With the development of world and human being, the taste, need and the attitude of human being also changes. India is one of the common market in the world with a population of more than one billion. Soft drink is a popular common product which is generally purchased by consumers for quenching their thirst in summer and also to have cooling refreshment. As far as the market of soft drinks is concerned, it is facing cut throat competition from the larger number of soft drinks available in the market. Different brands are available in every segment of flavors, but the attitudes of the consumers differ from each other due to several factors. Every company tries to increase their market share and their sales volume. Discounting system followed by the companies proved to be an essential factor to boost up the purchases made by the retailers. The companies try to attract the retailers to purchase more by providing some schemes or incentives or cash/card discount. If more discount or any other incentive scheme is given to the outlets, they make purchases to avail that offer. Therefore, it is essential for any company to have an efficient and effective discounting system.
Distribution is the spine of any FMCG company. The main function of a retailer is to bridge the gap between the supplier and the customer. The central focus of distribution is to increase the efficiency of time, place, and delivery utility. For any FMCG product it is essential to have a good distribution network which should be better than that of its competitors.Distribution is the key area for any FMCG business. For a smooth distribution network, it is essential to keep the retail outlets satisfied which in turn mainly depend upon the profitability. Their profitability is checked by keeping a satisfied profit margin for them. Apart from that, the company also provides discount on purchase of different pack sizes to some HVOs which in turn increases their profit margin. Sometimes the company also provides incentives to the outlets which make frequent and high purchases. To meet stiff and challenging competition from some of the other brands, it is essential for the company to have an effective and efficient distribution network. Therefore, the company tries to keep the outlets satisfied by offering discounts and some other incentive schemes from time to time.
- To find out any kind of misrepresentation being done by salesmen or by distributors related to daily sales by making out their own personal benefits from the discounting system.
- To compare the discounts given to HVOs on the basis of their sales volume.
- To make proposals to minimize the revenue leakages and this will help the company in saving its funds.
- To study the discounting policies of the company.
- To know about the different pack sizes being sold by the company.
- To find out the outlets where the company is offering high discounts.
- To analyze the discount rates offered to HVOs.
- To find out whether they are actually getting the products at the pre - decided discounted price or not.
Understanding Phase : This being the primary phase of the study involves the understanding of the basic factors that affect discounting. In FMCG businesses, there are many factors that affect the discounting policies directly or indirectly and it is essential to have the knowledge of all these factors to understand the discounting system. Every company has their own terms and ways of doing things. It is essential to have an in depth knowledge about everything to understand different prospective of business. This phase includes three stages:
Stage1 : To have the knowledge of all the factors that affects the discount to be given to different HVOs. This includes factors like sales, competitor's strategy, negotiation, etc.
Stage2: To collect the data of sales and discounts of different HVOs. This includes the collection of data of sales and discounts for the year 2006 and 2007 of different HVOs being served by the company. It includes direct as well as indirect HVOs.
Stage3: This stage involves the short listing of the HVOs for personal visits and for making inter comparison of the discounts of the HVOs on the basis of their sales volume.
Analysis phase : After being familiar with the basics of the business, the next part of the project work includes personal market visits and visits through route rides to detect any kind of wrong practices being adopted by the salesmen and the distributors to fetch out their own personal benefits from the discounting system. It also includes analyzing the discounts given to the short listed HVOs and to make a comparative study of the discount and sales volume of the HVOs.
Interpretation Phase:- After carefully analyzing the discounts of various HVOs, the next part involves finding out the variations where some HVOs are getting higher discounts on different pack sizes as compared to other short listed HVOs and recommendations have to be made as to how the leakages can be reduced and a fair discounting system can be maintained. The basic aim of this stage is to give suggestions that can work as decision making information which will be solely for the use of the organization.