EXECUTIVE SUMMARY

Company transfers their goods to distributors who further transfer it to the retailers. In short, distributors are link between company and retailers. They are responsible for making goods available at the retail outlet. This complete channel is known as distribution channel. The number of distributors of a company depends on companys product and their coverage. Distributors are given a particular area by the company where they do their business. Certain big companies have few distributors who handle big areas. They are known as large/super distributors. Large/super distributor do their business in the same manner like normal distributor but what sets them apart is that they cover larger area and hence have greater investments, margins, number of salesmen, support staff etc. Johnson and Johnson dont follow the large/super distributor model. They have 16 distributors who handle the Mumbai metro. Some of the distributors are mega in size whereas others are small in size. The project aims to understand the feasibility of applying such a model for Johnson and Johnson. With increasing popularity of large/super distributor model, a study is conducted to understand and analyze the different aspect of large/super distributor and also benchmark the Johnson and Johnsons performance. The different aspect include . Business . Structure . Processes . Information . Customer Satisfaction An alternative model has been prepared where a thorough comparison between old model and new model has been undertaken to understand which one is more appropriate. The process of reducing the distributors from 16 to 6 is shown step by step. Also cost benefit analysis of new model is done to better understand the advantages and disadvantages of adopting large/super distribution model.

JOHNSON & JOHNSON AN INTRODUCTION

COMPANY Johnson & Johnson is a global American pharmaceutical, medical devices and consumer packaged goods manufacturer founded in 1886. The corporation's headquarters is located in New Brunswick, New Jersey, United States. Its consumer division is located in Skillman, New Jersey.

The corporation includes around 250 subsidiary companies with operations in over 57 countries. Its products are sold in over 175 countries. Since the 1900s, the company has pursued steady diversification. It added consumer products in the 1920s and women's sanitary products and toiletries in the 1970s and 1980s. International expansion started in 1919 with Johnson & Johnson, Canada. Johnson & Johnson spread its roots to the worlds largest democracy, India, during the endemic post- independence turmoil of 1947. In September 1957, a new company, Johnson & Johnson India Ltd. was created and registered with twelve employees on its rolls. In the 50 years since its establishment in India, Johnson & Johnson have gained a reputation for delivering high-quality products at competitive prices.

PRODUCTS

Johnson & Johnson's brands include numerous household names. Among its well-known consumer products are Johnson's baby products, the Band-Aid, Clean & Clear facial wash, Neutrogena skin and beauty products and Acuvue contact lenses. In 1893, JOHNSONS Baby Powder was developed. It led to an entirely new business - trusted products to help parents care for their babies and young children.

It also developed JOHNSONS Baby Shampoo with NO MORE TEARS formula, a mild soapfree formula that cleans babys hair but wont irritate the eyes. It is one of the shampoos which helps parent to wash their babys hair without causing any irritation to babys precious eyes.

LISTERINE Antiseptic was created in 1879 by Dr. Joseph Lawrence and Jordan Wheat Lambert as a surgical disinfectant. They soon discovered that it was great at killing germs in the mouth, making it the first-ever antiseptic mouthwash. In 2006, LISTERINE joined J&J family when they acquired Pfizer Consumer Healthcare.

In 1920 Earle Dickson, came up with the idea for a ready-made bandage that people could apply themselves. The iconic BAND-AID Brand Adhesive Bandage went to the market in 1921

In 1897, Johnson and Johnson started producing and marketing disposable sanitary napkins for women. This was a big improvement over homemade methods. The brand name Stayfree includes product like maxi pads, pantiliners (named Carefree), and feminine wipes.

The clean and clear brand was originally developed by Revlon as a line of sensitive skin personal care items in 1957. The "Clean and Clear" name was based on products that contained no fragrance or dyes, and left no residue after rinsing. In 1991, Revlon sold Clean & Clear to Johnson and Johnson. Primary focus of Clean & Clear is on acne is positioned as a low cost product.

COMPETITORS OF JOHNSON AND JOHNSON

Considering the various business verticals of Johnson and Johnson, it has major competitors in each of its business verticals. The following are the details of its major competitors.

UNILEVER

Unilever is part of the Unilever Group owned by the Netherlands-based Unilever N.V. and UKbased Unilever PLC. As a top maker of packaged consumer goods worldwide, Unilever operates in many global markets, such as Africa, Asia, Latin America, the Middle East, North America, and Western Europe. The company's products cover several categories, including savoury; dressings and spread; ice cream and beverages; personal care; and home care. Unilever's brands include popular names like Axe, Dove, Pond's, Suave, Vaseline, Signal, Slim Fast, TIGI, Lipton, and Country Crock, among others.

PROCTER & GAMBLE The Procter & Gamble Company (P&G) boasts boatloads of brands. The world's #1 maker of household products courts market share and billion-dollar names. It's divided into three global units: health and well being, beauty, and household care. The company also makes pet food and water filters and produces soap operas. Some 25 of P&G's brands are billion-dollar sellers, including Fusion, Whisper, Braun, Bounty, Charmin, Crest, Downy/Lenor, Gillette, Iams, Olay, Pampers, Pantene, Pringles, Tide, and Wella, among others. P&G shed its coffee brands in late 2008. Having grown through acquisitions like Clairol and Wella as notable conquests, P&G's biggest buy in company history was Gillette in late 2005.

Company Distributor Retailer Consumer

CHANNEL PARTNERS

The channel partners play a major role in ensuring that the product reaches the target customer. The following is an overview of its channel model. CHANNEL STRUCTURE The products of the company move to the target customer through a pre-defined channel. The following is the structure that is generally followed by an FMCG company. The following is the channel structure followed by them in metros. THE SCOPE OF EVERY CHANNEL PARTNER DISTRIBUTOR They play a major role in making goods available to all the retailers. The loyalty of the distributor with the company depends not only on the policies of the company but also on the information transparency maintained by the company. A distributor works very closely with the company and is essentially responsible for the growth of the company. Proper margins and support by the company to the distributor makes them work efficiently. The distributors can be encouraged by making them aware of their contribution to companys progress and also making them understand that how they can improve their business and profits by better performance and help them in achieving the same.

RETAILERS Retailers are the link between customer and company. The products of the company are distributed to its customers through the retailers. Generally they sell many company products and thus have very low loyalty to a particular company. Tough competition exists at retail outlet which might lead to company losing some of its customer. To maintain the loyalty of the customer towards company, the company has to continuously make the customer aware about the attributes of the product and remind him about the superiority of the product over the competitors. Thus, window display and advertising plays an important part of visibility. A better company retailer relationship leads to better visibility at the

retail outlet. Not just relation but offer provided to retailer for display and keeping stock of companys product helps in retaining the customers.

CONSUMER

They generally consist of the normal people who buy product for daily usage purpose. Most of the products of Johnson and Johnson are targeted towards children. Companys biggest strength is the baby product however company has products in other category like OTC (Over the counter), wound care etc which also contribute to the overall business of the company. There are many consumers who do not use Johnson and Johnson products hence the company should focus on creating greater awareness among the consumers about their products and provide best quality product. This will help in building customer loyalty to their brand.

In some rural and urban part of the country the wholesaler also come into the channel of distribution.

WHOLESALER The wholesaler is another member in the channel who helps in making the product available at the retail outlet. Generally in metros, retailers prefer to buy their stock from distributor but in other small cities and rural areas, wholesalers do the job of making goods available. They act as intermediaries between the retailers and the distributors.

RESEARCH METHODOLOGY To understand the project, primary research was important to get basic insight into their businesses. The objective of conducting primary research was as follows: . To understand the working of large/super distributor . To understand their business, structure, processes, information and customer satisfaction policies . To find out the distinguishing characteristics

. To benchmark Johnson and Johnsons performance

PRIMARY RESEARCH The data for and insights of the distributor were collected through primary research in the form of interviews. The interview brings greater clarity and it helps in understanding not only the competitors performance but also Johnson and Johnson. INTERVIEWS Interviews of different distributors were conducted for and the data was properly noted.. Johnson and Johnsons distributors as well as competitor distributors were interviewed to better understand the process of benchmarking. Also those distributors were selected who do business for Johnson and Johnson as well as its competitors. Interviews of ABI were also conducted to know their understanding of company and work at distributors level. After the interview data was sorted according to project details and after assimilation and benchmarking a procedure to improve the performance of Johnson and Johnson was arrived upon

Cabin for meetings Distributor Operational manager/Group leader Team leader Salesman and Merchandiser Computer operatorCashierAccountantGodownKeeper Assistant STRUCTURE

TARGET ALLOTMENT The business of FMCG companies grows with increase in their sales. Encouraging salesmen to increase their sales can be achieved through target setting. Targets are essentially the approximate figures given to a particular salesman to achieve in a particular month. Salesmans targets are not just based on the value of sales but its also based on the SKUs. Companies first allot the target for every distributor and then at distributors point separate target for salesman are set. Salesmen wise target setting is done by distributor with the help of company employee handling that distributor known as ABI (Area Business In charge). This is how the targets percolate in the entire value chain of an FMCG company. The basic points taken into consideration while setting the target are the class of the retail outlets and the size of area handled by the salesman. Past performance and capabilities of the salesman are also taken into consideration. Large/super distributors use company software in defining the targets. Checking of past performance of the salesman and calculating the target is done by the company software. After setting the target, large/super distributor keep a daily check on salesmans progress and performance with the help of company software. ROLE OF SUPPORT STAFF Support staffs are the people employed to do the back office work and work apart from market visit and merchandising. Back office work includes preparing bills, managing accounts, delivering products, petty cash management etc. Large/super distributors have big businesses to handle as a result of which their back offices work is greater for which they appoint more support staff compared to others. Support staff is responsible for all work before and after the market visit of salesmen. The work load of support staff increases further because they to handle all account, ensure that goods are delivered to right retailers and the payments are properly collected and accounted.

Due to larger area coupled with greater transactions, the work of the back office people in large/super distributor is challenging. Some of their work is outsourced as in case of delivering the products to retailers. Yet managing all the accounts and ensuring the authenticity of each one of them is demanding. The large/super distributor will hire approximately 5-6 back office people depending on his business and investment size. SALARIES AND INCENTIVES Salary is the amount paid to hired person for his work. For a large/super distributor, salary is one of the major expenses. The reason for the same is the number of salesmen, merchandisers and back office people hired by large/super distributor. Some companies classify their salesman according to their performance and pay salaries accordingly. Also back office peoples salary keep on increasing with better performance on their part. Generally Salaries are paid in cash but some large/super distributor also pays them through bank account. Incentives are extra additions to the salary. They are given to encourage salesman to give better performance which in turn leads to better performance for the company. This thus helps in developing a partnership between the companies through the formation of mutual symbiosis. There are different parameters which are used for the payment of incentives. These parameters can be any of the following a. Sales targets b. Visibility targets c. Coverage targets d. Profit targets e. Efficiency targets Generally incentives are provided when salesman achieves 100% or more of their targets or if they give best performance throughout a year. Some companies purposely set higher targets and hence give incentive to the salesman even if salesmen they achieve around 80 to 90 percent of target.

Incentives are not just provided by the distributor but it is also provided by the company. Large/super distributors follow the incentive program developed by the company. Based on that, incentives are divided between distributor and the company. Some companies along with salary also provide benefits like provident fund, insurance etc. Besides salary, companies also provide Travelling Allowances to the salesman for their daily market visit. This allowance are either given separately or included in the salary. Salaries, incentives and benefits to the salesman are normally decided by the company and there working policy. CURRENT POSITION OF JOHNSON AND JOHNSON Johnson and Johnson are currently working with 16 distributors all over Mumbai. Out of these 16 distributors one distributor was recently converted to a mega distributor. Mega distributors are like large/super distributors who handle huge area. This concept adopted by Johnson and Johnson is a pilot project and the project has been successful. Some distributors of Johnson and Johnson are in charge of small area and their progress is mediocre, whereas other distributors are showing good progress over the year. The profit/business of the distributors also depends on factors like . Area . Types of retail outlet . Consumer preference . Population etc In certain areas, Sales can be progressive without much effort from the distributor. Job of distributor should be to take advantage of the area allotted to them and grow as much as possible. Johnson and Johnson being a popular brand have high consumer preference and awareness especially in the baby products category. The business of other categories and awareness about them is also showing signs of growth. The distributors are obliged to work for company like Johnson and Johnson and company can make sure that the brand popularity and sales keep on increasing. It can be done through marketing, advertising and sales at retail outlet. Distributors come into picture when target is to increase sales and this will also lead to growth of distributor as well as company.

FUTURE TARGET

Every company strives for progress and the future target of most companies is to grow by increasing sales. Sales can be increased when the consumption of companys product increase. This is where job of marketers and advertisers are important. Apart from marketers and advertisers, making products available at each retail outlet can motivate consumers to buy the product. Distributors are the one whose responsibility is to make product available to the retailers and achieve higher visibility at the retail outlet. Johnson and Johnson can focus on improving the performance of distributors step by step. This can be done through achieving benchmark. Benchmarks are setting standards after comparison with competitors for future growth.

CONCLUSION

Considering the current situation of Johnson and Johnson and analyzing the strengths and weaknesses of the company vis--vis the competitors, the company should implement the large/super distributor model in a step wise process. This will help the company not only in improving its efficiency but will also be beneficial for the company in the long run in improving the overall distributor- company relationships and giving an edge to the company over its competitors. The implementation process will have to be closely monitored as it will pose a few challenges as mentioned earlier. The company officials and the entire team from the company including the ASM, ABI and the respective sales professionals will have to be aligned with the goals of the company and also clearly educated about the entire process as well as the benefits for the smooth and effective implementation. The company should also look into the distributors perspective very closely so as to ensure that the process has a support from the distributor and also their insights and ideas are taken care of at the first stage itself. This will lead to avoidance of repetitive work and would help in reducing the costs and time required for implementation.