CASE ANALYSIS ON PI FOODS LTD. PROBLEMS IDENTIFIED IN THE CASE.

PROBLEM OF SALES FUNCTION PROBLEM OF DISTRIBUTION FUNCTION(LACK OF A PROPER PROCEDURE FOR PLACING ORDERS) PROBLEM OF INCORRECT SALES FORECASTING PROBLEM OF PROPER COMMUNICATION

THEORETICAL EXPLANATION. Beat or call plan- the daily plan of visiting the existing and prospective customers as per a timetable or schedule. Coverage- the plan drawn by the sales manager for the channel member to call on market segments and outlets. DISTRIBUTION AND SALES- Distribution is THE HEARTBEAT OF SALES MANAGEMENT.EITHER SALES MANAGEMENT OR DISTRIBUTION MANAGEMENT CANNOT EXIST,OPERATE OR PERFORM WITHOUT EACH OTHER.WHILE SALES MANAGEMENT MAY PLAN THE STRATEGY AND THE OPERATIONAL DETAILS TO ACHIEVE REVENUE, GROWTH AND MARKET SHARES,IT IS THE DISTRIBUTION PART WHICH EXECUTES THESE PLANS,OF COURSE,UNDER THE GUIDENCE OF SALES MANAGERS.DISTRIBUTION MANAGEMENT HAS A MAJOR ROLE IN ALL THE TASKS PERFORMED BY SALES MANAGEMENT AND THE EXTEND OF THIS INVOLVEMENT DEPENDS ON THE LEVEL OF THE DISTRIBUTION CHANNEL IN THE OVERALL DISTRIBUTION HIERARCHY.DISTRIBUTION MANAGEMENT HAS THE RESPONSIBILITY OF PHYSICAL MOVEMENT AND STORAGE ALSO.THERE HAS TO BE A CONTINOUS AND REGULAR CORDINATION BETWEEN THE SALES MANAGEMENT AND THE DISTRIBUTION CHANNELS TO GENERATE DEMAND AND MANAGE IT IN A COST EFFECTIVE MANNER EVERYDAY.. SELECTION OF DISTRIBUTION CHANNEL Product considerations : The nature and type of product have an important bearing on the choice of distribution channels. For examples, perishable goods need speedy movements and hence shorter channel or route of distribution An important market factor is "buyer behaviour"; how do buyer's want to purchase the product? Do they prefer to buy from retailers, locally, via mail order or perhaps over the Internet? Lets have a look on, v The duties of sales managers , Creating & Managing Distribution Network in the territory "all the organisations through which a product must pass between its point of production and consumption"- distribution. Managing Sales team of the territory. RESPONSIBLE FOR SALES FORECASTING v Duties of distributor The distributor focuses on marketing and distributing food products that can increase profits for retailers and wholesalers. Negotiating deals that benefit the buyer as well as the distributor is an important part of the job. He must also research consumer buying habits and trends to help him choose popular items to present to customers. v Duty of retailer. Assurance of regular supply : He maintains adequate supply of goods so that consumers are sure of getting regular supply at the time of their need Close interaction with customers : A retailer brings new products to the notice of customers and educates them in their uses. A retailer thus, acts as a friend and guide to his customers. Indeed his interaction with customers is of

intimate personal nature and thus he is able to provide feedback to wholesalers and dmanufacturers about consumers' preferences. 1.PROBLEM WITH SALES AD DISTRIBUTION FUNCTION SALES MANAGEMENT AND DISTRIBUTION CHANNELS MANAGEMENT ARE TWO SIDES OF A SAME COIN.THERE SHOULD BE AN INTEGRATION OF THESE TWO. we can say here the problem is concerned with both distribution and sales function. because the sales people did not set the correct objective and strategy and the distribution management did not see to that the products were made available to all outlets. It was the responsibility of the sales management to see to the depth of the distribution and the responsibility of the distribution management to see that whether the products were being made available to each outlet. If the problem is incorrect sales forecasting by distributors,there should be a proper procedure for communication between the company and the distributor.here is the need for distributor agreement.there it is clearly mentioned about the term purchase orders. for eg. . Distributor shall order products by written notice to Company. Each order shall specify the number of units to be given, the type of units to be given (as identified by Company model number designations indicated in the Price List) including all optional features. Company shall indicate its acceptance of such release by returning a signed copy to Distributor. Company agrees to give units to Distributor as close as possible to the delivery schedule set forth in each order as accepted by Company, unless Company otherwise indicates in writing. Company shall not be required to honor any release which: (a) specifies a shipping date earlier than Company's thencurrent delivery schedule for the date such release is received by Company and/or (b) specifies a quantity to be delivered in any one month within the current delivery schedule which is greater than one hundred percent (100%) of the total quantity shipped in the preceding sixty (60) day period. This type of a distribution agreement in writing will help the sales manager to answer the questions by the regional sales manager when these complaints from distributors happens. Sales Representatives play a major role in the success of their individual companies. They are the reason clients, customers or buyers may either be satisfied or not. And they are required to make the best of this opportunity by offering quality service to customers. They are supposed to know the ins and outs of their companys products and services so they can educate clients on how these products and services can be used to reduce costs or increase revenue. More often than not, a sales person is required to spend much time travelling and visiting prospective buyers and current clients to remind them how committed the company is to satisfying their personal and business needs. Sales territories are required primarily to create focus for the sales team. Having two or more people selling at the same place is not useful and can create unnecessary clashes between colleagues. If you dont have clear demarcation then the same customer will be visited by different people from the same company which is undesirable and a complete waste of time.here in this case , . Either depending on sales territory or geographic area each sales person should be given the power to cover his area. One person handling all the super A class, another one A and another one B etc is not practically possible.
Responsible for Sales Forecasting Predicting the future is reaching new levels of quality and accuracy with the best sales forecasting practices.sales manager typically sets goals for the sales force and motivates to exceed these goals-concerns that require accurate demand estimates. Proper communication Informally communicate with all the distributors and retail ouleters, at least once in a month and to identify their satisfaction level and if needed give them promotional measures to boost up sales. Past sales records will help to forecast the demand and this helps to prevent the shortage or over production. In places where sales figure slumps, make marketing communication effective and strengthen the sales force. Analyse the result and then decide whether to continue it or not.

 Lack of integration in ideas , objectives ,tactics made the work complex. Only if sales and marketing forces are integrated, revenues and target can be achieved. Now due to retailers mistrust in sales managers not only sales and market leadership position but also their satisfaction levels start declining. The sales man here should be an order taker, who responds to customer demands. He should handle the problems of retailers too. Objectives include work according to the instruction of marketing team and thus find a match between the two. Depending on the demand for specific products ,sales managers should keep a record (either based on past sales record or survey) and provide the retailers with the most demanded products and stock it. The main sales objectives can be to utilise existing sales force resources optimally Use effective and efficient channels THE STRATEGIES CAN BE to ensure that all segments is being covered i.e. all class of retailers and the action plan taken can be to provide more incentives to sales people on the basis of all retail stores visited and also give effective supervision by the area sales managers. THE TACTICS CAN BE Distributor agreement Train each sales person in deficient areas Link incentives to sales quotas on sales volume and expenses. If time constraint is there,B and C class customers to be served by telemarketing,direct mail and online marketing solutions Identify the reason for shortage of supplies by some of the distributors and non-receipts of companys products by C and D class retail outlets . Distributors who correctly identifies the demand and balances it with the supply should be given promotional offers. Distributor agreement. Study about the conditions, climate and culture of the area (mainly where the C and D retail outlets resides). Analyse how necessary these products are to the inhabitants there. For eg: in a village area the products extracted from milk may not work more since milk is easily available in most of the village areas. In that case concentrate more on the other products like chocolates and beverages with target market children. Give more promotions to baby foods and create awareness, knowledge and thus increase their liking. The area sales managers should be more informative and they should not only submit sales report but also what were the problems they faced in last quarter or last two weeks and how they overcame it , how it impacted the results and now what are the problems they are facing and what should be the measures. Make sure that the price to all retailers big or small, should be the same [ Retailer Landed Price should be the same Infrastructure to store the products in the outlets should be checked. Treat all the shops(irrespective of the classes)equally.allot more time for Cand D CLASS shops and study their sales and moving of products. The beat or call plan should be made clear to all without any ambiguity. The sales manager should ensure proper market coverage. GROUP D

It is clear from the case that the sales persons able to meet their monthly target, so increasing sales revenue is not a matter of concern here. The real problem is inefficiency of distribution. The second problem which can be pointed out after reading the case is lack of communication between the regional sales manager, the area sales manager and the sales person. Demand management can be successfully managed only if both sales and distribution functions act together as an integrated team or partners.

Both these channel partners must act with the knowledge and support of the regional sales manager. There has to be a continuous and regular coordination between the sales management and distribution because it helps not only in generating demand but also ensure that the distribution objectives are also met in a cost effective way. Around 10.5% of the total target is met from the C and D class outlet so the sales person should give equal importance to C and D class outlet. Once the sales persons visit all the outlets as stipulated, the sales forecasting did by the distributors would be more accurate (Now, the distributors sales person hardly visits C & D outlets and then estimates the sales for a particular period). The more accurate forecasting helps in producing the items on time and release of the same from the various warehouses on time. Thus, the shortage of supplies as reported by the distributors can be avoided. Sales Operation Planning for PI foods Beat Plan Week/Outlet 1st 2nd 3rd Super A 3 times 2 times 3 times A 1 1 1 1 B 1 1 1 1 C 1 * 1 * D * 1 * 1

4th 2 times

The regional and area sales manager should meet at the beginning of every month to discuss about the progress made, complaints received if any, during the previous month. How to make sales person visit shop C & D? We can classify the sales person based on the area they are assigned with responsibility. It is better than dividing sales person based on the shops they are visiting. So here targeted revenue from various shops of different class can be obtained without any complaint from sales person. Otherwise a sales person who is only focusing on class C & D find it difficult to meet the target compared to sales person in class A, super A and B. Dividing sales person based on shop class is also expensive because their work are unevenly distributed. If we classify the sales person based on area, then each sales person is responsible for all the shops in a particular area irrespective of the shop classes. They should also follow the standard norms as stipulated by the organization. From Exhibit we can see that the total sales revenue potential for class B, A, super A is Rs. 30000 (taking upper limit of class B, adding worst case scenario of A, super A class revenue). For class D and C it is approximately Rs3500 (considering the best case scenario).

Total revenue potential that can be generated is Rs33500 approximately. So percentage of sales revenue from class C & D is (3500*100/33500) =10.4% So we can have the assumption that 10.4% of the sales revenue is generated by class C & D. This value can vary, but it cannot be above 10.4% because we are considering the worst case scenario of super A & A and best conditions for class C&D. About 90% of remaining sales revenue is obtained from upper class shop. So here we can see that for achieving the sales target, the sales persons are focusing on super A, A and B. The main products of company are baby foods, dairy products like milk powder and ghee, chocolates, confectionery and beverages. But not all consumers buy baby foods and dairy products from pan shop and small shop. In some cases cold storage facility is not available. So certain products cannot be supplied to low end shops but the company can supply products like chocolate and confectionery. Baby food | Dairy pdts | Choc. | Confctry | Beverages Super A Y Y Y Y A Y Y Y Y B Y Y Y Y C * * Y Y D * * Y * Y- Supply of products to shop. Y Y Y Y Y

If the sales person can generate 9 - 10.4% of his total sales revenue from low end shops like class C & D then give him additional pay apart from his fixed salary. In the low end shops he may be able to sell only chocolates and confectioneries. Another option is to give him more incentive for each product he is selling in low end shops compared to the incentive he is getting from selling products to higher class shops

PI Foods Ltd.-Managing Sales and distribution In this case the main problem lies with the Distribution function. Its not the matter of sales or increasing the sales revenue. Even the visits to the Super A & A class was much higher than the other classes so there monthly as well as weekly targets were much higher.B,C,D were not getting much supplies or there is shortage of goods from the distributors therefore much complaints are arising from these class people. But the case also mentions the reasons for the shortage of supplies to the distributors. 1. Forecasting by the distributors 2. Factory production constraints 3. Misallocation of dispatches from warehouses to the distributors. The problem doesnt not only lie with the distributors but also with the retailers because they did not ensure whether there is regular supply or not. The second problem that arises over here is the lack of communication between the Regional sales manager, area sales manager and the sales person. This problem also lead to the dissatisfaction level of the retailers. Sales Objectives 1. To make sure that the distribution is even across all the classes 2. No complaints arises from the retailers. 3.Smooth flow of functioning of the distributors,retailers and the sales person. 4. Effective communication between the Regional sales manager, area sales manager and the sales person.

Strategies 1. Incentive plans to motivate the sales people to work harder and visit all the stores regularly. 2. Surprise check to see if they are visiting the stores and making the supplier happy. 3. Incorrect sales are prevented. For eg.Reviewing the sales projection figures and making or suggesting corrective measures for better achievement of the results.

PI Food Ltd is company which have a product mix of baby foods, dairy products like milk powder and ghee, chocolates and confectionary and beverages. The company is facing a problem in shortage of supply to the distributers and non receipt of company products to the C and D class retailers (C classsmall shop, D class- Pan Shop). As the B, A, super A class generate more sales the sales executives trends to sell more product s to these top classes. Even thou they are targeting the C and D classes the end result is that they are not been considered by the executives of the company. This made complain to the regional sales manager Mr. Ramesh Kulkarni. This case portrays the inefficiency of sales and distribution. One of the main tasks of sales management is coverage of markets and outlets. In, this case C & D class retailer complains that the distributors and sales people does not visit them on regular basis. Other problem faced in the case is the complaint of shortage in supply by some distributors and the one of the other major responsibilities of sales. Sales management is finished goods inventory management at C&FAs and distributors. Regarding shortage of supply to the distributors the justification given by the sales manager that it was due to incorrect sales forecast by the sales manager, factory production constraints and misallocation of dispatches from warehouses to distributors due to lack of information on the difference in the estimated figures in sales and production. Bring to the notice of sales management if problems persist.

The actual problem

The main Problem in this case is that there is no proper control over the hierarchy. The sales manager is not getting updated with the sales sections or classes of customers covered. Even thou the sales targets are been meet by the sales executives the classes of customers are not been taken care of. This will in a long run effect the distribution and sales of the company products. There the problem is mainly due to the distribution methods practiced in the organistion.

What can be done in PI Foods

Here the distribution has been affected. There is no proper distribution throughout the targeted customers of the company. There is also a communication defect between the sales executives, sales manager and the regional sale manager. They consider lesser importance to the small business groups. The things that can be done are that. Rank and rate the client who buys more in each classes, the allot the clients to the existing sales force. Fix separate target in different class (Super A, A, B, C, D) to the sales executives. As proper communication is lacking from the top officials to the bottom executives they should maintain a good communication and updates throughout the hierarchy. The distribution channel should be well maintained to avoid the shortage of supply. Regular report should be given to the top manager regarding the sales that is happening in each class by the sales managers. The sales manager should see to it that the executives are regularly visiting all the classes of customers. Special commission should be given to the sales executives when they attain the target of the C and D classes(for a short period).

Due to the lack of proper distribution the sales will be affected also , so there should be some measures to increase the sales. The different types of sales promotion that can be used are: Consumer promotion:

Co Consumer promotion also called sales promotion are directed at consumers both individuals and organisations. They can be used for both consumers markets and business markets. The broad objective of consumer promotion is to offer the consumer additional benefits to attract him or buy the products. Coupons:

A coupon is a price reduction offer, generally in a form of a certificate, to a consumer. A coupon can be redeemed or exchanged for a price-off, a gift, or a discount on a subsequent purchase.

Bonus packs:

A bonus pack offers the consumer an extra amount of a product at the regular price by providing extra units. This gives the consumer more value for the money.

Price offs:

Price offs offers a temporary price reduction to consumers. Typically price-offs are marked on the products packages and are in the range from 10 to 50 per cent off on the regular price.

These can be the tactics and strategy with can be followed by PI Foods ltd.

By Group G

According to my opinion,It was both the problems of sales management & distribution function.Either both of them cant operate or perform well without eachother.Here Sales management was not able to manage the distribution channels without giving them proper deevelopment,evaluation,incentive,recruitment,exit etc.and they were not be able to distribute the supplies according to the demand of distributors.And they didnt possess a proper feedbacksystem,ie,the Regional Sales Manager got the problems directly from the distributors &retail outlets.Also as a result of an inefficient sales management ,each distributors sales person were not willing to visit C&D class retailers.Inturn ,it affected the achievement of both market volume & shares.As far as Distribution Management Function is concerned ,they didnt take any initiative to support sales function.Sometimes an ineffective distribution management is mainly due to the lack of promotions & sales incentives for each corrective action by them.As a result the distributors sales person were not willing to visit both C&D class retailers.Also Distribution management didnt ensure wide & equitable distribution of supplies.So it was happened due to the ineffective function of both Sales &Distribution Management. Sales Position First line (operational) sales manager-area sales manager Middle (tactical) -Regional sales manager Sales force objectives 1.surplus of supplies by distributors 2.Receipts of company products by C&D class retailers Strategies 1.- PROPER SALES FORECASTING by distributors - effective productive measures -proper allocation of dispatches from warehouses -appropriate information regarding the estimated or forecasted sales figures and factory production figures.

2.-proper incentive & promotion system for distributors sales force. - ensure wide & equitable distribution.

TACTICS -Check the past data & compare it with the present one. -Availability of resources in production areas -Access the correct data regarding the demand of products. -Proper estimation of sales figures by comparing both past & present data. .