analysis of ITC

1. ITC

2. What is ITC
 ITC is one of India's foremost private sector companies
with a market capitalization of nearly US $ 19 billion and
a turnover of over US $ 5 billion
 ITC has a diversified presence in Cigarettes, Hotels,
Paperboards & Specialty Papers, Packaging, AgriBusiness, Packaged Foods & Confectionery, Information
Technology, Branded Apparel, Personal Care, Stationery,
Safety Matches and other FMCG products
 ITC’s diversified status originates from its corporate
strategy aimed at creating multiple drivers of growth
anchored on its time-tested core competencies: unmatched
distribution reach, superior brand-building capabilities,
effective supply chain management and acknowledged
service skills in hoteliering

3. The Product-Mix
 FMCG




Cigarettes
Foods
Lifestyle retailing
Personal Care
Stationery
Safety Matches
Agarbatti
Hotels
Agri-business
Paperboard and Packaging
Information Technology

5. Composition
 Manufacturing
Unit Separate for each product line
Contract Manufacturing
Backward Integration
E-Chaupal
 Storage Hubs
Stores all the products

6. Cont…
 Distributors
Exclusive based on population
Needs to stock all FMCG products( Except
Stationery)
 Wholesalers
 Retailers
 Paanwalas
Deepest penetration possible

7. Suitability
 Perishable




Short Span
Customers prefer fresh products
Lot Size
Smaller Lot sizes
Convenience
Waiting Time
Product Assortment

8. Channel Objectives
 Consumer Behavior
Quality Conscious
Convenience goods, Needs Intensive distribution
Demands variety
Very less waiting time
 Company Objectives
Reach masses
Rural penetration
Diversification
Competitive advantage
 Alternatives
Sell ready to eat products through sweet shops like bikanerwala
Showrooms for High-End products
E-Chaupal

9. Features
 Selection
Distributor is selected based on
Infrastructures, Delivery Van, Computer,
Warehouse, Sales Force
Population based ( 1 Distributor per 20-25 thousand)
 Control
Uses Coercive power
To deal in Cigarettes, it is must to deal in Other
goods
 Terms and Conditions
Price, Selling Condition, Godown Condition etc…

10. Functions
 Manpower
 Promotion
 Credit
 Infrastructure
 Stocking

11. Benefits
 No Benefits
 Higher margins
 No Credit- Only Cash Payments
 No Freebies, Paid Vacations Gifts etc..
 Very rarely Cash gifts (linked with
performance)

12. Others
 Order
Distributors- Weekly
Retailers- Twice a week
Paanwalas- daily
Online order is placed by distributor
The periodical order from wholesaler , retailer,
Paanwalas is collected by staff of distributor.
 Payment
Mostly on Cash-Basis; sometimes post dated
cheques
Very rarely Credit is allowed on cigarettes

13. Cont…
 Transportation
Uses delivery van, Rickshaw, Cycles,
Autos
 Conflicts
No Conflicts
Some tiffs raise between distributor and
retailer due to under supply from
distributor
 Problems

14. Analysis
 ITC has the most popular brands of cigarettes in India.
 The sale takes place from the largest of retailers like Big
Bazaar, Spencer's to the smallest of Paanwalas at every
nook and corner in India.
 Thus ITC has deeply penetrated the Indian cigarette
market.
 With an already established distribution channel for
cigarettes, ITC is also selling safety matches, which is
complementary to both the cigarettes and Agarbatti. T
 he retailers and Paanwalas are also ready to stock ITC’s
candies, potato chips and finger snacks because of the
higher margin as compared to Frito lays, which is its
biggest rival in potato chips and finger snacks segment.

15. Analysis
 By entering into the branded Indian biscuit industry




there was a business synergy.
ITC was already value-adding to wheat with its
branded Atta presence. By entering the biscuits
segment, it improved its bottom-line further.
The company used its existing network of
convenience stores -- the company’s name for the
hole-in-the-wall pan-beedi shops-- for Sun feast.
The company says the brand is now available in
nearly 1.8 million outlets.
Sun feast captured around 7% in mere 3 years since
its launch in 2003

16. Thank you