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Distribution Channel of The Times of India



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Distribution Channel of The Times of India

  1. 1. Distribution Channel of The Times of India Ishpreet Singh – 12P139 J Abhinav– 12P140 Karan Jaidka – 12P141 Kshitij Agrawal – 12P142 Ladlee Rathore – 12P144 Group 10 – Sales and Distribution Management – Section B PGPM 2012-14
  2. 2. Methodology  Analyzing the distribution structure of Times of India  Identifying the roles (Primary and secondary) of all the intermediaries  Analyzing the promotion schemes followed by TOI  Conducting a detailed study of the flow of the product and relationship between these existing intermediaries  Interviewing intermediaries to get insights about problems in the existing system  After identifying the inefficiencies in the channel, conducting research for probable solutions  Making recommendations
  3. 3. Company Background Owned and managed by Bennett, Coleman & Co. Ltd. 45 dailies and periodicals 108 editions from 9 centres 16 Special Interest offerings targeted at groups of consumers ranging from photography to education to annuals on beauty, fashion etc. Readership of 76.43 lakhs Times of India is ranked as the top English daily in India by readership
  4. 4. Industry Overview More than 1,30,000 printing presses in India More than 10m families involved in the industry INR 20 bn+ turnover Per capita consumption of paper & boards - 4.5 kgs Machinery - new & second-hand - predominately from China, France, England, Germany
  5. 5. Industry Overview Circulation and Readership Circulation [number of copies distributed (not same as sold)] one of the principal factors used to set advertising rates Readership: number of people reading the publication Advertising 80% of the revenue comes from advertising & 20% from sales
  6. 6. Distribution - Structure The Times of India Printing Press Depots Agents Vendors Vendors Beat Boys Newspaper Stands Beat Boys (3-4) Newspaper Stands Readers
  7. 7. Channel Members Printing Press It takes the content from the editorial team and prints using high capacity advanced press machines that deliver the product in packaged condition Situated in Ghaziabad for Delhi NCR region Capacity to print over 10 lac copies Printing starts around 1-1:30 am usually After Printing, stacking is done before dispatching newspapers to depots Labeling done to match stacks with destination Usually stocks for depots situated the farthest are dispatched earliest
  8. 8. Channel Members Depots The distribution centre receives the copies from the transporter and stocks it for a short duration  Close to 100 depots in Delhi  Keep publications (newspaper + magazines) for various companies  Serviced by salespersons who are company employees  Unorganized – keep newspapers / magazines scattered on pavements or on steps of some malls etc  Records are kept at depots in the following format:- Newspaper 1 Newspaper 2 Vendor code Qty to be Delivered Qty Actually Delivered Qty to be Delivered Qty Actually Delivered X Y
  9. 9. Channel Members Agents Employed where distribution is not organized Exclusive agents of TOI Work on commission, themselves act as salesmen Delhi market- Working with depot Gurgaon- Working with agency system
  10. 10. Channel Members Vendors Like retailers. Link between depot and end consumer Go to nearest depot everyday. Pick out publications they want They sell via : door-to-door beat boys/single point newspaper stands MDI vendor serve in areas – Sector 14 and MDI. He collects newspapers from Old Bus Stand Agent
  11. 11. Channel Members Beat Boys The delivery boys have demarcated regions/housing societies, which they serve Hawkers are individuals who do not have established customers and sell at road sides, bus stands etc. They make small quantity purchases Deliver required publications to proper destinations Have route-wise list of addresses and their required newspaper/publications 3-4 beat boys cover an area via their routes
  12. 12. InformationFlow New consumer/Existing consumer taking or terminating subscription Inform their Vendor( increase/decrease his order by one ) Vendor Informs the distributor Distributor informs the company.
  13. 13. Channel Margins Margin given by TOI to channel members is around 30% More or less uniform rate across the industry Agents get 5-10%, salesmen on payroll get fixed salary Vendor receives 20-25%, to cover the costs incurred due to travel, beat boys etc. It depends on the type and language of newspaper. (Hindi – 25%; English – 20%)
  14. 14. Credit Periods 30 day credit period to distributor is offered, subject to 3 month security deposit For Vendors, on an informal basis, 1-2 days is offered. Vendors buy a fixed, large amount of newspapers daily and pay in cash on a day-to-day basis 2% of the papers which remain unsold at the end of the day can be returned back
  15. 15. Promotion Schemes Trade Schemes Offered to channel members Incentive to increase sales Challenge for channel member: Balance reader interest while trying to increase sales to avail benefits of the scheme Discounts for purchase of larger volumes by vendor Bonus of 50 paise for each new account generation by vendor Discounts Mainly for institutional sales Eg. Bulk sale at schools at discount rates
  16. 16. Promotion Schemes Reader Schemes Directed at final consumer/reader. Mainly to draw in new customers Varies depending on location & demography Could include trials, discounts, freebies, combo offers etc Subscription Sales Offer choice of publication for a certain amount of time at a lump sum discount price Purpose- gaining new customers and making customer switch
  17. 17. Issues Identified Timely Delivery Payment & Claim Delays Return Policy Manual Packaging system
  18. 18. Timely Delivery  Important to deliver on time at each level  Dispatch first to depots that are farthest  Company might go against norms- For eg. deliver first in areas of early risers  Unnatural events could affect on-time delivery  Most common reasons are traffic jams, monsoons, break- downs etc  Ownership is transferred once paper leaves press  In case of delay, agitated vendors and stall owners might switch to substitutes to satisfy their customers
  19. 19. Recommendation  Local Knowledge about routes etc. can be helpful  Timely delivery at important locations  Benchmarking competition, especially managing routing properly. Distributors should take care of critical vendor locations Possible Roadblocks  Additional costs due to operational inefficiency to be borne by TOI  Routing is not under control of TOI  Could lead to complete system failure  Distributor must be capable of handling this task
  20. 20. Payment & Claim Delays Informal Credit terms between distributor & vendor Chances of default are higher Probability is higher towards month end when vendors are cash-strapped Could translate into distributor defaulting on payment to TOI Challenge for distributor to balance sales & credit based promotion
  21. 21. Recommendations  Formal credit system can be introduced  Higher incentives for timely payment  Credit period could be extended to Distributor when possible which can be passed on to Vendor Possible Roadblocks  It can happen that distributor is bearing costs which may not work  Vendors may not be comfortable with formal credit system Payment & Claim Delays
  22. 22. Return Policy TOI allows up to 2% returns with full refund of costs In case it exceeds the limit, channel members bear the loss Distributor also allows the same 2% returns for vendors Issues arise when inventory increases above a certain level due to poor forecasting or unforeseen reasons
  23. 23. Recommendations  Benchmarking competition, like HT, the market leader (Gurgaon region) allows 10% returns with full refund  TOI too should offer comparable return rates  Increase flexibility for channel members, which could lead to boost of sales Possible roadblocks  Higher costs to TOI  Would need tighter monitoring by TOI to prevent misuse Return Policy
  24. 24. Manual Packaging  Automatic & manual packaging, both are used in industry  Manual Packaging has lot of inefficiencies associated  Delays – could cascade on to delays in loading, delivery  Human Errors – could lead to incorrect quantities or editions being packed  Onus to make up is on distributor, as error is detected usually after leaving printing premises  Distributor has to bear costs of transporting replenishments to aggrieved vendors
  25. 25. Recommendations  Try the use of automatic system  Eventually phase out use of manual packaging systems  TOI should adopt tight monitoring mechanisms  Maintain beat boys at distributor to handle any errors Possible roadblocks  Costs in setting up automated systems might be prohibitive  Distributor may not be willing to maintain beat boys Manual Packaging
  26. 26. THANK YOU