group 3 coca cola case2

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Managing Indian Market

A Reporton

Supply Chain MANAGEMENTSubmitted to:

Mr. R.R.Parida

[Course Facilitator]

Submitted by:

Group No. : 02

1. Aditya Narayan

2. Asha Mahto

3. Jyoti Mekap

4. Jagdish Padhy

5. Mamata Rani Sahu



Self Help Groups:

G r o u p N o.02

C S R E M,

P a r a l a k h e m

u n d i

P G D M 2 0 0 9-11

SocialPerspective of Management



CERTIFICATE

THIS is to certify that Mr. Aditya Narayan (S0901), Mr. Bhabani

Shankar Mishra(S0916), Mr. Jyoti Mekap(S0926) and Mr. Pratush

Patnaik (S09), Mr. Simadri Nani Babu (S09) has successfully

completed the report entitled “Self Help Groups”.

I appreciate their skill, diligence and sense of commitment in

preparation of the project. The Project Work has been submitted as

partial fulfillment of the PGDM degree of Centurion School of Rural

Enterprise Management, Paralakhemundi. This project has been

prepared exclusively for the academic purpose hence it shall not beused for any kind of non – academic purpose.

Signature of Project Supervisor



DECLARATION

We do hereby declare that the project report entitled “Self Help Groups” submitted to the

Centurion School of Rural Enterprise Management, Paralakhemundi, for the partial

fulfillment of the degree of PGDM, is an authentic piece of work under the guidance of Prof.

Lopa Mudra Tripathy (Faculty, CSREM). This project has not been submitted for the award

of any other degree from any other institution neither in full nor as a part and has not been

published anywhere else before.

Signature

Aditya Narayan (Roll no.S0901)

Bhabani Shanker Mishra (Roll no.S09)

Jyoti Mekap (Roll no.S0926)

Pratyush Patnaik (Roll no.S09)

Simadri Nani Babu (Roll no.S09)



ACKNOWLEDGEMENT

We would like to use this opportunity to thank Dr.G.C.Patro (Director CSREM) who has

given us the opportunity to undertake this project at Paralakhemundi. We would also like to

thank Prof. Umakanta Nayak (PGP Coordinator) to initiate this project work and give us a

better scope to enhance our professional attitude and skills.

We acknowledge our gratitude and indebtedness to our project guide Prof. Lopa Mudra

Tripathy (Faculty CSREM) for her enlighten guidance and valuable suggestions and

comments in preparing of the report.

We express our gratitude to all the respondents who has shared their valuable time in

answering different type of questions given to them.

Last but not the least, heart filled thanks to all our friends and also everyone else whose

name we were not able to incorporate in the acknowledgement but whose help and

support has been vital in the completion of this project work.

Signature

Aditya Narayan (Roll no.S0901)

Bhabani Shanker Mishra (Roll no.S09)

Jyoti Mekap (Roll no.S0926)

Pratyush Patnaik (Roll no.S09)

Simadri Nani Babu (Roll no.S09)



M

This report is a output of study done on distribution channel of FMCG multinational. These studies

will give a brief idea about the business of a Coca Cola distributor operating in Gajapati district of

Orissa. This case identifies the key activities that lead in generating ideas about the stocking,

merchandising and display practices of this particular company. It focuses not only on the profit that is

generated from this business but also how this person ensures the sustainability of his business in a

remote place. It also provides information about the initial investment, cost structure, inventory

maintenance, means and sources of finance, credit policies, types of business losses, segmentation of customers, profile of important clients, rotation of money etc. This study was carried out in two phases;

first phase was preliminary study and then secondary study. The purpose of preliminary study was to

gather information from the distributor about his business, which is done with the help of a

checklist. The secondary study was done to understand the industry and brand with which the

distributor is involved. So the following case will enable the readers in understanding the functional

or operational levels of a company including the channel partners and the role of the distributor for

managing his as well as company’s business.

r. Hrudananda Sahukar, owner of

Devi agency, a 47 years old person,

is an inhabitant of

Paralakhemundi. By

profession he is a businessman,

working as a distributor of Coca

Cola Company. He has started this

business 23 years before when he

was at Visakhapatnam. After about

12 years he shifted to Orissa, andcontinued as a distributor in this

place. His sales territory comprises a

range from Mohana to Gunpur

covering near about 180 km, which

shows he is the distributor of Coca

cola Company of around both 50

towns and villages. Other than his

store, there is no more same brand

store in Paralakhemundi. But the

town has got several samecategory stores like Pepsi, Shakti

etc. He has taken a rented shop

of about 2000 sqft near the

new bus standof Paralakhemundi. It

serves both as store and

warehouse. As it is not a very

big shop, decorative items and

furniture are not used.

The Soft drink

Industry

Nearly three decades ago the

competitive environment of the

carbonated soft drink (CSD) industrywas based on recognition of inherent

acceptance to the dominance of the

Coca-Cola Company. Beginning in

the 1960s Coca-Cola's dominance

had been increasingly challenged

particularly by Pepsi. The

new competitive

environment is well publicized

and intense. The Cola wars

were declared and the battle

continues. Pepsi and Coca- Cola are

widely recognized as being two of

the premier marketing companies in



the world. A great variety of new

products and package types have been

introduced. Coca-Cola and further

developments in the CSD industry came

about from major changes in strategy by

Pepsi and Coca-Cola. To some extent these

strategic changes arise from Pepsi'schallenge to Coke's dominance of the

industry. However, there are several



factors external and internal to the

industry have been important catalysts

for these changes. Rather than simply

reacting to a changing competitive

environment Pepsi and Coca-Cola

Company have created and implemented

strategies that turned the new

environment to their advantage.

The Coca Cola Company

The coca cola company is a beverage

company and the world leader in soft

drink sales. Coca-Cola produces and

distributes several brands globally.

However, they are leading manufacturer,

distributor and marketer of soft drink

concentrates and syrups, juice and juice-

drink products. The company is a

profitable company that trades on the

New York Stock Exchange. The original

product was formulated and based in

1886 by john Pemberton, a pharmacist in

Atlanta Georgia. Coca-Cola includes its

flagship product Coca-Cola which is popularly known as Limca, Sprite, Fanta,

Maaza, Thumps up. Coca-Cola became

incorporated in 1919, Today it markets

and connects with consumers using a

portfolio of nearly 400 brands in over

200 different countries. Coca-Cola has

five strategic business units: North

America, Africa, Asia, Latin America,

Europe and the Middle East. Coca-Cola

and Pepsi products occupied nine of thetop ten spots in the U.S. soft drink

market. Coca-Cola ranked first in soft

drink sales globally and the company

earned almost 80 percent of its profits

from international sales. The goal of the

company is simple and effective. The

goal is to produce growth for the

company, not only intends to strengthen

the company but inspire the people

working for them.

Outreach

He is basically covering a geographical

area of about 180 km as his sales

territory which is defined

by the company itself. He has got

five spokes at places like

Ranipentha, Gumma, Kashinagar,

Gurandi and Rayagada. He hasgot

seven staff members for

distributing the goods, collecting

payments etc. The ordering cycle of his

customers varies from one day to one

week. Generally the ordering cycle is

one day for local customers and one

week for others. The frequency of his or

his staff member’s visit also ranges from

one day to one week. The distributor or his staff members used to visit the local

customers everyday. Within a range of

30 km they visit once in three days, and

once in a week for the rest of the

customer. The delivery is done in a door

to door basis. Customers need not to

come to his store and take the goods.

They use vehicles like two autos and one

truck to visit their customers. One auto

moves everyday in Paralakhemundi. Theother auto moves within a range of 30

km once in three days, and the truck

visits seven blocks once in a week in a



rotation basis. Individual deliveries are



only possible with reachable

customers mainly the local

customers. The other

customers do not get

individual

deliveries.

Picture no. 01: Loaded

delivery auto

Devi Agencies

resources he faces many

problems in reaching his

customers.

Sometimes due to tyre

puncture and other problemsrelated to vehicle, bad weather,

he could not able to deliver the

goods to his customers in time.

This makes his

customers

unhappy and

dissatisfied.

Some retailers are reluctant to

purchase empty bottles. So Mr.

Sahukar fails to have business

deals with them.

Sometimes his staff

members star t

quarreling with each other or

they star ts quarreling with the

customers. Managing these

issues becomes difficult for

him. Because of these quarrels

there exists a higher threat of

losing valuable

customers.

Another problem

i

n

f

ie

l

d



faced by

Spokes

Dir ect

Devi

Age

ncies is

supply

conf lictsituation.

G

ur andi

R ani p

anta

R ayagada

Kasi n

agar

Guma

Although the

area

Retailer

Means before

the reach of its delivery team

some other rival productsor

supplementary

products supply takes away

the cash flow from prospective customers. So

it leads sometime

sales deficit situation for that

week. Also creates

difficulties in

in which he is working is

convenient, and he has

required workforce and

fulfilling targets.



Table 01: Brands of Coca Cola

Aerated Sof t

Dr ink

Thumps-up

Limca

Spr ite

Coca Cola

Fanta

Mango Juice Maaza

Packaged

Water K inley

gained in last 28 years. It is operating

under the area known as highly alcohol

penetrating circle. The ace product in

product mix is Thumps up with multiple

sales to other products. The preference

of consumers and sales varies area wise.

Coca Cola is only sold in

Paralakhemundi and no demand exists

for it elsewhere.

He always tries to

minimize these

problems by negotiating with

customers. A good

businessman will never

attempt to lose loyal

customers and will always

look for prospective

customers. So Mr. Sahukar

always tries to maintain

good relationship with his

loyal customers by providingthem higher margin and

credit facilities. He anyway

manages to pass the benefits

of HVOs to loyal customers

by doing some manipulations

in billing.

The staff member who

quarrels with the customer,

Mr. Sahukar transfers that

particular staff to other area,

and assigns the distribution

work to another staff member

so that the relation can be

rebuild.

P

r

o

d

u

c

t

s

Devi Agencies distributes

all seven

brands (Refer Table no. 1) of

Coca Cola in its territory.

The product mix is based

upon consumer preferences,retailer’s feedback and the

experience it has



The packaging of product

is done in three ways glass

bottles, plastic bottles and

metal cannes. The

size in all

category varies from eachother. For example in glass

category standard size of

bottle is 200 ml and 300 ml

whereas in plastic bottling

the range starts from

500 ml and ends on 2 litres.

Cannes comes in a universal

size of 300 ml.

Glass bottles are delivered incarats, whereas plastic

bottles and cannes are

packed in cartoons and

convenient to handle. The

carats are very difficult to

manage and are highly

expensive in term of

maintenance but are crucial

to show the presence and

are

important for acquiring sales

and display space.

Mainly the company is

known for its carbonated

beverages but

also have mango

juice called

“Maaza” and packaged

water named “Kinley”. The

sales of these products in

urban areas are much higher

than in the areas operated by

Devi Agencies. Kinley and

Maaza contributes only 4%

of total sales which is almost

comes from town locality.



Coke and its rivals strategy

The main competitors for Coca Cola are

Pepsi and the Local cola which was

introduced to compete against Coca-

cola. Local cola has slightly moreadvantage over both Pepsi and Coca-cola

because of its cheaper price (Rs.5) and

higher dealer margin. Here in Gajapati

district, coca-cola has one distributor

point covering one lacs fifty thousand of

customers operating in the area from

Mohana to Gunupur. From this point of

view, Coca-cola is in a better position in

local area of Paralakhemundi to make

good relations with the distributors as

well as retailers in a cost effective way

since Pepsi is operating from

Berhampur.

If we consider the marketing strategy of

both Pepsi and Coca-cola, a lot of

similarity can be found. In the 1990s

both the companies followed a value

pricing policy but in 2001/02 both

entered in to premium categoriestargeting both rural and urban population

because of change in affordability of the

Indian consumers due to the economic

growth.

Coke has been leading the competition

from 1998-2002 in terms of higher

market capitalization, gross margin and

net income. The market for carbonated

beverages was slowing down and other newer segments were growing. Water

and Sports beverages grew at 26% and

15%. Pepsi’s growth was because of

acquisitions that it had made and

introductions of various new products.

Pepsi acquired Gatorade and gained 81%

market share in sports beverage segment.

Pepsi’s Lipton was outperforming

Coke’s Nestea. Pepsi’s Tropicana

defeated Coke’s Minute Maid in every

market.

Despite India’s complexity, Coca-Cola

followed two major points on which to

build the marketing strategy. First, there

is a love for both cricket and movies in

India, Coca-Cola targeted the celebrity

and the cricket greats to promote its

product. Second, Coca-cola officialslearned that soft drinks were seen as a

luxury item, only consumed for special

occasions. One another significant fact

about soft drink industry showed that the

price value equation is no more existing

as mentioned earlier. Coca-Cola

communicated directly to the consumers

through its same product promoter

Aamir Khan, noting that they should

only expect to pay 5 rupees for the

product.

Since consumer patterns of India varies

because of cultural diversity and rural

consumers behave differently from the

urban. Realizing this fact, to reach out to

rural India, Coke started out by drawing

up a hit list of high potential villages

from various districts. To ensure full

loads, large distributors were appointed,and they were supplied from the

company's depot in large towns and

cities.



At another level, the problem of low

working capital of the small retailer was

addressed through smaller drop sizes.

Smaller drop size was quite appropriate

decision because of because of the

higher service frequency of the hub and

spoke mode

Coke realized that the communication

media used in cities and urban areas

would not work in villages because of

low penetration of conventional media.

So Coke decided to concentrate on

various haats (weekly markets) & melas

melas (fairs) held annually in various

parts of the country to reach the ruralcustomers.

Targeting the rural consumers Coca cola

launched Chota Coke in 2002 priced at

Rs. 5, it bought out a commercial

featuring Bollywood actor Aamir Khan

to communicate the message of the price

cut and the launch of 200 ml bottles to

the rural consumers. It was proved as

one of the most successful strategy toreach rural consumers.

By seeing this success, PepsiCo too had

started focusing on the rural market, due

to the flat volumes in urban areas. Like

Coca Cola, PepsiCo too launched 200 ml

bottles priced at Rs. 5. To challenge

Coca Cola’s strategy, PepsiCo launched

another product of 300 ml priced at Rs.6.

SegmentationSegmentation is done for better

understanding the needs of consumer so

that it can be fulfilled. Devi Agencies

has segmented its total territory in

different segments. And they have

identified the consumer preferences over

there. The different segments they have

classified are alcoholic persons, adult

students, young students, households and

acidity suffering people. The distribution

of product is done on these segments

locality. For example Thumps-up is

available inside all beer bars and nearby

all wine shops. Fanta and Coca Cola is

available at all school and colleges and

so on. Other strategy is to sale any

product at a point where other product is

not available.Sales

Sales is managed by effective workforce

of seven people. Coca Cola India

appoints one Sales Executive at each

Distributor’s office and under him/her

every spoke has a Market Developer on

companies’ payroll. All MD reports to

Sales Executive and sales executive

reports to Area Sales Manager, whohandles eight territories in by his

Berhampur office. Sales executive are

responsible for formation of Hubs and

Spokes in their territories. As spoke has

a direct impact on profits of a distributor

so Sales Executive has to take consent of

distributor also.

Devi Agencies manages its sales by

aiming “Availability at Arm’s Reach”.

Sales in the town and nearby areas are

managed by effective and experienced

team of two members with help of a



Table 02: Spoke wise Bever age

pr efer ences

Spoke Ar ea Preferred Br and

R ani panta Fanta

Guma Fanta

K asinagar Limca

Gur andi Thumps-up & Sprite

R ayagada Thumps-up & Sprite

auto. Other areas are managed by

another two teams using auto and a mini

truck.

Sales figures varies from product to

product. As Thumps-up is known as itsace product so it is the leader in sales

(Refer Chart no. 01) with a annual sales

of 58590 carats in year 2007-08. The

second is Limca with a contribution of

17% and the rest contributes 15% in

which 8% is the part of Fanta.

Spokes are responsible for maintaining

their target provided by Sales Executive

with help of Market Developers. Spokes

also have discriminative consumer

preferences in its territory (Refer Tableno. 02). The targets for spokes are

determined on the basis of market

development expectations, experience of

the spoke and market developer and on

the last year’s performance (Refer Table

no. 03) and sales quota is decided for

next year and is reviewed on quarter

basis.

Spoke Model

Coca Cola initiated its rural campaign by

adapting Hub and Spoke Model to tap

rural market because it understood the

geographical differences in India. There

is a vast difference in the urban and rural

market in almost all parameters like

consumption pattern, preferences, credit,margins structure and personal relations.



Spoke are designed by Sales Executive

appointed at distributor’s office with

consent of distributor. The need analysis

is done by SE and report is sent to Area

Sales Manager at regional office, the

company allows the spoke by verifying

the status of the distributor and size of

the territory.

Spoke are in direct connection with

distributors, they sends their orders to

and pays to distributors. The credit can

be provided based on the relationship

they are maintaining. In case of Devi

Agencies they are providing credit of 3

days to spoke. Another condition here isthat a spoke has to order full load of a

truck so that it directly delivers the

company supply to save loading and

unloading cost.

Spoke receives a margin of Rs. 8/- per

carat which can be increased by

receiving some volume scheme revised

by company time to time. Distributor

also offers volume discount especially inoff season to fulfill its targets.

Display

There is always a strong fight between

the cola players for display space at

retailer’s place. Coca Cola has came up

with some innovation to acquire those

spaces. Like small hanging boards

(Refer Picture no.02)for very small

shops, hanging bucket for medium shops

and big boards and bottle stands for

HVO’s and other big outlets (Refer

Picture no. 03). The soft drink

companies are bearing huge losses by

using glass bottles and carats but it plays

a crucial role in acquiring display space.

As cola purchase is known as impulse

purchase so the spontaneous display has

a crucial role in end sale.

Picture no.02: Display board for small shops

Another stunt for acquiring display is to

provide refrigerators to high volume

Outlets and other outlets giving high

sales. By providing the cooling system

company makes people barred from

storing other than its line of cola in its

shop. A person visits on a month basis to

ensure the guidelines are followed.



Devi Agencies has some problems in

handling these issues:

• Demand for display unit is much

more than supply from company

• Maintenance of lighting board isan issue

• Company is interested in

providing cooling system in

urban areas

• Maintenance and service of

cooling system

• Improper monitoring of cooling

system guidelines

Pricing

Pricing is done at company level and varies

for spoke, HVO and retailer (Refer Table

no. 04). Distributor is doing some

manipulation to pass HVO benefits to its

loyal customers.

Maaza comes in a pack of 200 ml and

250 ml size where 200 ml price is

same as other 200 ml brands and 250ml is priced at par other 300 ml

brands.

Price for plastic bottle is same for the

package but quantity varies according to

volume of the product. For example the

price for 1.5 litre cartoon is same as the

price of 500 ml bottle cartoon but the



quantity of bottle in 1.5 litre is 12bottles

and 500 ml is 36 bottles.

Products in the form of tin can be priced

differently and some premium is levied

on this category due to high packagingexpenses.

Margins

Margin for a distributor associated with

Coca Cola is very high in the industry.

Even in FMCG segment it is one of the

highest paying company to its channel

arms. The margin for a distributor per

carat can be as high as Rs. 20/- per carat

depends on the reseller. It has to allow adiscount of Rs. 5/- per carat to HVO,

which is reimbursed at month closing,

the same procedure is followed for a

spoke who gets Rs. 8/- per carat discount

on the retailers price. The retailers also

make good money out of Coke business.

Schemes

Company announces schemes and

incentive plans for distributor, retailer aswell as for spokes associated with

distributor. Schemes for distributors are

mainly related to volume of sales they

are making. It is mostly in form of non

cash benefits. Few examples are trip to

Bangkok, Gold coins, Refrigerators,

Free empty Carats and these gifts cannot

be en-cashed. For retailers company

comes with plans like volume discount

on quarter basis and incentives for

pushing non pulling brands like Sprite

and Kinley. These incentives are given

in form of discount coupons, empty

carats or credit to their account. For

spokes the schemes are based on their

performance in terms of sales and the

reach they made in remote places. They

are incentivized by providing free empty

carats, cooling systems, gold coins based

on their competencies.

Interesting fact of these plans is that only

retailers are entertained for schemes in

seasonal time to make extra money. In

case of distributor and spoke associates

the plans are announced in off season

time i.e. November to January, which is

very tough task to achieve.

Credit

The business of Devi Agencies is highly

profit making business but they adapted

a policy of not providing credit since

inception of its business. Company does

not conditions distributor to provide

credit to retailers, HVO, hubs and

spokes. CCI is only interested in

fulfilling the target and outreach made

by a distributor. It is the headache of distributor to capture markets by any

instruments. So Devi Agencies decided

not to provide credit and was able to

settle because of first mover advantage.

They believes in maintaining good

relation by providing quality service, on

time delivery and discounts. In some

cases to loyal customers it provides a

credit of three days. Another form of

credit is provided to spokes which is on

a condition that if they will order for full

truck load they can avail credit of three



to four days. A retailers and HVO’s in

Paralakhemundi gets a running a/c

facility with the distributor. On an

average they are benefitted by 4-5 days

credit and the a/c are refreshed in every

three months.

Finance

As the financial of Devi Agencies is

considered, they are able fulfill their

targets, are efficiently managing funds

but are not able to grow in terms of

profits. As the sales have gone up by

almost 12% and they have pulled back

the cash discount from many areas but

are not able to increase their profits but a

negative growth they are registering.

As the CCI is in full support with Devi

Agencies as far as it enters in new

markets and tap new consumers. Another

critical issue for Devi Agencies is to face

a prospective challenge from a direct

competitor in form of sub dealer of to

Berhampur dealer of Pepsi Co.. The cost

of outreaching is shooting as the fuel rate

hikes day by day. So it is in a dilemma of

whether to expand and to sustain thecurrent position or to come tie up with

another product line to share its

distribution infrastructure and outreach.

HVO



Bibliography h tt p: // www .c o c a- c ol a i n d ia.c o m / h tt p: // www .re d i ff.c o m / m on ey /2 00 6/ f e b /0 3 in ter.h t m (September 18, 2009)

h tt p: / /k no w l e dg e.e m o r y .e du/ a r t ic l e.cf m? a r tic le id = 8 2 2 (September 17,

2009) h tt p: / /p r o jec ti n f ol in e .c o m / C o ca %2 0 C o l a % 20 I n d ia %E 2 % 8 0 %99 s %2 0 Th i rs t

%2 0 f o r %2 0 th e % 2 0 R u r a l%2 0 M a r k e t .h tm l (September 17, 2009) h tt p: // www .o p p a p e r s .c o m / e ss ay s/ c o c a -c o l a - o v er v i e w / 6 7 4 1 1 (September

19, 2009)

Some Snapshots!!!

O

http://www.coca-colaindia.com/

http://www.rediff.com/money/2006/feb/03inter.htm





http://knowledge.emory.edu/article.cfm



http://projectinfoline.com/Coca%20Cola%20India%E2%80%99s%20Thirs


http://www.oppapers.com/essays/coca-cola-overview/67411






http://www.coca-colaindia.com/

group 3 coca cola case2

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