.2. Understanding the supply chain capabilities.3. Achieving Strategy Fit
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COST-RESPONSIVE EFFICIENT FRONTIER.
responsiveness
HIGH
LOW
HIGH LOWCOST
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ACHIEVING STRATEGY FIT
Implied uncertainty spectrum
Responsive supply chain
Efficient supply chain
Certain demand
Uncertain demand
Responsiveness spectrum Zone o
f
Strateg
ic Fit
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LOGISTIC MANAGEMENT
Transportation part of whole supply chain is called ‘logistic’. So logistic is a spoke in a complete wheel of supply chain. Retailing and logistic are concerned with product availability. In other words it can be described as ‘getting the right products to the right place at the right time’. This is a complex process of supply chain. Logistic controls the flow of material from procurement to distribution. So, there are two types of logistic to smooth the process: Inbound logistic Out bound logistic
INBOUND LOGISTICThis controls of material flow from procurement to operation process.
OUTBOUND LOGISTICThis handles the movement of finished goods to end customer.
The logistic management task is therefore become more important, and initially concerned with managing the components of ‘logistic mix’. There are five components:
1. Storage facilities- these might be warehouses or distribution centers or simply the stock rooms of retail stores. Retailers manage these facilities to enable them to keep stock in anticipation of or to react to, demand for product.
2. Inventory- all retailers hold stock to some extent. The question for retailers is the amount of stock or inventory that has to hold for each product and the location of this stock to meet the demand changes.
3. Transportation- most products have to transport in some way at some stage of their journey from production to consumption. Retailers have to manage a transport operation that might involve different forms of transport, different sizes of containers, vehicles and scheduling and availability of drivers and vehicles.
4. Utilization and packaging- retailers are concerned to develop products that are easy to handle in logistics terms, do not cost too much to package or handle, yet retain their selling ability in the shelves.
5. Communication- to get the product where retailers need them, it is necessary to have information, not only demand and supply but also about volumes, stock, prices and movements. So, it is necessary to capture data at appropriate points in the system and to use that information to have a more efficient and effective logistics operation.
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To start any business it is very necessary to keep logistic system very flexible. During implementation of this idea retailers have to ponder on these decisions. The various decisions in logistic management that need examination for and integrated system are:
1. Product design2. Plant location3. Choice of market/sources4. Production structure5. Distribution/dealer network design6. Location of warehouses7. Plant layout and logistic8. Allocation decision9. Production planning10. Inventory management-stocking levels11. Transportation-mode choice, shipment size and routing decision and transport
contracting12. Packaging13. Material handling14. Warehouse operation
TOTAL LOGISTIC COSTThe important elements of total logistic cost are: Product inventory at stores Pipeline inventory Product inventory at warehouses and dealers Transit losses/insurance Storage losses/insurance Handling and warehouse operations Packaging Transportation Customers’ shopping
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ROLE OF GOVERNMENT
In the Indian context, government plays a significant role in logistics. Some of the legislations that affect logistics are:
1. Central Sales Tax and Local Sales Tax2. Consignment Tax3. Excise Duties4. Octroi and Entry Tax5. Use of packaging material6. MODVAT7. Motor Vehicles Act and similar acts for other modes
1. Central Sales Tax (CST) - It is a tax on interstate commodity sales. In institution where there is a resale in the receiving state, local sales tax is also incurred. CST is not incurred if there is a branch in the receiving state for the organization since then the interstate movement would be considered as stock transfer.
2. Consignment Tax- It is a measure to collect tax even on the interstate stock transfers.
3. Excise Duties- It is payable when the product leaves the factory. Excise duties have an influence of increasing finished goods inventory rather than pipeline and warehouse.
4. Octroi and Entry Tax- It is levied before goods enter a city or state, respectively. A logistic implication of Octroi and Entry taxes is that warehouses and trans-shipment points mushroom outside the Octroi/state boundaries.
5. Regulations regarding use of packaging material, especially jute for commodities like foodgrain, sugar and cement, are made to protect the jute farmers. This has implications on increased storage and transit losses since better packaging material like high density polyethylene cannot be used as much.
6. MODVAT- It is modified value added tax, ensures that double charging of excise duties is prevented and eliminates the need for prepayment and future collection of refund of such duties.
7. Motor Vehicle Act- The Motor Vehicle Act, 1988, has brought in strict regulations to prohibit overloading of trucks and ensure better quality of drivers.
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Distribution Management
Generally distribution management refers to the outbound movement of finished products. Included here is inventory and warehouse management. Own warehouses may be used, distribution centres, or sites of the wholesalers from where products will be distributed to retailers and finally to the end consumer(Taylor 1997: 11).
MARKETING INTERMEDIARIES
The people and organizations that assist in the flow of goods and services from producers to customers are known as marketing intermediaries. Following are the common types of intermediaries: Middlemen- Middlemen refers to just about anybody acting as an intermediary
between the producer and the customer. Agent or Broker- Intermediaries with legal authority to market goods and
services and to perform other functions on the behalf of the producer are called agents or brokers. Agents generally work for producers continuously whereas brokers may be employer for a particular deal.
Wholesaler- Wholesalers are organizations that buy from producers and sell to retailer and organizational customers. They primarily deal in bulk and sell to the retailer or other intermediaries.
Retailer- This is the last link of the marketing channel. Retailers sell directly to end customers. They purchase goods from wholesalers or in some cases directly from the producers.
Distributors- Distributors is a general term applied to a variety of intermediaries. These individuals and the firm perform several functions, including inventory management, personal sale and financing. The basis difference between an agent and a distributor is that while agents work on a commission basis, distributors deal on their own account.
Dealer- This is another general term that apply to just about any intermediary is dealer. Basically, the same type of intermediary acts as a distributors. In other terms dealer can be one who can sell only to final customer and not to other intermediary.
Value-added resellers (VARs) - They are intermediaries that buy the basis product from producers and add value to it or, depending on the nature of the product, modify it and then resell to final customers.
Merchants- They are intermediaries that assume ownership of the goods that they sell to customers or other intermediaries. Merchants usually take physical possession of the goods that they sell.
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1 Physical Distribution (Logistics) The activities of distribution involved in the physical relocation of products.
2 Distribution Physically moving products and establishing intermediary relationships to
support such movement.3 Channel of Distribution
The system of relationships established to guide the movement of a product.
1 Functions of Intermediaries Perform the marketing function better. Provide efficient distribution of the product. Merchant middlemen
• Intermediaries that take title to the goods they distribute. Agents/brokers
• Do not take title to the goods they distribute.
Types of Distribution Channels
Direct channel (or zero level)• A distribution system without intermediaries
Indirect channel• A distribution system with one or more intermediaries. This may
further be classified onto the following:1. One-level channel: In this type of channel there is only one
intermediary between producer and consumer. This intermediary may be a retailer or a distributor.
2. Two-level channel: This type of channel has two intermediaries, namely, wholesaler or distributor and retailer.
3. Three-level channel: This type of channel has three intermediaries, namely, distributor, wholesaler and retailer.
4. Four level channel: It has four intermediaries, namely, agent, distributor, wholesaler and retailer.
Dual distribution• A distribution system with more than one channel.
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Alternative Channels of Distribution
Alternative Channels of Distribution
Retail Wholesaler
Agent/Broker
Direct Channel Indirect Channels
Producer
Producer
Producer
Producer
Consumers orIndustrial
User
Consumers orIndustrial
User
Consumers orIndustrial
User
Consumers orIndustrial
User
Retailers orIndustrialDistributor
Retailers orIndustrialDistributor
Retailers orIndustrialDistributor
Wholesalers
Wholesalers
Agents orBrokers
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LOGISTIC AND SUPPLY CHAIN OF JOHN PLAYERS INVOLVING INDIRECT DISTRIBUTION
John Players and Miss Players, flagship brands of ITC-LRBD (Life Style Business Division), are involved in indirect distribution. Though they deal with fashion products - such as apparel - hold two major challenges for supply chain managers: it takes months from sourcing and design to the final product; and fickle fashion trends must be guessed right. While the former renders the supply chain inflexible to consumer demands, the latter leads to costly reverse logistics because products with weak demand have to be withdrawn from the market. Sanjeev K. Khanna, Manager Logistics, Lifestyle Retailing Business Division (LRBD), ITC Limited, has a solution. “Time-to-market is the crux,” he says. The company has put in a flexible supply chain that responds to trends in markets swiftly, using a mix of approaches - just-in-time (JIT) production, Regional Distribution Centres (RDC), and a multi-modal transport solution of express, full truck load (FTL) and dedicated fleet arrangements for faster movement of inventory at optimized costs. Feted by the Retailers’ Association of India (RAI) with the ‘Best Supply Chain Practice-Organised Retail’ for 2006, the success has spurred the team on to explore newer ways such as RFID to improve its responsiveness further. Khanna puts the firm’s supply chain strategy in perspective. “Our business model, rather than the prevalent industry practices, dictated our supply chain initiatives,” he says.
Other players such as Arvind Mills and Madura Garments had their major production facilities in and around Bangalore, forcing them to maintain central warehouses in Bangalore. Stocks were sent out from this central point to the rest of the country. There was no such compulsion for LRBD since its suppliers were spread across India. It set up regional distribution centres for each of the four zones: Delhi, Kolkata, Bangalore and Pune. Each of these stocking points is a few hours or at most, a day’s journey away, from the major markets. So the company can cater to consumer demands as and when required. It replenishes store shelves in all its major markets within 24 hours and all over India within 48 hours of order placement. The company is able to meet consumer demands for any particular color or size, not available in stores but stocked in a RDC, an impressive 98 percent of the time. No mean task, given its nation-wide distribution network spans 150 market touch-points, including 46 exclusive stores, 16 large format retailers (LFRs) and 38 multi-brand outlets. If the retailer’s store shelves are empty, ITC can fill them up before the others can arrive (which might take days), Production too is flexible-volumes can be ramped for a style in vogue.
In a conventional set-up, it is not possible to restart a base stock cycle to cater to additional demand as these are 7-8 month-long cycles that run on sourcing forecasts of a fashion season. LRBD’s ability to replenish beyond the base stock to the RDCs also within a day’s time comes from ITC’s JIT production capabilities at Bangalore. If inventory at RDCs plummets below a certain level, the Bangalore factory, stocked with fabrics in grey and ready to be dyed and available in all possible trims, springs into action. A retail software called MOVEX gives visibility into inventory at points of sale,
36
warehouses and production facilities, enabling a daily replenishment of stocks at the RDCs.
Services Provided by 4PLs
Besides flexibility, it has reduced stocks obsolescence and inventory levels (from 120 days to 15 days). Reverse logistics volumes have also come down due to better alignment with market trends. LRDB has also worked out an innovative multi-modal transport solution for different product lines to reduce costs without compromising on distribution time. For its Wills Lifestyle range, the company uses an express arrangement with logistics services provider, like Safexpress, with transport costs charged per kilogram of inventory. This is ideal for the high-value, low volume run on this range of products. It allows responding to critical demand quickly - the express cargo company can pick up goods from the factory and deliver it to the retail points in a customised manner.
Special Skill/Handling
Others (brokering, freighting
forwarding, purchase order
management, order taking)
TransportationWarehousing
Information Technology
Reverse Logistics
International
Services of
4PLs
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For its low value-high-volume John Players range, the company uses the full truckload option. For reverse logistics, LRBD uses dedicated fleets - for a fixed cost and distance, they use vehicles supplied by carrier companies at their discretion. This lowers the cost as the same vehicle is used to transporting stocks both ways. The fleet has also helped transport of John Players and Wills Lifestyle without adding to costs. The vehicle offloads these brands at different points and collects store-returns on the same run. This reduces the need to stock inventory at expensive locations such as retail stores.
ITC has shown remarkable finesse in managing a complex logistics very smoothly. Safexpress was driven to deliver every step of the way. Yet, the sheer number of SKUs that LRBD has to handle (close to 100,000 SKUs for John Players and Wills Lifestyle) threatens its time-to-market performance. A whole warehouse with, say, 2 lakh pieces, will get scanned automatically. This saves weeks of manual audits. With such approaches in place, LRBD is targeting a reduction in logistics costs from 5 per cent of sales currently to about 4 per cent, which will improve the benchmarks not just in India but globally too. ITC on the ways to build its brands that won’t just cater to the indigenous market but will play in the international arena.
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FLOW CHART OF SUPPLY CHAIN OF ITC-LRBD
MBO- MULTIBRAND OUTLETEBO- EXCLUSIVE BRAND OUTLETLFS- LARGE FORMAT STO
39
MANUFACTURER
MANUFACTURER
MANUFACTURER
OUTSOURCING AGENT
RDC
CSA NOIDA
MBO EBO LFS LFS
FACTORY OUTLET
Above diagram gives a rough idea of supply chain of ITC-LRBD, basically ITC outsourced all its merchandise from different places and stock them in RDC’s (regional distribution centre). There are eight RDC of ITC in India; 1. JP RDC Mandoli, Delhi2. JP RDC Saharanpur, U.P.3. Warehouse-GT Karnal4. Warehouse-Saharanpur, U.P.5. JP RDC, Pune6. JP RDC Wagholi7. JP RDC Kolkata8. JP RDC Bangalore
All control the movement of goods from manufacturer to customer. In Western U.P., ITC has its channel partner, named “Upmarket distributors”. This handles the distribution of merchandise in Western U.P. Upmarket distributor has its warehouse in Noida. This channel partner is called CSA (consignee sales agent), of ITC. CSA, supply merchandise to all MBOs (multibrand outlet), EBOs (exclusive brand outlet), LFS (large format store) and factory out lets, within Western U.P. After outsourcing merchandise comes to RDC Mandoli, Delhi. Then it is send to CSAs warehouse, Noida. Till Noida ITC bears all the expenses of transportation. Up market is in 4PL logistic with ITC. 4PL or fourth party logistic is an integrator that assembles the resources, capabilities and technology of its own organization and share data base or real time information with the parent company.
ITC-LRBD (Life Style Retailing Business Division), work on push strategy. It does the merchandise planning for John Players and Miss Players on seasonal basis. In a year there are 2 seasons, starting from January- July & August-December, each for six months. Currently John Players has season-12, and working on season-13. Same as Miss Players is having season-3 and working on season-4.
ITC-LRBD, plans for next season on the basic of previous year sales. Roughly ITC-LRBD takes into account 30%-40% growth in the sales figure.ITC-LRBD has different method of forecasting for multibrand out let (MBO0, and exclusive brand out let (EBO). For MBOs, primary billing is the forecasting data. Primary billing is the quantity being placed by MBOs at the time of booking. For EBOs secondary billing is the projecting data. Secondary data is the sales report generated by EBOs within six month.
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FLOW OF DOCUMENT
ASN- ADVANCE SHIPMENT FORM
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BOOKING
BOOKING
ORDER PLACED
ORDER PLACED
ORDER SENT TO GURGAON
ORDER SENT TO GURGAON
ASN TO CSA NOIDA
ASN TO CSA NOIDA
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TRANSACTION IN
TRANSACTION IN
DISPATCH NOTE
DISPATCH NOTE
STOCK TRANSFER NOTE
STOCK TRANSFER NOTE
INDENT TO RDC
INDENT TO RDC
Booking Process
All the dealers of John Players and Miss Players placed their orders to CSA (consignee sales agent), Noida for six months. This is called booking process, they assemble at one place and book their order for the coming season. Like, this time the Booking Process for the AUTUMN-WINTER COLLECTION(JP-13)was held at HOTEL MOSAIC, NOIDA on the 23rd and 24th of JUNE. Order varies from store to store, generally around 3,000 pcs (tentative). CSA, Noida place their order to Gurgoan according to the order placed by dealers. Then advance shipment note (ASN) is send by Gurgoan to CSA Noida.
Once CSA, Noida tally their order and a approve letter then from RDC, Mandoli merchandise send to Noida warehouse. This is called transaction in (T.I.). As the merchandise arrives at the store all the dealers are informed. Prior to this if dealer pay their amount within 7 days to 15 days, then they get 2% discount on invoice. There is credit period of 45 days and if dealer exceed from 180 days then outstanding letter is being sent to dealer. During agreement dealer gives 3 or 4 blank checks, starting amount would be 6 lakh.
Upmarket distributors outsource their transportation channel. They work with two transport companies, Shri laksmi transport and Golden transport, involve in 2 Pl logistic. Upmarket distributor work on mark down method. For MBOs (multibrand outlet) 25% mark down and for EBOs (exclusive brand outlet) 30% mark down. Lead time with Noida is around a day and for Western U.P it is around 4-5 days. Dealers take their delivery received in 4-5 lot, lot size depend on dealer to dealer. For dispatch of merchandise Upmarket either sends on ‘to pay’ or dealers itself manage its transportation. Everyday 4-5 lakh billing is done from this warehouse. This warehouse caters to whole Western U.P.
WAREHOUSE
Warehouse facilitates the function of distribution. This warehouse has the capacity of around 50,000 ps. Merchandise is arranged size wise in the ratio of 1:2:2:1. Signature Line is the premium brand of ITC-LRBD (lifestyle retailing business division), it is arranged color wise in the warehouse and rest merchandise is arranged price wise. In each SKU (stock keeping unit), barcode and price tag are attached. In each price tag following category are mentioned:
SKU (Stock Keeping Unit) Size Mrp Fabric Code Mfd (Manufacturing Date)
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Pkd (Packaging Date) Quantity Type
Scanner is used for loading and unloading of merchandise for the ease of counting. Barcodes are scanned and automatically system uploads the quantity. There is hardly any chance of shrinkage. In a year or two if it appears, then & there mail is sent to ITC-LRBD main office. Shrinkage is very minimal in the process. So, it is not much of concern for the company.
RETURN POLICY
There are two types of goods return, within the warehouse. First is customer goods return and another one is from warehouse itself. First case is handled by ITC only. ITC work on 100% return basis. In the second case if warehouse has demanded 50,000 psc and only 40,000 psc has been taken from the dealers then remaining 10,000 psc would be send to ITC. This process is same for every season. Remaining merchandise of last season is being return to the ITC.
TERMINOLOGY OF DOCUMENTS
Form 31- It is a road permit against central purchase more than Rs. 5000. It is for state transfer.
Form C- C form has to issue against central purchase and sales tax will be charged @4%.
OC stamp- OC stamp is check post permit in a state other than city. ASN (advance shipment note) - Message that informs a consignee of the actual
dispatch of a shipment and indicates its expected arrival date and other particulars. On return to Shaharanpur Bilti and OC stamp is used. If merchandise comes to Noida warehouse from RDC, Mondoli, then Form 31 and
Bilti is used. Out OF Noida OC stamp is used. Tin No- Trader identification number, it is on VAT. DO- Document order. GIT- Goods in transit. When order is send to Noida from Gurgaon, and all order is
not received completely by Noida warehouse then within 5-10 days Gurgaon send GIT.
Outside the city OC ticket is attached. In case, if carrier found without OC stamp, then 10% of whole amount is being paid to the check post officer. It is checked on every check post.
In brand factory merchandise is send on chalan. Invoice is generated only on that merchandise which is being sold.
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Comparitive Analysis with Zodiac:
Zodiac is India's premium and one of the oldest brands in the readymade menswear category. The company started off as an exporting firm launched Zodiac in the domestic market in late 80's. In the Indian readymade menswear category which is estimated to be around 6000 crore, Zodiac have a market share of 17 % in the branded premium category.
With over 50 years in the Shirts business, Zodiac is India's Premium Manufacturers & Exporters of Quality Formal Office Shirts, Branded Luxury Dress Shirts. India's exclusive menswear brand Zodiac has been selling in the Middle East since 1993. Zodiac does its business through the Landmark Group, MK Group, Carrefour and our own exclusive Zodiac stores. The brand has an enduring reputation for its quality offerings in the Indian market and it remains committed to the same USP in its overseas operations as well. Zodiac competes with international brands across Europe and the Middle East and that too at premium price-levels.
The Zodiac story began way back in 1954 when M.Y. Noorani started a trading company. One of the first orders that he received was for fabric for an Indian company. When the fabric arrived in India, the buyer cancelled the order and Noorani was faced with a choice whether to abandon the consignment, thereby losing the entire amount paid for the fabric, or to pay import duty and take delivery of the consignment. He chose to pay the import duty and take delivery of the consignment himself, which he converted into Neckties. Thus began, Zodiac's legendary Tie business. The Ties became so successful, that soon there was a need to brand the Ties. Noorani in consultation with a few friends and colleagues selected the name Zodiac. The rest is history.
Zodiac is built on the hallmarks of highest quality and a policy of non discounting. Quality is etched into the very fibre of the organisation, one of the reasons why Zodiac stays competitive, globally. “Delivering the best on every aspect of the shirt, be it the fabric, stitching, buttons or lining, Zodiac sells at par with top brands like Hugo Boss, Armani, Thomas Pink etc. in the premium segment internationally.
Zodiac basically emphasizes on men’s wear. Zodiac basically maker, few years ago It has started making other men’s wears known as shirts also. Today, Zodiac's combined manufacturing capacity is 5 million shirts, half a million ties and 1 million pairs of socks. It has manufacturing facilities in India (Karnataka, Gujarat) and the UAE (Dubai), with design and sales offices in 3 of the 5 fashion capitals of the world -- New York, London and Dusseldorf. Zodiac's retail network includes over 700 outlets and 80 exclusive showrooms spread across the country. The recent tie-up between Zodiac and Ciro Citterio, a UK-based company has helped Zodiac sell its formal shirts under its flagship brand, in 130 stores across the United Kingdom.
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Zodiac as a brand is promoted very subtly. You seldom see the campaigns in mass media. But if you read magazines, you are not going to miss the ads either in the back cover or inside cover. The ads are crafted in similar format and without any celebrities or fantasies, it is shirt all the way.Zodiac is positioned as shirts from " Finest Quality Shirt Makers". The core qualities of the product are the unmatched quality and the designing. Zodiac follows the design and retail focus. The shirts which are available across the globe take fashion cues from the west and the designers back in India puts it into the shirts.
DISTRIBUTION MODEL OF ZODIAC
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MANUFACTURE
RDC
INSTITUTIONAL SELLING
MBO
ZRS
LFS
MBO- MULTIBRAND OUTLETZRS- ZODIAC RETAIL STORELFS- LARGE FORMAT STORE
LOGISTIC AND SUPPLY CHAIN OF ZODIAC
Zodiac is one of the finest shirt makers in India. Zodiac with over 50 years in the shirt business is India’s premium manufacturers and exporters of quality formal office shirt, branded luxury dress shirt. The brand has an enduring reputation for its quality offerings in the Indian market and it remains committed to the same USP in its overseas operations as well.
Zodiac is in direct distribution. It has manufacturing unit and CDC (Central Distribution Center), both in Bangalore. Zodiac handles its distribution through out India from Bangalore only. It has a main office in Bombay.
Zodiac has three brands:
Zodiac (formal) Zod (club wear)
Z3 (semi formal)
Zodiac is available in Life Style, Pyramid and Shopper Stop. There is no CSA (Consignee Sales Agent) involved, company handles right from manufacturing unit to delivery on stores. All three brands have different team, they handle individually each brand. For ties and hankies they have distributor. EBOs (Exclusive Brand Outlets) are called ZRSs (Zodiac Retail Stores). Internally all three brands are same but their operation is done individually. They have ‘NOS’ (never out of stock) only in Zodiac, but not in Zod and Z3. All brands have different retail outlet.
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BOOKING
There are two types of booking system in Zodiac. One is venue booking and other one is for ‘NOS’. ‘NOS’ is never out of stock, it is the basic merchandise or core article of Zodiac. All three brands has different venue booking system. For Zodiac that is the formal wear, it has 8 booking in a year, every after 46days. For Zod, that is the club wear, it has 7 booking in a year, every after 52days. Z3 it is a semi formal brand and is has 4 booking in a year, every after 91days. Zodiac follows the pull strategy, so they work on make to order. This is the reason frequency of booking is so high. Company follows the trends so closely and works on it. Ratio of booking for shirts is 1:2:2:1, 1:3:2:1, or 2:2:2:1. This ratio is based on the size in ascending order. This ratio is tentative it also depends on the dealer to dealer. Lead time for ‘NOS’ is around 7-10 days. For venue booking company demand 10 post dated checks from the dealer and for ‘NOS’ 3 post dated checks. Company has its own policy and it never compromise on it.
TRANSPORTATION
Company bears all expenses of transportation. It never works on to pay system. It has its dedicated carrier for smooth movement of goods. Invoice and CST are required as documents. CST is 3% and VAT that is includes in invoice is 4%.
RETURN POLIY
Company has no return policy though it works on pull strategy. It manufactures the same quantity that is demanded by their customer so there is no extra merchandise is being manufactured in the company. ZRSs (Zodiac retail store) has to inform their sales report daily to their respective branch and for MBOs (multibrand outlets), once in a week. In every MBOs there is one Zodiac employee to monitor the sale of the company.
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SWOT ANALYSIS
DIRECT DISTRIBUTION CHANNEL
STRENGTHS
It eliminates the cost of consignee sales agent.
Product innovation ongoing.
Better control over distribution.
WEAKNESSES
Lead time is more. No contact with end consumer.
Transportation cost is more.
OPPORTUNITIES
New market verticals. Technology development.
Global influences.
Life style trend.
THREATS
Political effect. Environmental effect.
New technology.
Market demand.
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INDIRECT DISTRIBUTION CHANNEL
STRENGTHS More connectivity with end users. Less lead time. Smooth penetration of merchandise. Help in forecasting for next season. Dealers are more satisfied. End-users sales control and direction. Dealers are more satisfied. It can manage variation in demand.
WEAKNESSES Channel partner conflict. It can mold the distribution of
merchandise.
OPPORTUNITIES
New market verticals. Technology development.
Global influences.
Life style trend.
THREATS Market demand very seasonal. Legislation could impact. Environmental effects would favour
larger competitors.
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CONCLUSIONS: For mass brand like John Players, indirect distribution is really effective. In indirect distribution company has to take less pain in distribution of merchandise. In company go for indirect distribution than company can save money in distribution
of merchandise. Channel partner are aware of the market, so it help in penetration of merchandise.
SUGGESTIONS: During my study, I found that involvement of channel partner in the distribution is
really necessary for proper movement of merchandise. So, ITC should continue involving channel partner for better penetration.
Though John Players is a fashion brand so ITC-LRBD (life style business division), should constantly thrive on to reducing lead time. As lead time is a crucial element for fashion apparel.
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Comparative Analysis with other Apparel Brands
1. Peter England:
Peter England is located in Great India Place.Its parent brand is Madura Garments
About the merchandise:
Formal wear:
Shirts- 495 to 899
Trousers-849 to 1299
Summer suits-2995 to 4999
Corduroy blazers-1995 to 2995
Party wear (Elite collection)
Shirts-899 to 1199
Trousers-1199 to 1499
Casual wear (Elements)
T-shirts-249 to 499
Denim-699 to 1199
Casual shirts-599 to 899
Accessories:
Ties-345 to 495
Socks-75 to 105
Cufflings-345
Peter England has even come up with Ladies and Kids collection.
Sizes available:
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Shirts- 39, 40, 42, 44
Trousers- from 30 to 46
T-shirts- small, medium, large and extra large
Denims-28 to 40
Promotional offer:
Buy garments worth Rs.1750 and get a polo t-shirt free. In their formal wear, they never give discount,
but in their Elite and Element collection, they give discounts upto 20 to 30%. Their Elite and Element
collections keep on changing within every 3 months with introduction of new colours and designs.
Sale, walk-ins and conversions:
Monthly sale for Peter England is about 10-12 lacs, and on regular basis, its approx 20-30 thousand in
weekdays and 50-80 thousand during weekends. There conversion rate is about 95% among 15-20
walk-ins in a weekday and 50-70 during weekends.
Targeted customer:
There targeted group of customer lies between age of 30-50, the maximum moving product among the
targeted group is the formal shirts.
Brand ambassador:
Aditya Birla group does not believe in electronic media adds, they only go either for print add or just
add within their store.
Competitors:
The best competitor of Peter England is John Players and Allen Solly
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2. Allen Solly
It is located in The Great India Place and in Atta market.
The store in Atta market is the second biggest store in India, the biggest one is in Mumbai.
About the merchandise:
Formal wear:
Shirts-799-4000
Trousers-1399-2499
Suits-6000-25000
Casual wear:
T-shirts-299-1499
Denim-1399-2499
Bermuda-999
Blazers-4595-8000
Their premium collection is called Prodigy and their experimental collection is called Deviation which
keeps on changing every week. The week I visited, the new experimental trousers were there which was
called Neon Crushable. The refilling of the stock is done on every Monday.
.
Accessories:
Cufflings-780-1290
Ties-495-1295
Sizes available:
Shirts-39,40,42&44
Trousers-38 to 46
Denim-30-46
T-shirts-small,medium,large, extra large
Promotional offer:
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Friday club-where permanent members get additional discount, on first billing of the day one gets
discount on second purchase.
Sale, walk-ins and conversions:
Sale is about 12lacs, on regular basis on weekday it’s about 20-25 thousand and in weekends its one
lacs. Walk-ins during the weekdays is between 20-80 and during weekends 200 walking and conversion
rate is 20-30%
Targeted customer:
The targeted customer group of Allen Solly is aged between 30 to 50 and maximum of them are settled
executives. They have maintained a database of 1500 loyal customers.
Brand ambassador:
The brand does not have any brand ambassador as they think the quality of the product is sufficient to
sell the brand.
Competitors:
According to store manager of Allen Solly, their competitors are Van Huesen, Black Berry, Colour Plus
and John Players in formals.
3. Excalibur:
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It is located in The Great India Place.
About the merchandise:
Formal wear
Shirts-495-1095
Trousers-595-1095
Summer suits-3095-6095
Casual:
Party wear shirts-895-995
T-shirts-395-795
Accessories:
Ties-495-795
The maximum selling product is formal shirt.
Sizes available:
Shirts-39,40,42,44
Trousers-32-46
T-shirts-small, medium, large, extra large
Promotional offer:
The latest promotional offer of Excalibur is buy two and get two free and a gift. The other one, which
was before, was, buy two and get one free.
Sale, walk-ins and conversion:
Sale is of about 6.5 to 8 lacs. Their sale period is July to September last and first week of November till
the mid of January. Their walk-ins in weekdays is approx 30 to 40 in a day and during weekends its 80
to 100 and their conversion rate is 30-40%.
Targeted customer:
Their targeted customer group is aged between 25-50.
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Maximum sale:
Their maximum sale happens to be in winter season, which even raises upto 24-30 lacs, and the sale
period is from first week of November until mid of January.
Brand ambassador:
The brand ambassador of the brand is super model Milind Soman.
Competitors:
According to the store manager of Excalibur, their competitors are John Players and Peter England.
4. Indigo Nation:
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Indigo Nation is located in The Great India Place.
About the merchandise:
Formals:
Shirts-699-1099
Trousers-899-1099
Casuals:
Party wear shirts-1099
T-shirts-499-699
Accessories:
Ties-299-499
Belts-399-599
Wallets-699
Sizes:
Shirts-39,40,42,44
Trousers-32-46
T-shirts-small, medium, large, extra large
Promotional offer:
The promotional offer of Indigo Nation is quite innovative. They give discounts on doing something
like as much high as one will jump, one will get the discount of that much. Next one was one has to
draw a shirt sketch by seeing the one made by the store and if one will do it correctly, will get a discount
of Rs.200. Promotion is done on both print and electronic media.
Sale, walk-ins and conversion:
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The store manager didn’t disclose their monthly sale but about the walking its 18-20 per day on an
average and the conversion rate is about 40%
Targeted customer:
According to the store manager, the targeted group of the brand is between 25-40 and the maximum
people who shop are well-settled people within the age group of 28-32.
.
Brand ambassador:
There is no brand ambassador of the brand.
Competitors:
The best competitors of the brand are Allen Solly, Black Berry and John Players.
Promotional Strategy
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WHAT IS PROMOTION?
Promotion is the systematic set of activities people use to communicate with others about their product or service and to convince and educate them to use it. Everything done in this planned frame communicates something about the business concern. In product, this includes a wide variety of activities including brochures, distribution of samples billboards, and newspaper ads. Promotion involves careful planning.
TOOLS OF PROMOTION
In this fast moving world in a day or two we are encountered with new product. This becomes very crucial for companies to send out message in a very attractive and long lasting way hereby reducing life cycle of the product. Some promotional tools that is really fruitful for any business through which messages are communicated to people. There are four main promotional tools used for lucid communication.1 .Advertising2. Personal selling3. Sales promotion4. Publicity
Development of promotional strategy required more than awareness of tools. Though it is a systematic and continuous process, so it demands some golden rules that set the entire promotional strategy. Some steps have to follow for success of promotional strategy.
Steps of Promotional Strategy
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Figuring out who you are (Establishing your identity)
Deciding on your product (Developing a theme)
Deciding who you want to attract (Identify your target audience)
Deciding who you want to attract (Establishing Your Objectives)
Getting your message across (Developing Your Message Content)
Deciding how to say it (Developing Your Message Structure)
Deciding how to say it (Developing Your Message Structure)
Deciding how to present it
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(Developing Your Message Format)
Taking message to the audience (Choosing Your Delivery System)
How it is going (Evaluation)
EFFECTIVENESS OF PROMOTIONAL STRATEGY
Effectiveness of promotional strategy highly depends upon movement of the product. To know the impact of promotional activities I have done market survey and tried to find out result based on my survey.
FINDINGS AND ANALYSIS
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Conclusion
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Going through the analysis and findings, it can easily be interpreted that :
John Players is a well acclaimed brand amongst the customers.
Customer’s experience in buying John Players products is positive.
Amongst the well known formal apparel brands like Peter England, Excalibur, Indigo Nation, Allen Solly etc., majority of the customers choose John Players.
The highest selling product of John Players is Formal Shirts.
Customers trust the brand because of its quality.
Customers have the positive perception that John Players’ pricing suits its quality.
Also because the window display of John Players’ stores is creditable, customers are easily attracted.
Ever since John Players has come up with its Premium clothing range-Signature Line, it has started giving its competitors a tough challenge.
About the Distribution Channel, a big brand like John Players should stick to Indirect Distribution as it involves less pain.
I also found the staff and the respected employees of John Players to be immensely amiable and co-operative.
Recommendations
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During my training what I found or learnt is that: Quite a substantial proportion of the customers are not aware of the fact that John Players is a product of ITC.
Also, Miss Players, which is the ladies apparel brand of ITC, is less known.
Thus, I would recommend that:
Both John Players and Miss Players should be promoted in the maximum possible way.
There are very minimal advertisements of both these brands that we get to see.
So, I would recommend more of electronic and print advertisements that would make the customers aware of these brands
More advertisements should be made in Business Magazines like, for e.g., India Today, Outlook, etc.
Also, more of promotional schemes of both these brands should be forayed.
ANNEXURE
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Questionnaire:
Name: D.O.B:
Email-id: Telephone no:
Occupation:
Ques1 How often you go for shopping?
a. Weekly b. Fortnightly
c. Monthly d. Whenever required
Ques2 Which brand you prefer most?
a. John player b. Peter England
c. Excalibur d. Allen Solly
e. Indigo Nation
Ques3 Why do you prefer a particular store?
a. Wide range b. Quality product
c. Reasonable price d. Fresh stock
e. Centrally located f. Effective display
g. Sales person h. Fashionable cloth
Ques4 What attracts you most about John Players store?
a. Window display b. Service and staffing
c. Promotional offer d. Interiors
Ques5 Which product of John Players you mostly buy for your wardrobe?
a. Shirt b. Trousers
c. Denim d. T-shirt
Ques6 What you like most about John Players product?
a. Quality b. Price
c. Fits d. Styling
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Ques7 Which brand pricing is most suited with its quality?
a. John Players b. Peter England
c. Excalibur d. Allen Solly
e. Indigo Nation
Ques8 Does promotional activity of various brands motivate you for purchase?
a. Yes b. No
Ques9 Does attachment of a celebrity to a brand effect your purchase?
a. Yes b. No
Ques10 Do you find any problem while purchasing John Players product?
a. Yes b. No
If yes, what are they?
a. Colour b. Size
c. Availability d. Design
Ques11 How was your experience with John Players?
a. Extremely good
b. Very good
c. Good
d. Bad
e. Very bad
f. Extremely bad
Bibliography and References:
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Merchandising Mathematics: high margin returns for retailers and vendors, by Meridith Paider (The Meridith Group)
Logistic and Supply Chain Management by, G. RAGHURAM & N. RANGARAJ Logistic and Retail Management, by JOHN FERNIE & LEIGH SPARKS www.thehindubusinessline.com www.adityabirlanuvo.net www.wikipedia.com www.itcportal.com www.supply-chain.org www.supplychaintoday.com
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