Sales Distribution

ACKNOWLEDGEMENT

No work is a work of individual. This project is not an exception to it. I owe a sense of gratitude to the co-operation and support of all those people who have let me understand what is needed from time to time for completion of this project. It is very difficult to prepare a project especially when someone is new for this experience.
Without any help or guidance it is not easy to achieve this given task. So I would thank all the patrons of this project. I am thankful to HUL having given me an opportunity to work with them and make the best of my internship. Firstly, I am thankful to Mr. Mahesh Jagadale (TERRITORY SALES OFFICER) HUL OOH who inspired me and guided me throughout the period of my internship Project Work that enabled me to successful completion of the report.
I am also grateful to PROF.PRAKASH PATEL, And PROF. NEELU NAKRA Faculty CKSVIM college of management - VADODRA for his continuous and deliberate discussion on the topic and indeterminable burden taken by him in helping me during the project.
I extend my thanks to Dr. RAJESH KHAJURIA (Director – CKSVIM College of management) for providing all the necessary facilities in bringing out this project report
Last, but not least I am thankful to my parents who motivated me throughout this project work, The preparation of this report would not have been an easy task without the help and support of my parents. And I m thankful to all the customers who gave their precious time and insights without which the completion of this project has not been envisaged. HETAL R. SHAH

EXECUTIVE SUMMARY Hindustan Unilever Limited has been a major player in Indian beverage market, with its strong brands of tea like TajMahal, Lipton etc. and in coffee with its brand BRU. With its brand Lipton, HUL marked its entry into vending solutions market a decade earlier. Out-of-Home as this market is termed was at that time had Nestle as the only major player.HUL in past decade has grown immensely and is now second largest player in this market. Assigned in Ahemdabad, the main objective was to understand the “Channel management”. For the fulfillment of this objective, I first studied the vending solutions market during the process of sales lead generation and its management. This gave me a firsthand experience of the market, its trends, and intricacies. In order to understand the distribution network process, I designed a questionnaire and did a survey in Ahemdabad. The survey revealed some of the facts like distributors are quite satisfied with the policies of HUL, but the customers are not that satisfied with the service provided by the distributor to them. Further, factor analysis of the collected data was done, which revealed that, CHANNEL DESIGN PROCESS depends upon n three main elements.
1. Type of available business intermediaries.
2. The number of intermediaries needed.
3. Terms and responsibilities of each channel member. This research study holds its importance in the sense that these results can be further utilized by the company to design its channel more effectively. Lastly, I also explored opportunities for the company, in big corporate located at Ahemdabad. The survey of the region revealed a very lucrative opportunity for the company to develop its business

INDEX
CONTENT PAGE NO.
Director Recommendation………………………………..
Certificate……………………………………………………..
Declaration…………………………………………………… Acknowledgement……………………………………………
Executive Summary…………………………………………..
CHAPTER- 1: INTRODUCTION
1.1 Introduction to study………………………………………….
1.2 Objectives of the study………………………………………
1.3 Scope of the study………………………………………………
1.4 Importance of the study………………………………………..
1.5 Limitation of the study…………………………………………..
1.6 Methodology of the study………………………………………
CHAPTER-2: INTRODUCTION TO THE ORGANISATION 2.1 History of company
2.2 Company profile
2.3 Pricing Strategy
2.4 Organization Chart
2.5 HR Scenario
2.6 Financial Scenario
2.7 Milestones
2.8 Competitors
2.9 Awards Achieved

CHAPTER-3: CONCEPTUAL FRAMEWORK
3.1 Introduction
3.2 Importance of channel management
3.3 Channel design decision
3.4 Channel management decision
3.5 Distribution channel in HUL- OOH divisions
3.6 Channel Design

CHAPTER- 4: DATA ANALYSIS AND INTERPRETATION
4.1 Questionnaire
4.2 Data analysis and interpretation CHAPTER – 5: FINDINGS AND SUGGESTIONS
5.1 Findings
5.2 Suggestions
5.3 Conclusion
5.4 Annexure
5.5 Bibliography
5.6 References

INTRODUCTION TO STUDY
Hindustan unilever has it presence in India for last many decades many decades and with its iconic brand and dedication towards serving the customers with quality products has made not only it a leading FMCG, but also a very well respected one.
HUL being A Leader in FMCG Company has always been a dream company for marketer and having got an opportunity to do summer internship to do in such well reputed organization for marketing student like me proved to be an oblivious choice.
Designated in OOH- Food division I worked in Ahemdabad with primary objective Understanding the distribution channel and market for beverage vending premix solutions.
This topic gave me full scope to understand market and more importantly to understand the importance and management of distribution network.
Beverage vending solution in India is approximately 18 years old which marked the entry of Nescafe in the market.
In next some years other players like HUL CCD Barista etc. entered into the market.
The study mainly focuses on CHANNEL MANAGEMENT IN VENDING MACHINE.

OBJECTIVES OF THE STUDY
 Study and analysis of channel management for beverages vending solution.
 To understand the distribution network of Hindustan Unilever Ltd.
 To find the ways to use the distribution network as the key differentiating factor from its competitors.
 Intermediaries satisfaction from the company.
SCOPE OF THE STUDY
 The scope of the study is confined to distribution networks in Ahemdabad only, as the project duration is short time.

IMPORTANCE OF STUDY
 The main aim of doing this study is to know how HUL used it distribution network, brand image, and pricing strategy as a key differentiating factor from its competitor to capture larger market share.

LIMITATIONS OF THE STUDY
 The distributors showed lack of interest due to time constraint or some other personal issues.
METHODOLOGY OF STUDY
The study is done by collecting data of two types
I. Primary data
II. Secondey data

INTRODUCTION TO THE ORGANIZATION

Hindustan Unilever Limited

Type
Public company BSE:HUL

Industry
Fast Moving Consumer Goods FMCG)
Founded 1933
Headquarters Mumbai, India

Key people Harish Manwani (Chairman), Nitin Paranjpe (CEO and Managing Director)
Products
Home & Personal Care, Foods and beverages, Water Purifier
Revenue
Rs 20,869.57 core (US$ 4.45 billion) (2008-2009) [1]

Employees
Over 65,000 direct & indirect employees
Parent
Unilever Plc

Hindustan Unilever Limited (HUL) (BSE: HUL) is India 's largest fast moving consumer goods company, touching the lives of two out of three Indians with over 20 distinct categories in home & personal care products and food & beverages. They endow the company with a scale of combined volumes of about 4 million tonnes and sales of over Rs. 20,000 crores . HUL is also one of the country 's largest exporters; it has been recognized as a Golden Super Star Trading House by the Government of India.
HUL was formed in 1933 as Lever Brothers India Limited and came into being in 1956 as Hindustan Lever Limited through a merger of Lever Brothers, Hindustan Vanaspati Mfg. Co. Ltd. and United Traders Ltd. It is headquartered in Mumbai, India and has employee strength of over 15,000 employees and contributes for indirect employment of over 52,000 people. The company was renamed in June 2007 to “Hindustan Unilever Limited”.
In 2007, Hindustan Unilever was rated as the most respected company in India for the past 25 years by Businessworld, one of India’s leading business magazines. The rating was based on a compilation of the magazine’s annual survey of India’s Most Reputed Companies over the past 25 years. HUL is the market leader in Indian consumer products with presence in over 20 consumer categories such as soaps, tea, detergents and shampoos amongst others with over 700 million Indian consumers using its products. It has over 35 brands. Sixteen of HUL’s brands featured in the ACNielsen Brand Equity list of 100 Most Trusted Brands Annual Survey (2008). According to Brand Equity, HUL has the largest number of brands in the Most Trusted Brands List. It’s a company that has consistently had the largest number of brands in the Top 50 and in the Top 10 (with 5 brands).
Hindustan Unilever 's distribution covers over 1 million retails outlets across India directly and its products are available in over 6.3 million outlets in India, i.e., nearly 80% of the retail outlets in India. It has 39 factories in the country. Two out of three Indians use the company’s products and HUL products have the largest consumer reach being available in over 80 per cent of consumer homes across India.
The Anglo-Dutch company Unilever owns a majority stake (52%) in Hindustan Unilever Limited. HUL was one of the eight Indian companies to be featured on the Forbes list of World’s Most Reputed companies in 2007.

HISTORY OF THE ORGANIZATION
. In the summer of 1888, visitors to the Kolkata harbor noticed crates full of Sunlight soap bars, embossed with the words "Made in England by Lever Brothers". With it, began an era of marketing branded Fast Moving Consumer Goods (FMCG). Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim. Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937.
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company, followed by Lever Brothers India Limited (1933) and United Traders Limited (1935). These three companies merged to form HLL in November 1956; HLL offered 10% of its equity to the Indian public, being the first among the foreign subsidiaries to do so. Unilever now holds 52.10% equity in the company. The rest of the shareholding is distributed among about 360,675 individual shareholders and financial institutions.
The erstwhile Brooke Bond 's presence in India dates back to 1900. By 1903, the company had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition. The erstwhile Lipton 's links with India were forged in 1898. Unilever acquired Lipton in 1972 and in 1977 Lipton Tea (India) Limited was incorporated.
Pond 's (India) Limited had been present in India since 1947. It joined the Unilever fold through an international acquisition of Chesebrough Pond 's USA in 1986.
Since the very early years, HUL has vigorously responded to the stimulus of economic growth. The growth process has been accompanied by judicious diversification, always in line with Indian opinions and aspirations.
The liberalisation of the Indian economy, started in 1991, clearly marked an inflexion in HUL 's and the Group 's growth curve. Removal of the regulatory framework allowed the company to explore every single product and opportunity segment, without any constraints on production capacity.
Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the most visible and talked about events of India 's corporate history, the erstwhile Tata Oil Mills Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL and yet another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever Limited, to market Lakme 's market-leading cosmetics and other appropriate products of both the companies. Subsequently in 1998, Lakme Limited sold its brands to HUL and divested its 50% stake in the joint venture to the company.
HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994, Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory represents the largest manufacturing investment in the Himalayan kingdom. The UNL factory manufactures HUL 's products like Soaps, Detergents and Personal Products both for the domestic market and exports to India.
The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods, with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the UB Group and the Dollops Ice cream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed BBLIL launching the Wall 's range of Frozen Desserts. By the end of the year, the company entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995 the Milk food 100% Ice-cream marketing and distribution rights too were acquired.
Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal restructuring culminated in the merger of Pond 's (India) Limited (PIL) with HUL in 1998. The two companies had significant overlaps in Personal Products, Specialty Chemicals and Exports businesses, besides a common distribution system since 1993 for Personal Products. The two also had a common management pool and a technology base. The amalgamation was done to ensure for the Group, benefits from scale economies both in domestic and export markets and enable it to fund investments required for aggressively building new categories.
In January 2000, in a historic step, the government decided to award 74 per cent equity in Modern Foods to HUL, thereby beginning the divestment of government equity in public sector undertakings (PSU) to private sector partners. HUL 's entry into Bread is a strategic extension of the company 's wheat business. In 2002, HUL acquired the government 's remaining stake in Modern Foods.
In 2003, HUL acquired the Cooked Shrimp and Pasteurized Crabmeat business of the Amalgam Group of Companies, a leader in value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of 2000’s. Project Shakti was started in 2001. It is a rural initiative that targets small villages populated by less than 5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over 100,000 villages across 15 states and reaching to over 3 million homes.
In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush product range and Ayush Therapy Centers. Hindustan Unilever Network, Direct to home business was launched in 2003 and this was followed by the launch of ‘Pureit’ water purifier in 2004.
In 2007, the Company name was formally changed to Hindustan Unilever Limited after receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke Bond and Surf Excel breached the Rs 1,000 crore sales mark the same year followed by Wheel which crossed the Rs.2, 000 crore sales milestone in 2008.
On 17 October 2008, HUL completed 75 years of corporate existence in India
COMPANY PROFILE
MISSION:
Unilever 's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene, and personal care with brands that help people feel good, look good and get more out of life

VISION:
HUL 's vision is to continuously innovate technologies to further reduce water consumption and further increase conservation in its operations. Simultaneously, HUL sites will progressively help communities, wherever required, to develop watersheds
MAJOR BRANDS OF COMPANYS
• SOAPS: Lux, Lifebuoy, Liril, Hamam, Breeze, Dove, Pears, Moti and Rexona, Vim.
• DETERGENTS: Surf Excel, Rin and Wheel
• SKIN CARE: Fair & Lovely, Pond’s and Vaseline
• HAIR CARE: Sunsilk, Dove, Clinic all clear and Clinic plus
• ORAL CARE: Pepsodent and Close up
• DEODORENTS: Axe
• COSMETICS: Lakme, Aviance
• AYURVEDIC: Ayush
• TEA: Brooke Bond and Lipton
• COFFEE: Bru
• FOOD: Kissan, Modern bread, Annapurna and Knorr
• ICE CREAM: Kwality Wall’s
• FABRIC WASH: Comfort, Ala bleach
• DISINFECTANT: Domex
• Water: Pure it.

CORPORATE SOCIAL RESPONSIBILITY
Greening Barriers:
Water Conservation and Harvesting
(Linked to product Pureit)
HUL 's Water Conservation and Harvesting project has two major objectives:
a. to reduce water consumption in its own operations and regenerate sub-soil water tables at its own sites through the principles of 5R - Reduce, Reuse, Recycle, Recover and Renew;
b. help adjacent villages to implement appropriate models of watershed development.

SHAKTI - Changing Lives in Rural India

Shakti is HUL 's rural initiative, which targets small villages with population of less than 2000 people or less. It seeks to empower underprivileged rural women by providing income-generating opportunities, health and hygiene education through the Shakti Vani programme, and creating access to relevant information through the Shakti community portal.

In general, rural women in India are underprivileged and need a sustainable source of income. NGOs, governmental bodies and other institutions have been working to improve the status of rural women. Shakti is a pioneering effort in creating livelihoods for rural women, organized in Self-Help Groups (SHGs), and improving living standards in rural India. Shakti provides critically needed additional income to these women and their families, by equipping and training them to become an extended arm of the company 's operation.

Health & Hygiene Education

Lifebuoy Swastya Chetna (LBSC) is a rural health and hygiene initiative which was started in 2002. LBSC was initiated in media dark villages (in UP, MP, Bihar, West Bengal, Maharashtra, Orissa) with the objective of spreading awareness about the importance of washing hands with soap.

The need for a program of this nature arose from the fact that diarrhoeal diseases are a major cause of death in the world today. It is estimated that diarrhoea claims the life of a child every 10 seconds and one third of these deaths are in India. According to a study done by the London School of Hygiene and Tropical Medicine, the simple practice of washing hands with soap and water can reduce diarrhoea by as much as 47%. However, ignorance of such basic hygiene practices leads to high mortality rates in rural India.

Economic Empowerment of Women

The Fair & Lovely Foundation is HUL 's initiative which aims at economic empowerment of women across India. It aims to achieve this through providing information, resources, inputs and support in the areas of education, career and enterprise. It specifically targets women from low-income groups in rural as well as urban India. Fair & Lovely, as a brand, stands on the economic empowerment platform and the Foundation is an extension of this promise. The Foundation has renowned Indian women, from various walks of life, as its advisors. Among them are educationists, NGO activists, physicians. The Foundation is implementing its activities in association with state governments.

Special Education & Rehabilitation

Under the Happy Homes initiative, HUL supports special education and rehabilitation of children with challenges.

Asha Daan:
The initiative began in 1976, when HUL supported Mother Teresa and the Missionaries of Charity to set up Asha Daan, a home in Mumbai for abandoned, challenged children, and the destitute.

Ankur:
In 1993, HUL 's Doom Dooma Plantation Division set up Ankur, a centre for special education of challenged children. The centre takes care of children with challenges, aged between 5 and 15 years. Ankur provides educational, vocational and recreational activities to over 35 children with a range of challenges, including sight or hearing impairment, polio related disabilities, cerebral palsy and severe learning difficulties.

Kappagam:
Encouraged by Ankur 's success, Kappagam ("shelter"), the second centre for special education of challenged children, was set up in 1998 on HUL Plantations in South India. It has 17 children. The focus of Kappagam is the same as that of Ankur.

Anbagam:
Yet another day care center, Anbagam ("shelter of love"), has been started in 2003 also in the South India Plantations. It takes care of 11 children. Besides medical care and meals, they too are being taught skills such that they can become self-reliant and elementary studies.

PRICING STRATEGY: After having fought a bitter price battle for market share with its rivals, Hindustan Unilever Ltd (HUL), Indian subsidiary of the Anglo-Dutch consumer goods company Unilever Plc, is now working on a new growth strategy for its BEVERAGE INDUSTRY.
“Price cut or hike is not a long-term growth strategy. Pricing, in fact, is now passe,”
“Strategy for growth, now is focused on product innovation, new consumer, National tie-ups with corporate, marketing and promotions,”
For premix we price according to different segment of customers, which primarily depends on various decisions like:
• Purchasing a machine
• Renting a machine
• Machine free of cost
• Price penetration to kill out competition.

ORGANIZATION CHART PUBLIC

BOARD OF DIRECTORS

CHIEF EXECUTIVE OFFICER

MANAGING DIRECTOR

REGIONAL SALES MANAGER

AREA SALES MANAGER

SALES OFFICER

TERRITORY SALES OFFICER

TTSO BUISNESS RS EXECUTIVE SALESMAN HUMAN RESOURCE POLICIES Attracting, motivating and retrieving best talent, these competencies have played a seminal role in HUL’S growth and success. The company key strength is its people HUL 's 32,400 employees, including about 1,425 managers, are all sharply focused on the Common goal, which is to “meet the everyday needs of people everywhere.”HUL has equally played a seminal role in India 's overall employment generation, creating over 200,000 indirect jobs in those sectors of the economy connectedwith the company 's operations. On an average, HUL creates five indirect jobs for every single permanent employee. HUL abides by a policy of scrupulous meritocracy, which unfailingly seeks calibre, competence and contribution. As early as 1942, the decision was taken to develop Indian managers for running the business. The first Indian Director was appointed in 1951 and the first Indian Chairman in 1961. Managers are selected by a unique, time¬proven system of performance in groups and as individuals. HUL is the number one preferred employer at leading campuses. It is enriching its talent base with diversity by recruiting people with complementary skills, especially for the newer businesses, and is also bringing in a large number of talented women. On completion of training, which includes projects in Indian villages and international cities.
The manager works in different functions
• Progress is based on merit
• Adhering to company’s code of buisness principles.
• Ability and performance.
• The values of Truth, Courage, Action and Caring form the bedrock of these buisness principles. HIL 's managers are of the highest standing not only in Indian industry, but alsohandle international assignments in the Unilever world. Today, over 60 HUL managershold top positions in different Unilever companies or corporate functions. Training of all employees began in the early fifties and in¬house management development programmes commenced in 1953. Such formal training activities now cover all levels of employees, through three exclusive Staff and Management Training Centres, besides training at the company 's units. One of the most spectacular successes has been in developing a whole new generation of industrial workmen. Employees at the company 's new factories in backward areas have all come from an agricultural background. But systematic training has converted them into first generation industrial workmen. The result has been that HUL factories, like those in Khamgaon and Sumerpur with first generation industrial workmen, have come to be recognized as among the best in the Unilever world. HUL 's progressive and constructive policies towards its employees are specially relevant, now that the country is globalizing. The company 's belief that a 'fair day 's work deserves a fair day 's wages’ has helped preserve harmonious industrial relations. The factories registerproduction andproductivity rates, which are the best in the industry, and also have benefits, which are comparable to the best in their respective regions.

CHAPTER - 3
INTRODUCTION TO CHANNEL MANAGEMENT
The route by which a product or service is moved from a producer to customers. A distribution channel usually consist of a chain of intermediaries including wholesalers, retailers, and distributors, that is designed to transport goods from the point of production to the point of consumption in the most efficient way.

COMPLICATED SUCCESS FACTORS FOR DISTRIBUTION Distribution strategy needs the support and encouragement of top management to succed. Some of CSF’S could be
• Clear, transparent and unambiguous policy.
• Serious commitment of the channel partners.
• Fairness in dealings.
• Clearly defined customer service policies.
• High level of channel integrity.
• Equitable distribution at time of shortage.
• Timely compensation to channel partners

IMPORTANCE OF CHANNEL MANAGEMENT.
A marketing channel system is the particular set of marketing channels a firm employs and decision about it are among the most critical ones management faces. According to research it has been noted that proper distribution network earns more profit then advertisement. One of the chief role of marketing channels is to convert potential buyers into profitable customers. Marketing channels must not just serve markets, they must also make markets. The channel chosen affect all other marketing decision. The company pricing depends on which type of distribution network it uses. In addition channel decision include relatively long term commitments with other firms as well as a set of policies and procedures. Channel choice depends upon the company’s marketing strategy with respect to segmentation, targeting and positioning. In managing its intermediaries the firm must decide how much effort to devote to push versus pull marketing. HUL skillfully employs both push and pull strategies. Marketing activites directed towards the channel as a part of a push strategy are more effective when accompanied by a well-designed and well executed pull strategy that activates consumer demand. For Lipton and Bru pull strategy is appropriate as it has high brand loyalty and high involvement in the category, when consumer are able to perceive difference between brands, and when they choose the brand before they make purchase decision.

THE ROLE OF MARKETING CHANNELS HULs delegate some of the selling job to intermediaries because intermediaries have their contacts, experience, specialization and the scale of operation through which they make widely available and accessible target market usually offering the firm more than it can achieve own its own.
CHANNEL FUNCTIONS AND FLOWS A marketing channel performs the work of moving goods from producers to consumers. It overcomes the time, place, and possesion gaps that separate the goods and services from those who need or want them.
CHANNEL FUNCTIONS
• Information gathering.
• Customer motivation .
• Bargaining with suppliers.
• Placing order
• Financial support.
• Inventory management.
• Risk bearing
• After sales support..

Manufacture selling a physical product and service might require three channels. Sales channel, delivery channel and service channel. The main point is who perform the various channels functions. All channels functions have three things in common.
• They use up scares resources.
• They can often be performed better through specialization and
• They can be shifted among channel members.
When the manufacturer shifts some functions to intermidiaries, the producer’s costs and prices are lower, but the internediary must add a charge to cover its work. If the intermidiaries are more efficient than the manufacturer, prices to consumers should be lower. If consumers perform some functions themselves, they should enjoy even lower prices. In vending market service and delivery is provided by the intermediaries thus they cover their cost by charging service charge in form of AMC or in form of contract.

CHANNEL LEVELS The producer and the final customer are part of every channel.

DIFFERENT TYPES OF CHANNELS

• ZERO-LEVEL CHANNEL (DIRECT MARKETING CHANNEL) : It consists of manufacturer selling directly to the final customer.
• ONE-LEVEL CHANNEL : It contains one selling intermediary, such as a retailer.
• TWO-LEVEL CHANNEL : It contains two intermediaries. In vending solution markets, these are typically a C&F and redistribution Stockist
• THREE-LEVEL CHANNEL : It contains three intermediaries. CHANNEL-DESIGN DECISIONS Desiging marketing channel system requires analyzing customer needs, eastablishing channel objectives, and identifying and evaluating major channel alternatives.

ANALYZING CUSTOMER’S DESIRED SERVICE OUTPUT LEVELS
In designing the marketing channels, the marketer must understand the service outputs levels its target customers products five service outputs:
1. Lot size
2. Waiting and delivery time
3. Spatial convenience ‘
4. Product variety
5. Service backup

The marketing channel designer knows that providing greater service output also means increasing channel costs and raising prices for custmers.

ESTABLISHING OBJECTIVE AND CONSTRAINTS

Markets should state their channel objective in terms of targeted service output levels. Under competitive conditions, channel instructions should arrange their functional tasks to minimize total channel costs and still provide desired levels of service output. Usually, planners can identify several market segments that want different service levels. Effective planning requires determining which market segments to serve and choosing the best channels for each. Channels objective vary with product characteristics. Perishable products requires more direct marketing. Bulky products, such as building materials, require channels that minimize the shipping distance and the amount of handling. Products requiring installation or maintenance services, such as Vending Machine are usually sold and maintain by the company or by franchised dealers. A number of other factors affect channel objectives. In entering new markets, for instance, firms often closely observe what other firms from their home market are doing in those markets.

IDENTIFYING AND EVALUATING MAJOR CHANNEL ALTERNATIVES

Companies can choose from a wide variety of channels for reaching customers. Each channel has unique strenghts as well as weaknesses. A channel alternative is described by three elements: the types of available business intermediaries, the number of intermediaries needed, and terms and responsible of each channel member.

TYPES OF INTERMEDIARIES
A firm needs to identify the types of internesiaries available to carry on its channel work. Companies should search for innovative marketing channels. HUL’s Ooperation Shakti, involves self-help groups (SUGs) of women to distribute its products in rural areas.
NUMBER OF INTERMADIERIES Companies must decide on the number of intermediaries to use at each channel level. Three strategies are available: exclusive, distribution, selective distributin, and intensive distribution.

EXCLUSIVE DISTRIBUTION
It means severly limiting the number of intermediaries. It’s appropriate when the producer wants to maintian control over the service level and outputs offered by the resllers, and it often includes exclusive dealing arrangements. By granting exclusive distribution, the producer hopes to obtain more dedicated and knowledgeable selling.

SELECTIVE DISTRIBUTION
It relies on more than a few but less than all of the intermediaries willing to carry a particular product. It makes sense for establishes companies and for new companies seeking distributors. The company does not need to worry about too many outlets; it can gain adequate market coverage with more control and lesss cost than intensive distribution. Stihil is a good example of selective distribution.

INTENSIVE DISTRIBUTION: The manufacturer places the goods or services in as many outlets as possible. Some firms avoid intensive distribution and do not want to be sold everywhere.
TERMS AND RESPONSIBILITIES OF CHANNEL MEMBERS Each channel member must be treated respectfully and given opportunity to be profitable. The main elements in the “trade – relation mix” are price policies, condition of sales, territorial rights, and specific service to be performed by each party.
• PRICE POLICY calls for the producer to eastablish a price list and schedule of discount and allowances that intermediaries sees as equitable and sufficient.
• CONDITION OF SALE refers to payment terms and producer guarantees.
• DISTRIBUTORS AND TERRITORIAL RIGHTS define the distributors territories and the terms under which the producer will enfranchise the other distributors
• MUTUAL SERVICE AND RESPONSIBILITIES must be carefully spelled out, especiaaly in franchised and exclusively – agency channel.

EVALUATING THE MAJOR CHANNEL ALTERNATIVES :
Each channel alternatives need to be evaluated againts economic control, and adaptive criteria. ECONOMIC CRITERIA: Each channel alternative will produce different level of sales and cost. Firm will try to align customers and channels to maximize demand at lowest overall cost. Clearly sellrs try to replace high cost channels with low cost channels as long as value added per salke is sufficient.
• The first step in analysis is to estimate how many sales are likely to be generated by a company sales force or sales agency.
• The next step is to estimate the cost of selling different volumes through each channel.
• The final steps is to compare sales and cost. CONTROL AND ADAPTIVE CRITERIA:
Using a sales agency poses a control problem. A sales agency agency is an independent firm seeking to maximize its profit. Agents concentrate on the custoomers who buy the most and not who buys the manufacturers goods. Moreover agents might not be the master of the technical details of the companys product or handle its promotion material effectively.

CHANNEL MANAGEMENT DECISION After a company has chosen a chnnel system it must select, train, motivate, and evaluate individual intermediaries for each channel. It must also modify channel design and management over time.

Training

SELECTING CHANNEL MEMBERS To customers channel are the company. To facilitate channel member selection HUL determine what characteristics distinguish the better intermediaries. HUL evaluate the number of years in buisness, other lines carried, growth and profit record, financial strength, cooperativeness and service reputation.

TRAINING AND MOTIVATING CHANNNEL MEMBERS: HUL determines its intermediaries needs and construct a channel positioning such that its channel offering is tailored to provide superior value to these intermediaries. It plans and implements careful training programs, market research programs, and other capability building programs to improve intermediaries performance. It uses psitive motivators such as higher margings, special deals, premiums, subsidies to gain intermediaries cooperation.

HUL try to forge a long term partnership with distributors. It clearly communicates what it wants from its distributors in the way of market coverage , inventory levels, marketing development, account solicitation, technical advice and service and marketing information.

EVALUATING CHANNEL MEMBERS HUL periodically evaluate intermediaries performance against standard such as sales quota attainment , average inventory level, customer delivery time, treatment of damaged and lost goods, and customer service satisfaction. If underperformance is observed then it should be counseled, retrained, motivated or terminated

OOH division has a very basic distribution network, with materials coming directly from factory to depot at ASLALI and from there to distributors. From distributors it directly goes to customer. Ahmedabad region has 2 distributors, with service part, taken care by both of them for all customers. As far as sales lead generation and acquisition of accounts is concerned, that is done by HUL OOH division’s personnel, and later those accounts are allotted to distributors depending on their size and capability of handling an account. Then distributor’s technician team would install the machine. On an average per month a distributor sells 4-6 tonnes of material. On an average a distributor has 8% to 12% margin in products given by the company.

RESEARCH: STATEMENT OF PROBLEM:
Background to the Problem: Hindustan Unilever Limited is the Indian FMCG conglomerate, selling Food, Beverages, Home and Personal Care brands in about 100 countries worldwide. Out-Of-Home (OOH) is an arm of HUL that caters to the on-premise food & beverages requirements, using state-ofthe-art vending machines, with branded product mixes. So far OOH division has done more than 23000 installations spread over more than 100 towns and catering almost 2 billion cups of beverages annually. HUL offering has well known brands like Brooke Bond TajMahal & Lipton for tea and relatively new brands like BRU for coffee and Knorr for soups. Thus with these products OOH provides a full basket of offerings to its customers. Despite of competent product offerings and having one of the wide spread distribution networks, OOH division is a distant second to market leader Nestle’ in this segment. On top of this, it is facing fierce competition from other big and small players, ranging from Cafe Coffee Day (CCD) to Amazon and Barista’s Fresh & Honest. Moreover there is a strong disapproval from the customer side for service providance. Due to this there is risk factor for getting machine withdraw from customers. From market research it has been found that service provided by competitors like Nestle are much better then provided by HUL’s distributor. Other than this brand positioning of Nestle is more stronger then HUL in segments like coffe.There is lack of awareness for HUL presence into vending market. With such current market situation now, company faces following challenges. Management challenges. How to motivate distributors and train technician to provide qualitative service to the customer? How to further strengthen its Brand image? What steps should be taken to generate awareness about lipton and bru vending premix solution ?
In order to find out answers to these questions, market research was conducted with the objective of understanding the importance distribution network. The geographical area of research was taken as Ahmedabad.
OBJECTIVES OF RESEARCH:
Primary Objective of Research: -

References: Rs 20,869.57 core (US$ 4.45 billion) (2008-2009) [1] Employees