EXECUTIVE SUMMARY

This study aims at the various wholesale loyalty programs being run by confectionery and
FMCG companies for their wholesalers and how these programs benefit the wholesalers.
Loyalty programmes as a term is well known in Indian retail industry be its Shopper stops
First Citizen card or Payback card, but it is a little known fact that loyalty programmes
are run on much higher scale by wholesalers in FMCG & Confectionary Industry as well.
Initially the data was collected on the raw hand from various shops in the city so as to
compare the benefits associated with the ongoing programs but the major support came in
from the distributors who take care of the supply of products and goods to the wholesalers.
There are certain factors that have predominantly worked towards enabling the
confectionery sector to grow in recent years. These include higher disposable incomes that
have enabled consumers to enhance their purchasing power, rapid urbanization that has led
to busy lifestyles and subsequent inclination of consumers towards premium range of
confectionery and aggressive marketing campaigns by all the players to break the product
clutter and attract consumers through brand loyalty initiatives. In addition to these, the other
factors which are contributing towards the rapid growth of the industry include the growing
gifting culture within the country, fast expanding retail network and developing rural sector.
With this data which was collected from the distributors and the wholesalers the detailed
analysis of various confectionery and FMCG companies program was done.
On the basis of this collection few suggestions were forwarded to the company so as to
justify whether the loyalty program is beneficial for the Ferrero or not.

INTRODUCTION TO TOPIC
The Indian Confectionery market is experiencing rising demand due to various driving
factors which, in turn, have been instrumental in providing immense opportunities to
manufacturers to grow and operate in the market lucratively.

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Wherein chocolate confectionery enjoys more popularity in comparison to the others. The
report also gives an insight into further segmentation of these sub-markets. Moreover, the
chocolate confectionery segment is dominated by a large number of MNCs and organized
confectionery manufacturers. There are certain factors that have predominantly worked
towards enabling the confectionery sector to grow in recent years. These include higher
disposable incomes that have enabled consumers to enhance their purchasing power, rapid
urbanization that has led to busy lifestyles and subsequent inclination of consumers
towards premium range of confectionery and aggressive marketing campaigns by all the
players to break the product clutter and attract consumers through brand loyalty initiatives.

In addition to these, the other factors which are contributing towards the rapid growth of
the industry include the growing gifting culture within the country, fast expanding retail
network and developing rural sector. This project help us analyze various motivating
factors for a retailer to push particular brand in market.

INTRODUCTION TO INDIAN CONFECTIONARY MARKET

Indian confectionery industry is divided into organised and unorganised sector. Organised
confectionery industry is worth Rs.2000cr and it is estimated to grow at 9% per annum.
Overall industry has a turnover of Rs.3500cr with a huge potential to grow. The sugar boiled
confectionery has got a major share.

Category Distribution
chocolate count; 9%
chocolate bar; 12%
mint,chewing gum; 11%
sugar boiled confec.; 68%

A large part of confectionery industry in India comprises of local subsidiaries of global

confectionery majors like Perfetti, Lotte, Cadbury, Wringleys etc. One of the leading player
in Indian confectionery industry is Candico worth around Rs.125cr .It is the only company
which has production facilities overseas.

Salient features of Indian Confectionary Industry

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SNAPSHOT OF INDIAN CHOCLATE INDUSTRY

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COMPANY OVERVIEW

Ferrero SpA is an Italian manufacturer of chocolate and other confectionery products. It

was founded by confectionerPietro Ferrero in 1946 in Alba, Piedmont, Italy.Today Ferrerois
the third largest confectionery company in the world and it is controlled by
Pietro&Giovanni Ferrero. Ferrero International SA's headquarters is in Luxembourg.
Its German factory is the largest of all and Pasquale Giorgio is its current CEO
It has 16 plants, 38 operating companies and around 25,000 employees all over the world.
The Ferrero philosophy is based on few principles:

Use only the highest quality ingredients.

Be unique! Never copy anyone else.
Manufacture with the most modern technology.

MISSION
High quality, crafted precision, product freshness, careful selection of the finest raw
materials, respect and consideration for our customers: these are Ferreros key words
and values which have helped make its confectionery well-known and loved by millions of
consumers all over the world. Its products are the result of innovative ideas, and are therefore
often inimitable, despite being widely distributed, and have become part of the collective
memory and customs of many countries, where they are often considered true cultural icons.
Ferrero also means caring about hygiene, the environment, social issues and the local
communities where the company is present, as well as its own human resources.
Today many Ferrero products are global, in that they are sold everywhere. Ferrero is one of
the largest confectionary groups in India.
However Ferreros distinguishing characteristic is that it is glocal (think globally, act
locally), a company which is both global and local, which focuses on international
development, without losing sight of its relationship with local communities.
The consumer is always at the centre of our strategy. Ferreros relationship with its
consumers is based on longstanding and mutual trust, built up over the years with expertise,
experience, understanding and intuition. This is a measure of Ferreros interest in consumer
needs, and this is a key factor of the companys success.

Ferrero stepped in India in Dec,2006 and is presently headed by Mr.RudolphSequeira. It

has only launched a few products in India according to the taste of the people. The
products are

NUTELLA : the world famous chocolate spread;

FERRERO ROCHER: pralines; combination of creamy milky chocolate,

whole roasted hazelnut & crispy wafer;

TIC TAC: small candies of different flavours;

KINDER JOY:chocolate snack egg with surprise toy inside.

These products are all in four different categories i.e. in premium chocolate, choco spread,
and mouth freshener.The whole Ferrero group closed 2012-13 financial year with a
turnover of 7.7billion at 8.2% growth over last 2011-12.The European confectionery
industries are very competitive, heterogeneous and highly fragmented markets with some
major players leading the industry in nearly all countries involved in this business meeting.
About two third of the entire market is satisfied by the top ten western European
confectionary companies (67%).The five largest Western European countries including the
UK, Germany, France, Italy and Spain alone account for 74% of the total Western
European confectionery market leaving only a share of 26% which is spread across the
remaining European countries.

SCOPE IN INDIA
Ferrero finds scope in India due to increasing income-levels, changing lifestyle, many
festivals. These and various otherfactors made the company set-up its manufacturing unit in
Maharashtra. Indian confectionery market is expanding like never beforeas the local
subsidiaries of global confectionery majors like Cadbury, Perfetti Van Melle, Lotte and
Wrigleys are swinging in to action with new marketing strategies backed by investment to
grab largest share of Indian confectionery market.
The Ferrero products are of premium quality and its main target is middle high class people
because of their purchasing power. So the products such as Rocher and Nutella are more
available in supermarkets, bakeries etc.
In India small shopkeepers play an important role in distribution of the product. So products
such as Tic-Tac and Kinder Joy are available in wholesale market. But the competition is too
much high as competitors are providing with discounts, gifts etc. i.e. wholesale loyalty
programme. So the best deal has to be given to the wholesalersso as to win over the
competitors.

During the initial phase, the task was to understand the products of the Ferrero. The margins,
schemes given to the wholesalers and retailers and the functioning of sales executives and
sales officer. Another task was to understand the distribution channels of the company and to
meet the distributors to understand their role.
For the schemes and margins help was taken from sales officer as he provided me withthe
printouts and various other pamphlets so as toincrease my understanding of margins and
schemes.
The main objective was to study the loyalty programme of the competitors and other FMCG
companies so I visited many wholesale shops and distribution points. The main hurdle to
collect the data was that it was difficult to get the proper literature about the programs as
many of the wholesalers do not have the catalogue related to the programs. After frequent
visits I was able to collect the catalogues of some companies and got information verbally
about them.

PRODUCTS OF FERRERO

Ferrero RocherT-16

Ferrero Rocher T-24

Kinder Joy

Nutella

Tic-Tac (Mint,Orange,Mango,Cherry)

Marketing Mix
Product
Ferrero should offer products according to the tastes of Indian consumers. If these products
can be offered in different flavours that resemble different cuisines, it could be a great success
in India. People celebrate many festivals and eat varieties of sweet dishes. So, chocolates can
replace sweets as the young generation would definitely like to try something new.
Also, some high end products can be offered like they are being offered in Europe because
high class people would take it as their status symbol and they want the superior quality and
taste.

Promotion
For the promotion of Ferrero products in India different tools of promotions can be used like
advertising, media, TV, radio, press, hoarding boards,events(road shows), short message
services, direct consumer, retailers and wholesalers.
The Indian consumers are very much influenced by promotional activities so it should be
planned wisely. For example, film stars and cricketers are very famous in India so they can be
used as a tool of promotion.
Distribution

These days small shops play an important role in the distribution of confectioneries in India.
So, Ferrero should sell its products in both super markets as well as small shops. Perfetti, for
example uses a network of small shops in selling its chewing gum and candies. Likewise
Ferrero can also sell some of its products through small shops. Similarly, in order to increase
the volume of sales and revenue, middleman like wholesalers and retailers should be involved
by attracting them with good commission and other benefits. Transportation and storage
arrangements can also be made for the smooth supply of products.
Price
The main competitors of Ferrero in India, Cadbury and Nestle, have priced their products
lower than Ferreros. So, it would be easy for Ferrero to compete with them if price can be
slightly decreased.
Price cannot be cut down sharply because nuts and other dry fruits as well as good quality of
cocoa has to be imported since these are not produced in India.
SWOT ANALYSIS OF FERRERO ROCHER

SWTO
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MARGIN
Retailer
Tic Tac 15%
Rocher 20%
Nutella 20%

Wholesaler
Lilliput 10%
Kinder Joy 10%
Nutella 9.5%
5% margin for distributors on each item

SCHEMES
Nutella-15+1
TicTac-1 stand+1
Rocher-Summer surprise-T3(*2)-save Rs 11/T16-save Rs 86/T24-save Rs 141/-

Wholesale
Kinder joy-3 cases get 1% cash discount
6 cases get 1 box free
12 cases get 3 box free
Lilliput-1 case gets 2% cash discount
3 cases get 1 jar free
5 cases get 3 jar free
(also the coupon )

PRICE DISTRIBUTION

CompanySADrsbtiRelu
STOCKIS
T

SKU

RC-T3
RC-T16
RC-T24
RC-T30
Nutella
TT Tree
TT Refill
KJ

RETAILE
R

Case Value

Unit Price
39.29
203.57
385.71
392.86
154.76
197.73
8.24
25

3771.84
4071.40
1542.84
4714.32
2321.40
3954.60
2373.12
1800

MRP

Case Value

Unit Price
45.83
237.50
450
458.33
162.50
208.80
8.70
26.40

4399.68
4750
1800
5499.96
2437.50
4176
2505.60
1900.80

Unit Price CaseValu

e
55
5280
285
5700
540
2160
550
6600
195
2925
240
4800
10
2880
30
2160

DISTRIBUTION CHANNEL

The distribution is very simple as the product comes from the company to the CSA.From
there it goes to the distributor/stockist. Now there are 21 distributors and the company is
planning to increase it more.The distributor delivers the product to the retailer according to
their need and finally to the customers. This is the simple process of the distribution. But for
the modern trade like More, Reliance fresh etc. the distribution is somewhat different. For the
modern trade the distribution is directly from CSA.

VALUE CHAIN OF NUTELLA

MARKET ANALYSIS

Most of the companies or new products try to step into the country from south India like
Cadburys Lite from Andhra Pradesh and Tamil Nadu. The Ferrero has started its distribution
from Kerala because product is familiar to most of the people, purchasing capacity, high
demand of imported chocolates. Then the market has spread to other parts of the country.
Many people from Kerala are settled abroad and they generally bring chocolates for their
family and Ferrero Rocher is one of them. But now the Rocher is available in their home
place so there is possibility of frequent buying by the customers. There can be more demand
of Rocher T24 in North India as compared to South as there are many festivals, the trend of
giving gifts is very common there.
In Maharashtra, places such as Mumbai, Pune, Nashik, Nagpur etc. are the key areas as it has
a huge population of Higher Income Group families.Also,Rocher and Nutellais aimed at
upper middle class and high class people due to the higher prices. Now most of the retailers
are stocking global brands as their demand has increased immensely. In Pune, many imported
chocolates are available but the range of premium chocolates is very narrow. So there is a
huge scope in the market to establish as a premium chocolate brand which gives quality
product.
The market of mouth fresheners is very wide. Generally, price of the product is less and it is
affordable by every segment and every class. Not only in cities but also in small towns,
interior areas etc. there is a huge demand of it.
By the observation it is found that every product of Cadburys is followed by its name so
people are very much aware of the product under its umbrella. On the other side, very few
people know that Rocher, Nutella, Tic Tac and Kinder Joy are the products of Ferrero.

COMPETITOR ASSESSMENT

There are few players in the premium chocolate category and Cadburys is considered as the
market leader. Cadburys is dominant player as it has a huge market share of around 70% but
when it comes to imported brands it has lost its hold on premium chocolate segment. So it has
relaunched its product Bournville, in Indian market aiming 20-30 year old segment.
Another product Cadburys Celebrations is considered as the major threat for Rocher as it is a
gift pack focussing on festivals, special occasions etc.The price is very competitive in
festivals as 504 gm is for Rs.525/- and 425 gm for Rs.425/- for two different types.
Another big competitor from the globe is Mars. Mars group has launched Snickers in the
Indian market. The first TVC of this brand is made for India and made in India. It wants to
position Snickers as the chocolate which can be consumed for evening hunger. It is done so
that to come closer to Indian people. Mars also has M&M and Bounty.
Nestle which is not in the premium chocolate category has introduced Kit Kat Chuncky in
African Choc and Hazel Nut. It can be considered as a competitor but not a threat. Also
Krafts Food Toblerone,is a major new entrant in the high end chocolate category.
Kinder Joy can be considered as the unique product targeting kids. No other brands in the
market are like it. So it has a very clear advantage to grab the opportunity. The product has to
compete only with the price with is high from the customers view point.
In the mouth fresheners, the competition is high. Many established companies like
Wringleys, Perfetti etc. along with many local brands are penetrating into the segment. The
local brand adopts the similar shapes and packs and ultimately kills the demand for the
product. The case is same in Nutella, the local brands also entered in this line but at last
quality matters so Nutella emerges as quality product and it has not got much competition.

WHOLESALE PRACTICES
As by the observation it is found that major players of the confectionery industry such as
Cadbury, nestle, Perfetti etc. are continuing with simple practice of giving discounts on the
purchase. They are not following the whole sale loyalty programme and as it has become a
common thing in wholesale market. The discounts are as follows:
Cadbury-3% and additional 2% if in bulk.
Nestle-2%
Perfetti-1pkt free with 2 cases

But ,if we see the wholesale practices by other companies such as HUL, P&G, Reckitt
Benkiser etc., they have been growing at a fast pace and companies have gained much from
these programs. In detail they are as follows:

(a)HULs VIJETA
Hindustan Unilever Limited in order to reward their privileged wholesaler runs a program
which is known as VIJETA.
Rs.250/- -1pt (for detergent and personal product)
Rs.150/- -1pt(for foods and products such as nail polish, lipstick etc.)
For membership, purchase of the Wholesalers should be:
Platinum-Rs.1,50,000 and above
Gold-Rs.75,000-1,50,000
Silver-Rs.50,000-75,000
The target is judged on quarterly basis and points can be redeemed on yearly basis. The
Wholesalers have to wait for a long for his reward ,so the company is planning to change its
structure so that points can be redeemed in every 6 months.
There is also a scheme called Power SKU, in this if the purchase of the products are in
dozens then the points will be doubled and wholesalers can be benefit from it. The points are
doubled in the third month for those products in which the company witnesses a downslide in
the first two months. So company ultimately recovers the loss by giving extra point to the
wholesalers.
For all these the must condition of the company is the visibility point. In this the products of
the HUL have to be placed in such a way that they are visible to everyone at the entrance site.
If the wholesalers are not fulfilling this criterion then the membership will be cancelled and
the points will not be redeemed at the end of the year.
As the company gives gift of gold coins so as to convince Wholesalers it also sends a copy to
their homes so that the females can put pressure to participate very actively in the
programme.

Apart from the positive things there are certain limitations too. The companys target which it
gives to the wholesalers is not acceptable by them. The target continuously increases in every
month and it generates pressure for wholesalers to attain the target.

Discontinuation of Membership:
Wholesalers membership to the program may be discontinued if:
1. Wholesalers best of 3 quarter average < minimum eligibility turnover.
2. A wholesaler voluntarily decides to opt out/resign from the Program.
SUMMARY OF THE WHOLESALE PROGRAM
Hindustan Unilever Limited in order to reward there privileged wholesaler runs a program
which is known as VIJETA.
A Wholesaler can earn three types of points; Base points, Power Points and Growth Bonus
points. Base points are given on the purchase worth Rs 250/-, Power points are given on
certain products which are mainly the high range products of HUL and the list of these
products changes every month whereas Growth Bonus points are given to the wholesaler if
he is able to achieve more than his target sales for the quarter. 1 point is equivalent to Rs 2
and at the time of redemption of the points the gift worth the amount of the points can be
picked up from the gifts store of HUL.
There are three Tiers in this program i.e. Platinum, Gold & Silver which are defined by
HUL on the basis of year on year sales target for their wholesalers. If the wholesaler is able
to achieve more than what is required from him in terms of the sales target then his tier can
be upgraded, this will be done on the basis of his last three quarter results.

(b)P & Gs WHOLESALE KA BADSHAHThe programme was launched 6 years ago. It is for every three months. Like HUL,there is no
gift system in this. The points are attained so that the Wholesalers can get the discount in the
bill for the next month.

For every Rs.250/- , 1pt will be awarded. In this programme there is a card system such as
jack card, queen card, badshah card. Every card is known because of its respective targets
such as:
For 1 month,20 pts-1jack card
For 3 months,100 pts-1queen card
For 3months,500 pts-1maharani card(conditions apply)
For 3 months,1000 pts-1 badshah card
But the most important thing in this programme is that the value of one particular card will
not be mentioned to the wholesalers. This is done to avoid undercutting. If the
Wholesalersattain three or more badshah card then there will be all India level draw. Double
points are awarded to the products whose last two months sale has been down.
The example of how this point system works is as follows:
Suppose Wholesalers has attained:
1st month-443pts
2nd month-210pts
3rd month-381pts
Total

-1034pts

In which, jack card is 22+10+19=51, queen card is 10 and badshah card is 01.
The value of each card is not mentioned to the Wholesalers; the company decides the value of
each card say the value of 1 jack card be Rs.50/-,1queen card be Rs.150/- and 1 badshah card
be Rs.1500/-. So if no of cards is multiplied with respective value of the card,the result will
be:
51*50=2550/10*150=1500/01*1500=1500/Total

=5550/-

So the total amount will be deducted from the next bill.

(c)RECKITT BENKISERs UDAAN

In this programme also, there are three categories like platinum, gold and silver.

PLATINUM MEMBERSHIP: The membership of the program is solely based on invitation

i.e. company invite most important and permanent customer (wholesaler) to participate in this
UDAAN program. The minimum requirement to be a member of UDAAN platinum club is:
-Average monthly business (2008)>=Rs 1.5lks
-Two permanent visibility window to display RECKITT products in wholesalers shop.

Location for UDAAN window:

-for back window:
1) Window should be 4 to 8 feet above from the ground surface.
2) Minimum of 2*1.5 feet (length & breadth)
3) Corner shelf would not be entertained
-one sided window:
1) Should be visible from outside of the shop
2-) Minimum of 2*1.5 feet (length & breadth)
3) It should be behind the cash counter.

GOLD MEMBERSHIP:
1) For qualifying in the Gold category the Wholesalers must achieve 350 pts and avg.
Reckitts business of Rs.30,000/2)One permanent visibility window every month.
3)If no points are earned for two months,membership will be withdrawn.
4) Wholesalers must achieve min. 350 pts to get the gift.

Apart from these there are two kinds of point system i.e Base points and Champion bonus
points.
Base points- 5pts on a purchase of Rs.5000/- (and forwarded in multiple of 5)
Champion bonus points- 15% of total quarterly points at the end of the quarter target
achievement.
In gold category, gifts are given when the Wholesalers achieves following points:
3100pts-washing machine/refrigerator
2000pts-TV
&1100,770, 550, 350.(pts)

OPINION OF THE WHOLESELLERS

The wholesale loyalty is widely spread in the market, nowadays every FMCG company tries
to implement it to get the maximum advantage from it. But the same time what Wholesalers
think about the loyalty programme is very important because this programme is all for
them .So for this a questionnaire was prepared by which it will be convenient to understand
theie opinion towards the loyalty programme. The survey was done on 20 wholesalers from
different areas of Mumbai.

METHODOLOGY
5.1 REVIEW OF LITERATURE

Title- HLL gives a boost to Channel Loyalty marketing

Name of Website- http://www.afaqs.com/
Comment by- DIREM: Vivek Basrur (Managing Director)
Date- 4th March 2014
Abstract DIREM Marketing Services Pvt. Ltd, India's leading direct and relationship marketing
agency has been appointed by Hindustan Lever (HLL) as its outsource program
management agency to handle all aspects of its channel loyalty program, Vijeta.
Vijeta is HLL's wholesaler loyalty program, which helps the company grow profitable
relationships with thousands of wholesalers across the country. It provides a platform
for interaction, to bring the wholesale customer and the company closer, helping them
work towards a shared vision.
This program also allows wholesalers to accumulate points from their business with
the FMCG giant, and redeem them for exclusive gifts and awards, in addition to a
range of amenities and benefits. The program has been in operation for over a year,
and looking at its success there are plans to expand its scope in the coming months.
Comment Channel loyalty has, in recent times, emerged as a powerful tool for marketers. The
fundamental proposition on which such a program runs is that while most channel
activities are margin driven, if one can build real loyalty through a well designed
program, one maintains channel preference even in the face of competition moves

Title- Super-Max launches new loyalty programme Bandhan

Name of Website- http://www.indiainfoline.com/
Comment by- Sameer Khan, National Sales Manager- Super-Max Personal Care Pvt. Ltd
Date- 3rd Feb, 2014
Abstract Super-Max Personal Care Pvt. Ltd, one of the worlds leading manufacturers
of razor blades unveiled BANDHAN, their unique loyalty programme for
wholesalers & channel partners. This initiative is aimed at maintaining and
rewarding the relationship with their channel partners.
Bandhan, an
extensive loyalty programme intending to cover more than 10,000
wholesalers across the country includes even smallest of the wholesale
clusters, enabling Supermax reach not only the district headquarters but even
the farthest of talukas. This is the only on-the-spot redemption loyalty
programme by an FMCG company in the shaving category connecting
thousands of wholesalers on the same platform.
Wholesalers and Channel partners are invited to five star properties in their
respective cities for an afternoon of gratification and redemption of loyalty
points at Bandhan Melas. SuperMax has partnered with brands like Gitanjali,
Bajaj, Honda , TVS etc and products from these can be purchased using the
Bandhan loyalty points. Bandhan Melas have already been conducted across
various cities such as Mumbai, Delhi, Chennai, Ahmedabad, Jaipur, Lucknow,
Kolkata and have seen huge turnouts.
Comment Bandhan is one of the most successful wholesalers loyalty programme running
across FMCG companies in India. For us our channel partners are very
important and Bandhan gives us the opportunity to share our success and joy
with the wholesalers and channel partners. Bandhan is a platform that provides
a systematic approach of distribution and also assists immensely during new
product launches, visibility drives and in receiving real time feedback from the
trade. Launched in 1986, Super-Max has grown from strength to strength and is
today one of the leading brands in the personal grooming category worldwide.
Super-Max offers an exhaustive range of personal care products which cater to
all segments of the market.

Title- Strategy of selling premium products in niche areas helps Ferrero double sales
Name of Website- http://articles.economictimes.indiatimes.com/
Comment by- Sagar Malviya
Date- 23rd April,2014
Abstract Ferrero India posted a 68% rise in sales at 575 crore during the year-ended August
2013, against Cadbury and Nestle's growth in low teens, though at a higher base.
Ferrero Rocher and Kinder Joy brand of chocolates
He came to India in 2011 when the consumer market was going through its worst
phase in over a decade. Two years later, the suave but reclusive Oddone has more than
doubled his company's business, crossing the 500-crore mark despite rivals
like Cadbury and Nestle struggling for growth as Indians cut down on discretionary
products, including chocolates.
But the high growth came at a cost. Ferrero India - which also sells the Nutella spread
and Tic Tac breath mint in the country - sustained a loss of over 196 crore, or a third
of its sales, mainly due to currency devaluation and heavy marketing spends. The
company also had to withdraw Ferrero Rocher from thousands of kirana stores as it
realised that the storage environment at local grocers wasn't up to its liking, especially
during summers.
Ferrero now has almost 8% market share in the chocolate confectionery segment
worth 6,832 crore, though it still lags behind giant Cadbury which commands 68%
share, and Nestle around 19%. Yet, both rivals are anxious to introduce their existing
products to the niche market created by Ferrero. For instance, Nestle has launched
Alpino while Cadbury has brought Toblerone to the market.
Comment
The success is largely attributed to the firm's differentiation strategy of
selling premium products in niche segments. They have the most differentiated and
innovative products with each brand being market leaders and category creators.
Ferrero-led premiumisation and the gifting category it built few years ago when its
unique gold laddo became the new-age upgraded mithai
Kinder Joy chocolate egg that's packed with a surprise toy and is now a 200-crore
brand
While both Nestle and Cadbury focused on massbrands selling candies and toffees for
lower than a rupee, Ferrero launched Kinder at almost 30. While it was a risky and
ambitious strategy, it seems to have paid off

 A decade later, the company has over 2,000 employees working at its Baramati
factory in Maharashtra, and Indians now form the third largest workforce by
nationality after Italians and Germans for its parent company.

5.2 Importance of the Study

5.3OBJECTIVE

1)To study the best whole sale practices in confectionery industry and other FMCG
companies.
2) Analysis of competitors practices vis--vis other FMCG giants, such as, HUL, Reckitt
Benkckiser and P&G.
3) To study Wholesalers view point regarding existing loyalty programmes by Ferreros
competitors and to suggest whether it will be useful to Ferrero or not.

5.4LIMITATIONS
Some of the wholesalers were hesitant in giving the adequate information.
Unavailability of the right contact - Many a times the right contact persons were not
present, in that case follow up was done 2-3 times.
Few of the retail owners were very reluctant to provide information on Margins, Rates
of Displays, Schemes offered by competitors, conditions imposed by competitors on
such Schemes & Displays.
Since the results have been drawn on the basis of the information provided by the
respondents, chance of response error might have crept.
Due to the busy schedule of distributors and wholesalers, the frequency of meeting
distributors was very low.
5.5Hypothesis

 Does a brands sales actually increase by such loyalty programmes

Do retailers get motivated by cash discounts or gifts.

Research Methodology
The project involves the analysis of the wholesale programme and distribution channels of
confectionery industry and other FMCG industry in Mumbai and various programs offered by
them to tap market. Also to find the various margins and benefits given by the competitors on
their products in these programs.

SUMMARY OF RESEARCH METHODOLOGY:

Research Approach

Survey

Source

Primary Data and Secondary Data

Collection Method

Direct Observations, Personal Interview.

Research Instrument

Personal Interview.

Sample Unit

Wholesalers and Distributors.

Sample Size

35 Shops & 5 Distributors

DATA ANALYSIS & INTERPRETATION

Participation in Wholesalers Loyalty program

yes; 100%

Reason for participation

For gifts; 100%

INFERENCE: All the wholesalers participate in loyalty programme for the gifts. There is no
other reason to participate in the programme.

Monthly sales of HUL

above 9 lakh; 19%
upto 2 lakh; 26%

5-9 lakh; 26%

2-5 lakh; 29%

INFERENCE: It is found that there is an even distribution in different ranges in HUL.

But in the case of Colgate and P&G , the monthly sales comes around Rs.75,000/- to Rs. 1.20
lakhs. Around 60% of the Wholesalers come in this range and rest 40% are below the range.

Increment in sales

no change; 32%

marginal; 68%

INFERENCE: 68% of the Wholesalers had marginal increase in their sales and they believe
that its not because of the loyalty programme but because of the demand of the products. And
rest 32% believe their sales are same as before.

Preference in return

cash; 100%

INFERENCE: All the Wholesalers prefer to get cash in return instead of gift items. They
like to have options between cash and cash discount. None of the Wholesalers is interested in
getting gift items.

RESULTS & FINDINGS:

1) By directly interacting with the Wholesalers it was found that Loyalty programme dont
have much impact on the sales. If, every home uses HUL products, so even if Loyalty
Program is there or not the sale of the particular product will be as usual. Even in the case of
the other companies also there is not much change in the sale. But it is accepted that marginal
increase is noted but those figures do not motivate the Wholesalers in any sense.
Apart from sales it definitely brings stability in distribution i.e. now the prices and margins
are same in every area but before it was not like that.
2) Second observation is that,it increases pressure on the wholesalers.The target increases by
22% for the next month for HUL. And the delivery of gifts and gold coins is too late that it
becomes useless to participate in the HULs loyalty programme. So, altogether there was a
negative impression for the HUL LP.
3) But in the case of P&G it is found that Wholesalers are quite happy from their distribution,
loyalty programme and their response to them. It is just because it is giving what Wholesalers
want on proper time.

SUGGESTIONS/ RECOMENDATION

It was found that for implementing the loyalty programme the company needs ranges in the
product i.e. they need back-up.If the season is not appropriate for the particular product the
Wholesalers will not be able to purchase it so this loss can be recovered by other product.
For the company like Ferrero who has only two products Kinder joy and Tic Tac for the
wholesale. My personal experience is that in the summers there was a shortage of products ;
and let suppose company was running loyalty programme so the products will not be there to
deliver to the Wholesalers and the programme will turn to be a complete failure.
So it proved that there is a need of product range for the loyalty programme to back-up the
sales.
1)So it is recommended that it is not advisable for the company to start the WS loyalty
programme as it has no back-up products. Apart from this the company can start giving
discounts on bills according to the point system in every 3 months. But this has to be judged
by the company very closely.
Suppose Rs.200/-=1run
If the WS achieves 50 runs and the value of this run will not be mentioned to the WS but
company will multiply that value will the run and will give the bill discounts to the WS and
respectively for 75,100 and more runs.
By this the return to the WS will be fast and by the survey it was found that the WS want cash
or cash discounts and most important it should be fast. The company need not have to spend
much on this programme. The process is very clear and there is no pressure on the WS also.
For all these company should maintain database of the WS very strictly.

2)It is also advisable to focus more on Super Value Shops(SVS) as the products are of
genuine quality and the target is middle-high class people. The company can give discounts
in the bill for the visibility also because in these shops visibility factor can affectsales
drastically. Proper merchandising will definitely help to increase the sales to a higher extent.

Target market
Urban middle-high class people should be targeted because of the purchasing power this
population possesses. These people know about different brands and are demand a superior
product. Moreover, they have a sense of taste as well and they would like to use Ferrero
products as a status symbol on different occasions like Valentines Day, Mothers Day,
Raksha Bandhan, Holi, Deewali and many more.
The rural population should not be targeted because in India majority of population below
poverty line live in rural areas. Until the price of Ferrero products goes down after a decrease
in import duties, it is quite risky to target rural population because the main competitors of
Ferrero, Cadbury and Nestle, have a good distribution network in rural areas and the price of
their product is less than that of Ferreros. So, without brand awareness consumers in rural
areas is more likely to choose a product of lower price.

Positioning
Ferrero has launched 4 different products in Indian confectionery market. All these products
are unique in their own category and should speak the differentiation and benefits in the
minds of the costumers.

Ferrero Rocher should be positioned as a high quality creamy milky chocolate mixed
with hazel nuts and crispy wafer.
Nutella should be positioned as a rich and real chocolate spread.
Tic Tac should be positioned as a unique mouth freshener and mood booster.
Kinder Joy should be positioned as a surprise gift for kids that contains chocolate
inside an egg like shell.

CONCLUSION

As mentioned above, product like Tic Tac can be the market leader as it has high demand. So
for this small shopkeepers play a major role. It is aware that Wholesalers should be targeted.
If above mentioned plan is implemented then there can be increase in the sale and the product
will reach in every corner.
Another important thing is that, people must be aware of the product very clearly. This can be
done by ads, displays, proper merchandising so that product should be in their mind. As there
are number of competitors in the market so the availability of the product is the major
consideration as, if the product is not available in the market so it is very obvious that
customers can switch to other product.
As far as the observations and findings, the Ferrero has taken a place in Punes market. But in
the chocolate category Cadburys is the leader, but if we see premium chocolates Rocher is
playing an important part, the only thing where it lacks is unawareness and the high price. So
for this, if offers are given it should reach to the customers at the right time

BIBLIOGRAPHY
1. Hughes, A. (2003). ARE LOYALTY PROGRAMMES LOYAL. In The customer loyalty solution:
What works (and what doesn't) in customer loyalty programs. New York: McGraw-Hill Education
- Europe.

2. India.

(2013,
June
4).
Retrieved
January
http://articles.economictimes.indiatimes.com/keyword/india

8,

2015,

from

3. THE BIGGIES SPREADING SWEETNESS. (2004). In Key players in the global

confectionary industry (4th ed.). Leatherhead: Leatherhead Food RA.

4. LOYALTY PROGRAM. (n.d.). Retrieved December 30, 2015, from http://www.nestle.com/

5. Ferrero.com

corporate
http://www.ferrero.com/

website.

(n.d.).

Retrieved

January

16,

2015,

6. VIJETA. (n.d.). Retrieved January 8, 2015, from http://www.unilever.com/

7. Wholesalekabadshah. (n.d.). Retrieved December 14, 2015, from http://www.pg.com/

from

ANNEXURE

I.QUESTIONNAIRE
WHOLESALE LOYALTY PROGRAMME
Shop name(wholesale):

Name of the owner:

1) Do you participate in any kind of loyalty / customer programmes run by companies?

a) Yes

b)No

2) If yes, why do you participate?

a) I get to buy gift of my own choice with the accumulated points in the end
b) It is more beneficiary, because instead of passing the additional scheme money to retailer it
gets accumulated.
c) Rate issues are not there in the market.
d) Others

3) Which all loyalty programmes you are participating?

a) HUL

b) P&G

c) Colgate

d) Other

4) What will be the average monthly turnover of companies you participate in Loyalty
programme?
a) HUL...................
b) P& G.................
c) Colgate..............
d)Other..................

5) Do you think this programme motivates you to go for achieving targets and gifts?
a) Yes

b) No

6) Do you think your sale has increased after you joined the loyalty programme?
a)Yes

b) No

If yes,
How much % ?......................

7) What is the best thing in HUL programme?........................................

What is that you dont like in it?..............................

8) What is good in Colgate programme?

What you dont like in it? ..

9) Which one do you prefer in return from the loyalty programme?

a) Gift items
b) Cash
c) Cash discount in bills
d) Other

10) Any suggestion to improve the loyalty programme?

II.QUESTIONNAIRE FOR THE STOCKIST

The process was the part of survey as I was told by the company. By doing this company will
be knowing the performance of the distributor/stockist and how well they are working in
distributing the products.So the questionnaire was prepared open ended to extract much
information from them.
1) How many beats are you covering?
2) What are the vacant areas?
3) What are the products are you handling other than Ferrero?
4) How many vehicles and salesman do you have?
5) What is the frequency to visit the wholesalers and retailers?
6) Do you visit personally?
7) What is the wholesalers contribution of your agency?