SDM PROJECT REPORT
Course: Sales And Distribution Management
Masters in Business Administration
Indian Institute of Management - Ranchi
Submitted to:
Prof. Shibashish Chakraborty
Sales And Distribution Management
IIM Ranchi
Submitted by Group 7:
Sahil Gupta (M147-24)
Samridhi Sinha (M149-24)
Rohit Kori (M045-24)
Manthaj Morajker (M031-24)
Arijit Barua (M176-24)
Sanath Yesurke (M048-24)
Archita Jain (M175-24)
Amit Kumar Pushkar (M171-24)
Introduction:
The project examines the sales force structure and distribution network of ITC Limited, one
of India's largest diversified conglomerates. ITC operates in several areas, including FMCG,
Cigarettes, Foods, Personal Care, Stationery, and Agarbattis. The company is responsible for
creating one of the largest and most sophisticated distribution networks in the country. The
project is based on a primary interview with an Area Sales Manager of ITC, with inputs from
specific industry inputs. The project analyzes the following; the structure of the sales team at
ITC, the sales territories they have defined, the training provided to the sales staff, and the
performance management of the sales personnel working for ITC. The project also analyzes
ITC as a multi-channel distribution company, comprising General Trade, Modern Trade, and
Institutional Sales, and gives particular emphasis to the important roles of its distributors and
retailers, including the turnover, margins, infrastructures, and challenges faced. The project
not only describes the channel conflicts, incentive schemes, and the use of technology in
ITC's sales organization but arrives at a conclusion about how ITC builds one of the largest
FMCG sales and distribution networks in India.
Sources: The findings in the report is based on an in-depth interview with Sumanta Mondal,
Area Sales Manager, ITC (LinkedIn id )
Also, we have referred to the ITC sales/distribution studies from different sources available
on websites supplemented by industry analyses. For reference, website links are mentioned at
last.
Overview of ITC Sales Force Structure:
1. Dual Structure – Geography + Product Line: ITC has a sales organization that is
built around both territory (North, South, East, West India) and product divisions
(Cigarettes, Food, Personal Care, Stationery/Classmate), which allows for
specialization and strong market presence.
2. Top-Down Command Structure: The command structure is hierarchical and starts
at the very top with a Managing Director (MD) who oversees all sales areas. The MD
supervises National Sales Managers (NSMs) for each product category, allowing for
strategic control supervision at a corporate level.
3. Regional and District Division: Each NSM’s role is then divided again into District
Managers (DMs) who operate across the four territories of India. Each DM employs
Regional Sales Managers (RSMs) within the product channels.
4. Branch Control: Within the product focused branch office structure, each RSM will
directly oversee 4-5 branch offices, providing control and execution support and
strategy at the local level.
5. Branch Office Hierarchy: At the branch office level, the structure followed helps
escalate professionalism by developing different tiers in sales professionalism and
experience. The structure is as follows:
● Assistant Branch Manager
● Area Sales Manager (ASM)
● Area Executive (AE)
● Sales Trainee (STR)
6. Sales Trainees - Front-Line Execution: Sales Trainees, generally recent university
graduates, make up the arms-length sale force that engages the market directly. Once
they sell, their effort travels up the organizational construct communicating grassroots
selling to corporate strategy.
7. Structure Strengths and Weaknesses:
● Strengths: separation by territory and difference in product specialization,
more direct local market management, reduced duplication of calls to
customers, and defined professional career paths (SO→AE→ASM, etc.).
● Weaknesses: bureaucratic layers reduce speeds of communication, compared
workload to territory requires adjusting territory sizes and territory balancing.
Below is the Diagrammatical representation of the structure:
Advantages of Sales structure: A defined chain of command and specialization by
product/geography (allows for accountability) and weather coverage. ITC is equipped with an
effective sales force (approximately 10,000 field level staff), and it can divide sales to
sufficiently cover all outlets of distribution with minimal overlap. Specialized channels
(cigarette vs. FMCG) can allow managers to develop specific expertise.
Disadvantages of Sales structure: The multi-layer structure can slow down
managerial decision making and coordination needs to take place across the levels. This also
applies to reporting consideration (some hybrid geographic/product/functional) that can cause
redundancy or manager confusion. Finding a balance of span of control can be difficult, if a
manager has too few sales people may raise costs, if a manager has too many sales people
may not be receiving enough supervision.
Sales Territories: ITC uses a combination of geography, volume potential, and coverage
workload to define territories. Each Armed Salesman/Armed Salesman has a sales territory
that is sized so that projected sales are within a manageable range (typically ₹1–2 crore per
Armed Salesman/Armed Salesman in personal care sales). If the volume of sales in a
geographical area exceeds ₹2 Cr, that geographical area is split into territories that are
allocated to separate Armed Salesman/Armed Salesmen. Some key guidelines in assessing
the sales potential of a territory are past sales ("based on past history, what did you.."),
market population and outlet density, as well as travel distance restrictions under practical
constraints. Beat planning segregates each territory into rounds that occur in-a-weekly-basis.
Effectively, every weekly round requires a delivery vehicle (beat) that carries
approximately ₹1 Lakh worth of goods and visits approximately 15 retail shops each week.
Having this "15 shops per week" cycle facilitates each shop/store in this beat being visited
each week.
Selection, Training & Evaluation: Normally, sales staff are recruited via campus or
HR screening and interviews conducted in multiple stages (by DM/RSM). New hires (Sales
Trainees) participate in a formal induction and on-the-job training program lasting
approximately three months encompassing product knowledge, ITC systems (which now
completely track sales and logistics online), and field selling skills. Upon completing the
training, ASMs role model field-based competencies for AEs/STRs in the territory.
Performance is assessed using basic KPIs including sales volume, outlet coverage and
collection rate, and be measured using basic weekly targets (ITC divides the monthly targets
into 4 weekly targets). Sales personnel will be rated based on whether or not they meet the
quotas for a week, and a formal performance evaluation will take place, with pay incentives
tied to achievement.
The Below Chart represents the timeline and process of Selection, Training
and Evaluation
Training & Onboarding: New hires will attend a training program lasting three months
covering ITC products and processes. The various stages of training are campus recruitment
evaluation, HR interviews, classroom instruction, and partially field mentoring. Progress will
be evaluated at the end of the training program before placement confirmation (placement
may depend on the training). After placement, on-the-job inputs on performance will
continue to occur through regular reviews with the Area Sales Manager (ASM) in the
territory.
Beat Planning: Territories are broken down into "beats" for delivery. An example beat:
one delivery vehicle will load ₹100,000 worth of goods and visit 15 outlets in a week.
When each delivery vehicle visits more than 15 shops, the additional shops will be scheduled
for a delivery during the next round one-week later. This allows for weekly service of every
store, without overloading.
Channel Designs and Conflicts: In order to deliver various products, ITC employs a
multi-channel distribution strategy, including a variety of distribution channels: General
Trade (via distributors/wholesalers to local retailers), Modern Trade (e.g. JioMart, D-Mart,
etc.- all large chains), and Direct Sales (for key accounts - KAM(s) manage the big
customers). Certain products such as Classmate (stationery products) and FMCG products
utilize ITC's considerable distributor network, while several do, but certain ones (e.g.
institutional sales or exports) can use Direct Sales channel. In each channel, however, the
hierarchy remains: the NSM(s) and DM(s) develop the overall strategy, while Operations and
Sales teams manage the implementation via the distributor and retailer sales force. Most Key
Accounts are managed by KAM's of the Modern Trade or e-commerce customers.
Channel Levels:
● At the top are the NSMs and DMs set direction (or strategy),
● The mid-tier managers (RSMs, Branch Managers, and ASMs) manage execution,
● The field personnel (AEs and STRs) and third-party distributors/ wholesalers
execute the sales.
● The distributors (sometimes referred to as WD - wholesale distributors) are a critical
link as they purchase in bulk from ITC and supply a variety of smaller wholesalers
and retailers.
ITC Branch/ASM → Distributor/WD → Wholesaler → Retailer → End Customer.
ITC also sells directly to some modern trade retail chains (and skip the wholesaler).
Potential Conflicts: Having multiple channels and categories of products can create
conflicts. Some examples include:
● Modern Trade vs General Trade: Large modern stores frequently negotiate lower
costs. For example, modern-trade outlets may take a discount to avoid paying a
distributor, putting pressure on the distributor and the local retailer who can no longer
compete for the margin.
● Category overlaps with a different landscape: these overlapping parallel channels
(e.g. cash-and-carry versus traditional distributor channels) include selling the same
ITC SKUs and typically create price cuts for ITC SKUs and confusion. Some research
suggests that Cash and Carry and Distributor channels include limited competitive
advantages including price and service (pick-up, credit terms, returns) in the same
target for the same retailer.
● Territory Overlap: Multiple distributors can be found servicing overlapping
territories if strict controls are not taken seriously. ITC has a formal structure to limit
sub-distributors to exclusive territories, but research identified "territory conflicts
amongst distributors" as an issue, wasted effort with no purpose, and overall
disruption to individual and group margins.
● Product Portfolio Priorities: ITC divisions may also compete for internal reasons.
For instance, a retailer may have limited shelf space and each division's salesmen
(cigarettes versus soaps versus stationery) are competing for attention. With organized
support, opportunities for any category to be overlooked could be avoided.
● Promotional Support: Each division operates its schemes, leading to potential
overload for channel partners. Conflict could arise if, for example, the food team and
personal-care team each run their schemes to the same retailer at overlapping times
with no coordination.
ITC attempts to minimize conflicts by closely monitoring channel activity (with IT systems
to provide visibility when appropriate), and at times devising specific SKUs/limits for
channels (i.e. modern-trade exclusivity). Training and communication with the sales function
is the third method to connect channel approaches.
Distributor or Dealer Business:
ITC depends on distributors (dealers) to access retailers. They do not typically have multiple
distributors for their product avenues in the area. For the purposes of this analysis, some key
elements of the distributor model:
● Count & Coverage: ITC has roughly 900+ wholesale distributors across the country,
serving 74,000 local markets and 1.2 million retail outlets. In one ASM's territory
there are 69 distributors, covering 22,000 outlets. Individual distributors will usually
have 800–1,000 retailers (on average, 1,300/900 using total outlets vs dealers, and
overall, ITC's dealer-to-retailer ratio is more or less comparable).
● Infrastructure & Staff: Distributors typically will own and operate their own fleet of
trucks/vans; they also employ their own sales/promotions staff. ITC's FMCG field
force comprised 3000 dealer-facing sales personnel and 1500 field marketing staff.
(These figures include company salespeople and independent dealer sales agents.)
Additionally, depending on their size, what distributors employ varies, larger
distributors can have tens of staff, while smaller ones might only employ a few.
● Turnover & Scale: The monthly billing of an ITC distributor is typically not more
than ₹2 crore. The interviewee indicated that the distributors in his region rarely
exceed ₹2 Cr/month turnover. ITC is designed to appoint further distributors if
distributors reach too large a turnover and by design, to ensure the workload is
balanced.
● Financials & Margins: The margins are still limited for the distributors. A marginal
is typically 3% on food/personal-care SKUs and 1.45% on cigarettes. Distributors
absorb their own distribution costs for salaries, fuel, and vehicle but ITC reimburses
its distribution costs post sale. Distributors pay ITC upfront (distributors do not
receive any credit from ITC ), and take credit on their wholesaler / retailer. ITC wants
distributor ROIs to be in the range of 25-30%.
● Targets & Incentives: Distributors are issued targets by the ASM or DM and in
many cases are paid incentives for overachievement. The incentive structures often
relate to volume based schemes (where distributors receive bonus earning based on
sales volumetric slab thresholds). ITC also sets daily and weekly billing metrics for
its sales staff (for example, number of calls made in a day or lines sold). In terms of
retailer level incentives, there are promotions and gifts: the shopkeepers receive gifts
or free offering when they achieve scheme targets, or at festive periods (for
example, Diwali & Christmas).
● Terms of payment: ITC operates on a cash basis with its distributors (not company-
financed credit). Distributors will frequently use credit to help smaller retailers.
Sometimes, but in different amounts, depending on local practice. Sometimes to
provide a little leniency in the payment window puts those distributors' capital at risk,
so ITC encourages their distributors to collect quickly. With new product launches,
ITC sometimes allows distributors credit temporarily or an extra margin to encourage
the distributor to take on inventory.
● Use of technology: ITC has digitized much of the process. Their systems allow more
sophisticated tracking of retailer classification and coverage. Sales personnel report
that with the mobile app, it's as easy as recording their orders and collections. The
ASM said, "everything is online" now, instead of keeping manual logs. Route
planning (Permanent journey plans) and sales-tracking software help distributors to
optimise their beats and better understand gaps in coverage.
KPI ITC Typical Numbers
No. of Distributors 900+ nationwide (69 in one ASM’s area)
Retail Outlets Covered 1,200,000 total (~22,000 in one region)
Avg Retailers/Distributor 800–1,000 (varies by region/population)
Monthly Turnover (per dist) Up to ₹2.0 Cr (cap on size)
Distributor Margin 3% (Food/PC); 1.45% (Cigarettes)
Expected Distributor ROI 25–30%
Credit to Distributor 0 days (ITC: payment on delivery)
Payment Reimbursement Distributor bears costs (fuel, staff); ITC reimburses
Sales Personnel / Dist. 1 ASM/WD point + AE support; 25–30 calls per day
Calls per Day (sales rep) 25–30 (each covers ~180–210 outlets)
Incentive Metrics Volume slabs, % of target (lines sold, bill value)
Retailer Schemes Festive gifts, free samples or discounts on targets
Conclusion:
Thus, this project provides a comprehensive study of the ITC’s sales force structure and
illustrates how this has enabled the company to build one of the most robust distribution
network . The dual structure of geography and product line specialization ensures an
extensive market presence and also the defined hierarchical structure provides clear
accountability and control over the field operations. We have done the detailed analysis of the
sales team hierarchy, beat planning, training, territory management and performance
evaluation mechanisms, highlighting ITC’s strengths in systematic coverage, professional
sales development, and strong use of technology to track performance and optimize
operations. However, the challenges identified are: potential conflicts between different
channels, duplicate reporting and difficulties in managing and balancing workloads across
territories. In relation to the growing multi-channel distribution strategy that encompasses
General Trade, Modern Trade and Direct Sales channels, this approach was seen to be
sufficiently strong but would need ongoing integration processes to manage overlapping
product portfolios and conflicts between the expanding channels. This is all stated while
commenting on the fact that ITC has a very well-established network of distributors, which is
key to its distribution reach but is additionally associated with its own set of challenges that
relate to margins, augmenting credit, and incentivizing a wide distribution network. In
conclusion, ITC has established a solid infrastructure, disciplined training and/ or sales force
management, a strategy for appropriate use of technology, and appropriate structured territory
management. All add significant value to ITC's competitive advantage in the FMCG market.
For future development, these factors could be considered for further development:
enhancing and/or improving inter-channel coordination, particularly in relation to managing
distributor relationships, and enabling access to timely data analytics for allowing
instantaneous decision making.
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