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
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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
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)
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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
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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.
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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
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
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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
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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.
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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
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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
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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
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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)
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
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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
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CHAPTER -III
RESEARCH OBJECTIVE
RESEARCH METHODOLOGY
RESEARCH DESIGN
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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.
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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.
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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.