Sample Proposal 1

MANAGERIAL COMMUNICATION
SUBMISSION IV
PROPOSAL: GROCERY RETAILING
Submitted to:
YYYYYYYY
XXXXXX
ZZZZZZZZZ
Word Count: 1193 words
Submitted by:
XXXXXXX
Roll No.:
Section
From Kirana to Ghar Aana

Groceries Home Delivered at 8%
Discount
Proposal presented to:
ITC LIMITED, BANGALORE

On: th September, 200x
By
YYYYYYY
Ist Year Student,
email: zzzzzzzz@iimb.ernet.in
FROM KIRANA TO GHAR AANA
We will lower the cost of living give a better life to all

Sam Walton
INTRODUCTION
Banning of smoking in public places, ban on cigarette advertising and excessive excise
duty on cigarettes has deeply impacted the growth and profitability of ITC. In the last
financial year ITCs cigarette sales have fallen by 10%. This has not stopped ITC and it
has decided to reinvent itself. To derisk its business, the management has proactively
decided to venture into new businesses like greeting cards, confectionary, and readymade garments. It soon plans to launch a full range of personal care products. It also
wants to become Indias marketing & distribution backbone routing products of noncompeting brands through its distribution network.
Indian food chain is highly inefficient. Indian consumer on an average pays more than 3
times the farm-gate price for food grains. ITC sees a humongous opportunity for itself in
rationalising the Indian food chain. To tap into this opportunity, two years ago, the
company initiated the concept of e-choupal farmer kiosks. These kiosks offer real time
information and customised knowledge to the farmer, helping him to align his
agricultural output on market demand and better price through improved quality and
higher productivity. It plans to set up 100000 such kiosks in rural India.
Food accounts for 50% of private consumption expenditure and is Rs. 1,20,000 Cr.
industry. Of this 64% is accounted for by unbranded groceries cereals. Pulses, oil, sugar
spices. For ITC, the e-choupal network has laid the base for effective sourcing of raw
materials like grain and pulses for the foods initiative. The company now plans to
forward integrate and process, brand and sell these commodities. Last week the company
has test lunched Aashirwad atta in Delhi.
We are students of IIM Bangalore. We are interested in studying distribution capability
required by ITC for its future initiatives in the food sector. Based on this we want to
recommend a distribution strategy that can help take-on entrenched competition in the
branded commodities market Hindustan Lever, ConAgra, Cargill Foods, Pillsbury.
As management students, this project will help us relate management theory with market
realities. We will also learn problem solving and project execution skills. We look
forward to your support for this project.
PROJECT DESCRIPTION
Branded commodities are a very challenging industry. It is high volume, low margin
business with major players yet to break even. Despite heavy expenditure in advertising,
customers have not quickly adopted packaged groceries owing to the price premium over
unbranded groceries. Owing to higher margins on unbranded groceries its a real
challenge to convince retailers to stock the branded groceries, display it and promote it.
Given this scenario we suggest that ITC should go for a Direct-To-Home distribution
channel in urban areas the prime market for branded groceries.
Typically, ex-factory cost for atta is 55-60% of Maximum Retail Price. Distributor
margins, trade discounts, retailer margins, sales-force costs, trade receivables, together
make up for 20-25% of final consumer price. These costs can be dis-intermediatcd if
consumers can be accessed directly. A big chunk of the savings can be passed on to
consumers in the form of lower prices and thus compete with unbranded groceries. A
strong entry barrier will get erected in the form of a new purchase system which
competition will find very difficult to breach.
Branded groceries like atta have a short shelf life. Average time spent in the conventional
distribution channel is 35 days and losses due to expiry are high. Through a direct-to-home
channel, these losses can be minimised and consumers will get factory fresh groceries.
Based on the above insights we would like to recommend the design of a Direct-to-home
distribution channel. As a first step towards that we would like to study your requirements,
analyse your competitors and understand consumer behaviour.
PROJECT METHODOLOGY AND SCOPE

It is proposed that the entire project will be divided into the following phases.
Phase I: We would like to interview the SBU head of the ITCs Food Business and
understand the distribution capability required by for its initiatives in the food sector.
Phase II: We will analyse the shortcomings of the conventional distribution channels of
competitors - Hindustan Lever, ConAgra, Cargill Foods, Pillsbury. For this we plan
to interview sales officers, distributors of the above companies. We also plan to
interview 3 grocers and purchase manager of FoodWorld Supermarkets.
Phase III: We will survey consumers and understand the consumer acceptance of this
novel distribution channel. We plan to do a do a dip-stick survey among 20
households (5 belonging to SEC A, 10 belonging to SEC B, 5 belonging to SEC C)
Phase IV: We will design a viable direct-to-home distribution channel that can meet
ITCs current and future requirements. We will seek technical inputs from expert faculty
at IIM Bangalore.
Due to constraints on time, we will not be able to do a comprehensive market and
consumer research. We will also not be able to execute the idea and provide
implementations support. Our responsibility will end with making recommendation on

the design of the proposed Direct-To-Home distribution channel.
PROJECT MILESTONES
The project shall follow the following schedule, and produce the following interim
milestones:
Date
October 8, 2002
October 10, 2002
November 7, 2002
November 8, 2002
November 12, 2002
November 28, 2002
December 6, 2002
Scheduled Completion of Milestone

Project Commencement through signing of
Memorandum of Understanding and nondisclosure agreement
Preliminary meeting with Food-SBU Head and
his marketing team to gain precise understanding
of client requirements, lay down quantified goals
and decide the applicable data collection strategy.
Completion of Data collection and organizing,
with the creation of a structured knowledge base
Discussion of data collected feedback from
management about further requirements
Interim report delivered to ITC.
Discussion of interim findings and further
refinement, if any.
Final Report to be delivered, with an oral
presentation to top management
OUR EXPECTATIONS:
I will need the following assurances to produce a comprehensive report:
A letter of project approval, to facilitate interaction with outsiders.
Access to sales and market data from ITCs marketing department.
Manpower
Requir
ement
1 person
3 hours
2 persons
10 hours
3 persons
55 hours
2 persons
10 hours
1 person
2 hours
2 persons
5 hours
1 person
5 hours
Acceptance of the project proposal in writing by October 1, 2002.
COMMERCIAL TERMS
No of members
Person-hour rate
Time required for the project
Direct costs for the team (210* 600)
Rs 126,000
Overhead costs (assumed same as direct costs)
Rs 126,000
Total cost of the project
3
Rs 600
210 Man Hours
Rs 252,000
Other terms and conditions

1. Travel and food expenses shall be billed at actuals.
2. Rs. 50,000 is the advance payable. At the inception of the contract and the balance
will be payable on completion of the project.
CONCLUSION
The project will aim to provide ITC with new distribution model for its foods business. It
is hoped that through the proposed Direct-To-Home distribution channel, ITC will be
able to make a big dent in the grocery retailing market and have large loyal base of
customers. We look forward to your support.
ANNEXURE
PROFILE OF IIM BANGALORE
. one of Asias finest business schools. Business Today magazine has recently
rated it as India's best Business school. The post graduate programme is continually
monitored and frequently revised to incorporate cutting edge management theories and
practice. Latest technologies are employed for effective delivery and the curriculum
emphasizes practice orientation. Exchange programmes with leading business schools
around the world expose our students to management thought and practice in different
national environments and cultures.
PROFILE OF PROJECT LEADER

ZZZZZZZZZZ is a first year student of Post Graduate Program in
Management. He has earlier worked for Indias leading FMCG company, Marico
Industries. At Marico he has successfully prototyped a direct-to-home discount grocery
retailing business.

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MANAGERIAL COMMUNICATION

PROPOSAL: GROCERY RETAILING

From Kirana to Ghar Aana

Proposal presented to:

ITC LIMITED, BANGALORE

FROM KIRANA TO GHAR AANA

We will lower the cost of living give a better life to all

PROJECT METHODOLOGY AND SCOPE

implementations support. Our responsibility will end with making recommendation on

Scheduled Completion of Milestone

A letter of project approval, to facilitate interaction with outsiders.

Access to sales and market data from ITCs marketing department.

Acceptance of the project proposal in writing by October 1, 2002.

Time required for the project

Direct costs for the team (210* 600)

Overhead costs (assumed same as direct costs)

Total cost of the project

Other terms and conditions

PROFILE OF PROJECT LEADER

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