Sales Promotion

A REPORT

ON

STREAMILING OF HUB AND SPOKE DISTRBUTION THROUGH TRADE PROMOTION

By

MOHAMMED SAROSH MOHIYUDDIN

PEPSI FOODS PRIVATE LTD.

A REPORT

ON

STREAMILING OF HUB AND SPOKE DISTRBUTION THROUGH TRADE PROMOTION

By

MOHAMMED SAROSH MOHIYUDDIN

06BS1827

A report submitted in partial fulfillment of

the requirements of MBA Program of

ICFAI Business School

Distribution List:

1. Pepsi Foods Pvt Ltd.

2. ICFAI Business School

TABLE OF CONTENTS

Particulars Page No:

1. Abstract 4

2. Introduction 5

Trade sales promotion

3. Scheme details 7

4. Costing 8

5. Roll out 9

6. PET bottle scheme 10

7. Reference 10

Abstract:

In a competitive market, where the competition has a major share, it becomes important for the company to generate loyalty among the outlets for its own products and also to increase its presence among the outlets who stock solely the competitor's products. The main period for sales of beverages is from the beginning of March to the end of May. This is the period during which the retailers are willing to stock fast moving products such as beverages. Therefore the retailers can be targeted to stock the company products by a sales promotion program. The program will also function as a vehicle for market penetration.

In order to increase the sales revenue and market share, the Hyderabad Unit of Pepsi rolled out a special scheme for the retailers called 'Galiyon Ka Badshah'. The scheme targets the outlets that come under the Hub and spoke distribution system. About 22 areas in Secunderabad under 17 sub distributors are being targeted. Initially about 300 outlets were identified by the spokes (sub distributors) and also by the QSM by market survey and from EDS (each dealer survey) database. By the end the enrollment period, a total of 464 shops had taken up the scheme.

The trade sales promotion consists of three elements, i.e visibility, volume and gifts. The outlets are given a specific target to be achieved during the scheme period to receive gifts. The outlets are offered collaterals like displays which increases the visibility. After enrollment, the sales are tracked by a tracking card kept at the outlet.

Another scheme is being offered to the enrolled outlets from 12th to 30th April. This is to promote the sales of PET bottle range of Pepsi products. It offers a discount to the spokes as well as the outlets.

Introduction

Trade Sales Promotions

Promotion Decisions, certain promotions can help "push" a product through the channel by encouraging channel members to purchase and also promote the product to their customers. For instance, a trade promotion aimed at retailers may encourage retailers to stock more than the competitor's products. With thousands of products competing for limited shelf space, spending on trade promotion is nearly equal that spent on consumer promotions.

Many sales promotions aimed at building relationships with channel partners follow similar designs as those directed to consumers including promotional pricing, contests and free product. In addition to these, several other promotional approaches are specifically designed to appeal to trade partners. These approaches include:

1. Point-of-Purchase Displays

2. Short Term Allowances

3. Sales Incentives or Push Money

4. Promotional Products

Point-of-Purchase Displays

Point of purchase (POP) displays are specially designed materials intended for placement in retail stores. These displays allow the products to be prominently presented and thereby increase their probability of standing out. POP displays come in many styles, though the most popular are ones allowing a product to stand alone, such as in the middle of a store aisle or sit at the end of an aisle where it will be exposed to heavy customer traffic.

For channel partners, POP displays can result in significant sales increases compared to sales levels in a normal shelf position. Also, many marketers will lower the per-unit cost of products in the POP display as an incentive for retailers to agree to include the display in their stores.

Short Term Trade Allowances

This promotion offers channel partners price breaks for agreeing to stock the product. In most cases the allowance is not only given as encouragement to purchase the product but also as an inducement to promote the product in other ways such as by offering attractive shelf space or store location, highlighting the product in company-produced advertising or website display, or by agreeing to have the retailer's sales personnel "talk-up" the product to customers.

Allowances can be in the form price reductions and buy-back guarantees if the product does not sell in certain period of time.

Sales Incentives or Push Money

Since sales promotions are intended