Vishal Mega Mart

1

PROJECT REPORT ON

TO ANALYZE THE DISTRIBUTION CHANNEL OF

VISHAL MEGA-MART

SUBMITTED BY

AKANKSHA MISHRA

SUBMITTED IN PARTIAL FULFILLMENT OF THE

DEGREE OF BACHELOR OF BUSINESS

ADMINISTRATION,

UNIVERSITY OF PUNE.

THROUGH

DR. D.Y.PATIL INSTITUTE

OF MANAGEMENT & RESEARCH

PIMPRI, PUNE-18

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DECLARATION

It is hereby, declared that all the facts and figures including

dissertation is a result of my own research and investigations including

formal analysis of entire project work and the same has not been

previously submitted to any examination of this university of anywhere

else.

This declaration will hold good and in my wise belief with full

consciousness.

DATE: -

PLACE: - PUNE AKANKSHA MISHRA

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ACKNOWLEDGEMENT

At the outset, I would like to thank VISHAL RETAIL LTD. for giving

me the approval to do this project in the organization. I am grateful to

MR. PUSHKAR DAS (Asst. Mall Manager) for the moral support,

encouragement and generous assistance.

I thank my study guide, MR. GAURAV PUROHIT (Purchase

Manager) for his encouragement and contribution of time, counsel to me.

I am also thankful to MR. VIKAS SHRIMALI (EDP Executive), for

coordinating the project work and giving me the guidance. This project would

not have been possible without his co-ordination.

I am thankful to many individuals of Vishal Retail Ltd. for the

encouragement and professional assistance. My thanks to those local

transporters who helped me by giving me all information regarding my needs.

I extremely gratitude to RUNU MONDAL (Project Guide) for his

guidance to choose me the topic and give brief idea for making a good project

report.

_________________

AKANKSHA MISHRA

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TABLE OF CONTENTS

S. NO. TOPIC PAGE NO.

1. Executive Summary 6-9

2. Introduction 10-12

3. Company Profile 13-34

4. About Distribution Channels 35-40

5. Review of Literature 41-49

6. Research Methodology 50-60

7. Analysis of Data 61-76

8. Findings

Conclusion

Suggestions

77-81

9. Bibliography 82-83

10. Annexure 84-90

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SECTION -1

"EXECUTIVE SUMMARY"

EXECUTIVE SUMMARY

The objective is to analyze the distribution channel of VMM. The

study is to know about the process of delivering the goods & products to

retail stores. The channel through which the whole process is completed &

the various intermediaries who plays important role to maintain the proper

supply of goods.

The method of data collection used was survey method & the data

collection tool used for the survey was questionnaire. The sample

population consists of the distributor’s outlet who keeps all the documents

and general information about supply & distribution.

RM adopted : Convenient Sampling.

Sampling Element : Local distributors.

Sample Size : 23 Distributors..

In analysis of data section there are following items which are included,

they are:

- SWOT analysis of VRL,

- Present & Future Retail sales in India,

- Graphical representation of Questionnaire.

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Findings were:

The Company has its own manufacturing products except FMCG & Toys

section. Company has its own transportation system. Many distributors are

not satisfied with the payment service of the company. Company purchases

in bulk or in large quantity, that’s why the cost becomes low. When Mall

purchases on Head office level, sometimes they delivered excess stock than

the requirement. There is no action for complaints, suggestions & problems

of salesman, floor manager & even top level of VMM

Conclusion was:

The Company has its own manufacturing products that are why good

quality products are manufactured at low cost. As company is also using its

own transportation, that’s why the transportation cost also becomes low &

the profit becomes high. There is delay in making payment that’s why the

distribution channels is not so effective. Sometimes there is a mistake while

preparing Purchase Order at local level, there is a problem of excess stock of

perishable products on FMCG section There is a demand of FMCG products

is higher in comparison to other products & some of them are perishable, so

company purchases these products at local level.

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Suggestions were:

The Company should take action to improve their payment policy, if

company makes prompt payment to the distributors. As Company receives

excess stock, proper action should be taken by the company to solve out this

problem by reducing the excess stock at every level. There should be some

precautions while preparing the Purchase order to reduce the excess stock of

perishable products. The Company should implement the suggestions given

by the customers & the management in order to improve the services

provided by them.

Annexure is

IT iscalled as the last section of project report which includes:

- Format of questionnaire,

- Any format given by the company,

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SECTION -2

"INTRODUCTION"

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{A} INTRODUCTION TO THE SUBJECT:

A channel of distribution or a distribution system is a key external

resource. It is important with key internal resources like manufacturing,

research etc.

Distribution channels cab be viewed as set of interdependent

organization involved in the process of making a product or services

available for use or consumption. The basic role of distribution channels is

to transform the consistent supply in to assortment of goods that people want

to buy. Manufacturers produce large quantity of similar goods, whereas

consumers usually desire only limited quantity of wide range variety of

goods. This gap is bridge by channels.

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{B} WHY THIS TOPIC?

IMPORTANCE OF DISTRIBUTION CHANNEL:

Distribution channels often require the assistance of others to reach its

target market. A company needs others to help with the distribution of their

product. A company that handles its own distribution functions be in a better

position to exercise control over product sales and potentially earn higher

profits.

While on the surface it may seem to make sense for a company to

operate its own distribution channel (i.e., handling all aspects of distribution)

there are many factors preventing companies from doing so. While

companies can do without the assistance of certain channel members, for

many marketers some level of channel partnership is needed. For example,

marketers who are successful without utilizing resellers to sell their product

(e.g., Dell Computers sells mostly through the Internet and not in retail

stores) may still need assistance with certain parts of the distribution process

(e.g., Dell uses parcel post shippers such as FedEx and UPS). In Dell’s case

creating their own transportation system makes little sense given how large

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such a system would need to be in order to service Dell’s customer base.

Thus, by using shipping companies Dell is taking advantage of the benefits

these services offer to Dell and to Dell’s customers.

SECTIONSECTION - -33

""COMPANY PROFILECOMPANY PROFILE""

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{A} "COMPANY INTRODUCTION":-

It was incorporated on July 23, 2001 under the Companies Act, 1956

as "VISHAL RETAIL PRIVATE LTD". The man behind this company is

Mr. Ram Chandra Agarwal. It was converted to a public limited company

by a special resolution of the members passed at the annual/extra ordinary

general meeting held on November 18, 2005. The fresh certificate of

incorporated consequent on change of name was granted to our Company on

February 20, 2006, by the Registrar of companies, West Bengal at Kolkata.

As of April 2007, it operates 51 retail stores, including 2 stores which

are operated by its franchisees. These 51 stores are spread over about

12,82,000 square feet & are located in 18 states and 39 cities across India.

By the end of March 2007, it'll expand its outlets 61 companies owned

outlets & many franchise operations. Its loyalty programme gives the Indian

consumer of being rewarded every time he makes a purchase at any of its

stores anywhere in the country. Consumers can make purchases at any store

and accumulate points at a central level. These points are redeemable at any

of its stores. He can accumulate points even when he makes a purchase

while traveling and redeem points at any store.

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So no matter where he is in India, he can partake in its loyalty

programme. In its efforts to strengthen its supply chain, it has set up 7

regional distribution centres and an apparel manufacturing plant. It started as

a retailer of ready-made apparels in Kolkata in 2001.

In 2003, it acquired the manufacturing facilities from Vishal Fashions

Private Limited & M/S Vishal Apparels. Currently, it sell ready-made

apparels & a wide range of household merchandise and other consumer

goods such as footwear, toys, watches, toiletries, sports items, crockery, gifts

and novelties. It endeavors to facilitate one-stop-shop convenience for its

customers & to cater to the needs of the entire family. Mr. Ram Chandra

Agarwal has been ranked as the 28th most powerful person in the retail

industry.

Its apparel manufacturing plant is located at Gurgaon, Haryana. For

ensuring efficient supply chain, it has set up 7 regional distribution centres

located around:

- Kolkata (W. Bengal)

- Thane (Maharashtra)

- Jaipur (Rajasthan)

- Ghaziabad (U.P)

- Ludhinana (Punjab)

- Gurgaon (Haryana) & Delhi

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COMPETETIVE STRENGHTS: -

It believed that its primary competitive strengths are:

Understanding of the 'Value Retail' segment,

Supply Chain Mgt.,

Logistics & Distribution network,

Geographical spread,

Identifying new locations,

Private labels,

Information Technology systems, &

Experienced & skilled mgt. team.

ITS STRATEGY : -

It intends to pursue the following strategies in order to consolidate its

position as an operator in the 'Value Retail' segment in India:

Increasing its penetration in the country by leveraging its supply

chain,

Distribution & logistic network,

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Emphasis on backward integration,

Expansion of FMCG,

Procurement from low-cost production centres outside India,

Its category management system is used to plan promotional schemes.

It launches promotional schemes weekly (i.e.-Discount, Buy1 Get1, Combo

Packs, Cross tie-up etc.). Apart from general sales promotion, the category

manager formulates promotional plans for 'Slow Movers'. In addition, to

promote sales, it focuses on layout of the stores & positioning, presentation

& display of merchandise, in order to appeal to the customers.

work force. It has 6,801 employees both employed in its stores as well

as in its manufacturing unit & other facilities. Description is as below:

* According to Age -

AGE NO. OF EMPLOYESS

18-24 3,793

25-35 2,178

35 & Above 830

TOTAL 6,801

*

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Increasing customer satisfaction &

Its base of loyal customers.

SALES PROMOTION & CUSTOMER SERVICE : -

Its category management system is used to plan promotional schemes.

It launches promotional schemes weekly (i.e.-Discount, Buy1 Get1, Combo

Packs, Cross tie-up etc.). Apart from general sales promotion, the category

manager formulates promotional plans for 'Slow Movers'. In addition, to

promote sales, it focuses on layout of the stores & positioning, presentation

& display of merchandise, in order to appeal to the customers.

HUMAN RESOURCE : -

Its H.R policies are aimed towards creating a skilled & motivated

work force. It has 6,801 employees both employed in its stores as well as in

its manufacturing unit & other facilities. Description is as below:

* According to Age -

AGE NO. OF EMPLOYESS

18-24 3,793

25-35 2,178

35 & Above 830

TOTAL 6,801

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* According to Qualification -

QUALIFICATION NO. OF EMPLOYESS

Under Graduate 4,060

Graduate 2,498

Post Graduate 243

TOTAL 6,801

QUALITY CONTROL : -

Its dedicated professional Quality Control team ensures the quality of

its products. Its quality checks start the basic cloth and accessories and end

with its doing a full inspection on the finished items. It believes that Quality

Control is the key to success. Basic goal is to give the customer with the best

quality and value for his money.

INFORMATION TECHNOLOGY SYSTEM : -

It focused on acquisition & implementation of advanced information

technology systems, processes and business applications in order to handle

all stores operations including inventory management & billing. Its office

processes are also computerized which support procurement, supply chain

logistics, distribution centres management & inventory control. All the

locations are connected through company-wide virtual network connection

which helps to efficiently manage its network of outlets throughout the

country.

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Based on its existing I.T system, they are able to generate daily

reports covering the various aspects of its business such as division wise

sales per store, inventory movement & position at stores & distribution

centres & generation of purchase and delivery orders.

In August 2005, they had entered into a software end-user license

agreement with Systems Applications & Products in Data Processing Private

Limited ("SAP India") for grant of a non-exclusive & perpetual license to

their company to use the SAP software, document & other information

related thereto. They have partly implemented their I.T set up & are

currently in the midst of completing the process of upgrading their I.T set up

& have entered into an agreement dated September 6, 2005 with Tata

Consultancy Services Limited for providing I.T services including

implementation of more advanced ERP applications such as SAP, rendering

services inter-alia for MIS on reports related to:

Stock Management,

Receipt Processing,

Picking & Packing,

Project Systems,

Merchandise Assortment Management,

Pricing & Promotion,

Sales Controlling &

Financial Accounting.

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COMPETETION : -

They face competition from other retailers of similar products &

services. These include stand-alone stores in the organized and unorganized

sector, as well as other chains of stores including departmental stores. They

focus on offering their customers a vast variety of products and services

catering to their diverse requirements & needs.

COMMITTEE OF THE BOARD : -

They have constituted the following committees of their B.O.D for

compliance with corporate governance requirements:

- Audit Committee,

- Shareholders/Investors' Grievance Committee &

- Remuneration Committee.

INCENTIVE SCHEMES : -

Latest incentive scheme of VRL is as follows:

90% to 99.99% Target achieved : 5% of Salary.






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160% and Above : 40% of Salary.

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{B} "COMPANY HIERARCHY":-

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BOARD OF DIRECTOR

S

BOARD OF DIRECTOR

S

------------------------------------------------------------------------------------------

"MALL HIERARCHY":-

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Mr. Ram Chandra Agrawal{Chairman, Executive Director & M.D}

Mr. Ram Chandra Agrawal{Chairman, Executive Director & M.D}

Mrs. Uma Agrawal{Executive Director & Whole Time Director)

Mrs. Uma Agrawal{Executive Director & Whole Time Director)

Mr. Surendra Kumar Agrawal{Executive Director & Whole Time

Director}

Mr. Surendra Kumar Agrawal{Executive Director & Whole Time

Director}

Mr. Bharat Jain{Independent Director}

Mr. Bharat Jain{Independent Director}

Mr. Rakesh Agrawal{Independent Director}

Mr. Rakesh Agrawal{Independent Director}

Mr. Jay Prakash Shukla{Independent Director}

{C} "PRODUCTS RANGE":-

The main 5 categories or sections are as follows:

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MALLMANAGER

FLOOR MANAGER

SUPPORT FUNCTION

Asst. Floor

Manager

Asst. Mall

Manager

Purchase Manager E.D.P

Salesman

1) HOME FURNISHING :

Drawing Room Bedroom

Door Mat Bed Sheet

Carpet Pillows

Curtains Pillow Cover

Kitchen Bathroom

Aprin Bath Mats

Kitchen Napkin Towel Gift Sets

2) FOOD MART :

Food Non-Food

Staples Soaps

Biscuits Hair Oil

Health Drinks Washing Powder

Papad Fairness Cream

Sugar (Own Manufacture) Detergent Powders

Tea/Coffee Hair Colour

Edible Oil Face Wash

Maggi Detol(Soaps & Liquid wash)

Flour Wrap

Snacks Napkins

ChocolatesShampoo

3) SPORTS & FITNESS :

INDOOR GAMES OUTDOOR GAMES

Basket Ball Cricket Bat

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T.T. Bat Football

Boxing Kit Lawn Tennis

Swimming Costumes Tennis Racket

Water Ball Tennis Ball

4) BOYS & GIRLS ACCESSORIES :

BOYS :

Upper Lower

Shirt Casual Jeans

Shirt Formal Cotton Trouser

Ethnic & Sports Winter Wear

Night Suits Suit

T-Shirts Blazer

Dupatta Windcheater

Sherwani Jacket

GIRLS :

Upper Lower

Kurta Pants Jeans

Skirt Top Capri

Ethnic Winter Wear

Nighty Jackets

Lancha Stawl

Sharara Blazer

Salwar SuitTrack Suit

5) HOUSEHOLD:

Acrylic Ware Copper Steel

Dinner Set Jug Cake Server

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Home Aids Pressure Cooker Non Stick

Floor Wiper Cooker Handi

Sanitary Brush Pressure Pan Dosa TawaGeneral Plastic Goods Electrical App. Bone ChinaCoffee Mug Chopper Soup Set

Bucket Microwave Oven Dessert Set

Glass Ware Thermo Ware Porcelain

Cup Tiffin Cup & Saucer

Lemon Set Container

NOTE:

In order to maximize the value that the customers derive in spending on

goods bought in their stores, they undertake variety of measures to provide

them quality goods at reasonable price like in-house production of garments,

procurements of goods directly from he manufacturers & customized

products mix at their stores depending on the regional customer behavior &

preferences. They have a number of in-house brands (these are called private

labels) such as:

- Zepplin

- Paranoia

- Chlorine,

- Kittan Studio,

- Famenne,

- Fleurier Women & Rousea

These all brands contributing 9.68% of their income in Financial Year

2007. It helps in their brands building exercise as well as to improve

margins.

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{D} "COMPANY WORKING STYLE IN THIS

SUBJECT":-

PURCHASE PROCESS :

VRL has a policy to purchase goods & products on two different levels,

as VRL also manufactures its own products like Home appliances, Apparels,

Women accessories, Pulses etc.

So these above explained products are purchased by each store on HEAD

OFFICE LEVEL. So the process of purchase of products on H.O level is

under mentioned:

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PURCHASE ON H.O LEVELPURCHASE ON H.O LEVEL

Merchandiser

Warehouse In charge

Creation of Packages

Requisition form

Stock to central w.house

Inbound Entry/Delivery

Outbound delivery

Stock-in by Software

Received by Store

Goods Transportation

Gate Entry

1. Requisition Form: - It is prepared by various floor managers, and then

these products which are required received to H.O, then they send the

requirements through its (VRL’s) own transportation services. In this way,

whatever requirements are received from various floors are to be sent to H.O

& then they supplied required goods to those particular outlets.

2. Merchandiser: - Whatever requirements received at H.O level, all are

fulfilled by the merchandisers according to category. They collect the

requirements & then send to warehouse incharge. These warehouse incharge

works on product category, so they collect & send the requirements to the

central warehouse. These merchandisers work according to the product’s

category.

3. Stock to central warehouse: - It receives the requirements from various

warehouses which work according to various products’ category. In this

way, various category like FMCG products, home appliances, men’s

apparels & all other categories are collected together & then after dispatch to

the particular outlets. So, this central warehouse supplies according to needs.

4. Packages for showroom: - As central warehouse receives the various

requirements from different warehouses, then all products are packed in

aluminum boxes. These boxes are transported through VRL own

transportation services at the particular outlet.

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5. Outbound delivery for stores: - As all the required products are packed

in boxes, the outbound entry is done at central warehouse after outbound

entry these boxes are dispatched & then transported to various outlets.

6. Goods Transportation: - As all outbound delivery done & goods

properly dispatched, then after only the transportation is done to the various

outlets.

7. Received by Store: - After above procedure is completed finally goods

received by the store, they check all the formalities regarding transportation

& about the received goods. On this level various formalities are done at

store level regarding the goods receivable procedure.

8. Gate Entry: - Just after reaching the goods at outlet, first of all the gate

entry regarding to the goods receivable is done & goods are also checked

whether they are properly received or not.

9. Inbound Entry: - As goods received by the particular outlet, gate entry is

done after this inbound entry is done in respect to whatever goods are

received. They check all the documents regarding to transportation of goods,

how much quantity, how many boxes & what products are received are

checked.

10. Stock-in by Software: - Then after, as the goods are manually received

by the store & as all inbound entries are done the stock-in entries through

software called SAP is done. In other words whatever goods are received

manually is should be entered in software.

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After completing whole process of goods receivable the goods are

displayed for sale. In this way, the purchase procedure on H.O level is

completed.

The second procedure is of LOCAL LEVEL. It is as follows:

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PURCHASE ON LOCAL LEVEL

Purchase Order

Requirements to Vendor

G.R.C

Requisition form

Gate Entry

1. Requisition Form : - It is prepared by various floor managers, and

then these products which are required received to H.O, then they

send the requirements through its (VRL’s) own transportation

services. In this way, whatever requirements are received from

various floors are to be sent to H.O & then they supplied required

goods to those particular outlets.

2. Purchase Order (P.O): - These are prepared only when goods are

purchased through local vendors. The P.O consists of:

Vendor

Purchasing Org.: VRL

Purchasing Group: SER for services

Company Code: VRL

Account assignment Category: K (Cost Center)

Item Category: D (Services)

Article Short text: description of Type of service

PO quantity: 1

Order unit: au (activity unit)

Merchandise Category: Services

Site: name of site where we want services.

3.Requirements to Vendors: - As the P.O is prepared, it is send to the

concerned vendors & then he sends the required goods to the store

according to the P.O information.

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4. Gate Entry : - As vendor sends the requirements, the goods are

received & gate entry is done before goods entered into the store.

5. Goods Received Challan: - Basically it’s a document which is filled

at the time of received of goods by software (SAP). It contains the good’s

description such as quantity, rate, brand etc.

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DOCUMENTATION :

There are 2 types of transportation:

- Within the state,

- From one state to another state.

a) Documents which are required while transportation within the state are

as below:

- Bill of goods,

- RST & CST number &

- Challan.

b) Documents which are required while transportation from one state to

another are as follows:

- Bill,

- Form no. 18 (Sales Tax),

- TIN no.,

- Builty,

- Challan &

- Labor charges receipt.

Contents in documents:

- Builty: Description of consignor,

Description of consignee &

Description of material.

- Challan: Fair &

Freight.

- Labor Charges: These are varies according to materials (whether it is

heavy or domestic)

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""ABOUT DISTRIBUTIONABOUT DISTRIBUTION

CHANNELSCHANNELS""

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The distribution channel:-Frequently there may be a chain of intermediaries; each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user. This process is known as the 'distribution chain' or the 'channel.' Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user.

ChannelsA number of alternate 'channels' of distribution may be available:

Selling direct, such as with an outbound sales force or via mail order, Internet and telephone sales

Agent, who typically sells direct on behalf of the producer

Distributor (also called wholesaler), who sells to retailers

Retailer (also called dealer or reseller), who sells to end customers

Advertisement typically used for consumption goods

Distribution channels may not be restricted to physical products alone. They may be just as important for moving a service from producer to consumer in certain sectors, since both direct and indirect channels may be used. Hotels, for example, may sell their services (typically rooms) directly or through travel agents, tour operators, airlines, tourist boards, centralized reservation systems, etc.

There have also been some innovations in the distribution of services. For example, there has been an increase in franchising and in rental services - the latter offering anything from televisions through tools. There has also been some evidence of service integration, with services linking together, particularly in the travel and tourism sectors. For example, links now exist between airlines, hotels and car rental services. In addition, there has been a significant increase in retail outlets for the service sector. Outlets such as estate agencies and building society offices are crowding out traditional grocers from major shopping areas.

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Channel members

Distribution channels can thus have a number of levels. Kotler defined the simplest level that of a direct contact with no intermediaries involved, as the 'zero-level' channel.

The next level, the 'one-level' channel, features just one intermediary; in consumer goods a retailer, for industrial goods a distributor. In small markets (such as small countries) it is practical to reach the whole market using just one- and zero-level channels. hoy hoy

In large markets (such as larger countries) a second level; a wholesaler for example, is now mainly used to extend distribution to the large number of small, neighborhood retailers or dealers.

In Japan the chain of distribution is often complex and further levels are used, even for the simplest of consumer goods.

In Bangladesh Telecom Operators are using different Chains of Distribution, especially 'second level'.

In IT and Telecom industry levels are named "tiers". A one tier channel means that vendors IT product manufacturers (or software publishers) work directly with the dealers. A one tier / two tier channel means that vendors work directly with dealers and with distributors who sell to dealers. But the most important is the distributor or wholesaler.

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The internal market:-

Many of the marketing principles and techniques which are applied to the external customers of an organization can be just as effectively applied to each subsidiary's, or each department's, 'internal' customers.

In some parts of certain organizations this may in fact be formalized, as goods are transferred between separate parts of the organization at a `transfer price'. To all intents and purposes, with the possible exception of the pricing mechanism itself, this process can and should be viewed as a normal buyer-seller relationship. The fact that this is a captive market, resulting in a `monopoly price', should not discourage the participants from employing marketing techniques. Less obvious, but just as practical, is the use of `marketing' by service and administrative departments; to optimize their contribution to their `customers' (the rest of the organization in general, and those parts of it which deal directly with them in particular). In all of this, the lessons of the non-profit organizations, in dealing with their clients, offer a very useful parallel.

Channel decisions:- Channel strategy

Product (or service)<>Cost<>Consumer location

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Managerial concerns:-

The channel decision is very important. In theory at least, there is a form of trade-off: the cost of using intermediaries to achieve wider distribution is supposedly lower. Indeed, most consumer goods manufacturers could never justify the cost of selling direct to their consumers, except by mail order. Many suppliers seem to assume that once their product has been sold into the channel, into the beginning of the distribution chain, their job is finished. Yet that distribution chain is merely assuming a part of the supplier's responsibility; and, if they have any aspirations to be market-oriented, their job should really be extended to managing all the processes involved in that chain, until the product or service arrives with the end-user. This may involve a number of decisions on the part of the supplier:

Channel membership

Channel motivation

Monitoring and managing channels

Channel membership:-

Intensive distribution - Where the majority of resellers stock the 'product' (with convenience products, for example, and particularly the brand leaders in consumer goods markets) price competition may be evident.

Selective distribution - This is the normal pattern (in both consumer and industrial markets) where 'suitable' resellers stock the product.

Exclusive distribution - Only specially selected resellers or authorized dealers (typically only one per geographical area) are allowed to sell the 'product'.

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Channel motivation

It is difficult enough to motivate direct employees to provide the necessary sales and service support. Motivating the owners and employees of the independent organizations in a distribution chain requires even greater effort. There are many devices for achieving such motivation. Perhaps the most usual is `incentive': the supplier offers a better margin, to tempt the owners in the channel to push the product rather than its competitors; or a competition is offered to the distributors' sales personnel, so that they are tempted to push the product. Dent defines this incentive as a Channel Value Proposition or business case, with which the supplier sells the channel member on the commercial merits of doing business together. He describes this as selling business models not products.

Monitoring and managing channels:-

In much the same way that the organization's own sales and distribution activities need to be monitored and managed, so will those of the distribution chain.

In practice, many organizations use a mix of different channels; in particular, they may complement a direct sales force, calling on the larger accounts, with agents, covering the smaller customers and prospects.

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""REVIEW OFREVIEW OF

LITERATURELITERATURE""

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WHAT IS RETAILING ?

“Retailing can be defined as a set of business activities that adds value to

the products & services sold to the final consumers for their personal, family

or household use”.

From the marketers point of view: It can be defined as a set of marketing

activity designed to provide satisfaction to the end consumers & profitably

maintain the customer base by continuous quality improvement across all

areas concerned with selling goods & services.

Retailing Involves :

- Understanding the needs of customers,

- Developing goods assortment of merchandise,

- Displaying the merchandise in an effective manner so that consumers

find it easy & attractive to buy.

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BENEFITS OF RETAILING :

It plays major role in transfer of goods & services from the manufacturer

to the end consumer. In this process, retailers deliver many benefits to

customers, manufactures & wholesalers.

a) Benefits to customers :

- Breaking bulk,

- Providing assortment(variety),

- Holding inventory,

- Providing after sales services,

- Providing information.

b) Benefits to Manufacturers & Wholesalers :

Retailers provide the Retailing can be defined as a set of business

activities that adds value to the products & services sold to the final

consumers for their personal, family or household use”.

From the marketers point of view: It can be defined as a set of marketing

activity designed to provide satisfaction to the end consumers & profitably

maintain the customer base by continuous quality improvement across all

areas concerned with selling goods & services.

Retailing Involves :

- Understanding the needs of customers,

44

- Developing goods assortment of merchandise,

- Displaying the merchandise in an effective manner so that consumers

find it easy & attractive to buy.

It plays major role in transfer of goods & services from the manufacturer

to the end consumer. In this process, retailers deliver many benefits to

customers, manufactures & wholesalers.

- Breaking bulk,

- Providing assortment(variety),

- Holding inventory,

- Providing after sales services,

- Providing information.

c) Benefits to Manufacturers

- manufactures with great revenues, which could be re-invested in

production.

- Retailers gather information regarding taste & preferences of

customers.

- Retailers provide feedback on the goods & services.

- They help manufactures to make modification to the existing products

or launch new products to satisfy needs of customers.

45

WHAT IS DISTRIBUTION CHANNEL ?

A channel of distribution or a distribution system is a key external

resource. It is important with key internal resources like manufacturing,

research etc.

Marketing channels cab be viewed as set of interdependent

organization involved in the process of making a product or services

available for use or consumption. The basic role of marketing channels is to

transform the consistent supply in to assortment of goods that people want to

buy. Manufacturers produce large quantity of similar goods, whereas

consumers usually desire only limited quantity of wide range variety of

goods. This gap is bridge by channels.

WHY MARKETING NEED INTERMEDIATARIES ?

Manufacturers don’t always need marketing intermediaries to sell their

goods to consumer and industrial markets.

Intermediaries perform certain functions better than most manufacturers.

These functions include transportation, storage, selling, advertising, and

relationship building.

Companies often outsource distribution to others.

BROKERS are marketing intermediaries who bring buyers and sellers

together and assist in negotiating an exchange, but do not take title to the

goods.

46

DISTRIBUTION DECISIONS ?

Product decisions may be the most important of all marketing decisions

since these lead directly to the reasons (i.e., offer benefits that satisfy needs)

why customers decide to make a purchase. But having a strong product does

little good if customers are not able to easily and conveniently obtain it.

With this in mind we turn to the second major marketing decision area –

distribution.

Distribution decisions focus on establishing a system that, at its basic

level, allows customers to gain access and purchase a marketer’s product.

However, marketers may find that getting to the point at which a customer

can acquire a product is complicated, time consuming, and expensive. The

bottom line is a marketer’s distribution system must be both effective (i.e.,

delivers a good or service to the right place, in the right amount, in the right

condition) and efficient (i.e., delivers at the right time and for the right

cost). Yet, as we will see, achieving these goals takes considerable effort.

Distribution decisions are relevant for nearly all types of products. While

it is easy to see how distribution decisions impact physical goods, such as

laundry detergent or truck parts, distribution is equally important for digital

goods (e.g., television programming, downloadable music) and services

(e.g., income tax services). In fact, while the Internet is playing a major role

in changing product distribution and is perceived to offer more opportunities

for reaching customers, online marketers still face the same distribution

issues and obstacles as those faced by offline marketers.

47

In order to facilitate an effective and efficient distribution system many

decisions must be made including (but certainly not limited to):

Assessing the best distribution channels for getting products to

customers

Determining whether a reseller network is needed to assist in the

distribution process

Arranging a reliable ordering system that allows customers to place

orders

Creating a delivery system for transporting the product to the

customer

For tangible and digital goods, establishing facilities for product

storage

48

TYPES OF CHANNEL MEMBERS :

Channel activities may be carried out by the marketer or the marketer

may seek specialist organizations to assist with certain functions. We

can classify specialist organizations into two broad categories:

resellers and specialty service firms.

Resellers

These organizations, also known within some industries as intermediaries,

distributors or dealers, generally purchase or take ownership of products

from the marketing company with the intention of selling to others. If a

marketer utilizes multiple resellers within its distribution channel strategy

the collection of resellers is termed a reseller network. These organizations

can be classified into several sub-categories including:

Retailers – Organizations that sell products directly to final

consumers.

Wholesalers – Organizations that purchase products from suppliers,

such as manufacturers or other wholesalers, and in turn sell these to

other resellers, such as retailers or other wholesalers.

Industrial Distributors – Firms that work mainly in the business-to-

business market selling products obtained from industrial suppliers.

49

Specialty Service Firms

These are organizations that provide additional services to help with the

exchange of products but generally do not purchase the product (i.e., do not

take ownership of the product):

Agents and Brokers – Organizations that mainly work to bring

suppliers and buyers together in exchange for a fee.

Distribution Service Firms – Offer services aiding in the movement of

products such as assistance with transportation, storage, and order

processing.

Others – This category includes firms that provide additional services

to aid in the distribution process such as insurance companies and firms

offering transportation routing assistance.

50


""RESEARCHRESEARCH

METHODOLOGYMETHODOLOGY""

51

DEFINITION OF RESEARCH:

According to Clifford Woody “Research comprises defining the

problems, formulating hypothesis, collecting organizing & evaluating

data, making deductions and reaching conclusion & testing the

conclusions to determine whether they fit the formulating hypothesis.”

OBJECTIVE OF THE RESEARCH :

There are various objectives of the research, they are follows:

- To gain familiarity with a phenomenon or to achieve new insights into

it.

- To show accurately the characteristics of a particular individual,

situation.

- To determine the frequency with which something occurs or

associated.

- To test a hypothesis of a casual relationship between variables.

52

RESEARCH PROCESS :

53

PROCESS

Developing the research plan

Collection of data

Research findings

Define the problem & research objective

Analyze the data

(i)Defining the Problem and the Research Objective:The research objective

states what information is needed to solve the problem. The objective of the

research was to derive the comparison between VRL & other retailers.

ii) Developing the Research Plan: Once the problem is identified, the next

step is to prepare a plan for getting the information needed for the research.

The present study adopted the exploratory approach wherein there was a

need to gather large amount of information before making a conclusion.

iii) Collection and Sources of data: Market research requires two kinds of

data, i.e., Primary Data and Secondary Data. Data gathering involved the

usage of both primary and secondary data though there was an extensive

usage of primary data. Well-structured questionnaire was prepared for the

customers. There were personal interview surveys mostly by cold calling

(door-to-door) surveys. The questionnaires contained both open-ended and

close-ended questions. Here, open-ended questions were more useful as it

was an exploratory research that was conducted wherein the main objective

was to get an insight into how people think rather than measuring how many

people think in a particular way. Secondary data was collected from various

journals, books and web sites.

54

iv) Analyze the Collected Information: This involved converting raw data

into useful information. It involved tabulation of data and using statistical

measures on them for developing frequency distributions and calculating the

averages and dispersions.

v) Report research findings: This phase marked the culmination of the

marketing research effort. This report with the research findings is a formal

written document. The research findings and personal experience were used

to propose the recommendations to develop the services of VRL.

55

B. Data Collection Methods:

All data sources available to the researcher can be classified as either

Secondary

Primary.

Primary Data can be collected through :

Survey,

Experimentation,

Observation,

Focused group interview &

Projected technique.

Secondary Data can be collected through :

Company’s Literature,

Annual Reports,

Sales Reports,

Magazines,

Journals,

Legal Documents &

Government Gazettes.

56

RESEARCH METHODOLOGY ADOPTED FOR THE STUDY

RM adopted for the study was Convenient Sampling. Research

design refers to plan, structure and strategy on which the researcher has

to work. In other words we can say that a research design is a blue print

of a research. It lays down the methods and procedures for collection of

requisite information and its measurement and analysis with a view to

arriving at certain meaningful conclusions at the end of proposed study.

After setting the research design the next step is of data collection. To

collect the relevant data we have to keep in mind two aspects –

determining relevant data source and designing data collection form

Filling up of questionnaire from the distributors and recorded the

responses in the designed schedule for further analysis and processing.

PROCESSING AND ANALYSIS OF DATA : -

This step includes prepare questionnaire and processing of collected

data. The schedules are required to be edited during the survey for

necessary corrections. After the survey was completed they are required

to be checked again for completeness, accuracy and uniformity.

57

LIMITATIONS OF THE STUDY :

There are some limitations regarding this project, which are as

follows:

- VRL is using its own transportation system from Head Office level

(New Delhi), so the mall was unable to provide data regarding the

distribution of the company.

- As only selected FMCG products are purchased at local level so there

are limited distributors.

- No particular department at the mall level to provide proper

information regarding distribution.

- Data collection is limited due to close-ended questionnaire.

- As Head Office is situated at New Delhi, so information is collected

from local distributors only.

58

SAMPLE DESCRIPTION :

Convenient sampling was chosen as the sample selection procedure. The

sample size was taken to be as 23 existing distributors. 3-4 distributors were

interviewed individually everyday and asked to fill the questionnaires. These

interviews and questionnaires were mainly aimed at 4 things:

a) To assess perception of the existing distributors.

b) To get some idea about the image of VRL in the minds of the existing

distributors.

Convenience Sampling :-

Convenience sampling, as the name implies, is based upon the researcher

who is to select a sample. This type of sampling is also called as accidental

sampling as the respondents in the sample are included in it merely on

account of their being available on the spot where the survey is in progress.

Sampling units- Who are to be surveyed? The marketing researcher

must define the target population that will be sampled.

Sample size- How many people should be surveyed? Large samples give

more reliable results than small samples. However, it is not necessary to

sample the entire target population

Field Area- It is geographical area under which the research is being

done.

59

Convenient sampling method was used. It was the best sample selection

procedure as individual distributors were chosen and requested for an

interview and filling of the questionnaire. Sample size of 23 distributors was

taken so that the conclusion is not biased and care was taken while getting

the questionnaire filled so that the distributors does not misunderstand the

question and check the option that is not applicable.

60

METHOD OF DATA COLLECTION IN SURVEY :

Here, in project the method of data collection is as follows:

Primary Data :

- Questionnaire by which various questions were asked to distributors

to know about their perception (It is attached with annexure).

Secondary Data :

- Company’s bulletin through which general information was taken

about the company. (It is mention in bibliography) &

- Internet.

Sampling Element : Various Distributors.

Sampling Method : Convenience Sampling was taken because

some

distributors were not interested to discuss

about their

policy. Their response was not positive.

Sample Size : 23 Distributors.

61


""ANALYSIS OFANALYSIS OF

DATADATA""

62

SWOT ANALYSIS OF COMPANY :

SWOT MEANS:

S = STRENGTH,

W = WEAKNESS,

O = OPPRTUNTIES,

T = THREATS. HERE S’

‘W’ IS INTERNAL

‘T’ IS EXTRNAL ELEMENTS FOR ANY COMPANY.

a) STRENGTH:

First of all it is a part of Vishal Retail Ltd. capital and its capital is

very huge.

Its return is very high compare to other companies in retail sector

because of its huge capital.

Company goodwill is very strong in market.

Its products are flexible enough according to need of customers.

Its management and working team is also very strong.

Its working process is very fast.

Due to huge capital, purchasing power is also strong in comparison

to other retailers.

b) WEAKNESS:

Local or rural people are not very much aware about Vishal Mega-

Mart.

63

c) OPPORTUNITIES:

Now a days retail sector is on boom in India so it is very good

opportunities for company in this sector.

Its very good opportunities to growth in this sector because of

higher returns on its products.

d) THREATS:

Now days there are many competitors in this sector.

Other companies are also offering same or high benefits.

64

-----------------------------------------------------------------------------------------------------------

RETAIL SALES IN INDIA :

The figure explains about the retail sales in India below:

NOTE: Above figures are indicated in Rs. Crore .

ANALYSIS:

- Above graph denotes about the present & future sales in India by

various retailers.

- It shows a regular increase in retail sales year-by-year.

- It also defines that there is only increase in sales in future period.

65

ORGANIZED SECTOR SHARE IN INDIA :

FIELD SHARE

Clothes & Textiles 36%

Watch & Jewellery 17%

Food & Grocery 11%

Footwear 13%

Durables 10%

Others 10%

ANALYSIS:

- This graph denotes shares of various sectors.

- It mentions how much expenditure done by an individual out of

various sectors.

- On this basis, clothes & textiles have the highest share whereas

durables & others are comparatively lowest.

GRAPHICAL PRESENTATION OF QUESTIONNAIRE

66

1) What is your promotional scheme for the company?

OPTIONS PERCENTAGE NO. OF

DISTRIBUTORS

Salesmen’s visit 48% 11

Advertisement 21% 5

Others 31% 7

Sample size: 23 Distributors

Analysis:

- Most of the distributors opine that salesmen’s visit is more effective

tool for the promotion.

- While only 21% prefers advertisement.

- But 31% prefers various tools like visit of distributors, frequent

telecommunication etc

2) What discount policies have you adopted for the company?

67


DISTRIBUTORS

Cash Discount 18% 4

Quantity Discount 47% 11

Regular Order 35% 8

Sample Size: 23 Distributors

Analysis:- Since company purchases in bulk or huge quantity, that’s why the

distributors mostly provide quantity discounts.

- 35% of the distributors provide discounts if regular Orders are placed by the company

- Only 18% of the distributors give cash discount to the company.

3) What is the scheduling for delivery to the company?

68


DISTRIBUTORS

As per demand 54% 12

Regular basis 33% 8

Others 13% 3

Sample size: 23 Distributors.

Analysis:

- Large group of distributors delivered on the basis of demand of the

company.

- 33% prefers the delivery on the regular basis.

- As there is flexibility in contracts & transactions sometimes the

delivery is done on that basis itself

4) On which basis schemes & offers are provided to the company?

69


Analysis:

- The distributors offer schemes to the company mostly for their bulk

purchasing as they required the products in large quantity.

- Sometimes the schemes & offers are provided on regular basis, it

depends on the transactions done by the company.

- Very few distributors allow offers & schemes on the payment service.

70


DISTRIBUTORS

Bulk Purchase 63% 14

Regular Order 28% 6

Payment 9% 3

5) Is there any formal/informal meeting with the company?


DISTRIBUTORS

Weekly 13% 3

Monthly 61% 14

Quarterly 26% 6


Analysis:

- Only few distributors prefer weekly meetings because it is not

convenient for both the company & distributor.

- But very high % of distributors prefers monthly meetings because it

maintains the relation between both of the parties.

- On the other hand 26% distributors prefer the quarterly meetings to

discuss the policies & their personal opinions.

71

6) What customer’s feedback do you have regarding your product?OPTIONS PERCENTAGE NO. OF

DISTRIBUTORS

Quality products 40% 9

Compitible Rate 47% 11

Non-Acceptable 13% 3


Analysis:

- The distributors provide quality products to the company to maintain

the positive image.

- Whereas 47% distributors provides products on compitible rates as

there is very strong competition in the local market.

- But only few or less distributors are facing the problem of delivering

the non-acceptant products to the company.

72

7) What is the most preferable method for placing an order?


DISTRIBUTORS

Ready Stock 35% 8

Pre-sale 57% 13

Others 8% 2

Sample Size: 23 Distributors.

Analysis:

- It is surveyed that 35% distributors prefers ready stock delivery.

- Mostly distributors prefer Pre-sale delivery which is 57% because it is

more convenient for them to supply the required needs.

- Only few distributors opt for others like telephonic orders , mail etc

which is only 8%

73

8) Are the products available on time/demand?


DISTRIBUTORS

Yes 73% 17

No 27% 6

Sample Size: 23 Distributors.

Analysis:

- Here it is found that 73% distributors claims that they deliver the

products on time. They are providing the prompt service to the

company.

- 27% of the distributors have failed to make prompt deliveries because

of the various reasons which are mentioned.

74

9) If No, then what are the reasons?


DISTRIBUTORS

Shortage of product 46% 11

Source problem 16% 4

Salesmen’s visit 38% 8


Analysis:

- The main reason behind failure of prompt delivery is the shortage of

the products from the distributor which is 46%

- Due to infrequent visit of salesman the distributor faces problem in

delivering the products

- 16% of the distributor faces problem regarding unavailability of the

sources.

75

10) What is the mode of payment by the company?


DISTRIBUTORS

Postpaid 73% 17

Prepaid 27% 6

On the spot 0% Nil


Analysis:

- 73% of the company prefers postpaid payment which means making

payment only after the delivery of goods been made.

- In case of bulk purchasing the company has to made advance

payment.

76

- It is also found that the company doesn’t make on the spot payment.

11) Are you satisfied with the company’s policies?


DISTRIBUTORS

Yes 77% 18

No 23% 5


Analysis:

- From the survey it is found that 77% of the distributors are satisfied

from the company.

77

- 23% of the distributors are not satisfied with the company due to the

irregularity of making payment.


""FINDINGFINDING

SUGGESTIONSUGGESTION

CONCLUSIONCONCLUSION""

78

A} OBSERVATION & FINDINGS:

Various observation & findings are as follows:

Manufacturing : The Company has its own manufacturing products

except FMCG & Toys section. Thus the own manufactured product

are transported from Head office.

Transportation System : Company has its own transportation system,

that’s why the cost of products is lower than local market.

Payment : As many distributors are not satisfied with the payment

service of the company, thus sometimes conflicts arise between both

the parties.

Purchase : The Mall purchases products on 2 levels:

- Head office level &

- Local level.

Type of Purchase : As Company purchases in bulk or in large

quantity, that’s why the cost becomes low & it benefits the company

in sales point of view.

79

Excess Stock : When Mall purchases on Head office level, sometimes

they delivered excess stock than the requirement.

Payment Policy : Basically, Company prefers post-paid basis for

making the payment to the vendors. So, first payment is clears from

Head office then they send cheque to the company in the favor of

distributors. This procedure takes long time.

Suggestions & Implementation : There is no action for complaints,

suggestions & problems of salesman, floor manager & even top level

of VMM from board level.

Delivery : Company prefers delivery according their need or demand,

so there is no problem of excess stock at local level purchase.

80

{B} CONCLUSION:

There are various points regarding conclusive points, they are as

follows:

The company has its own manufacturing products that are why good

quality products are manufactured at low cost. As company is also using its

own transportation, that’s why the transportation cost also becomes low &

the profit becomes high.

As the distributors are not satisfied with the payment system of the

company & there is delay in making payment that’s why the distribution

channels is not so effective. As there is problem of excess stock at mall, the

warehousing is also negatively effected.

Sometimes there is a mistake while preparing Purchase Order at local

level, there is a problem of excess stock of perishable products on FMCG

section.

There is a demand of FMCG products is higher in comparison to other

products & some of them are perishable, so company purchases these

products at local level.

As there is no implementation for suggestions given by the

management & customers, so company is lacking in some areas. The mode

81

of payment is time consuming, so company is facing dissatisfaction from

distributor’s side.

{C} SUGGESTIONS:

From the above project report, there are various suggestions for the

company, which are as follows:

Payment Policy : The Company should take action to improve their

payment policy, if company makes prompt payment to the

distributors, it’ll benefit them to have effective distribution system &

relationship with distributors.

Stock : As Company receives excess stock, proper action should be

taken by the company to solve out this problem by reducing the

excess stock at every level.

Precautions : There should be some precautions while preparing the

Purchase order to reduce the excess stock of perishable products. It’ll

also help in reducing the misunderstanding between distributor & the

company.

Implementation : The Company should implement the suggestions

given by the customers & the management in order to improve the

services provided by them.

82


“BIBLIOGRAPHY”“BIBLIOGRAPHY”

83

BOOKS:-

(1)C.R.KOTHARI, research methodology,2nd edition,New

age international (p) ltd. Publishers,2004.

(2)Retail Management,ICFAI centre for management &

research,2003.

(3)M.V. Kulkarni,physical distribution management,3rd

edition,2002,everest publishing house.

WEBSITES:-

(1)WWW.WIKEPEDIA.COM

(2)WWW.vrl.org

AUTHORS:-

(1)VRL’s yearly bulletin

84

http://WWW.vrl.org/

http://WWW.WIKEPEDIA.COM/


“ANNEXURE”“ANNEXURE”

85

{A} FORMATS:

1) PURCHASE ORDER: (Format)

86

Select Vendor

Select Company Code: VRL

Select Purchase Org. : VRL

Select Purchase

Group: Like (004)

2) GOODS RECEIPT AGAINST P.O:

GOODS RECEIPT AGAINST POT Code: MB01

87

Posting date: This date will come as default when we are posting GR

Document date : This date will come as default when we are creating this document (GR)

3) GOODS RETURN CHALLAN: (Format)

88

Reason for Movement: Select the reason of movement.

4) PAYMENT VOUCHER:

PAYMENT VOUCHER

Dr. Date

Vendor No.

Vendor Name

Vendor Address

AMOUNT - -

Cr.

Bank

City

Paying Co. Code

Cheque No.

AMOUNT - -

Prepared by: ______________

Authorized sign______________

Received Sign: ______________

Enclosures:

- Cheque,

- Purchase Order,

- Bill of Vendor.

89

{B} QUESTIONNAIRE:

1) What are your promotional schemes for the company?

a) Salesman’s visit b) Advertisement c) Others

2) What discount policies have you adopted for the company?

a) Cash discount b)Quantity discount

c) Regular order

3) What is the scheduling for delivery to the company?

a) As per demand b) Regular basis c) Others

4) On what basis schemes & offers are provided to the company?

a) Bulk purchase b) Regular order c) Payment

5) Is there any formal/informal meeting with the company?

a) Weekly b) Monthly c) Quarterly

6) What customer’s feedback do you have regarding your product?

a) Acceptable b) Compatible rate

c) Quality product

7) What is the most preferable method for placing an order?

90

a) Ready stock b) Pre-sale c) Others

8) Are the products available on time/demand?

a) Yes b) No

9) If No, then reason?

a) Shortage of product

b) Source problem c) Salesman visit

10) What is the mode of payment by the company?

a) Postpaid b) Prepaid c) On the spot

11) Are you satisfied with the company’s policies?

a) Yes b) No

12) If No, then why?

__________________________________________________________________________________________________________________________________________

91

Vishal Mega Mart

Documents

ram chandra agarwal

continuous quality improvement

plays major role

apparel manufacturing plant

grocery footwear durables

specialty service firms

jewellery food

marketing activity designed