Dissertation Report On Scope of Loyalty Program (Udaan) in the F.M.C.

G Major Reckitt Benckiser and its implementation , a brief study on retail Loyalty Programs offered by Reliance , Hero Honda , Shoppers Stop , Bharat Petroleum and Hindustan Unilever.

Submitted By: Balesh Sharma E. No: A0102207034

MBA (M&S) Class of 2009

Under the Guidance of: Ms. Mamta Mohan Senior Faculty and Area Head Marketing (A.B.S)
In Partial Fulfillment of Award of Masters Degree In Business Administration To

AMITY BUSINESS SCHOOL

AMITY UNIVERSITY, UTTAR PRADESH

AMITY UNIVERSITY UTTAR PRADESH

AMITY BUSINESS SCHOOL

DECLARATION

I, Balesh Sharma a student of Masters of Business Administration from Amity Business School, Amity University Uttar Pradesh hereby declare that I have completed Dissertation on Scope of Loyalty Program {Udaan} in the F.M.C.G Major Reckitt Benckiser and its implementation , a brief study on retail Loyalty Programs offered by Reliance, Hero Honda, Shoppers Stop, Bharat Petroleum and Hindustan Unilever.

I further declare that the information presented in this project is true and original to the best of my knowledge.

Date: 24/03/2009

Name: Balesh Sharma

Place: N.C.R

Enroll. No: A0102207034

Program: M.B.A (M&S)

AMITY UNIVERSITY, UTTAR PRADESH

AMITY BUSINESS SCHOOL

CERTIFICATE

I, Ms. Mamta Mohan hereby certify that Balesh Sharma a student of Masters of Business Administration at Amity Business School, Amity University Uttar Pradesh has completed dissertation on Scope of Loyalty Program {Udaan} in the F.M.C.G Major Reckitt Benckiser and its implementation , a brief study on retail Loyalty Programs offered by Reliance, Hero Honda, Shoppers Stop, Bharat Petroleum and Hindustan Unilever, under my guidance.

Ms. Mamta Mohan Faculty & Marketing Head, A.B.S (A.U)

AMITY UNIVERSITY UTTAR PRADESH

AMITY BUSINESS SCHOOL

CERTIFICATE

This is to state that Balesh Sharma, a student of Master of Business Administration from Amity Business School has successfully completed his Dissertation Project at Reckitt Benckiser in the Retail Loyalty Program UDAAN under my guidance. The project focused on sales development and T.L.S (Total lines sold) improvement capacity of distributor sales representatives across the central Delhi. The project was taken up at Durga agency at central Delhi and duration was October 2008 to February 2009.

Mr. Anil Chawla (Senior Territory Sales In charge) Central Delhi Reckitt Benckiser India Ltd.

Date: 23/03/2009

Acknowledgement

I take this opportunity to express my hearty thanks and regards to Mr. Subbodh Sharma, Area Sales Manager, for giving me an opportunity to do my Dissertation Project at Reckitt Benckiser. I also take this opportunity to express my hearty thanks and regards to my project guide Mr. Anil Chawla for his unending support offered to me throughout the course of my training instead of his very busy schedule. I also express my sincere thanks to all the members of the Reckitt Benckiser Delhi team for showing trust in me and giving me an opportunity to learn by giving me equal responsibility during my project. A very special thanks to the Sales team at Central Delhi with whom I have spent most of my time during my project for their unending support and guidance in helping me complete this project successfully and giving me valuable inputs for my project. I would also like to show my heartful thanks to my faculty guide Ms. Mamta Mohan for her complete support in understanding my project and then guiding me in my recommendations.

Balesh Sharma A0102207034 Section B M.B.A (M&S) A.B.S (A.U)

Table of Contents

Cover Page Declaration Certificate from Faculty guide Certificate from Industry Guide Acknowledgement

S. No.

Chapters Name

Page No.

1. Executive Summary.9-10

2. Introduction11-12

3. Literature Review...13-16

4. Chapters...17-39

Chapter 1

17-20

Project Details
Topic 1: TLS and improving the same at Central Delhi for all DBSRs Importance and contribution of TLS Implementation Push strategies Offer more varieties to retailers in the same

Product segment Outcome Constraints Delay delivery DBSRs regular visit ????

Chapter 2 Topic 2: Udaan Gold outlet Retail Loyalty Program Understanding the UDAAN scheme Benefits of UDAAN scheme Observations & findings Reasons

21-23

Chapter 3

24-26

Topic 3: Increasing the no. of Gold Beat Current sales volume Feasibility of route Future prospect Final Beat

Chapter 4

27-39

Loyalty Programs by Reliance.28-29 Loyalty Program by Shoppers Stop.30-32. Loyalty Programs by Hero Honda...33-34 Loyalty Programs by Hindustan Unilever...35-37 Loyalty Programs by Bharat Petroleum..38-39

5. Research Methodology

40-42

Observation Technique Understanding TLS Importance and contribution of TLS Methodological implementation and reasons.

6. Results and Discussions43

7. Recommendations..44

8. References46

Annexure 1 Annexure 2

Executive Summary

The

Dissertation

project

was

undertaken

for

period

of

four

months

commencing from the October 10 th, 2008 to the Jan, 2009, which consisted of working on multiple live projects. I was given project in the field of sales. The first fifteen days of the project was limited to understand the working procedure of DB and DBSRs which included the know how of order taken by DBSRs and the supply provided by DB to retailers. On April 3rd Reckitt Benckiser launched a new Product called Clearasil, an acne expert which was earlier with Burj Piralmil. Clearasil is available with four product range viz. Ultra Clearasil, soap, face wash and cream. All DBSRs were given target regarding the numbers of outlets on which they needed to place the whole range of products of Clearasil. So for the next two weeks I visited around 10 beats along with DBSRs. There were some apprehensions regarding placing Clearasil by some retailers but when I explained about the products and the benefits attached with the product placement then they agreed to keep it in their outlets in most of the cases. All the required targets was achieved in the given time period by all DBSRs. I was given brief idea about the project initially for which I was needed to study market. how FMCG companies work and how schemes are implemented in the After two weeks I was given full details about my project. My

Dissertation included completion of three objectives. The illustrated objectives were as follows: 1. Understanding TLS and Productivity and improving the same at Durga Agency (Central Delhi) for all DBSRs. 2. Understand the Udaan Gold outlet Retail Loyalty Program and improve

the execution in these outlets. 3. Understand the concept of Gold Beat and increase the no. of Gold Beat from 3 to 6

From the project it is clear that my objective was to increase the sales of Durga Agency by increasing TLS and numbers of Gold Beat. It was also not possible to take each topic separately but all the topics needed to be worked upon simultaneously. However, after understanding the project I divided it into two phases.

1. I decided to work on TLS and Udaan Scheme implementation together. 2. In the 2nd month of my project I decided to work on the increment of gold beat from 3 to 6. Further report will discuss the each topic separately which will include the issues involved, options available, implementation, outcome and recommendations.

10

Introduction
By definition Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior which is potentially of benefit to the firm. In generally and in explaining more specifically, a loyalty card, rewards card, points card, advantage card, or club card is a plastic or paper card, visually similar to a credit card or debit card that identifies the card holder as a member in a loyalty program. Loyalty cards have been a system of the loyalty programs. In the United Kingdom it has been typically called as a loyalty card, in Canada it is regarded as rewards card or a points card, and in the United States either a discount card, a club card or a rewards card. Cards typically have a colour stripe that can be easily printed, and some are even chips. Small key rings cards (also known as key tags) which serve as important holdings which are often used for convenience in carrying and ease of access.

The dissertation project thus designed focuses on scope and importance of loyalty programs in the F.M.C.G sector and its variances across other retail formats. The loyalty program of Udaan is a premier and most popular retail loyalty program ever taken up by an F.M.C.G Major like Reckitt Benckiser.

The focus of Loyalty programs has been to retain customer s by providing additional benefits / schemes, so that the customers are no switchers and eventually become loyal to the brand. The major emphasis of Udaan has been to upgrade reckitt benckiser in certain respects as listed below:

Improving the visibility / display / P.O.P(Point of purchase) amongst the retailers who are regular in buying the products of Reckitt Benckiser , and also reducing the competition Reckitt faces with popular brands such H.U.L (having a popular loyalty channel partner focused loyalty program called as Vijeeta).

Improving the visibility across all retailing formats for Reckitts products.

11

Improving the T.L.S (Total lines sold) across the targeted markets by directing and motivating the distributor sales representatives to enhance sales by implementing certain policies and measures which are sales oriented.

Calculating the segregated market potential for sales and calculating the total lines sold for that territory. Also keeping a careful record about the improvements brought about in the total lines sold.

Create awareness of and relatedly about the new product. Monetary benefits and certain seasonal incentives to retailers help to push the product.

Though we all know that scope and knowledge of loyalty programs have done good to many a companies in different sectors, but I have not come across any FMCG company which has not been really active in loyalty programs. Either my knowledge is really limited or may be there's very less that FMCG companies have done in this area.

Company name
Reckitt & Benckiser Hindustan Unilever Proctor & Gamble Dabur India Nestle India I.T.C

Loyalty Program
Udaan Vijeeta Pampers.com Loyalty Option Nevu Go Play ISHAKTI

Focus
Visibility / display Distribution / Channels Sales / Popularity Retailer Focused Beverage sales focus Awareness / literacy/ Distribution

12

Review of Literature
Problem formulation:
The dissertation focuses on impact and importance of loyalty programs primarily in the F.M.C.G companies subjective to brand like Reckitt Benckiser. Understanding the designing and implementation of Udaan scheme-16 and its relevance to the company.

The loyalty programs though are extremely popular , have no generalized base that if these are implemented they would be successful or not and even if they are what strategies shall be designed by the sales managers at Reckitt Benckiser to make sure the Udaan scheme is successful in the long run and thus creates enough loyalty amongst all channel partners.

Analysis of primary factors and effective suggestions to make sure loyalty program fulfills its objective.

Secondary study of five different companies mainly in their retailing formats, and comparing their practical execution with that of Reckitt Benckiser in order to achieve tasks.

Literature Search:
The literature has been mainly subjective in nature and has been derived from certain websites and articles supporting or related highly to textual content. In study of five other companies the literature is fully secondary / Thesis based in its nature. Certain published and other previously unpublished sources.

13

Links / Sources in relevance to the similar research done previously:

www.techrepublic.com.com/search/loyalty+program.html www.marketingprofs.com www.scribd.com/doc/3229243/FMCG www.articlearchives.com/marketing-advertising/marketing-advertising-services www.cioinsight.com/c/a/Special-Reports/Trends-Loyalty-Programs

Analysis and Interpretation:

The analysis of the data thus collected has been done through two ways.

Firstly the field research done on Udaan scheme does not include primary research like getting questionnaires filled by consumers or retailers/ wholesalers to derive consumer insight or consumer behavior but it is objective in nature which comprises of the through sales data and increase in sales from certain key account retailers with due respects to the implementation and execution on Udaan scheme in the markets of central Delhi fully.

The analysis of the sales data, increase in the total lines sold has been explained with the help of graph plotted on S.P.S.S software, depicting the same.

The analysis of Shoppers stop , h.u.l , Bharat Petroleum , Hero Honda , Reliance is secondary and self directed with a few suggestions from me.

14

Comments on previous primary research done on the similar topic / authors discretion:
Companies that offer loyalty reward programs believe that their programs have a longrun positive effect on customer evaluations and behavior. However, if it has to believed that loyalty rewards programs increase relationship durations and usage levels, customers will be increasingly exposed to the complete spectrum of service experiences, including experiences that may cause customers to switch to another service provider. Usage of certain cross-sectional, time-series and varied data from a worldwide financial services company that offers a loyalty reward program, this article investigates the conditions under which a loyalty rewards program will have a positive effect on customer evaluations, behavior, and repeat purchase intentions. The conclusions rather would show that members in the loyalty reward program overlook or discount negative evaluations of the company vis--vis completion. One possible reason could be that members of the loyalty rewards program perceive that they are getting better quality and service for their price or, in other words, good value.

The

Dissertation

project

was

undertaken

for

period

of

four

months

commencing from the October 10 th, 2008 to the Jan, 2009, which consisted of working on multiple live projects. I was given project in the field of sales. The first fifteen days of the project was limited to understand the working procedure of DB and DBSRs which included the know how of order taken by DBSRs and the supply provided by DB to retailers. On April 3rd Reckitt Benckiser launched a new Product called Clearasil, an acne expert which was earlier with Burj Piralmil. Clearasil is available with four product range viz. Ultra Clearasil, soap, face wash and cream. All DBSRs were given target regarding the numbers of outlets on which they needed to place the whole range of products of Clearasil. So for the next two weeks I visited around 10 beats along with DBSRs. There were some apprehensions regarding placing Clearasil by some retailers but when I explained about the products and the

15

benefits attached with the product placement then they agreed to keep it in their outlets in most of the cases. All the required targets was achieved in the given time period by all DBSRs. I was given brief idea about the project initially for which I was needed to study market. how FMCG companies work and how schemes are implemented in the After two weeks I was given full details about my project. My

Dissertation included completion of three objectives. The highlighted objectives were as follows: 1. Understanding TLS and Productivity and improving the same at Durga Agency (Central Delhi) for all DBSRs. 2. Understand the Udaan Gold outlet Retail Loyalty Program and improve

the execution in these outlets. 3. Understand the concept of Gold Beat and increase the no. of Gold Beat from 3 to 6 From the project it is clear that my objective was to increase the sales of Durga Agency by increasing TLS and numbers of Gold Beat. It was also not possible to take each topic separately but all the topics needed to be worked upon simultaneously. However, after understanding the project I divided it into two phases

1. I decided to work on TLS and Udaan Scheme implementation together. 2. In the 2nd month of my project I decided to work on the increment of gold beat from 3 to 6. Further report will discuss the each topic separately which will include the issues involved, options available, implementation, outcome and recommendations.

16

Chapter - 1

Topic 1

TLS and improving the same at Durga Agency (Central Delhi) for all DBS

17

Implementation:

Push strategies:
In this era where consumers are getting more and more informed about the products which they are using, it is of immense importance to keep consumers informed about Reckitt Benckiser product through promotional events viz. advertisement, along with billboard and coupons. At the same time all FMCG companies are following the same strategies so instead of only pull marketing, push marketing should also work simultaneously. Based on this concept I instructed all DBSRs to ask and insist for more order and the schemes should be conveyed properly. By conveying schemes retailers find an incentive to order for more varieties of products in good quantities.

Offer more varieties to retailers in the same product Segment:

While working in the market I also realized that sometimes DBSRs do not offer whole range of product in the same segment so I insisted to tell them all the product range to offer to retailers each time they visit any outlet. For Example if one retail outlet has ordered 12 nos. of Lysol (Power) then I Suggested to make it 6 pcs of each variety viz. Flora, Power, citrus. In this way TLS was increased from 1 to 3. However old DBSRs were quite aware of this system. Only requirement was to tell them was that each time they have to make sure that ask about each SKUs. A little bit of training was needed for new DBSRs. For example Mr.Jha , a new DBSR, was new to this area. So it was quite shockingly difficult for him to get the desired TLS. But after I trained him how to increase the nos. of TLS, he improved significantly in the very next month.

18

Outcome:

From the above graph it is clear that where TLS was 104, 110, and 99 for the month of October, November and December respectively whereas for January and February it is 124 and 118 respectively. The above results suggest that the strategy which was implemented has borne fruits.

Constraints:

No project is without constraints but within the given constraints one has to perform well. But there are certain constraints which can be overcome easily while other takes lots of efforts to be eliminated. While in the given constraints I tried to give my best. But however, those constraints should be looked into for any probable solution which could pave way for future growth of the company.

19

Delay delivery:
Many a times DB was not able to supply products on time which led to cancellation of orders. The reason behind delay delivery was lack of delivery boys. Keeping this factor in mind supply planning should be done in advance

DBSRs Are they on regular visit ????

It was also observed that many a times DBSRs do not go in the field for order taking. Sometimes it is because of DBSRs and sometimes it is because of DB. This was not clear why DB used to instruct DBSRs not to go in the field for order taking.

20

Chapter 2

Topic 2

Udaan Gold outlet Retail Loyalty Program and improve the execution in these outlets

21

Understanding the UDAAN scheme:

Under this scheme selected outlet are targeted mainly those have good sales volume. These outlets are selected based on sales potential, locality and taking other point into consideration. In these outlets two windows at eye level are selected for display of only Reckitt Benckisers product. These windows are specially decorated by the merchandiser with company POS as per the specification given be the company. And to maintain these window retailer are offered monetary incentive of 2.5% of total purchase quarterly.

Benefits of UDAAN scheme:

UDAAN scheme has several benefits for Company, these are as follows: 1. Help to buildup the brand image of company. 2. Offer more visibility. 3. Result in more relative and increased impulse purchase. 4. Create awareness about the newly launched products. 5. Monetary benefits to retailers help to push the product.

Observations & related findings:

1. Hardly any outlet has proper window displayed as per the guidelines of UDAAN scheme. 2. Many of the outlets dont even have windows dedicated under UDAAN scheme.

22

Reasons:
1. As per the feedback given by retailers most of them said that they arenot given enough incentive. Other popular companies have been offering better incentive than us.

2. Many of them those who have maintained their window as per the specification have not yet received the payment for the same in the due time. Since the scheme is quarterly based, it takes more than4 months to receive the money. On top of that many outlets have not even got last year incentive.

3. Some of the outlets complained about having no time to maintain the window.

23

Chapter 3

Topic 3

Increasing the number of Gold Beats

24

Increase in the nos. of gold beat indicates company is expecting more sales volume from a particular beat. Currently 3 gold beats are under the purview of Durga Agency where one DBSR visits the beat twice in a week. Generally the sales volumes of the outlets in these beats are quite high compared to other beats. My project demanded a increase in the nos. of Gold Beats. For this purpose there were various criteria which were desired to look into.

Criteria:

Current sales volume:

It is of immense importance to select the outlets on the basis of the sales volume which they generate e in a month. Not every and any outlet can be put into Gold beat. So on the basis of value I segregated 50 outlets with a sales volume greater than Rs 6000. As at least 13-14 outlets are needed in each new beat. In this process lot of scrutiny was done to take out those outlets which are not possible to put into Gold Beat.

Feasibility of route:
Feasibility of route is another criterion to filter outlets. It is also of great Importance to check whether the outlets which are put in the new proposed Outlets are feasible in terms of order taking or delivery.Firslty 3 new Gold beats were proposed but later on because of infeasibility of route one proposed beat was rejected.

Future prospect:
After being in the market I observed that there is a huge sales potential for RB which needs to be exploited. Once few outlets are put into the Gold Beat then it will create an added pressure on DBSR to get the increased sales volume. And as explained earlier if TLS is increased then definitely sales volume will increase.

25

Final Beat:
Based on above discussed criteria the final Gold Beat 3 and 4 as proposed below:

Please refer to Annexure1 for the duty roaster of DBSRs.

26

Chapter 4

Topic 4

Loyalty Programs at Reliance, Shoppers Stop, Hero Honda, and Hindustan Unilever & Bharat Petroleum along with the methodology adopted to find out the same .

27

Loyalty Program at Reliance Fresh:

Reliance continues to offer its Membership & Loyalty program, "Reliance One", designed to deliver customized benefits to frequent shoppers. Till date there are approximately number of accounted 150,000 proud Reliance loyalty customers, growing at stupendous speed at the 40 stores across Hyderabad, Jaipur and Chennai. Customers can instantly become members in the store while they shop and can earn 1 Reliance One Point for every Rs. 100 / spent overall.

Reliance Retail has been focused on building a business that would focus on competitive offerings to Indian consumers across several verticals in diverse geographies through multiple formats. This will bring them and also built on an integrated platform which would be world class supply chain, logistics & information technology infrastructure.

Reliance Fresh stores deal mainly with stocked fresh fruits and vegetables, grocery, dairy, other processed food, household staples and meat. A private label brand called as Reliance Select is on the way to being introduced. Shoppers can avail and earn loyalty points with the Reliance One loyalty program. A separate format entrance and displayed exit has been conceived for the sections stocking meat items. Reliance Retail has also set up procurement centres in Tamil Nadu in areas such as Kodaikanal, Maduranthakam, Oddanchathram and Thiruvallur and a processing centre at Puzhal, near Chennai.

Loyalty Programs at Reliance Retail:

Reliance Retail, a 100 per cent subsidiary of the country's most valued firm Reliance Industries Ltd, is targeting to make its loyalty program one of the top 10 loyalty card base in the worldwide retail sector by 2012.

Reliance one, known as a pre-paid facility which allows customers to start using it right from the point of purchase, is valid across all the nine different formats of Reliance Retail stores. 28

The Wellness incubated outlet has around 5,000 products in different categories, including general nutrition, sports nutrition, skin and personal care, books, music and pharmaceuticals. It also has a well equipped optical shop, with a qualified ophthalmologist to test and prescribe lenses. The store comprises, holds a pharmacy that offers medicines and remedies in allopathic, ayurvedic and homeo-medical streams. For customers on long-term medication, Reliance has come up with a medical compliance program that will enable them to get reminders and alerts on the usage and replenishments of medication.

The Wellness format also has a customer loyalty program, Reliance One, which comes with free health insurance cover.

Under the loyalty program, a customer buying products worth Rs3, 000 in the first three months would get a cashless hospitalization benefit up to Rs25, 000. Purchases of an additional amount to Rs5, 000 in the 4-6 months period will foresee the cover go up to Rs50, 000. Interestingly, Reliance ONE, the customer loyalty program of the company, has also acquired around three million customers in the last 15 months. This means that Reliance is not only able to address a database of over three million middle and higher income customer families across several cities, but is able to attract these families across different formats, since, while, a customer can earn loyalty points on his/ her from any format and redeem the same at the same or any other format. The membership base of three million for Reliance ONE translates into an average density of one loyal customer per sq ft of space, says a PTI report. Reliance Retail is aiming to make its Reliance ONE customer loyalty program as one of the top 10 loyalty card programmes in retail sector of the world by 2012.

29

Loyalty Program at Shoppers Stop:

Shoppers' Stop is one of the leading retailers in India. The case let titled 'Shoppers' Stop Consumer Loyalty Program' gives an overview of the consumer loyalty program started by Shoppers' Stop, the First Citizen Club, to create loyalty among its customers. It also talks about the First Citizen Citibank MasterCard, a co-branded merged card launched by it in association with Citibank and MasterCard. The name "First Citizen" reflects their commitment to offering you the ultimate shopping experience. Reward Points provided every time you shop at Shoppers Stop. Exclusive premium benefits & privilege. Updates and information on what you can look forward to shop for at Shoppers Stop. Exclusive cash counters at Shoppers Stop so you can spend more time shopping than waiting in a line.

Shoppers Stops Citizen First Card

30

Shoppers' Stop's customer loyalty program is called The First Citizen, with these customers being part of The First Citizen's Club. This is a program offering members an opportunity to avail of a variety of special benefits, by amassing points on their purchases, and it also offers them privileged shopping experiences. Shoppers' Stop, at present, has a database of more than 2.5 lakh regular members whose purchases account for nearly 50% of Shoppers' Stop's total sales.

Shoppers' Stop, which is located in India, is a chain of varietal retail stores. Shoppers' Stop is owned by the popular business conglomerate K Rajeha Corp, and it was started in 1991, with the first store opening in Andheri in Mumbai. Today it has in almost all the major cities in India. It offers its customers a wide range varied of merchandise, international products and brands, and world-class customer service. Shoppers' Stop has been responsible for introducing the Indian consumer to international shopping standards of shopping. Shoppers' Stop has itself become a household name, renowned for its high quality products and services, and most importantly for providing the consumer with a complete shopping experience. Classic Moments: Earn 1 Reward point for every purchase of rs 100. Silver Edge: Earn 1 Reward point for every purchase of rs 50. Golden Glow: Earn 1 Reward point for every purchase of rs 34.

Terms and Conditions:

Indian citizens above 18 years of age. For individuals only not a Corporate Card / Corporate Membership. Few schemes only applicable for selected stores. Associate Shoppers stop First Citizenship can be provided only to siblings (brothers and sisters, spouse, children (18 + only). Car parking charges shall be reimbursed on purchase at shoppers stop showrooms, through valid Shoppers Stop First Citizenship Member. Reward points will be earned on purchase of Gift vouchers. Reward points cannot be earned on purchase made through Cheque / Demand Draft.

31

 Reward point structure liable to renewal with changing market conditions.

Benefits at a glance:

BENEFITS First Citizenship

CLASSIC MOMENTS Rs. 200

SILVER EDGE -

GOLDEN GLOW -

First Citizen(Reward Points)

1 R.P on every purchase of R.P on every purchase1 R.P on every purchase of rs.34 1 rs.100 of rs.50 1% 2%

Extra R.P on preferred brands Associate Card Yes(rs.100)

Yes( up to 2 ;rs. 100)

Yes 2 free(3 rd rs. 100)

Regular Updates

Yes

Yes

Yes

Exclusive Cash Counters Free Parking*

Yes

Yes

Yes

Yes*

Yes*

Yes*{Reserved}

Valet Parking

Yes

Yes

Yes

Home Delivery

Yes

Out-Store Offers

Yes

Yes

Yes

Merchandise and sale Yes

Yes

Yes

32

Loyalty Program at Hero Honda:

India, where Hero Honda Motors became the largest single-entity manufacturer of twowheelers in 2001, shipping 1.4 million motorcycles -- seizing a dominant 48-percent share of the domestic market in the process. In 2002 it plans to increase shipments further to 1.8 million.

The New Delhi oriented and based company is a joint venture between India's Hero Group and Japan's giant Honda Motor Company. Established in 1984, it came about to be popular when Honda chose Hero Cycles as its partner to set up a motorcycle operation in India after the Indian government relaxed foreign investment and import regulations on two-wheel motorized technology up to 100 cc. Hero Cycles was then, and still is, the world's largest maker of widely publicized bicycles, selling over 5 million cycles annually. Another Hero company, Hero Majestic, had also established a moped manufacturing business. This combination of mass-production know-how and a large distribution network proved crucial to Honda's decision to join Hero, despite being ardently courted by a number of other Indian manufacturers.

Passport to Customer Loyalty:

Last April Hero launched the Hero Honda Passport, a program designed to increase customer loyalty. Customers who are willing to and sign up are issued "passports," and they receive points when purchasing parts or referring new customers. "This helps us in getting to know our customers better," says Pawan Munjal. "There are 600,000 members in the program, and we also organize events where they can meet sports stars and film stars. This creates loyalty in our customers."

But to create loyal customers, a company must first have loyal employees. "Fortunately, Honda has a good name, Hero has a good name, so we attract very good people," says Brijmohan Lall, who at 79, still continues to put in a full day's work as chairman. "With our long experience we have created a trustworthy atmosphere. My door is never closed, so

33

anyone can walk in at any time."

As a reward for becoming the world's largest motorcycle manufacturer, the Manuals took the managers (along with their wives) who had contributed most to this success on a vacation to Switzerland last year. a unique CRM prospective -- Hero Honda Passport Program. It is unique and one of the largest programs of this kind in the world and has over 3 million members on its roster. The program is very moral supporting and has not only helped Hero Honda understand its customers and deliver value at different price points, but has also created a loyal community of brand ambassadors.

34

Loyalty Program of Bharat Petroleum:

Bharat Petroleum Corporation Limited (BPCL) is one of India's largest PSU companies, with Global Fortune 500 rank of 287 (2008). Its corporate office is located at Ballard & Estate, Mumbai. As the name depicts, its interests are in petroleum sector. It is involved in the refining to retailing of petroleum products. Bharat Petroleum has been considered to be a pioneer in Indian petroleum industry with various path-breaking initiatives such as Pure for Sure campaign, Petro card, Fleet card.

BPCL entered into a different milestone in the proposed coalition with TATA, with the launch of the TATA Credit cum Loyalty Card. BPCL has lately joined the Coalition Loyalty Program as an exclusive fuel partner. The Tata & Group has developed, initiated a Program in association with Master Card International and SBI Card that would accord a unified view of customers across various participating brands. The Program will focus on a mileage program where, members will earn a common currency of reward points for their transactions (including referrals, where tracked) across the participating companies. The launch took place at Taj Mahal Hotel in Mumbai on 15th of February. The gathering was honored with the august presence of a host of senior dignitaries from various companies. Mr. Ashok Sinha, the C&MD, was present on this occasion along with other eminent personalities consisting of Mr. Ratan Tata, the honored Chairman of The TATA Group of industries, Mr. A.K. Purwar, the Chairman, State Bank of India and other dignitaries from MasterCard International, GE Capital and a wide cross section of prominent media persons and other guests. Twelve of the Tata Group Companies along with a few select non competing external companies will be the stakeholders in this initiative and would benefit from this program through cross acquisition of customers, enhanced loyalty, reduction of churn and other such metrics. For the efficient purposes of the tie-up between the parties, BPCL shall provide the facility of redemption of fuel against the points redeemed by the TCC holders based on the fuel vouchers issued by BPCL to be redeemed at its selected petrol pumps based on the request sent by Tata. Customers benefit from this Program by maximizing their chances to earn points on regular purchases across several product

35

categories from shopping at a department store to fueling at Bharat Petroleum and using a telephone for servicing their cars. They also derive an advantage to redeem their accumulated points for inspirational products from within the participating companies

Pure for sure Campaign:

Some of us may even had occasion to use the filter paper that some outlets reluctantly part with to "check'' the quality of the fuel dispensed and wondered what Bharat Petroleum's new retail outlets with the "Pure for Sure" signs are all about. The company's campaign wants to hammer home the message that consumers can be absolutely sure of the quality and quantity of the diesel and petrol sold at these outlets. Pedantic school teachers might argue that that ought to have been "Pure and Sure'' instead, but that is another matter.

"Pure for Sure,'' although only marginal by about 10 per cent of BPCL's retail outlets, located mainly in large cities and along major highways, have been "converted'' to the new standard since its launch last July, they account for over 40 per cent of the company's annual sales of over 25 million tonnes of petroleum products and will therefore have a significant national impact.

Petro Card:
Petro Bonus is a unique program offering customers the convenience and security of paying for their fuel with an electronic purse, with the added opportunity to collect valuable awards and exclusive benefits. Petro Bonus enables us to purchase any item from a Bharat Petroleum outlet using the stored value Smart Card (the Petro Card) - a revolutionary and convenient payment mechanism.

It simply means greater convenience and unfolded security, speed of transaction, and rewarding opportunities to earn points with lots of gifts and benefits when you shop at a Bharat Petroleum outlet. And that's just the beginning. Petro Card also opens up for

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collecting huge savings for you at restaurants, stores and many other merchants across the country.

So become a Petro Bonus member today and take advantage of the many benefits of membership.

Fleet Card:
Whether you are cardholder or a potential cardholder and are planning to visit India, the chances are that your aircraft will be refuelled by Bharat Petroleum, as we accept the most number of carnet cards than any other oil company in India, for into-plane refuelling services.

Unlike other suppliers that require you to divulge the exact itinerary of your trip to them, Bharat Petroleum allows operate independently and you can operate independently and confidentially. You simply check for their presence at Indian airports from our web site during flight planning or en route and present any of the carnet cards accepted by us, to our personnel at the point of purchase, for quick refueling.

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Loyalty Program of Hindustan Unilever:

Hindustan Lever Limited (HLL) is India's largest fast moving consumer goods company, with leadership in Home & Personal Care Products and Foods & Beverages. H.U.L's brands are spread across 20 distinct consumer categories. The leading business magazine, as listed by Forbes Global, has rated Hindustan Lever as the best consumer household products company.

HLL has 32,400 employees (40,000 including Group Companies), including about 1,425 managers. It is an ethos that HLL shares with its parent company, Unilever, which holds 51.55% of the equity. A Fortune 500 and semi to fully transnational, Unilever sells Foods and Home and Personal Care brands through 300 subsidiary companies in about 100 countries worldwide with products on sale in a further 50.

Vijeeta:
Vijeta is HLL's wholesaler loyalty program-- which helps the company grow profitable relationships with thousands of wholesalers across the country. It provides a suitable 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 regular 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 involved with the operation for over a year-and looking at its success there are plans to expand its scope in the coming months.

Channel loyalty has-- in recent times-- emerged as a powerful tool for marketers. The fundamental and lucrative 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.

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DIREM's mandate from HLL is to handle all aspects of the Vijeta program-- and to direct its growth and future course as a relationship-building tool-- which will be a powerful source of competitive advantage for HLL. As a loyalty specialisttraditional DIREM was chosen for its higher-order capability and experience gained over many Indian and international loyalty marketing programs for consumers-- trade and business customers-- with which it has been involved over the years.

Mainly focuses on development band expansion of market distribution.

Provision of maximum no of product and seasonal schemes to all possible channel partners in order to maximize and maintain the sales level, thus maintaining its reputation as the Indian no.1 F.M.C.G Company.

Focus on providing good level of visibility / p.o.p display options to retailers in order to enhance consumer awareness about the existing stock keeping units and also develop a niche market for the newly launched brands.

Keep all the channel partners happy by providing good point systems / schemes and also providing them with higher incentives for additional sales generated.

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Research Methodology
Observation Technique:
In order to work on the project it was very important to understand about TLS. I had little idea about TLS but in order to understand it fully, it was very important to work in the market. For one month I observed how DBSRs take order and in which all areas improvements are needed.

Understanding TLS:
TLS is the numbers of lines sold by each DBSR. For example: if one DBSR took order of 6 nos. of Dettol soap (75gms) from one outlet and if the same order is taken from some other outlet then TLS would be 2.

Importance and contribution of TLS:

TLS for any FMCG company is very important. It shows that most of the products which company is producing are moving in the market at the right pace. Average value of one TLS is RS 230-250. From this aspect also TLS is very important because increase in TLS will ultimately increase the sales value. For example: Effect of increment of TLS from 100 to 140 in sales value Effective increase =40 Nos. of DBSRs =6.

So total number of TLS increased in one day=40*6 =240 Total TLS increased in one month = 240*20(average working days of each DBSR)

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=4800 Total increase in sales =4800*200 =Rs.9, 60,000 From the above calculation it can be seen that improvement in TLS can increase the sales value of the company.

Methodological Implementation and Reasons:

I divided my work in two phases:

1st phase: In this phase I took soft approach towards retailers. Realized them how
important they are for company and their help is very much required to make this UDAAN really take off. I have also taught merchandiser how to manage their windows.

2nd phase: In subsequent visit I followed them up and observed the windows.
Those who maintained the windows, I personally thanks them for their support and those who have not maintained their windows I noted their name and given their name to Distributor. Outcome: our constant effort had resulted in positive outcome. Out of 69 outlet which I monitored for UDAAN scheme , approximately 40 of them maintained their windows as told to them as per my last visit. But sustainability of these is still question mark since many retailers think they are not getting enough incentive.

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Research Tools Used:

Analysis of sales data for the total lines sold and improved done on S.P.S.S Software. Insight supported by plotting the details on the graph on S.P.S.S software. Secondary data from unpublished and published sources used for studying on loyalty programs and its scope on few other companies as shown in the project The research methodology is free of traditional research methods such as exploratory / descriptive and causal research as it does not comprise of any questionnaire to analyze anything by assuming any kind of hypothesis.

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Results and Discussions

In the given time frame I realized that if the above things are implemented then more focus should be given on TLS and productivity. A clear communication regarding incentive should be communicated form the company. At times delivery creates problem and prevents DBSRs to book order from the market. So in order to keep a smooth supply advance planning should be done.

The report highlights that key emphasis shall be laid on improving the sales techniques and measures rather than simply floating additional schemes for the retailers/ wholesalers every fortnight and season change. What retailers actually look for is capital retention / margin rather than display / free replacement / windows options.

Though financial incentives motivate the channel partners highly, certain schemes are drivers of F.M.C.G business such as point of purchase and visibility / display options without which no retailer will ever be able to spread awareness about the existing and the new products being launched by the company.

Sales attainment is not an aggressive expertise but a goal focused strategy which if implemented carefully with all possible variants and substitutes kept in mind. The project I have worked on clearly approves the fact that if the sales force , distributor sales representatives dont focus on individual sales quantity but focus on balanced sale of all products in proportion , the total lines sold will eventually lead to attainment of sales target easily and also promote segregate new brands.

Loyalty programs are the best promotional tools to derive customer satisfaction and promote the motivation levels of all the channel partners , thus the programs thus designed shall also focus on channel features and properties to promote the content and happiness of all retailers/ wholesalers / petty shop owners / chemists / key account store owners and other large retailing formats.

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Recommendations
The above cited are few of the reasons. But according to me the real crux of story is not the above cited reasons. TLS can easily be improved to 140-150 but DBSRs who are working are not very clear about the incentives which are provided by the company. RB wants to grow to Rs2000 Crs Company by Year 2010, so we have to keep our internal customers i.e. DBSRs then it would be easy for the company to grow. Transparency regarding incentive should be made clear. So following are two options which will make sure that right incentive is reaching to right people.

Provide incentive through cheque/DD to DBSRs - but this process is little bit difficult to maintain because DBSRs keeps on changing. A Detailed description regarding incentive should be provided to DBSRs through TSI with ASMs signature.

Sample:

The same should be pasted on the bulletin board of Agency. This will give an idea about how much of incentive each DBSR s deserves. This will definitely push DBSR to go beyond their target and desired TLS would be achieved.

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1. Payment period under UDAAN scheme can be shortened to make it more lucrative for the retailers. Moving from quarterly to semi quarterly or twice in month can be possible solution.

2. Regular visit by TSI at these outlets and monitoring closely as well as some times surprise visit by ASM can result into some positive result.

3. Clearance of payment on time can further motivate the merchandisers to maintain the window.

Recommendations (Back to basics.):

In the given time frame I realized that if the above things are implemented then more focus should be given on TLS and productivity. A clear communication regarding incentive should be communicated form the company. At times delivery creates problem and prevents DBSRs to book order from the market. So in order to keep a smooth supply advance planning should be done.

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References

Books:
G Dowling - California Management Review, 2002.

H Arantola 2003.

M GroB, M GroBweischede - Collaborative Customer Relationship Management.

Websites:
www.marketingprofs.com

www.scribd.com/doc/3229243/FMCG

Articles & Essays:

www.echeat.com/essay

en.wikipedia.org/wiki/Loyalty program

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Annexure 1

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Annexure 2

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