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DISTRIBUTION CHANNELS

OF
PIDILITE
About the Company …..
• Pidilite - established as a partnership firm Parekh Dyechem Industries
in 1961
• Started by three brothers -Mr. B K Parekh, SK Parekh and H K Parekh
• Name changed to PDI Industries after merger with Kondivita Industries
in 1984
• Merged with Pidilite Industries in 1989 – Merged name changed to
Pidilite Industries
• Launched Fevicol Brand in 1956
• Has become Largest manufacturer of adhesive
• Pidilite’s mainstay of earnings is consumer & industrial adhesives and
sealants (Almost 60% of turnover)
• Company has in total 40 brands spanning 400 industrial and
consumer products
• Expansion of Product Portfolio has lead it to be recognized as a
leading FMCG player
• Most brands amongst the top two in their respective segments Some
• leading brands - Fevicol, Parcol, Fevibond, Fevikwik, Pidifix,
Pidivyl, Pidiseal, Acrolyte, Fevicryl etc.
• Launched several new products in last few years - Fevi Stik(Super
glue stick), Feviseal EasiMix,Prime tape, Acron (art materials)
Fevicol –Company’s Largest Brand.
Fevicol is synonymous with adhesives in India. Pidilite
offers an extensive range of consumer, craftsmen,
engineering and industrial adhesives under Fevicol
brand name. Excellent quality, extensive product range,
close relations with customers and award winning
advertisement have made Fevicol one of the most
trusted brands in India and the largest selling adhesives
brand in Asia.
• Pidilite offers a range of hobby & craft products under
the Hobby Ideas brand name. The products are
complemented with book, videos and training
workshops to make hobby fun and easy for hobby
enthusiasts. Pidilite has also opened India’s first chain
of hobby & craft retail stores under the Hobby ideas
brand name. The shops offer a large variety of hobby &
craft products sourced from around the world.
• Pidilite offers a wide range of constructions chemicals
under the Dr. Fixit brand name. The extensive product
range is used for waterproofing and repair for both new
& old constructions. Dr. Fixit is market leader in retail
market of construction chemicals and the products are
available in all leading cement, hardware, tile and paint
shops.
• M-Seal is India's leading sealant brand. Pidilite offers a
range of sealants for sealing, joining & repairing
applications for both consumer & craftsmen market
under M-Seal brand name. M-Seal is also gaining
acceptance in international market.
• Pidilite acquired Roff brand in 2004. Roff is a pioneer
in construction chemicals in India and is well known
for modern tile fixing solutions like tile-on-tile and
waterproof tile joints. Pidilite also sells several
construction chemicals under Roff name for application
in waterproofing, sealing, flooring, concrete treatment
& plastering
DISTRIBUTION STRUCTURE
Distribution Structure
AMRITSAR CHANDIGARH
(PUNJAB) MANUFACTURING (HARYANA)
UNIT

Main GODOWN
(DELHI)

FORMAL

INFORMAL COMPANY
DEPOT. C&F AGENT
(KANPUR) GHAZIABAD

WSS(42) WSS(46)

WHOLESELLER RETAILER RETAILER WHOLESELLER


Ownership Flow

MANUFACTURING UNIT

Main GODOWN

C &F CO.
DEPOT

WSS PRIMARY SALES

RETAILER SECONDARY SALES


OWNERSHIP TRANSFER

• Goods are first manufactured in the company owned manufacturing


units situated at Vapi, Bhiwandi and Malhaar
.
• Goods are then sent to the various Main Go-downs spread across the
country for further distribution.

• Goods are then sent to the C & F agents and the Company owned
Depots

• Retailers also sell the goods to the end consumers under their
dealership.
TRANSPORTATION SYSTEM
FA C T O RY (M A HA R AS T R A)

TRUCKS

MOTHER GODOWN
TRUCKS TRUCKS

K A N P U R ( C O M PA N Y GHAZIABAD(C&F AGENT)
DEPOT)

TRUCKS TRUCKS

WSS(42)
WSS(46)

3 W H E E L E R S / VA N S

R E TA I L E R R E TA I L E R R E TA I L E R R E TA I L E R R E TA I L E R
TRANSPORTATION SYSTEM
Transportation system from the factory to the respective distribution
stages are covered solely by road.
• From the factory, the goods are transferred to the Main go-
downs in respective zones via trucks.
• Then trucks are used to transfer the goods to company depots
and C&F agents.
• Then the goods are sent via trucks to different WSS in their
assigned regions.

• Later the goods are sent to wholesalers or retail outlets, via


three wheelers or vans.
C&F AGENT
• C&F Agent have infrastructural and transportational facility
• They are responsible for the transfer of goods.
• No sale takes place at this level.
• These C&F agents get monthly emoluments from the company for
their service
DESCRIPTION OF
CHANNEL PARTNERS
WHOLESALE STOCKIST
• Wholesale Stockist are a very important link between
the C&F Agents and the retailers.
• The number of these stockist is not fixed and varies
according to following :
 The sales potential of the region.
 The geographic size of the region.
 Primary sale takes place at the Wholesale stockist.
Hence :their selection, motivation and evaluation
becomes very important to the company
RETAILER
The WSS sell the goods to the retailers who in turn sell it to the end
consumer.
The retailers are classified in terms of their sales potential in the
following manner

The retailers are


classified in terms of

Class B Class C
Class A Class D
Between Between
Greater than Rs 30,000 pm Below Rs 5,000
Rs 30,000-10,000 pm Rs 10,000-5,000
SELECTION OF WSS
 Capital Investment
This is dependent on the
• Present required turnovers
• The estimated future capital investments that will be required by
the distributor
• based on company’s growth plans in the area
 Infrastructure
The basic infrastructural requirements for a WSS are :
• Two rooms measuring at least (10*10) sq. feet each.
• Delivery vehicles preferably 3 wheelers
• Sales executives called Interim Sales Representatives or ISRs.
• Storage godown
 Relevant Experience

• It is imperative that the distributor has had at least 2-3 years of


experience as a channel member in the FMCG sector
• So that no training is required to be imparted to him on aspects of
the business.
• The distributor should not be dealing in competitor’s products.
• Should be able to function as a dedicated channel for Pidilite.
• The business should not be driven by his staff rather has complete
self involvement.
INCENTIVES TO THE WSS
Margin based payments

C O M PA N Y

C &F A G E NT

S O L D AT S O L D AT
108.93 S O L D AT 107.82
108.65

W S S A W S S B W S S C

S O L D AT S O L D AT S O L D AT
112 . 30 112 . 3 0 112 . 3 0
(MARGIN (MARGIN (MARGIN
3%) 3.25%) 4%)
RETAILOR RETAI LOR RETAILOR

BILLED AT BILLED AT BILLED AT


114 . 6 0 114 . 6 0 114 . 6 0

M R P 127 M R P 127 M R P 127


CHANNEL CONFLICTS

A.UNDERCUTTING

•AT THE WHOLESALER

112.30 112.30

WSS
110
WHOLESALER
Adventure Works: The ultimate source for outdoor equipment RETAILER
Reasons for undercutting

• TO WOO THE RETAILER TO BUY OTHER NON BRANDED


PRODUCTS.

 ON THE NON BRANDED PRODUCT,HE CHARGES HEAVY


PREMIUM

 THIS MORE THAN OFFSETS HIS LOSSES ON PIDILITE


PRODUCTS
AT THE RETAILER

RETAILERS PRIMARILY
DEALING IN MICA,PLYWOOD
ETC SELLS BELOW
DEALER PRICE

WOO THE CUSTOMERS TO BUY


OTHER ON BRANDED PRODUCTS

CHARGE HEAVY PREMIUM ON


OTHER PRODUCTS
o DONE BY B OR C CLASS WSS IN A TERRITORY EARMARKED
FORWSS A

CLASS CO PRICE SP SP RETAILER


(OWN (WSS A SP
AREA) AREA)

CLASS A 108.93 112.30 112.30 118

CLASS B 107.82 112.30 110 116

The main reason for this is to gain higher volumes and to gain
revenues.
EVALUATION
• Once a distributor is appointed, the company generally
does not take away business from him, except when the
underperformance has been observed over long
periods.

• While evaluating his performance, his targets


performance is studied relative to that of
other distributors in the nearby area (because growth
patterns may by regions).

• Also, if a WSS is found guilty of Stock inflow,he is


terminated.
CREDIT POLICY
• The WSS sells the goods at credit to the retailers for a 20 day period .
• The retailer has to pay within the limited perioud or the 1% cash
discount which is offered by the company,is not given to the retailer .
• As already explained,out of 2%CD( Cash Discount) given to the
retailers,1% is given at the time of delivery and 1%if the retailer pays
back wihin 20 days.
• In case the payment is not made in 20 days,an intrest n the money
@4%is charged by the WSS.
• If the retailer does not pay by the end of the month,the remaining
goods are confiscated by the WSS,as a company policy .
• STOCK POLICY:
• As per the company regulations the distributor is
supposed to maintain a stock of 3 weeks .
• The stock is formalized by the company; the dealer can
negotiate on 3-4 end days, the stock policy is formed
for the month.
• RETURN POLICY :
• The company follows a policy of return when the
product has not been sold for six months, is damaged or
has defects.
• RETURN ON INVESTMENT :
• The company does not gives any guarantee to the
distributor with regard to returns on his investment
which is in line with the market credentials of the
company .
• PROMOTION POLICY :
• The trade promotions are mostly secondary
schemes,which are primarily for the retailers.
Thank you