Distribution channel

Company Hub Factory Distributors

Pan-wallas

Wholesale Dealer

Small Wholesale dealer

Retailer

Consumer

Channel Objectives
Quality Conscious Convenience goods, Needs Intensive distribution Demands variety Very less waiting time Reach masses Rural penetration e-chaupal Diversification Build a competitive advantage

Payment Mostly on Cash-Basis; sometimes post dated cheques Very rarely Credit is allowed on cigarette Transportation Uses delivery van, Rickshaw, Cycles, Autos Storage and other procedures Some tiffs raise between distributor and retailer due to under supply from distributor ITC uses FIFO method to reduce the wastage of goods due to expiry. They also keep the good on constant move from low sales area to high sales area. The company collects all the expired goods four times a year, and destroys them. Retailers must return expired or damaged products within six months after the date of expire. Adjustment for them is done in three months time. ITC provides their retailers with racks, hangers, etc. to display the products. The benefits received by the retailers depend upon their sales volume and also the location of their shops.

Distributors No. of distributors depends on the demand They provide warehousing for the goods An Assistant Manager along with1-2 sales assistants Sales teams are paid and managed by the distributors All transactions are cash and carry

Small Retailer / Pan Shop Sells 15-20 packs a day Makes a margin of about Rs.1020 per pack Procures cigarettes from a dealer on daily basis

Large Retailer Gets his goods from the company distributors directly The goods come to his shop via the sales team Cash and Carry Point of Purchase displays Super stores and Hyper marts

DISTRIBUTION IN RURAL
ITC launched India's first rural mall, 'Chaupal Sagar', which offers products ranging from FMCG to electronics appliance to automobiles. ITC has 23 stores across India

E-Chaupal
Pricing Inbound Logistics

Mandi

Inbound Logistics

Operational Process

Display and Inspection Auction

Inspection & Grading Bagging & Weighing

Weighing & Payment

Payment Hub Logistics Outbound Logistics

Challenges in cigarette distribution

Ban on advertising Cancer and injurious to health warning and its negative impact Ban on FDI in tobacco industry Reaching majorly smallest pan wallas in the country greatest difficulty