1

A PROJECT REPORT ON

ANALYSIS OF DISTRIBUTION STRATEGY IN FMCG INDUSTRY (A COMPARATIVE STUDY OF ITC & HUL

Submitted for partial fulfillment of the requirements for the award of the degree

BACHELOR OF BUSINESS ADMINISTRATION

BY

Ms. Harjot Kaur Deol

Roll No. 1610101043

Under the guidance of

Dr. Hitender Shukla

Assistant Professor

Department of Management

INVERTIS UNIVERSITY, BAREILLY

SESSION 2018-19

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CERTIFICATE

TO WHOM IT MAY CONCERN

This is to certify that Ms. Harjot Kaur Deol student of BBA VI Semester in our institute has

successful completed her project work entitled” analysis of distribution strategy in FMCG

industry (a comparative study of ITC & HUL” for the partial fulfillment of the degree of

Bachelor of Business Administration for the session 2018-19.

Dr. Manish Gupta Dr. Dheeraj Gandhi Dr. Hitender Shukla

(Dean Management) (HOD, BBA & B.com) (Assistant Professor)

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STUDENT DECLARATION

I Harjot Kaur Deol a bonafide student of BBA Invertis University, Bareilly would like to declare

that the project entitled analysis of distribution strategy in FMCG industry (A comparative study

of ITC & HUL submitted by me in a partial fulfillment for the requirement of the degree of

Bachelor of Business Administration, is my original work.

Place: Bareilly

Date: Signature of the candidate:

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ACKNOWLEDGEMENT

First of all I am thankful to almighty for providing abundant grace, good health and knowledge

to do the research project.

Any fruitful work is in competence without the word is incomplete without a word of thanks to

those involved directly or indirectly in its completion with any sincere gratitude I would like to

thank everyone who has support my project.

I am extremely thankful to Dean management, Dr. Manish Gupta, Head of department Dr.

Dheeraj Gandhi ,Project guide Dr. Hitender Shukla and my project coordinators Mr. Tarun

Gupta who insight encouragement me to go beyond the scope of the project and the broadened

me learning on this project.

I would appreciate all the respondents who took out their valuable time to give their views and

filled the questionnaire. Lastly, I take this opportunity to thank my friends who chipped-in with

some valuable suggestions for the betterment of this project.

HARJOT KAUR DEOL

(BBA-VI SEMESTER)

1610101043

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TABLE OF CONTENT

S. No. CHAPTER CONTENT Page No.

1.

CHAPTER-I Introduction

9-23

2.

CHAPTER-II Literature Review

24-38

3.

CHAPTER-III

Research objectives

Research Methodology

Research Design

39-43

4.

CHAPTER-IV

Data presentation and

Interpretation

44-54

5.

CHAPTER-V Research Findings

56-57

6.

Limitations

58

7.

Conclusion

59

8.

Bibliography

60-61

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LIST OF TABLES

S no. Table no. Page no.

1. Table No. 1 45

2. Table No. 2 47

3. Table No. 3 49-50

4. Table No. 4 51

5. Table No. 5 53

6. Table No. 6 .

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LIST OF FIGURES

S No. Figure No. Page No.

1. Figure No. 1 46

2. Figure No. 2 48

3. Figure No. 3 52

4. Figure No. 4 54

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CHAPTER -I

INTRODUCTION

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INTRODUCTION

ABOUT DISTRIBUTION CHANNEL

Distribution (or place) is one of the four elements of the marketing mix. Distribution is the

process of making a product or service available for the consumer or business user that needs it.

This can be done directly by the producer or service provider or using indirect channels with

distributors or intermediaries.

A brief explanation of different channels of distribution is given below:

1.Manufacturer/Customer: This is also known as direct selling because no middlemen are

involved. A producer may sell directly through his own retail stores, for example, Bata. This is

the simplest and the shortest channel. It is fast and economical.

2. Manufacturer /Retailer/Customer: This is one stage distribution channel having one

middleman, i.e., retailer. In this channel, the producer sells to big retailers like departmental

stores and chain stores who in turn sell to customer. This channel is very popular in the

distribution of consumer durables such as refrigerators, T V sets, washing machines, typewriters,

etc.

3. Manufacturer/ Wholesaler/Retailer/Customer: This is the traditional channel of distribution.

There are two middlemen in this channel of distribution, namely, wholesaler and retailer. This

channel is most suitable for the products with widely scattered market. It is used in the

distribution of consumer products like groceries, drugs, cosmetics, etc.

Distribution is vital to the success of FMCG companies. Ensuring that they deliver to customers

their brands in the correct amount, the place and right time, in good condition and at a

competitive price, is still a challenge for the trade marketing and distribution companies

department. Also, the distribution is important for business partners, including independent

distributors, the relationship with them based on the principle of mutual profit.

FMCG companies have three objectives in terms of distribution:

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Brands’ availability – final consumers can buy the products only if those are on the

shelves. The right brands should be in the right outlet at the right time. Brands’

disponible should reflect the customers profile from each area.

Product’s quality – companies must ensure that the consumers have the best products in

terms of freshness, appearance package and quality.

Effective distribution of price viewpoint – making the availability and quality of products

in the most effective, has an important role in efficient distribution.

Indian FMCG Sector:

FMCG is the fourth largest sector in the Indian Economy with a total market size of Rs. 60,000

crores. FMCG sector generates 5% of total factory employment in the country and is creating

employment for three million people, especially in small towns and rural India.

The FMCG sector in India is a sector which is dominated by a high level competition between all

the players. This particular sector includes MNC’s as well as local Indian companies. Certain

companies are leaders in a particular state or area. While some of the companies are very strong

in the rural areas compared to the urban areas. Some of the most powerful companies in the

FMCG sector are Hindustan Unilever Ltd., ITC (Indian Tobacco Company), Nestlé India,

GCMMF (AMUL), Dabur India, Asian Paints (India), Cadbury India, Britannia Industries,

Procter & Gamble Hygiene and Health Care and Marico Industries. All these companies have a

proper distribution network along with proper product promotion tools which have helped them

to regularly increase their sales and visibility on the Indian scene.

The top 10 companies in India are as follows:

The FMCG sector can be sub classified into:

Personal Care: The personal care category has the largest number of brands, i.e., 21, inclusive of

Lux, Lifebuoy, Fair and Lovely, Vicks, and Ponds.  There are 11 HLL brands in the 21,

aggregating Rs. 3,799 crore or 54% of the personal care category. Cigarettes account for 17% of

the top 100 FMCG sales, and just below the personal care category. ITC alone accounts for 60%

volume market share and 70% by value of all filter cigarettes in India.

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Foods: The foods category in FMCG is gaining popularity with a swing of launches by HLL,

ITC, Godrej, and others. This category has 18 major brands, aggregating Rs. 4,637 crore. Nestle

and Amul slug it out in the powders segment. The food category has also seen innovations like

softies in ice creams, chapattis by HLL, ready to eat rice by HLL and pizzas by both GCMMF

and Godrej Pillsbury. This category seems to have faster development than the stagnating

personal care category. Amul, India’s largest foods company, has a good presence in the food

category with its ice-creams, curd, milk, butter, cheese, and so on. Britannia also ranks in the top

100 FMCG brands, dominates the biscuits category and has launched a series of products at

various prices.

Household care: In the household care category (like mosquito repellents), Godrej and Reckitt

are two players. Goodknight from Godrej, is worth above Rs 217 crore, followed by Reckitt’s

Mortein at Rs 149 crore. In the shampoo category, HLL’s Clinic and Sunsilk make it to the top

100, although P&G’s Head and Shoulders and Pantene are also trying hard to be positioned on

top. Clinic is nearly double the size of Sunsilk.

Herbal care: Dabur is among the top five FMCG companies in India and is an herbal specialist.

With a turnover of Rs. 19 billion (approx. US$ 420 million) in 2005-2006, Dabur has brands like

Dabur Amla, Dabur Chyawanprash, Vatika, Hajmola and Real.

Paint: Asian Paints is enjoying a formidable presence in the Indian sub-continent, Southeast

Asia, Far East, Middle East, South Pacific, Caribbean, Africa and Europe. Asian Paints is India’s

largest paint company, with a turnover of Rs.22.6 billion (around USD 513 million). Forbes

Global magazine, USA, ranked Asian Paints among the 200 Best Small Companies in the World

Chocolates/Confectionary: Cadbury India is the market leader in the chocolate confectionery

market with a 70% market share and is ranked number two in the total food drinks market. Its

popular brands include Cadbury’s Dairy Milk, 5 Star, Eclairs, and Gems. The Rs.15.6 billion

(USD 380 Million) Marico is a leading Indian group in consumer products and services in the

Global Beauty and Wellness space.

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Hindustan Unilever Limited ( HUL )

Hindustan Unilever Limited (HUL) is an Indian company based in Mumbai, Maharashtra. It is

a subsidiary of Unilever, a British-Dutch company. HUL's products include foods, beverages,

cleaning agents, personal care products and water purifiers.

HUL was established in 1933 as Lever Brothers and, in 1956, became known as Hindustan Lever

Limited, as a result of a merger among Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and

United Traders Ltd. It employs over 16,000 workers, while it also indirectly helping to facilitate

the employment of over 65,000 people. The company was renamed in June 2007 as "Hindustan

Unilever Limited". The Company has about 18,000 employees and has a sales of INR 34619

crores (financial year 2017-18). HUL is a subsidiary of Unilever, one of the world’s leading

suppliers of Food, Home Care, Personal Care and Refreshment products with sales in over 190

countries and an annual sales turnover of €53.7 billion in 2017. Unilever has over 67%

shareholding in HUL.

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Food Homecare Brands Personal Care Brands Washing

Detergent

Annapurna salt and

Atta(formerly known

as Kissan Annapurna)

Active Wheel detergent Aviance Beauty

Solution

Wheel

Bru coffee Cif Cream Cleaner Axe deodorant and

aftershaving lotion and

soap

Surf Excel

Brook Bond

Taj Mahal

Taaza, Red Label) tea

Comfort fabric

softeners

LEVER Ayush

Therapy ayurvedic

health care and

personal care products

Rin

Kissan squashes,

ketchups, juices and

jams

Domex

disinfectant/toilet

cleaner

International breeze,

Liril, dove lux,

Lifebuoy

Lipton Rin detergents and

bleach

Brylcreem hair cream

and hair gel

Clear anti-dandruff hair

products

Clinic Plus shampoo

and oil

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Imperial Tobacco Company (ITC):

ITC is an Indian company headquartered in Its five diversified businesses are Fast-Moving

Consumer Goods (comprising Foods, Personal Care, Cigarettes and Cigars, Apparel, Education

and Stationery Products, Incense Sticks and Safety Matches), Hotels, Paperboards & Specialty

Papers, Packaging, Agri-Business and Information Technology. Although the cigarette business

contributes more than 80% of the profits of the company, 80% of the capital is invested in the

non-tobacco businesses.

Established in 1910 as the 'Imperial Tobacco Company of

India Limited', the company was renamed as the 'India

Tobacco Company Limited' in 1970 and later to 'I.T.C.

Limited' in 1974. The dots in the name were removed in

September 2001 for the company to be renamed as 'ITC

Limited' where 'ITC' would no longer be an acronym. The company completed 100 years in

2010 and as of 2012-13, had an annual turnover of US$8.31 billion and a market capitalization of

US$50 billion. It employs over 30,000 people at more than 60 locations across India and is part

of Forbes 2000 list.

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CIGARETTE

S

FOODS . PERSONAL

CARE

EDUCATION &

STATIONARY

. LIFESTYLE

RETAILING

Hotels

&Tourism

Industry

India Kings Ashrivaad Savlon Classmate Wills Lifestyle ITC Grand

Chola

Classic Sunfeast Charmis Paperkraft John Players ITC ,

Gardenia,

Bengaluru

Gold Flake Bingo Engage ITC, Grand

Central,

Mumbai

American Club Mint Fiama

Navy Cut Candyman, Sunbean,Yippee

Vivel

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*TC Grand Chola, the world’s largest LEED Platinum rated hotel in the New Construction

category, launched in September 2012

DISTRIBUTION STRATEGY

HUL:

Phase 1: Wholesaler network HUL has a large distribution network comprising 5000

redistribution stockists and 40 C & F agents (Clearing and Forwarding Agents). The first phase

of the HUL distribution network had wholesalers placing bulk orders directly with the company.

Large retailers also placed direct orders, which comprised almost 30 per cent of the total orders

collected. The company salesman grouped all these orders and placed an indent with the Head

Office. Goods were sent to these markets, with the company salesman as the consignee. The

salesman then collected and distributed the products to the respective wholesalers, against cash

payment, and the money was remitted to the company.

Phase 2: Registered Wholesaler The focus of the second phase, which spanned the decades of

the 40s, was to provide desired products and quality service to the company's customers. In order

to achieve this, one wholesaler in each market was appointed as a "Registered Wholesaler," a

stock point for the company's products in that market. The company salesman still covered the

market, canvassing for orders from the rest of the trade. He would then distribute stocks from the

Registered Wholesaler through distribution units maintained by the company. The Registered

Wholesaler system, therefore, increased the distribution reach of the company to a larger number

of customers.

Phase 3: Redistribution Stockist The highlight of the third phase was the concept of

"Redistribution Stockist" (RS) who replaced the Registered Wholesaler (RW). The RS was

required to provide the distribution units to the company salesman. The RS financed his stocks

and provided warehousing facilities to store them. The RS also undertook demand stimulation

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activities on behalf of the company. The second characteristic of this period they realized that the

RS would be able to provide customer service only if he was serviced well. This knowledge led

to the establishment of the "Company Depots" system. This system helped in transshipment,

bulk breaking, and as a stock point to minimize stock-outs at the RS level.

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ITC:

ITC uses FIFO method to reduce the wastage of goods due to expiry.

They also keep the good on constant move from low sales are high are.

Retailers must return expired or damaged products within six months after the date of

expire.

Adjustment for them in three months’ time.

ITC provides their retailers with racks, hunger ,etc to display the products.

The benefits received by the retailers, depend upon their sales volume and also the

location of their shops.

ITC has hired IMRB (Indian Market Research bureau) to do the market research.

ITC foods utilizes distribution network efficiently.

Distributes products to more than a million outlets across the country.

Distribution centers located in the major states.

E-choupals- distribution channel where the farmers are linked to the company.

Help retailers manage their stock better.

ERP based logistics link-Distributers-Warehouse-Marketing-Branches to its head offices

and factories.

Developed a companywide hybrid network called Project Infoben.

SWOT analysis of Hindustan Unilever – HUL SWOT analysis:

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Strengths:

Brand visibility :From soap to mineral water, HUL is shaping the life of 1.3 billion

people daily. Being in consumer goods market with its 20 consumer categories such as

soap, tea, detergents, shampoo etc. & each having large assortments, helped HUL in

occupying the large shelf space of Grocery /departmental stores which itself explains the

acceptance/demand of their products in the market.

Market leader in consumer goods: According to Nielsen data 2 out of three Indian

consumers use HUL products. HUL used selective targeting strategy to emerge as a

market leader in the Indian market.

Innovative FMCG Company: Hindustan Unilever Research center (HURC),Mumbai &

Unilever Research India, Bangalore ,both research facilities were bought together in a

single site in Bangalore in 2006.Employees in this facility continuously  working &

developing innovations in products & manufacturing processes which is helping the HUL

to set it as front-runner in the consumer goods market.

Extensive & integrated distribution system: HUL’s brands are now household name

which is only possible due to its 4 tier distribution system namely

a) Direct Coverage through common stockist within a town of population under 50000

people.

b) Indirect coverage: Villages closer to larger urban markets have been targeted.

c) Streamline: Leveraging the rural wholesale market to reach markets inaccessible by

road.

d) Project SHATKI AMMA: It targeted the very small villages (2000 population) &

tapped into pre-existing women’s SHG (self-help groups).

High Brand awareness: By signing popular celebrities for the advertisements of their

products HUL has created positive word of mouth over the ages which helped them in

social acceptance of their products intelligently targeted & meant for different income

groups. ) Financial position: Having more than 80 years of experience in the consumer

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goods market & backed by Unilever who owns 67% controlling share in HUL, It is

financially strong. 8) Market share: Through high penetration in the market, HUL had

managed to hold their high market share in different product categories.

Weaknesses:

Decreasing Market share: Competitors focusing on a particular product & eating up

HUL’s share, like Ghadi & Nirma detergent eating up HUL’s wheel detergent market

share.

Large number of brands in different product categories: Sometimes having broad

brand portfolio can lead to confused positioning. Price positioning in some categories

allows for low price competition like AMUL captured Kwality’s market share.

Opportunities :

Expanding market: By penetrating more in the rural markets through its project Shakti

AMMA and transition of unorganized business to organized one will lead to further

expansion of the consumer goods market.

Awareness in usage rate of consumer goods: People getting more aware and conscious

about the usage may be through advertising /word of mouth /doctor prescription ,is

resulting in increase in usage rate of these products.

Increasing Income levels: Due to stable political scenario, improved literacy rate &

controlled inflation, disposable income of the people is increasing thereby resulting into

upsurge in demand & changing their lifestyle.

Threats :

Competition in the market: With increasing number of local & national players it’s

becoming very hard for the companies to differentiate themselves from others. There is

also threat from counterfeit products destroying its brand image in the market.

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Price of commodities: Increasing price of commodities will result in further increase in

the price. Further increase in price will result in decrease in sales, margins & brand

switching.

Buyers power: With highly diversified consumer goods market where there are lots of

brands claiming different sorts of benefits, it’s very difficult for consumers to stick to a

particular brand & hence results into brand switching where consumer got power to select

a brand based on several factors  like availability, reference group recommendation,

preference & price.

SWOT analysis of ITC:

Strengths:

Portfolio of Business: ITC has 6 strong and diverse businesses under its name which

boasts its total revenue and allows ITC to innovate and explore other business

opportunities

Strong Brands in various businesses: ITC is a strong house of brands with most of its

products leading the segments in which they operate. ITC owns some of the most popular

cigarette brands like gold flake and Classic. It also owns Sunfeast , which is amongst the

top selling biscuits in India.

Effective Social Business Initiatives: ITC has developed a triple-bottom-line strategy

through which concentrates on developing the nation’s economic, social and

environmental capital. ITC has brought in initiatives like E-Choupal, Choupal Pradarshan

Khet (CPK) which benefits the people at the grass root level, i.e. farmers.

Inter and Intra-divisional Synergy: ITC has successfully utilised the strengths of

existing business to foray into a newer products or categories. ITC leveraged the strong

distribution system of cigarette brands to create a channel for its FMCG products.

Weaknesses:

High Proportion of revenues from Tobacco products: ITC has been continuously

making efforts to divert the FMCG business from over dependence on tobacco products

and have been successful in doing so to an extent. But tobacco products remain to be the

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major source of the revenue contributing more than 60% of the total revenue from FMCG

businesses.

Association with Tobacco Products affects the image: ITC has made a lot of efforts to

improve its corporate image but the fact that ITC has many tobacco products in its

portfolio impacts its corporate image.

An increase in Tax on Tobacco affects revenue: Due to the increase in taxation on

tobacco products, the prices and hence revenues get affected.

Opportunities:

Strategic Acquisitions: ITC should continue making the strategic acquisition like they

have done in the past by acquiring Savlon from Johnson & Johnson and B Natural from

Balan natural Foods.

Growth in purchasing power and improving lifestyle: ITC should tap on the

increasing purchasing power and improving the lifestyle of customers in India. This

could help in increasing revenue for all its businesses.

Tap opportunities created in the Rural Market: The growing rural market in India and

other emerging nations create huge opportunities to improve the bottom-line of the

company.

Threats:

Intensifying Competition in FMCG businesses: ITC faces intense competition in its

FMCG business from large MNCs like HUL and P&G and Indian FMCGs like Patanjali

and Dabur. This limits the market share for ITC.

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Strict Regulations and Increasing Taxation in Cigarette Business: The Tobacco and

Cigarette Industry in India continue to be targeted by strict government regulations and

taxation system. This possesses a threat to the highly profitable Cigarette business of

ITC.

Increasing awareness on health: There has been an increase in the health consciousness

which has resulted in the decrease in demand for tobacco products in India. Also, anti-

smoking campaigns throughout the country affect the sales of cigarettes.

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CHAPTER -II

LITERATURE REVIEW

LITERATURE REVIEW

1.Vachani, Sushil and Smith, N. Craig, Overcoming Rural Distribution

Challenges at the Bottom of the Pyramid (September 9, 2010) Management

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scholars and development economists have provided a compelling case for greater attention to

the bottom of the pyramid, few contributions have examined specific strategies for reaching the

bottom of the pyramid. The majority comprising the bottom of the pyramid resides in hundreds

of thousands of villages located beyond most multinationals’ distribution networks. Its access to

essential goods is limited not just by high prices, but also by inadequate rural distribution. We

use the term socially responsible distribution (SRD) to describe initiatives that provide poor

producers and consumers with market access for goods and services that they can benefit from

buying or selling by helping neutralize the disadvantages they suffer from inadequate physical

links to markets, information asymmetries, and weak bargaining power. This paper examines

five SRD case studies of MNCs, government and NGO initiatives. It identifies the role they play

in promoting SRD, the different kinds of intervention strategies they use, and the payoffs for

multinationals and people at the bottom of the pyramid. The paper examines the obstacles to

higher earning potential and access to cheaper consumer goods for poor consumers, identifying

direct (e.g., infrastructure shortcomings) and moderating factors (e.g., illiteracy), and the

strategies of organizations from the three sectors in addressing these obstacles using broad and

targeted interventions. These strategies include bridging the infrastructure gap, use of

empowering information, leveraging technology, and cross-sectoral collaboration as well as

differentiated distribution and leveraged-bidirectional and leveraged-shared distribution.

2.Nie C. & Zepeda L. (2002) in their paper "A Lifestyle Segmentation Study

of US Food Shoppers to Examine Organic and Local Food Consumption" put stress on the

importance of individual distinctiveness in determining attitudes that in turn affect awareness and

behaviors regarding food choices. In this paper particularly the importance of lifestyle over other

26

distinctiveness has been shown. The article provides marketers and policy-makers with strategies

to communicate with the different segments to promote sustainable foods. The results of this

paper also provide strategies to figure out the framework to promote sustainable foods for the

different groups.

3. Luigi Battezatti;2013, Supply chains for FMCG and industrial products in Italy: Practices and the advantages of postponement, Issue 5 (3)

Analyses the supply chains of the FMCG and the durable goods in Italy and shows particular

methods of management, points of considerable development (manufacturing postponement) and

the general lack of scale economics. Postponement is a practice that is being increasingly

diffused to meet better the need to manage the complexity of the growing variety of products in

hand. The development of the postponement practice in Italy is determined by the specific

characteristics of the industrial and distributive structure and of the suppliers of services. It may

be seen that postponement is particularly suited to the Italian industrial structure if flexibly

realized as it does not specifically require scale economics

4. Dominik Zimon February 2017 , Quality Management Systems’ Impact on

the Functioning of Distribution Channels in the FMCG Market 18(156).

The main aim of this publication is to analyze the influence of standardized quality management

systems for the betterment of distribution channels in the FMCG market. The research covered

20 deliberately chosen distribution channels of a large manufacturing company carrying out the

activity in the food industry in the FMCG market in South-Eastern Poland. For the purposes of

the research process, channels are divided into two groups. In the first group were classified

channels in which all (or almost all) cells have implemented quality management systems (ISO

9001, ISO 9004 or ISO 22000). In the second group were classified channels in which

intermediaries had no standardized quality management systems. The research conducted

process helped to answer the research questions and the following conclusions: distribution

channels with implemented quality management systems in most cases have received better

grades than other distribution channels. In particular, their advantage is evident in aspects such as

customer service, timeliness and accuracy.

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Keywords: quality, management systems, FMCG, distribution channels

5. Dev Narayan &Gagan pareek January 2012, Conceptual Framework for designing a

Rural Distribution Model for FMCG products in India This paper reviews the challenges

faced by FMCG companies in India in Rural Distribution and provides a concrete conceptual

framework for rural distribution in India. Literature available on rural distribution models is

sparse and this paper aims to advance that body of knowledge from a practitioner’s point of

view since the first author is also a practicing General Manager for Sales in a prominent

multinational FMCG. Rural markets are very important for FMCG companies today owing

to the increasing development of consumerism in the bottom of the pyramid. Rural markets

are characterized by the 4 challenges (4A’s) of rural marketing which correspond to the 4P’s

of marketing. This paper deals with the rural marketing challenge of Availability with special

focus on a major rural marketing FMCG. The challenge of Availability corresponds to the fourth

P of “Place”. Qualitative as well as quantitative techniques have been used in building the

framework.

Keywords: Rural Marketing, Rural Market, Rural Channel Development, Conceptual

Framework for Rural Distribution.

6. Pravin Kumar Bhoyar , Asha Nagendra (1, January 2012) , Effectiveness of FMCG Distribution Channels with Respect to Satisfaction of Consumers in Rural Markets Issue 1(42)

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Distribution is the most important variable in the marketing plans of most consumer goods

manufacturers. It is estimated that there are over a million market intermediaries-distributors,

super-stockists, wholesalers, stockists, transporters and retailers - who are involved in the

distribution of a variety of consumer goods all over the country. This study focuses on the

effectiveness of FMCG distribution channels with respect to the satisfaction of consumers in the

rural market. Two companies - Hindustan Unilever Limited (HUL), and Godrej Consumer

Products Limited (GODREJ), which are pioneers in Fast Moving Consumer Goods (FMCG) in

the rural market were selected to study their distribution channels in 2 rural districts of

Maharashtra. Two different questionnaires were designed - one for channel members, and the

other for rural consumers. Results revealed that there are two distinct segments of consumers in

the rural markets. One set who cannot read, write or understand with ease. They do not buy

branded products. They have their own method of identification of products and communication

with the retailers. Rarely do they purchase branded packaged goods. The other set was the

slightly educated ones, who bought branded products and demanded range in products. The

study also revealed that there were limited stocks of products at village retailers; hence,

customers had to wait for some days. So, it compelled them to travel outside their villages to

meet their demands. The effectiveness of FMCG distribution channels in rural markets depended

upon the satisfaction of the rural customers. Since there was either poor quality or prevalence of

duplicate brands in the rural market, rural customers were not getting good quality and authentic

brands in the rural market of Sangli and Kolhapur districts. Hence, it was proved that the existing

FMCG Channels of Distribution in Rural Maharashtra did not serve the customers well. This

research was done during January 2009 and December 2009.

Keywords: FMCG Distribution Channels, Effectiveness, Rural Marketing, Rural Consumer

Behavior

7. Rajan Varadarajan & Rupali Kaul May 2018, Doing well by doing good

innovations: alleviation of social problems in emerging markets through

corporate social innovations Volume86, Doing well by doing good (DWDG)

29

innovations refer to the implementation of new products, processes and practices, and

modifications of existing products, processes and practices by firms that benefit society by

contributing toward alleviation of specific social problems and enhancing performance of

firms. Social problems refer to certain objective conditions that are perceived by society as

undesirable, and as requiring remedial actions. Certain social problems stem from quality and

quantity gaps in public goods such as education, electricity and water. Certain other social

problems stem from affordability, awareness, availability, and adoptability gaps associated

with private goods, resulting in population groups at the base of the market pyramid being

non-consumers of various quality of life enhancing private goods, and need services such as

healthcare. This paper presents an overview of potential opportunities for DWDG

innovations, with an emphasis on innovations for alleviating specific social problems in

emerging and less developed markets.

8. Avinash G. Mulky September 2013, Distribution challenges and workable

solution ,Issue 3(25) An effective distribution channel can be a source of strategic

advantage for companies. However, little research exists about the distribution channel

structure in India, which is largely traditional and quite unique. The first part of this round

table article provides an overview of distribution channels, particularly their constituents and

structure, with a special focus on distribution channels in India. The second part of the article

reports on a panel discussion with eminent academic and industry experts on the challenges

that companies in India face in designing, constructing, and managing distribution channels

on the ground.

Keywords: Distribution channels, Channel management, Indian retail , FDI in Indian retail

30

9. L. Antony Michaelraj &P. Shahbudeen February 2009, Replenishment

policies for sustainable business development in a continuous credit based

vendor managed inventory distribution system, Issue1(56) In a credit supply

environment in the fast moving consumer goods distribution in the developing countries,

retailers are making the payment to the distributors in number of unequal installments. The

distributors working with such retailers having different demand and payment policy have to

accept delay of payment as a competitive strategy and achieve their own business objectives.

Some distributors have the objective of minimizing the balance payment considering the

financial safety. Some other distributors have the objective of maximizing the sales with an

aim to go beyond business survival. In this paper two models are developed for the above

two objectives and optimal replenishment policies are suggested. Genetic Algorithm and the

linear programming are used together to solve the models. Two cases of biscuits and

confectionery products distribution are taken for study and the results are compared with the

existing system

Keywords: Supply chain management, Fast moving consumer goods, Vendor managed

inventory, Linear programming and genetic algorithm.

31

10.Dev Narayan Sarkar, Dr Gagan Pareek, Wholesale Model Of Rural Distribution In FMCG: A Quantitative Study Of Factors Issue 8(2)

The efficacy of wholesale channel in distribution of FMCG products in Rural India and provides

a situational framework for using wholesale channel in rural distribution. Literature available on

rural distribution models is sparse and this paper aims to advance that body of knowledge from a

practitioner’s point of view. Rural markets are very important for FMCG companies today owing

to the increasing development of consumerism in the bottom of the pyramid. Rural markets are

characterized by the 4 challenges (4A’s) of rural marketing which correspond to the 4P’s of

marketing. This paper deals with the rural marketing challenge of Availability with special focus

on a major rural marketing FMCG. The challenge of Availability corresponds to the fourth P of

“Place”. Ex post facto qualitative as well as quantitative techniques have been used in this

research work.

Keywords: Rural Marketing, distribution, wholesale, wholesaler, feeder wholesaler

.

11.Dr. Neetu Sharma March (2013), Marketing Strategy on different stages PLC And Its Marketing Implications On FMCG Products, Issue(2)3

"The world of fast moving consumer goods is possibly the hardest, cruelest and disciplined

industries all them all: The sheer science, and extraordinary thought, the investment in consumer

and competitor analysis for truly focused market orientation, the value validity and constancy of

marketing knowledge determines market share, profitability and survival. “A number of

variations of the Industry Life Cycle model are used to direct the focus of the marketing

activities during each phase of the model. Launch Engineering helps FMCG businesses be more

productive, improve branding, expand marketing communications, control ad agencies and refine

category management. FMCG outcomes include an easier, faster path to trial and brand adoption.

Special proprietary (pre-launch) new product pre-launch assessment tool almost eliminates the

chance of a product launch not going to plan; advanced market segmentation methods give you a

competitive 'edge'. Improved returns from advertising, trade spend (sometimes called

promotional budget), sales promotions & public relations (pr & publicity) pays for FMCG

consultancy fees many times over! Most of the models are similar in respect of the direction

provided in respect of the marketing effort and focus, despite the fact that they differ as to the

32

number and names of the stages. Despite the criticism of

the product life cycle model during the mid-70's, by a number of authors, the model continues to

be a valuable tool for marketers. This criticism came about as a result of some product life cycles

that started shrinking and others that were increasing without any apparent reason and other

products that did not reflect the usual shape of the product life cycle graph. FMCG persisted with

the use of the product life cycle concept continued to have a competitive advantage over those

who did not. It is clear that the use of the model has a significant impact on the success of the

business strategy and the associated corporate performance. The goals in respect of strategy,

competition, product, price, promotion and distribution will be different for the different stages

of the product life cycle. This article is focusing on a number of the primary product life cycle

management techniques that can be used to optimize a product's revenues in respect to its

effective positioning in a market during the introduction stage of the product life cycle.

KEY WORDS:- Marketing Strategy, Product Life Cycle, FMCG

12. S John Mano Raj; Dr. P Selvaraj 6 May 2016,Social Changes and the

Growth of Indian Rural Market : An Invitation To FMCG Sector

The Fast Moving Consumer Goods (FMCG) sector is a corner stone of the Indian economy. This

sector touches every aspect of human life. The FMCG producers now realize that there is a lot of

opportunity for them to enter into the rural market. The sector is excited about the rural

population whose incomes are rising and the lifestyles are changing. There are as many middle

income households in the rural areas as there are in the urban. Thus the rural marketing has been

growing steadily over the years and is now bigger than the urban market for FMCGs. Globally ,

the FMCG sector has been successful in selling products to the lower and middle income groups

and the same is true in India. Over 70% of sales is made to middle class households today and

over 50% of the middle class is in rural India. The sector is excited about a burgeoning rural

population whose incomes are rising and which is willing to spend on goods designed to improve

lifestyle. Also with a near saturation and cut throat competition in urban India, many producers

of FMCGs are driven to chalk out bold new strategies for targeting the rural consumers in a big

way. But the rural penetration rates are low. This presents a tremendous opportunity for makers

33

of branded products who can convert consumers to buy branded products. Many companies

including MNCs and regional players started developing marketing strategies to lure the

untapped market. While developing the strategies, the marketers need to treat the rural consumer

differently from their counterparts in urban because they are economically, socially and psycho-

graphically different to each other. This paper covers the attractions for the FMCG marketers to

go to rural, the challenges, the difference between the rural and the urban market and the suitable

marketing strategy with the suitable example of companies and their experience in going rural

13. Deepa Ingavale 2011,Tapping Indian rural market - Rural Distribution Strategy

The rural markets have been increasing steadily since the 1980s and are now bigger than the

urban market for both FMCGs (53%) and durables (59%). The rural consumer market, which

grow 25% in 2008 when demand in urban areas slowed due to global recession, is expected to

reach $425 billion in 2010-11 with 720 – 790 million customers which will be double the 2004-

05 market size of $220 billion. All smart marketers, Indian as well as MNCs, are trying to enter

into rural markets. Companies such as Hindustan Lever, Godrej, Colgate Palmolive, Parle Foods,

Philips, Dabur India have made inroads into the countryside. Rural reach is on the rise and it is

fast becoming the most important route to growth. Accessing rural markets presents challenges

to the marketers as these markets are geographically spread out with a large number of retail

outlets. Study on buying behavior of rural consumer indicates that the rural retailers influence

35% of purchase decision. India offers a huge, sustainable and growing rural market which can

be tapped effectively through innovative distribution channels with retailing being the most

critical element of this strategy as it is the final touch point. The paper focuses on the rural

distribution strategy and emerging distribution channels for rural market with due emphasis on

rural retailing.

Key words: Rural markets, global recession and rural retail system.

34

14. Dr. A.K Singh July 2014, A Study on the Problems faced by the FMCG Distribution Channels in Rural Area of Bhopal & Hoshangabad Districts of M.P., Issue 2(!)

Rural markets offer a great scope for FMCG Companies to market their products because of the

recent increase in the rural incomes. The tough competition in the FMCG sector makes it

important to constantly revise the schemes as per the market conditions. Understanding the taste

and preference of the consumers provide the useful insight into the market conditions and helps

companies devise their schemes accordingly. Proper distribution coverage is a powerful tool to

stimulate the demand which not only helps in retaining the present customers but can also attract

additional customers by offering better services. The right distribution objective is to get the

right goods to the right places at the right time for the least cost. The paper opted for an

exploratory study using the interview technique to solicit information from the distributers,

wholesalers and retailers. The data were complemented by other information from Consumer

Behavior and Rural Marketing literatures also. The distribution mechanisms and channel

behavior dimension of the rural market of Bhopal and Hoshangabad is analyzed. The channel

behavior has a critical influence on channel decisions and identifying the manner in which the

distribution channel performs would help us to understand how successfulness the company is.

The paper includes implications for understanding distribution management and channel

behavior which are critical to Study the Problems faced by the FMCG Distribution Channels in

Rural Area of Bhopal & Hoshangabad Districts of M.P.

15.Khicha (2007) studied that television and direct marketing activities help rural consumers

learn about different brands, ensuring product availability is even more critical. Marketers in

rural India claim that setting up a supply chain that reaches the remotest rural areas is

extremely arduous given the infrastructure in the country. HUL Project Shakti targeted rural

women from existing self-help groups to work as “direct-to-home” distributors for HUL

products, and helped the company break into a market they were unfamiliar with. A “hub

and spoke” model of distribution is the “future.” As he explains Dabur has successfully

35

adopted the hub and spoke model in India and it has worked very well. Here, feeder towns,

primarily on the highways serve as hubs, where companies can rent a warehouse and stock

their products. Spokes are comprised of „cyclist salesmen‟ who then distribute products to

small retail outlets in nearby rural pockets.”

16.Sastry et al( 2007) have studied the pertinent issues in rural market such as uniqueness

of the rural consumer, uniqueness of the structure of rural markets and the peculiarities of

distribution infrastructure in rural areas. These are special to rural markets and hence, require

unique handling. Practically in every aspect of marketing, rural markets pose certain special

problems, but the following are found to be important form the marketing point of view:

Distribution logistics, storage, transport and handling, Location and degree of concentration

of demands, dealers‟ attitude and motivation, consumer motivation and buying behavior,

Transmission media, their reach and impact, & organizational alternatives. Thus, the rural

market bristles with many problems and to achieve a firm footing, a marketer has to grasp

these problems and provide innovative solutions to them.

17.R. Elavarasan 12 2018, A study on impact of goods and services tax on Indian industries with reference to FMCGs sector, Volume 119 No. 12

GST is one of the most critical tax reforms in India which has been long awaiting decision. It is a

comprehensive tax system that will subsume all indirect taxes of State and central Governments

and whole economy into seamless nation in national market. It is expected to remove the burden

of existing indirect tax system and play an important role in growth of India. GST includes all

Indirect Taxes which will help in growth of economy and proves to be more beneficial than the

existing tax system. GST will also help to accelerate the overall Gross Domestic Product (GDP)

of the country. GST is now accepted all over the world and countries are using it for sales tax

system. This paper will help to show that, what will be the impact of GST after its

implementation, difference between old Tax system and GST and what will be the benefits and

challenges to the FMCG after implementation of GST.

Keywords: FMCG, Indian industry, Central sales tax, Excise duty, VAT, Dual tax system, GST,

Indirect Tax, GDP

36

18.Krishna Gopal Varshney 2018, Indian Rural Market -Opportunity and

challenges in the global context Issue1 (1) In spite of having so many challenges in

rural marketing the companies have shown considerable interest in the rural India and have

tried to market themselves using the 4A model which says that the products marketed should

be acceptable by the rural population, the products should be easily available, they should be

affordable and most importantly an awareness drive should be created to educate people

about the products.

19.Keerthan Raj P.S Aithal January 15, 2018 A ‘Desi’ Multinational – A Case Study of Hindustan Unilever Limited, issue2(1)

India has become a second home to many multinationals over the years. The fact that India has

second largest population in the world is alluring because it translates itself into a huge

opportunity to encase for marketers across the globe. Hindustan Lever Limited which set foot as

the subsidiary of Unilever has been one such multinational which has almost become a home

grown brand. The strategies adopted by this corporate leaves no stone unturned in cashing in on

the tiniest niche markets available. Reaching the four billion populations in the base of the

pyramid markets has been a topic of research in recent times. Lots of exploratory and case

studies have been made in this field. This paper is a study on the strategies developed by

Hindustan Lever Limited which has been one of the most successful companies to foray into the

emerging markets in South East Asia and successfully tapped the base of the pyramid in India. A

case study using archival material and secondary information sources suggest that having a

global lookout and one world one market strategy is not successful when attempting to cut into

base of the pyramid segments in emerging markets. The critical aspect here is developing

grassroots’ connection and social empathy which should translate to a cooperative spirit which

will leverage the strengths and overcome the weaknesses.

Keywords: Base of the Pyramid, Grassroots, Marketers, Multinationals, Niche, Strategies

37

20.Joe Nyaga 2014, Factors Affecting Distribution Of Fast Moving Consumer

Goods In Kenya: A Case Of Eveready East Africa, Issue 12(1) The general

objective was to investigate factors affecting distribution of fast moving consumer goods

(FMCG) in Kenya, with particular emphasis on Eveready East Africa Limited. The study

specifically aimed to; determine the effect of competition; establish the effect of price;

analyze the effect of promotion and investigate the effectiveness of demand forecasting on

distribution of Eveready East Africa Ltd products. The study adopted a descriptive research

design and the study population comprised of 120 distributors and staff assigned in market

territories in Kenya. The study applied a stratified sampling technique to select a total of 120

respondents. Questionnaires were used as the main data collection instruments and a pilot

study was conducted to pre-test questionnaires for validity and reliability. Descriptive

statistics data analysis method was applied. The study findings indicated that the major

factors affecting distribution of the company fast moving consumer goods are; high

competition from cheap imports, high prices of the company FMCG in comparison to the

competitors FMCGs, application of ineffective promotion campaigns and lack of effective

demand forecasting systems. The study recommendations were; introduction of less

expensive and high quality FMCGs in the market that is dominated by cheap and poor

quality imports; application of effective pricing strategies like competitor based pricing;

offering of effective promotion methods such as sales promotion and continuous advertising

and application of effective demand and forecasting systems such as distribution requirement

system and material requirement system

Keywords: Distribution, Fast Moving Consumer Goods (FMCG)

21.Lawrence Mpele Lekhanya, Nze Grace& Olajumoke Dorasamy Nirmala

2017, Exploring fast moving consumer goods (FMCG) small, medium and

micro enterprises manufacturers’ need for innovation to achieve growth,

issue 2(8) The purpose of this paper is to explore the level of innovation in the fast moving

consumer goods (FMCG) manufacturing SMMEs sectors and identify the causes of low

innovation in the industry, and examine to what extent these factors influence the

effectiveness of SMMEs manufacturers innovation strategies, as well as to design a new

38

innovation strategic approach to overcome innovation problems in the economic growth of

fast moving consumer goods SMMEs manufacturers. The study is aimed at determining the

level of innovation and factors contributing to low innovation in fast moving consumer goods

(FMCG) SMMEs manufacturers hindering their economic performance. Mixed approach of

quantitative and qualitative questionnaire was used for primary data collection. Sample

consists of 120 FMCG manufacturing SMMEs. Statistical Package for Social Sciences

(SPSS) (23.0) was employed for data analysis. Findings of the study will be presented with

figures and diagrams. This study will be a useful tool for general public and relevant

stakeholders in this sector.

Keywords: innovation, small, medium and micro enterprises, manufacturers, fast moving

consumer goods (FMCG)

22.Aditi Naidu April 2007;Strategies for Marketing to the Rural Customer in

India: The 4 As Model of Rural Marketing The present paper brings together

recent research findings and on ground efforts of marketing to the rural Indian customer. The

major premise of the paper is that to serve the rural markets, marketers need to plan and

implement the 4 As of marketing mix. Drawing from literature review as well as from real

life marketing exercises as found in news articles in business periodicals, textbooks, and case

studies, the paper presents the Indian rural marketing experience so far. By bringing out the

current practices in rural marketing in India, the paper demonstrates strategies for effective

marketing to the rural markets in India as anchored on the 4 As model of rural marketing.

Keywords: Rural Markets, 4 As of Rural Marketing, Acceptance, Affordability, Awareness,

Accessibility, India

39

CHAPTER -III

RESEARCH OBJECTIVE

RESEARCH METHODOLOGY

RESEARCH DESIGN

40

RESEARCH OBJECTIVES

To find the distribution strategy of HUL and ITC. To know the comparative financial position of HUL in comparative to ITC. To know the relationship between sales and selling & admin. expenses of both HUL & ITC.

41

RESEARCH METHODOLOGY:-

Research methodology is the way in which research problems are solved systematically. It is a

science of studying how research is conducted scientifically.

The term research is also used to describe an entire collection of information about a particular

subject. Research is defined as human activity based on intellectual applications in the

investigation of manner.

Business research can be defined as a systematic and objective process of gathering, recording

and analyzing data that provides information to guide business decision.

RESEARCH DESIGN

A research design is a framework or blueprint for conducting the HR research project. It details

the procedures necessary for obtaining the information needed to structure or solve HR research

problems.

Research Design is a set of advanced decisions that make up the master plan specifying the

methods and procedures for collecting and analyzing the needed information.

42

Type of Data collection

1. Primary Data

Primary research refers to research that has involved the collection of original data specific to

that particular research methods such as questionnaires or interviews.

The primary data are those which are collected a fresh and for the first time, and thus happen to

be original in character.

Collection of Primary Data

There are several methods of collecting primary data, particularly in surveys and descriptive

researches. Important ones are:-

1. Observation method.

2. Interview method.

3. Through questionnaires.

4. Through schedules.

2. Secondary Data:

Secondary data means data that are already available i.e., they refer to the data which have

already been collected and analyzed by someone else.

Collection of Secondary Data

There are several methods of collecting secondary data, particularly in descriptive researches.

Important ones are:-

1. Journals

2. Articles

3. Magazines

4. Websites etc.

43

Type of Research:

Research Area: India

Type of Data: Secondary Data

Research Tools: Graphs and Tables

Collection of Data Through:

• Websites

• Annual Reports

• Journals and Research Reports

44

CHAPTER-IV

DATA PRESENTATION

AND

DATA INTERPRETATION

45

DATA PRESENTATIONAND

DATA INTERPRETATION

1. Net Sales(2014-18)

Table no. 1

Net sales/year (In Rs. Cr.) ITC HUL

2014 35317 28539

2015 38835 31200

2016 39192 31461

2017 42777 32367

2018 43449 34878

Sales increased

23% 22%(in Five year)

46

Figure no. 1

2013.5 2014 2014.5 2015 2015.5 2016 2016.5 2017 2017.5 2018 2018.50

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

Comparision of Net sales

ITC Linear (ITC) HUL Linear (HUL)

Interpretation:

As per the figure 1, Sales of both ITC & HUL is increasing over the last five years. The sales

increased of ITC from 2014-18 is 23% where, sales of HUL is also increased by 22% from year

2104-18).

47

2. Net Profit of HUL & ITC (2014-18)

Table no. 2

Year/Net Profit

HUL

(In Rs. Cr.)

ITC

(In Rs. Cr.)

2014 3,867 8,991

2015 4,315 9,766

2016 4,137 9,492

2017 4,490 10,283

2018 5,23711,264

Profit Changed

(In 5 year) 35% 25%

48

Figure No. 2

Interpretation:

As per the figure 2 , we have analyzed net profit of both ITC & HUL is increasing over the last

five years. But as comparison of both HUL net profit is increased of 35% and ITC net profit is

increased only by 25%

2013.5 2014 2014.5 2015 2015.5 2016 2016.5 2017 2017.5 2018 2018.50

2,000

4,000

6,000

8,000

10,000

12,000

Net Profit

HUL Linear (HUL)ITC Linear (ITC)

49

3. (A) Relationship b/w Sales & Selling and administration expenses of ITC (2014-18)

Table no.3.1

Year Sales(In Rs. Cr.)

Selling and Admin Expenses

(In Rs. Cr.)

2014 35317 826

2015 38835 783

2016 39192 895

2017 42777 811

2018 43449 902

Correlation b/w sales & selling exp 0.3207

Interpretation:

On the basis of calculation of correlation b/w sales and selling & administration of ITC as per

the selling & administration expenses are increased there is no such effect on sales where the

correlation is 0.3207.

50

(B) Relationship b/w Sales & Selling and administration expenses of HUL (2104-18):

Figure no. 3.2

Year Net Sales (In Rs. Cr.)

Selling & admin Expenses

(In Rs. Cr.)

2014 28538.98 3,675

2015 31199.72 3,944

2016 31461 3,656

2017 32367 3,542

2018 34878 4,153

Correlation b/w sales & selling exp 0.6

Interpretation:

51

On the basis of calculation of correlation b/w sales and selling & administration of HUL as per

the selling & administration expenses are increased there is positive effect on sales where the

correlation is 0.6

4. Relationship b/w Net sales & Net Profit of Hul (2014-18).

Table no. 4

Year Net Sales(In Rs. Cr.) Net Profit(In Rs. Cr.)

2014 28539 3,867

2015 31200 4,315

2016 31461 4,137

2017 32367 4,490

2018 34878 5,237

52

Figure No. 4

Interpretation :

As per the fig 4, the profits of HUL are positively increasing every year with an increase of sales

but in 2016 the net profit of Hul was decreased by 4% from their profit of 2015 despite having

positive increase in sales.

2014 2015 2016 2017 20180

5000

10000

15000

20000

25000

30000

35000

40000

2853931200 31461 32367

34878

3,867 4,315 4,137 4,490 5,237

HUL Sales&Profit

Net Sales Net Profit

53

5. Relationship b/w Net sales & Net Profit of ITC (2014-18)

Table No. 5

Year Net sales(In Rs. Cr.) Net Profit(In Rs. Cr.)

2014 353178,991

2015 388359,766

2016 391929,492

2017 4277710,283

2018 4344911,264

54

Figure No. 5

Interpretation:

2014 2015 2016 2017 20180

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

35317

38835 39192

42777 43449

8,991 9,766 9,492 10,283 11,264

ITC Sales & Profit

Net sales Net Profit

55

As per the fig 5, the profits of ITC are positively increasing every year with an increase of sales

but in 2016 the net profit of ITC was decreased by 2.8% from their profit of 2015 despite having

positive increase in sales.

CHAPTER -V

RESEARCH FINDINGS

LIMITATIONS

CONCLUSION

56

RESEARCH FINDINGS

1. During the study it was found that sales of both ITC & HUL is increasing over the last

five years. The sales increase of ITC from 2014-18 is 23% where, sales of HUL is also

increased by 22% from year 2014-18).

2. During the study it was found that, we have analyzed net profit of both ITC & HUL is

increasing over the last five years. But as comparison of both HUL net profit is increased

of 35% and ITC net profit is increased only by 25%.

3. During the study it was found that , the profits of HUL are positively increasing every

year with an increase of sales but in 2016 the net profit of HUL was decreased by 4%

from their profit of 2015 despite having positive increase in sales which was triggered

by demonetisation. The reason was due to slow down of income and drop in

advertisement expenses.

4. During the study it was found that the profits of ITC are positively increasing every year

with an increase of sales but in 2016 the net profit of ITC was decreased by 2.8% from

their profit of 2015 despite having positive increase in sales which was due to

demonetisation.

57

5. During the study it was found that on the basis of calculation of correlation b/w sales and

selling & administration of ITC as per the selling & administration expenses are

increased there is no such effect on sales where the correlation is 0.3207.

6. During the study it was found that on the basis of calculation of correlation b/w sales and

selling & administration of HUL as per the selling & administration expenses are

increased there is positive effect on sales where the correlation is 0.6.

7. The ITC operates with its own sales channel, products are made available to the

wholesale dealers through Carried & Forward Agents (CFA’s) which is then forwarded to

the Retailers in towns directly or through Small Wholesale Dealers to reach the

consumers in the remotest of locations of the country.

8. HUL works on go-to-market strategies to reach out each and every part of the country

with its varied types of a distribution channel. By closely working with 2700+

redistribution stockists and shoppers every day to maximize their sales HUL makes sure

that whether it is a small Kirana store or drug store or pops and mums store at a distant

location their product should reach to all these locations on time every time. HUL market

strategies to focus on short supply for distribution

9. The different distribution channel used by the both the company HUL and ITC and the

different intermediaries which are present in the distribution channel, also explain the

strategy they have made to target the rural customer.

10. HUL has started the project like shakti, operation Bharat, operation harvest etc and ITC

has started the project like e-choupals etc to target the rural areas is an untapped market

and is a very good market to increase the sale by the company.

58

LIMITATIONS

1. The current years data was not available due to which results could be varied.

2. Bad connectivity in college campus, it was a tedious task to mine the data.

59

CONCLUSION

Both the company are strong player in the FMCG sector and has different foods production their

portfolio. The main food products of HUL are like tea-3 rose, red label, tazza, Taj mahal, lipton

coffee-bru, kissan ketchup, jams and kissan and amaze brainfood, knorr, ice-cream-kwality

wall’s , anupurna salt whereas the food product of ITC are like kitchen of India-chutney, buryan,

desserts etc, Ashrivaad- atta, salt, sun feast biscuit-milk magic , marie light,golden bakery, dark

fantasy, dream cream, sweet n salt, minto, candyman, bingo.

Doing this work also help me to understand the different distribution channel used by the both

the company HUL and ITC and the different intermediaries which are present in the distribution

channel, also explain the strategy they have made to target the rural customer. HUL has started

the project like shakti, operation Bharat, operation harvest etc and ITC has started the project like

e-choupals etc to target the rural areas is an untapped market and is a very good market to

increase the sale by the company.

This report also help to understand the position of the both the company in the market, as we

know that HUL is the market leadership in FMCG product and ITC is the growing company in

the sector. But because the large number of the product in its portfolio HUL is in much stronger

than that of ITC. HUL is not present in the snack foods . As comparison in 2016 there was

sudden fall in profit but no effect on sales in both ITC & HUL due to demonetisation but HUL

recovered it very soon and advertisement expenses were reduced.

Hence, working on this topic help me to learn a lot about the distribution channel of HUL and

ITC was a good learning platform

60

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61

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