Coke Red Guntur

Coca-Cola Company is the world’s leading manufacturer, marketer and distributor of non-alcoholic beverage concentrates and syrups, used to produce nearly 400 beverage brands. It sells beverage concentrates and syrups to bottling and canning operators, distributors, fountain retailers and fountain wholesalers. Coca-Cola was the leading soft drink brand in India until 1977, when it left rather than reveal its formula to the Government and reduce its equity stake as required under the Foreign Regulation Act (FERA) which governed the operations of foreign companies in India.

In the new liberalized and deregulated environment in 1993, Coca-Cola made its re-entry into India through its 100% owned subsidiary, HCCBPL, the Indian bottling arm of the Coca-Cola Company. The main objective of my training was to Design and implement the plan to increase numeric distribution and the RED(Right Execution Daily) Standards of the given territory. I am fortunate enough to get this kind of direct and performance based project objective for my summer training.

I worked hard with my heart and soul to improve the scenario in my territory. First I have listed out problems in our territory and keeping the problems in my mind I gave my recommendation which I discussed with my sales executive for implementation. As a matter of learning I have been able to learn lots of intricacies in sales and distribution of beverage major Coca-Cola. I have also given few suggestions for improvement in my territory. FMCG Sector in India The Indian FMCG industry witnessed significant changes through the 1990s.

Many players had been facing severe problems on account of increased competition from small and regional players and from slow growth across its various product categories. As a result, most of the companies were forced to revamp their product, marketing, distribution and customer service strategies to strengthen their position in the market. Unlike other economy sectors, FMCG share float in a steady manner irrespective of global market dip, because they generally satisfy rather fundamental, as opposed to luxurious needs.

The FMCG sector, which is growing at the rate of 9% is the fourth largest sector in the Indian Economy and is worth Rs. 93000 crores. The main contributor, making up 32% of the sector, is the South Indian region. It is predicted that in the year 2010, the FMCG sector will be worth Rs. 143000 crores. The sector being one of the biggest sectors of the Indian Economy provides up to 4 million jobs. The FMCG sector consists of the following categories: Personal Care- Oral care, Hair care, Wash (Soaps), Cosmetics and Toiletries, Deodorants and Perfumes, Paper products (Tissues, Diapers, Sanitary products) and Shoe care; the major players being; Hindustan Lever Limited, Godrej Soaps, Colgate, Marico, Dabur and Procter & Gamble. •Household Care- Fabric wash (Laundry soaps and synthetic detergents), Household cleaners (Dish/Utensil/Floor/Toilet cleaners).

Air fresheners, Insecticides and Mosquito repellants, Metal polish and Furniture polish; the major players being; Hindustan Lever Limited, Nirma and Ricket Colman. Branded and Packaged foods and beverages- Health beverages, Soft drinks, Staples/Cereals, Bakery products (Biscuits, Breads, Cakes), Snack foods, Chocolates, Ice-creams, Tea, Coffee, Processed fruits, Processed vegetables, Processed meat, Branded flour, Bottled water, Branded rice, Branded sugar, Juices; the major players being; Hindustan Lever Limited, Nestle, Coca-Cola, Cadbury, Pepsi and Dabur •Spirits and Tobacco; the major players being; ITC, Godfrey, Philips and UB Beverage industry in India

Four strong strategic elements to increase consumption of the products of the beverage industry in India are: •The quality and the consistency of beverages needs to be enhanced so that consumers are satisfied and they enjoy consuming beverages. •The credibility and trust needs to be built so that there is a very strong and safe feeling that the consumers have while consuming the beverages. •Consumer education is a must to bring out benefits of beverage consumption whether in terms of health, taste, relaxation, stimulation, refreshment, well-being or prestige relevant to the category. Communication should be relevant and trendy so that consumers are able to find an appeal to go out, purchase and consume. Chain followed from manufacturing to distribution Right Execution Daily (RED) Over the years, CCI had built its strong distribution system consisting of company-owned, franchised and contract manufactures and distributors. With its focus on effective execution, in 2006, CCI introduced ‘Right Execution Daily’ (RED), a distribution plan which boosted the sales of its products in urban markets through efficient brand displays and visibility programmes.

India, being a predominately rural economy and all major MNCs targeting the potential rural markets with their products, CCI was no exception. It made its presence felt in the rural markets of India with its unique marketing and distribution strategies. Since 2006, CCI has been growing consistently posting double digit growth as a result of its effective distribution plans. In pursuit of excellence, CCI implemented ‘Right Execution Daily’ (RED) strategy in 2006. RED helped CCI to post 10%–15% incremental sales annually.

The Coca-Cola Hellenic, fourth-largest bottler of TCCI, highlights the traits of RED in its Annual Report 2008 as, “This programme monitors, at the individual outlet level, how well we implement and maintain our merchandising standards. Furthermore, it helps us identify opportunities to make immediate improvements that support growth for our customers and us. RED is just one part of our efforts to enhance revenue growth opportunities by optimizing the combination of brand, package and price for each consumption occasion. The company’s sales team works with the owners of the outlets to ensure the visibility, availability and activation of the brands. They ensure that retailers maintain hierarchy in displaying brands – for instance, Coke on top, followed by other sparkling beverages such as Thums Up, next the juices such as Nimbu Fresh and Maaza and then Kinley water at the bottom of the visi-cooler. In this regard, a member of the Coke sales force in the context of modern trade, whether it is a small kirana, a bakery or a restaurant explained, “it is important that the brand be visible and appealing to a potential customer.

The Coke force works with retailers to ensure the cooler is in prime position, especially in outlets that exclusively stock only Coca-Cola brands. ” Besides, the approach also ensures placing the signages or hoardings of the brands communicating the offers (such as combo shots) and price messages at the entrance of the store increasing the sales. Distribution Coca-Cola, the world famous and best tasting cola product originated as soda fountain beverage in 1886, in Atlanta, US. 3 TCCC is the largest beverage company in the world with its operations spread in more than 200 countries. It leads the beverage markets in the world benefiting from its broad reach and scale. It markets nearly 500 global brands such as Coca-Cola, Sprite, Fanta, Maaza, etc. , and more than 3,000 beverage products including sparkling cola drinks, juices, sports drinks and energy drinks. 5 With the largest product portfolio, Coca- Cola allows the people across the globe to enjoy its beverages for about 1. 6 billion times a day. The company has been able to create a global reach with local focus through its ‘Coca-Cola System’ strength, consisting of the company, bottling partners and customers.

Coca-Cola manufactures the concentrates, beverage bases and syrups and sells them to the bottling partners. It owns the brands and focuses on marketing the brands to reach the consumers. It works with around 300 bottling partners ranging from international, regional to family-owned operations, responsible for producing, packaging, distributing and merchandising its products worldwide forming the world’s largest beverage distribution system. Its customers are retail stores, restaurants, drug stores, etc. , who in turn sell its products to end consumers.

The bottling partners are the essential entity of Coca-Cola System who produce and distribute the company’s products. The company also has a small size bottling operations of its own; however, its bottling partners do most of the operations. In 2008, about 78% of Coca-Cola’s worldwide unit case volume (volume of cases ) was produced and distributed by bottling partners not owned by company (i. e. , Coca-Cola had no ownership interest or a non-controlling equity interest in bottlers). These bottlers, formed in partnership with the company, work closely with its customers to carry out localized marketing plans.

In its 123 years of operations, TCCC has been serving consumers around the globe applying a Simple formula: provide a moment of refreshment for a very small amount of money – a billion times a day. The company’s presence across geographies, lifestyles and age groups provides tremendous opportunities to expand. The market cycles in different markets help the Company to balance its business. For instance, a challenging market in North America in 2008 was offset with its strong results from the markets of Latin America and Eastern Europe.

In the same year, the emerging markets due to their increasing per capita consumption of have accounted more than half of the company’s unit case volume for the company’s products. Distribution Routes The various routes formulated for distribution of products are as follows: •Key Accounts: The customers in this category collectively contribute a large chunk of the total sales of the Company. It basically consists of organizations that buy large quantities of a product in one single transaction. The Company provides goods to these customers on credit, payments being made by them after a certain period of time i. . either a month of half a month. Examples: Clubs, fine dine restaurants, hotels, Corporate houses etc. •Future Consumption: This route consists of outlets of Coca-Cola products, wherein a considerable amount of stock is kept in order to use for future consumption. The stock does not exhaust within a day or two, they so as to avoid shortage or non-availability of the product stack up instead as and when required stocks. Examples: Departmental stores, Super markets etc. •Immediate Consumption: The outlets in this route are those, which require stocks on a daily basis.

The stocks of products in these outlets are not stored for future use instead, are exhausted on the same day and might run a little into the next day i. e. the products are consumed at a fast pace. Examples: Small sized bars and restaurants, educational institutions etc. •General: Under this route, all the outlets that come in a particular area or an area along with its neighboring areas are catered to. The consumption period is not taken into consideration in this particular route. Distribution System Direct distribution: In direct distribution, the bottling unit or the bottler partner has direct control over the activities of sales, delivery, and merchandising and local account management at the store level. •Indirect distribution: In indirect distribution, an organization which is not part of the Coca-Cola system has control on one or more of the distribution elements (Sales, delivery, merchandising and local account management) Competitors The competitors to the products of the company mainly lie in the non-alcoholic beverage industry consisting of juices and soft drinks.

The key competitors in the industry are as follows: •PepsiCo:The PepsiCo challenge, to keep up with archrival, the Coca-Cola Company never ends for the World’s # 2, carbonated soft-drink maker. The company’s soft drinks include Pepsi, Mountain Dew, and Slice. Cola is not the company’s only beverage; PepsiCo sells Tropicana orange juice brands, Gatorade sports drink, and Aquafina water. PepsiCo also sells Dole juices and Lipton ready-to-drink tea. PepsiCo and Coca-Cola hold together, a market share of 95% out of which 70% is held by Coca-Cola and the rest belongs to Pepsi. Nestle: Nestle does not give that tough a competition to Coca-Cola as it mainly deals with milk products, Baby foods and Chocolates. But the iced tea that is Nestea, which has been introduced into the market by Nestle, provides a considerable amount of competition to the products of the Company. Iced tea is one of the closest substitutes to the Colas as it is a thirst quencher and it is healthier when compared to fizz drinks.

The flavored milk products also have become substitutes to the products of the company due to growing health awareness among people. Dabur: Dabur in India, is one of the most trusted brands as it has been operating ever since times and people have laid all their trust in the Company and the products of the Company. Apart from food products, Dabur has introduced into the market Real Juice that is packaged fresh fruit juice. These products give a strong competition to Maaza and the latest product Minute Maid Pulpy Orange. •Local Drinks: Their share is increasing rapidly as they give more margins to the retailers and they won’t any norms to have there in product in any outlet.

They offer products at relatively less price or some are offering products which are having demand in the market Example: Vijaya cool drinks, Soda Hub etc. Why RED Standards is used? •Coca-cola is a world leader in beverages and has a tradition of implementing unique system of execution for its sales force at the point of sale. •This will help company to directly connect with Consumer by providing them with a wide variety of choices to meet their desire, needs and lifestyles choices. This standard helps at the individual outlet level, how well company implement and maintains merchandising standards. •RED is just one part of company’s efforts to enhance revenue growth opportunities by optimizing the combination of brand, package and price for each consumption occasion. •This set ups the global standards for execution of certain parameters for each retailers and sales force. Problems in the territory •I have done red scoring for 30 outlets across the city and it is around 50, which is below the average red. The Scene on the field was more pathetic and discouraging than papers. •Retailers also prefer to have stock for one day. If there is a delay in stock they are having empty coolers although there sale is good. •Local distributors are facing problems because of super markets. •No motivational elements were given to retailers. •No clarity in offers.

There are around 10 % inactive outlets which are resulting in less RED score •In sufficient margins which is due to recent increase in the electricity prices •Retailers both are selling at more price than the prescribed price. Retailers were completely allured by schemes and discounts of Pepsi and contrary to that they were not getting any thing from Coca-Cola. •Purity of Visi-cooler was a dream in summer. •Some of the rogue retailers were misusing our visi-cooler. •Disappointment in Retailers with our services. •Problem of flexi boards with municipalities. •In some mass localities it is getting difficult to keep one set of RGBs(i.. e 200 ml or 300 ml) which is hampering the RED score •Often change in prices MD Problems •Having less number of MDs is one of the major concern. MDs are over burdened with the work resulted in less RED score •RED assessment is not proper •MDs are complaining that they are not getting enough salary and recognition In Guntur Bus stand and theatre areas are getting less scores Bus Stand area problems:They are not selling 200 ml and 600 ml bottles those outlets are getting scores only from the Boards Action Plan to improve the scenario •Credit policy should be given to retailers who are performing well(like diamond customers or RED score more than 80) and this motivates them. •MDs number should be increased.

So that the present MDs are not over burdened. •Presale should be encouraged for creating an organized supply chain with out any clutter between the retailers, distributors and plant •Strictly following the PJP (permanent journey plan ). •Providing best services available by giving them full range of products, according to availability in agency. •Start giving regular schemes to allure the retailers and gain their confidence. •Immediately addressing the problems of retailers helps in gaining increasing retailer confidence and this also increases trust on us. By taking each outlet as different case with different challenges we set different tactics to deal with them and satisfy them . •Certain outlets were uncomfortable with opening of their Visi-cooler at peak hours or in hot afternoons since this will have a negative impact on their sales. They should be treated separately by not visiting them at peak time. so that I have ample time to make Visi-cooler pure and as per standards. •Fixing a constant price for atleast one month. Recommendations •Company should a lot MDs to specific routes in a way that they are not over burdened. So that they can have good relations with the retailers.

Company should give offer amounts to the distributors with out any delay •Milk based products are the need of the hour as consumers are becoming more health cautious. We can make tie ups with the local manufacturers and release the products under our umbrella. •Alluring schemes must be made available to the retailers since these schemes help in motivating them. •Proper organized communication channel should be established to convey the details of schemes and discounts to the retailers. •Company should take care of grievances redress so that retailers don’t have loss in sales due to any fault in Visi-cooler. Giving regular discounts from the company should motivate outlets, which are showing consistently good results. •Special care should be given to outlets at important locations and they should be motivated regularly and if they are not having our Visi-cooler they should be horizontally expanded. •Order booking system should be encouraged by giving retailers good schemes and discounts if they are giving orders in advance and in bulk. •Employees should be encouraged with good incentives on the basis of performance and work ethics.

Company can pay the electricity bills of retailers at important locations for good performers. MDs should be transfer from one area to another on half yearly or annual basis so that one individual’s relationship with retailers doesn’t hamper the sales and RED Scores. •Special care should be taken in transferring the schemes and discounts to retailers. Numeric Distribution Guntur-1 Outlets-2500 (Approx) Coke-1600 Pepsi-300 Mixed-500 Guntur-2 Outlets-2100(Approx) Coke-1100 Pepsi-500 Mixed-500 Retailers •From the customer point of view, the retailer serves him by providing the goods that he needs in the required assortment, at the required place and time. From an economic standpoint, the role of a retailer is to provide real added value or utility to the customer. India’s Largest retail Chains: 1. PDS: 463,000 2. Post offices: 160,000 3. KVIC: 7,000 4. CSD Stores:3,400 The Canteen Stores Department and the Post Offices in India are also among the largest network of outlets in the country reaching population across the country. If we tie with these guys it increases the visibility and also increases the numeric distribution.

Evolution of Retail chain in India Transition from Traditional to Modern retailing With a share of over 95% of total retail revenues, traditional retailing continues to be the backbone of the Indian retail industry. •Over 12 million small and medium retail outlets exist in India, the highest in any country. •Traditional retail is highly pronounced in small towns and cities with primary presence of neighbourhood “kirana” stores, push-cart vendors, “melas” and “mandis”. •Modern/Organized retailing is growing at an aggressive pace in urban India, fuelled by bourgeoning economic activity. •Increasing number of domestic and international players are setting up base and expanding their business to tap the burgeoning market.

Coca-cola •If we want to increase the sale of coca cola we have to reposition the brand. The general perception of coke is that it is a high-class product. To remove this we have reposition the brand coca-cola in the eyes of the local consumers. Why repositioning of coca-cola? •More than 90% of the present market is traditional market. So we have to target the customers who are in the bottom of the pyramid. They are more in number and it is the untapped market. •We are getting stiff competition from Substitutes like fruit juices and local made drinks. Compared to other ubstitutes our price are less but their share is increasing rapidly as the consumers are becoming more health conscious. •The present trend in the market is consumers prefer milk products compared to preservative drinks although their price is more than double. The other reason is retailers are going towards local products as they are getting more margins. Conclusion In our territory one of the main reason for low RED scores is having less number of Market developers. Some routes are not having MDs due to this the existing MDs are overburdened with work. MDs are having complaints with their assessment.

Many small retailers prefer to have stock for only one day which results in empty freezes if there is a delay in stock which results in less RED scores. In market retailers are confused due to the often change in prices and discount schemes. Some Retailers are having complaints like that they are not getting the key amounts and discount offers in time. To overcome this retailers should be motivated to keep sufficient stock for the next day. Proper organized communication channel should be established to convey the details of schemes and discounts to the retailers. Few are saying the non-availability of desired stocks is a concern for them.

Although we are having a good market share of around 70 % in the town but most of the restaurants, bars and theatres prefer Pepsi because of the margin they give, some retailers are going to Pepsi because of their discount schemes and margins. To overcome this we should provide alluring marketing schemes to the retailers so that they are motivated to have our products in their outlet. Presale should be encouraged for creating an organized supply chain with out any clutter between the retailers, distributors and plant. Milk based products are the need of the hour as the consumers are becoming more health cautious.