A Project Report On Distribution Channel Of Mahavir Straw Board Mills (P) ltd.

Submitted by: VIVEK MODI (3049)

MBA (2003-05) NRIBM, AHMEDBAD

DATE OF SUBMISSION: 14TH JULY 2004

IN PARTIAL FULFILMENT OF M.B.A. PROGRAM

Acknowledgement

I am highly thankful to Mahavir Straw board Mills Pvt. ltd. for granting me permission for summer training in its esteemed organization. I am highly grateful to Shri Anjani Taparia for providing me proper guidelines, kind cooperation and constructive criticism throughout my project. I am also thankful to whole staff of Shri Mahavir Strawboard Mills Pvt. Ltd. for their support and coordination during the project. I am highly obliged to all those who have helped me directly or indirectly in successful completion of this project. Vivek Modi

Preface
As a part of our curriculum for MBA program we are supposed to undertake industrial training for a period of two months. In order to gain practical knowledge as well as to access applicability of different subjects we have studied throughout the mba-1. This kind of training enables us to face the real life situation of the market and allows better insight to take the practical industrial problem. I have undertaken this training at Shri Mahavir Strawboard Mills Pvt. Ltd. The aim of the training is to utilize the knowledge and fell about the marketing management. It will increase our ability to perform specific job systematically in a new way in industrial environment when we will come out into the market. We have done organizational study in which we have gone through all the functional areas of the organization. After this study we try to find out about the organizational polices. I have also recommend how the problems of the organizational can be solved.

Content
General information Introduction to marketing management. Company profile. Product profile Hierarchy of marketing department. Distribution channel network. Selection and function of intermediaries. Channel logistics. Product life cycle and marketing strategy. Competitive strategy. Promotional strategy. Human resource management SWOT analysis. Future plans. Observations Suggestions. Conclusions. Bibliography

General Information
Name of the company: Shri Mahavir Strawboard.

Registered office:

46, Strand Road, 3rd Floor, Kolkatta-7

Branch Office:

187, Gali Batasan, Chawadi Bazar, Delhi. C-1, 3rd floor, Khadiya Ahmedabad.

Location of plant:

Power house road, Mainpuri-205001

Auditor:

S.M.Daga & Co. Kolkatta.

Banker:

Central Bank Of India. Straw Board.

Product of the company:

Sundry Straw Board. Stiff board. Cone board. Strawboard Reel. Philosophy: The company believes in providing the quality product with full customer

satisfaction long-term with

and

build The

relationship

customers.

company believes in no compromises with quality.

Introduction To Marketing Management

Marketing

is

the

business

function

that

identifies customers need and wants determines the target market the organization can serve the best and designs appropriate products and services and program to serve these markets. However, marketing is much more than just an isolated business function. It is a philosophy that guides an entire is to organization. create The goal of marketing customer satisfaction

profitability by building value-laden relationship with important customer. Thus marketing calls upon everyone in the organization to think customer. Many people see marketing only as

advertising or selling but real marketing dose not involve the art of selling what you make so much as knowing what to make. Organization gain market leadership by understanding consumer needs and finding solutions that delights customers through superior value, quality, and service. If customer value and satisfaction are absent no amount of advertising or selling can compensate. People throughout the organization need to know how to define and segment a market and how to position themselves strongly by developing

need satisfying products and services for chosen market segments. They must know how to price the offering to make how to them choose attractive and and affordable and manage

intermediaries to make their products available to customers. The need to know how to advertise and promote products so customer will know about them and want to buy them. Clearly marketer needs a broad range of skill in order to sense, serve and satisfy customers need. Emergence of anything comes form ideas and these ideas need to be sold. Marketing executives and managers can very well do this. Psychology of end users and all supporting parties need to be understood by marketing managers. In short marketing revolves around the convincing power. Marketing channel decisions are amongst the most important decisions that management faces. A companys channel decisions directly affect every other marketing decision. The companys pricing depends on whether it uses mass merchandiser or high quality specialty stores. The firms sale force and advertising decision depends on how much persuasion training and motivation the dealers need. Whether a company develops or acquire certain new products depend on how well

those products fit the abilities of its channel members. Distribution channel can be well known as the backbone of any manufacturing unit. In todays competitive environment where the products are to be delivered where and when the customer wants distribution channel is of strategic importance. Thus to understand how actually a distribution channel works along with its various components can be very much beneficial to a student.

Company Profile

Shri Mahavir Strawboard Mills Pvt. Ltd. was established in the year 1964 and in all these years it has grown to be one of the best company in this field with cutting edge in technology, best quality and best customer satisfaction. The company was started as a private limited concern and saw tremendous success in the industry and is continuously running profitably due to the expertise of its management and the visionary power of its chairman. The company has adapted with time and expanded its business. The company has acquired subsidiaries business and in diversfiying in rice processing units. The company gets advantages as its uses the waste by product of rice industry as its main imputes in straw board industry. This makes the companys product cost effective and gives an edge in the market. Company renovates its machinery according to the latest development in the technology. It has a better chance to stay as a leader in the market with its superior technology with its established brand name in the market.

Product Profile
The basic and main product of this unit is automatic straw board in both sheet and form and reel form. This product was launched in the year

1964 and since then every year the company has undertaken tremendous effort in enhancing the quality f the product. The company has also renovated its plant and machinery according to the demand of the market. The other product of the company is stiff board and cone board these products are not manufactured on regular basis but as per the demand in the market. They are mostly seasonal in nature. The company also manages subsidiary concern program. The company produces its products as per the customer specifications. The company has to undertake production of different variety in order to satisfy the different markets. The company enjoys a widely recognize brand name in the industry this is due to the long-term existence of the company in the market. And also strong technological backbone. That helps the company to sustain in difficult times. and has undertaken diversification

Hierarchy of the Marketing Department

General manager

Area sales manager

Sales executive

Distributor agent

Distribution Channel Network

In todays competitive world customer is the king and always deserves the best. Each and every

activity

of

company

is

directed

towards

customers. it is the responsibility of the marketer to delivery the products as when and where the ultimate user wants. It is because of this reason that the function of distribution of the products is so much important and has acquire a position amongst the 4 P s of marketing process. Technically speaking the machinery through which the product is reached up to the final consumer is called distribution channel. Theoretically a distribution is a set of independent organizations, involved in the process of making the product available for use and consumption by the final user. Marketing channel decisions are amongst two types. 1. Conventional distribution system 2. Vertical distribution system Shri Mahavir Strawboard Mills Pvt. Ltd. has adopted the conventional marketing system that may be because of the reason that such a form the owner or producer has a better independence and control over the system. the most important decision that management faces. Distribution channel can be of

Channel network of Shri Mahavir Strawboard Mills Pvt. Ltd.: Following diagram broadly explains the

structure of distribution channel of Shri Mahavir Strawboard Mills Pvt. Ltd. The distribution channel starts form manufacturing plant.

Factory

Depots

Distributor

Wholesalers

Retailer

Consumers

The market penetration and distribution reach of the company complements the brand promotion effort. The company has a network of over 50 distributors all over the country and thousands of retail outlets making the companys product available to each and every consumer. The

companys efficient distribution network has given it the ability to tap even the remotest customer. Effective distribution is critical for the success of any brand in the strawboard market. The company has to its credit a strong and effective distribution network. Which has achieved the highest reach and penetration of the companys product in the retail universe. Generally form the factory the goods are dispatched to depots, which are located sate wise and are owned by the company itself. For the depots the goods are sent tot he distributor and wholesaler. The retailers can order to the wholesaler and the wholesaler can directly sell to the customer.

Selection & Function of Intermediaries

Distributor: They are exclusive companys distributors. The company enjoys full control over the distributors. They company following exclusive dealings and exclusive territories. The distributor

enjoys 5% return on investment on the companys product. If the company is going to launch a new product the company goes for the exclusive distributorship for the entire range of products. This is because the company feels that the old distributor may not have interest in having a range in their product portfolio. As it is a new product it may not fetch sufficient return. Thus they may not exert much effort and interest in promoting the products. The distributors are directly responsible to the company with regard to the variation in their sales volume. As a precautionary measure the company takes sufficient care and effort at the time of appointment of distributors. Generally there are four major criteria which are taken into consideration.

They are1. Financial stability:Distributor has to give fixed deposit to the company as a security amount. Company also has right to seek and scrutinize information about the financial position in the past business. Company appointed field force to maintain regular and constant check on distributors. They check

monthly stock statement and these monthly stock statements are forwarded tot he company on regular interval. The company also ensures that the distributors appointed are capable enough to put further investment and effort as and when needed vis--vis companys expansion policy or market fluctuations. It is preferred that the distributors have offices in the prime locality in the market and should have sufficient space for inventory holding. 2. Goodwill in the market. A sound goodwill happens to be a major factor in developing business. So the company takes care that the person appointed as a distributor possess a sound reputation in the market. The company also ensures that there are no legal or criminal offense registered against the distributor. They should not have any claims pending against them. 3. Market know how The distributor should be sufficient to judge the market ups and downs. He should be capable of forecasting the sale and future trends and also competitors product launches. The should be able to formulate a strategy the vis--vis to the company strategy.

4. Other factors. The person should be willing to be exclusive companys distributor. He has to sing exclusive contract with the company and should be ready for penalty in case of breach of contract. In adverse cases if the distributor proves to be unfit for the company it can either curtail its market coverage or can with draw certain core products form his product portfolio if necessary the company can cancel his distributorship.

Wholesalers Wholesalers are generally appointed by the distributor and not by the company. Thus company dose not have any sort of control over wholesalers. They need not They be are exclusive legally companys to the wholesalers. bound

distributors and not the company. It is preferred that the order is routed through the distributors. Generally direct dealing is discouraged unless the

company

has

harmonious

relations

with

the

wholesaler. Retailers:The company has a very aggressive strategy for the market penetration. Therefore the company ask the distributors to go in for every retailer through its sale force. The company remains in contact with its wholesalers to know the effect of incentives during promotional offers.

Channel logistics In all marketing channels the product must be moved in the right quantity at the time to a right place in order to be delivered most efficiently to the end user. For that management of the flow of the goods and information form the point of origin to the point of consumption. Warehousing.

The finished goods are kept at the companys warehousing form the localities near the its manufacturing dispatch facility. When the company receives the order distributor companys department takes care of it and deliver the goods to depots form the warehouse, which then are routed to the distributor. Order processing. Generally the method of the order processing of the company is that it receives order only by the distributors. The received order is sent through dispatch department. After the dispatch department verifies the company and send goods to the distributor through the convenient means of transport. Company charges 18 percent rate of interest on the value of goods dispatch after a stipulated credit period specified by the company form the date of delivery of goods. The company transports its material through road routes. Inventory. The company tries to minimize the inventory cost of the company by delivering the goods as and when required by the dist5ributors. Generally the distributors as per the corporate policy of the

company keeps 15 days of inventory. Thus the company dose not try to dump the products but see that they are available as and when required. If the distributor fails to maintain minimum inventory then the company raise inquiry and ask for possible explanation. The company uses cost based pricing for its products. The company has to its credit a strong and effective distribution network which have achieved highest reach and penetration of the companys product in the retail market.

Product Life Cycle & Marketing Strategies

The company was started in the year 1964. It has completed almost 40 years in this field and has grown to be an industrial leader. First few of its establishment company has enjoyed monopoly in the market. Over the years the competition has increased and the company has taken some

strategic moves to compete with the situation. Under these strategic moves the company has renovated its technology form time to time. At present the company is using the most modern technology available. The industry is still in its growth stage and there are huge prospects for future improvement in the demand. So the company has undertaken the massive task of increasing its customer base for expanding its business. The company sets high targets and achieves them In future the company can adopt the following strategies To do more intensive sales efforts than it presently does for which it will recruit more sales people. Also it should try to differentiate its products from that of rival and increase its brand awareness amongst the end user. The company should communicate the usefulness and uniqueness of its product it its clients. The company has big names like INDIAN Rayon and BSNL and numerous other names in its client list. The company sales force can use the name of these clients to promote the companys

name and image in the minds of potential customer. The company is having offices in the different parts of the country. By proper coordination and effective information form different places the company revenue. To increase the sales the company can motivates their present client by offering them good package in terms of price, credit terms, and create new uses for its existing products. The company should enter into new market segments. can increase the volume of its

Competitive Strategies
With improve the itself companys it has constant efforts plants to and

modernize

machinerys to stay ahead of competitors, and move ahead of the competition it can follow the following strategy. New user:

To remain ahead of competition it should try to widen its customer base as much as possible. Higher number of customer will give the company an additional strength in the case of sudden emergence of competition. For this it can penetrate the market segment or expand the market geographically. New uses: It should try to increase the uses of the existing products as well. More usage: It can offer competitive and lower price products to its present client to motivate them to use their products.

Promotional Strategy
To be successful a company needs a wellorganized marketing system. The sales department of the company is very well organized and effective in this matter. As the advertising is not effective for these products the company uses a wide variety of sales promotional tools.

There is a specific objective behind every sales promotion effort. Sales promotional schemes are to be designed for the particular purpose or occasion. The company dose not give any direct incentives to the end user but it gives incentives to the distributors and wholesalers who pass these benefits to the end customers. The company offers trial samples to the distributors to give them to customers. the company gives heavy discounts in off-seasons and cash discounts to increase the liquidity of the company. The company undertakes aggressive sales promotional strategies to remain ahead of its competitors in the market.

Human Resource Management

Recruitment and selection procedure. 1. Give the advertisement in the newspaper. 2. Collect bio-data. 3. Scrutinize the bio-data as per the requirements. 4. Give an interview call to the scrutinized candidates.

5. Take the interview and sometimes CEO of the company also involves himself in the recruitment process. 6. Select the suitable candidate, the company selects suitable candidates on the basis of the following criteria. Educational qualification. Communication ability Aptitude Attitude Experience Personality Basically company selects candidate form the external sources such as college campuses. Competitors and other sources. This recruitment procedure has the following advantages and limitations. Advantages By this way company has the benefit of new talents, new skills and new experiences. Scope of resentment, heartburn and jealousies can be avoided.

Limitations Better motivation with and increased moral existing associatedness employees is lost. It is more costly than the internal recruitment.

promoting

Here chances of wrong candidate selection are more.

Training After selection procedure is over, the selecte4d candidate is given training. Company is providing practical or on job training to the newly employed. Also some times the company provides hands on training tot he employees. In this training the trainer gives instruction to the trainee about how to operate a particular system and how to deal with adverse situation. Training is an attempt to improve current or future employee performance by changing the employees attitude or increasing his or her skill and knowledge. Generally the company gives training to the staff immediately after the selection. Performance remuneration: appraisal and employee

Basically in the company appraisal is done at regular intervals. In this performance appraisal following things on the basis of which the staff is evaluated: Quality: The degree to which the process or result of carrying out an activity approaches perfection, or is there other conforming to some ideal way of performing the activity or fulfilling the activity's intended purpose. Quantity: The amount produced expresses in monetary terms number of units or number of completed activity cycles. Punctuality: The degree to which an activity is completed or a result produced at the earliest time desirable form the stand points of both coordinating with the outputs of others and of maximizing the time available for the other activities. Cost effectiveness. The degree to which the uses for the organizations resources are maximized in the sense of getting the highest gain or reduction is loss form each unit or instance of use of a resource. Need for supervision: the degree to which a performer promotes feelings of self-esteem

goodwill and cooperation among coworkers and subordinates. Remuneration: Remuneration is paid on the basis of basic salary plus the amount of sales made by them in case of marketing executives. Whereas in the case of regular workers awards are and other to staff the remuneration includes basic salary plus overtime sometimes given exceptional performers on the job and in the market system. Feedback system: Each worker is required to fill up a form that contains the details about a particular days work performance. Company decides feedback and any changes to be made in production processes on the basis of these forms. Such forces not only help in keeping a check over the activities but also help the company to make adequate changes in structure and processes. Motivation: As the company offers fair package of remuneration and other benefits the commitment of the staff remain high. Here we can say that the

following factor is the motivating factor for the staff. Recognition by the top management. Work itself. Responsibility defined. Advancement and growth. While other factor such as salary status working condition interpersonal relation supervision and company policies are at the background for motivating the staff. Even thought this factor doesnt essential. Leadership role The company follows work oriented methods of leadership style meaning the follow Blake and Mounton model of leadership where production is given more importance to the people. In some situations company is overly concerned with production to the exclusion of the employee needs, means it is basically authoritarian style leadership. They follow participative management style in the matter that can affect the moral of the employee. motivate the staff but they are

Future Plans
The company pans to expand its

manufacturing capacity. The company also plans to add new product to its product range. The company is planning to manufacture duplex board.

This product has a large market share in paper industry and is used in a number of industries for packing products. The company also plans to establish new plants for the production of draw board in the near future.

Observations
After studying the company I have observed that the company produces high quality goods using the latest technology and strives for the best in everything it do. It also treats its employees

very well and because of this there is no union in the plant. The company undertakes public welfare projects in the near by area. The company is also running a charitable hospital for he welfare of the public. The company has progressed a lot in all these years and I view that the future is bright.

Suggestion
I have the following suggestions for the company:1. The quality of the product need to be maintained and should keep on improving for

better customer satisfaction. Looking at the strong technological base of the company this dose not seem as a far fetch possibility. 2. The company should appoint creative people in its workforce so that they will generate ideas and new uses for the same product. 3. The management of the company is not fully professionalized which hampers the growth of the company in the international market. 4. The company should try to educate the potential customer by arranging conference and make them aware of the benefits of quality products. 5. The company should try to expand its international market, as there is a huge scope for these products in the international market.

Conclusion
After a detail study of this company I can evaluate expanding that the company is day While to it day was industrial corporate.

started at a very small scale no one can imagine it

in this large form. The company shows its tremendous performance and potential as a successful marketer. User of the product always says that companys product are the best value for their money. When it entered the market as a manufacturer of the straw board it product largely connected on few users but as time passed the market has expanded and the competition has increased. The company has introduced a wide variety of products, which shows the characteristic of a successful marketer. When we consider financial profit aspect of the company we cannot say that profit increment is only result of increment in sale or increment in price. But it is more based on reduction of production cost. The company has successfully challenged and changed the conventions of the paper board industry. The company not only makes better product but also infuses the values with affect perceived characteristics of the internal customer company. oriented environment of the organization. Following is the SWOT analysis of the

SWOT Analysis
Strengths 1. The company is having rich experience of the market.

2. 3. 4. 5.

The company is having a good reputation in the market. The company has good customer retention ability. The customers are fully satisfied with the companys product. The company has high growth market potential due to increase usage in textile industry, book manufacturing and in packing industry.

6. 7.

The cost of production of the company is very low as compared to its rival. Mass production and modern technology gives the company a cutting edge over its competitors.

8.

Good export market is developing for the company.

Weakness 1. 2. Constant innovations and upgradation have created a major challenge for the company. Less flexibility in the production line.

3.

Demand is more and the production of the company is cannot be increased to meet the rising demand.

4.

During the recessionary period the company has no choice. Value addition at the same price or get out to the market.

5. 6. 7.

The company distribution channel has still not been able to tap the remotest consumer. Transportation cost is a major constraint in serving remote markets. Infrastructure facility is not available which hampers the production capability.

Opportunity: 1. The company has opportunity to grab the market share in the present circumstances where no major competitors are present.

2.

The

company

has

established

the

most

modern and well organized unit.

3.

Few players in the market who produces the same product. The government is giving support to the agrobased sector industries it gets and as the of company procures its raw material forma agriculture benefits government incentives and subsidies.

4.

5.

Moreover the cost of procurement of raw material is also low as agricultural by byproduct is available in plenty.

6.

Wide usage of the companys product and its applicability in the different fields gives a high growth potential to the company.

Threats: Threat indicate challenges posed by an

unfavorable trend and development that would lead in the absence of defensive marketing actions

to deterioration in sales or profits. The company has a threat in the following areas. 1. As the government policy changes the

increase in excise duty and taxes will affect the company. 2. Other threat is the economic environment of the country the recession prevails in the market and this has hampered the growth of the company. 3. New technology is to be procured form other countries and the company has to spend a lot of money for procuring the latest technology. 4. Opening increased up of international threat of market has the cheap imports

especially form China.

Bibliography
The following is the list of useful information sources, which helped e to present this report and

to make it much more informative than it could ever be. Books

Principle of Marketing: Philip Kotler Principles of Marketing: Gary Armstrong & Philip Kotler