IntroductionEvery company has its own core competency which cannot becopied or duplicated by any of its competitors. Companies always concentrate onthis core competency so as to build a strong position in their customer’sminds. But, there is a company, called Airtel which has outsourced all of itsoperations activities in order to concentrate one and only on their financing,marketing and management activities. This is a very bold step and not manycompanies would be ready to do this. But also, this is one of the reasons ofAirtel’s success because they were able to lower their costs and produce highvolumes of output. This paper outlines some of the basic methodology followedby Airtel in managing its distribution channel. This is the path by whichAirtel reaches their customers.
The efficient managing of their distributionchannel is the main reason that customers always feel happy to be an Airtelsubscriber. Distribution channelA chain of intermediaries through which the product passesby in order to reach the end consumer is called as a distribution channel. Itmay be a business-to-business (B2B) or Business-to-Consumers (B2C) sector, butevery company in every sector will have its own distribution channel. Thedistribution channel includes wholesalers, retailers, shop keepers and variousother intermediaries who help in the distribution of a product to the endconsumer. It is always very important for the company to choose theirintermediaries in the distribution channel. Because they are the real peoplewho are going to interact with the customers.
Their behaviour to the customers mightas well affect the sales of the company. Distribution channel is not only thepath of movement of products, but it’s also the path by which payment willreach the company from the consumers. There are generally three types ofdistribution channel in practise.The first type is the long distribution channel, whichincludes all the four business intermediaries, that is the producer, thewholesaler, the retailer and then the end consumer. In US, as per the laws andrestrictions the alcohol producers are not allowed to sell directly to theretailers. They have to pass the products first to the wholesalers and thenthey will pass it on to retailers who would in turn sell it to the end consumers. The second type is the medium distribution channel, whereinthe producer would sell his products to the retailers who would in turn sell itto the end consumers.
So, in here, there’s no wholesaler involved. The third and final type of distribution channel is theshort distribution channel. Here, the producer would directly sell hisproducts. For example, an exclusive showroom of Himalayas. This will give anadded advantage to the producer that he doesn’t have to wait to get to know thefeedback from his customers.
They can get immediate feedback which will helpthem in updating themselves. The distribution channel is very important for thecompany. Even if the company takes any strategic decision in which they want togo for a forward integration, then also the intermediaries in the distributionchannel are going to play a major role. Airtel (Company history)Airtel is a name which even kids are aware of today. This isthe name which is connecting millions of people all over the world.
Airtel hasreached the position in which they are today, because of their hard work andperseverance. This didn’t happen overnight. There’s a big story of successwhich tells us how Airtel as just being a regional operator has become thesecond largest operator in the Asia Pacific region. Bharti Telecom services was found by Mr. Sunil Bharti Mittalin the year 1986.
They were the first company to provide push button phones,when the rest of the country was still using rotatory phones. They had apartnership with Siemens AG and they started making push button phones in Indiarather than importing it from Taiwan as the other companies used to do at thattime. Bharti Airtel was found in 1995 in New Delhi as a regional operator.Within a span of 20 year, Sunil Mittal worked very hard to bring his companyreachable to almost all the households of India. Innovation was always adoptedin each step of their process. In the year 2003, Sunil Mittal rebranded all histelecom services under one brand name called Airtel.
Airtel was exceptionallygood in their strategic planning activities. Their equipment partner isEriccson and Nokia and their IT support is provided by IBM. The current CEO ofAirtel is Mr. Gopal Vittal and the Chairman and Managing director is SunilMittal himself. One of the main important strategic planning activity whichAirtel carried out was the concept of “Minutes Factory”. By this method, exceptthe core competencies of the company like the financing, marketing and themanagement activities, all other operations related activities were outsourced.By this Airtel was able to cut their costs as well as increase their volume ofproduction.
This is a very innovative and different technique which is not beencarried out by the other players. They have their presence in over 20 countriesand they are operating mainly in India, Sri Lanka, Bangladesh and a fewcountries in Africa. They are the first company to introduce 4G in India. In2004, Airtel collaborated with the world famous music director Mr. A.R.
Rahmanwhich was the most efficient marketing technique which anyone can do. This madeAirtel to establish the brand globally across various countries.Also Airtel has merged with Tata telecommunications onOctober 12, 2017. This was mainly due to competition that the company is facingdue to the introduction of Reliance Jio. There are also talks going on aboutthe merging of Airtel and Aircel. In addition to this, Airtel had also faced aloss during the previous year (2016-1017) due to the introduction of Jio. Butthen, Airtel has a very strong consumer base and they have very efficient towerconstructions which enables them to remain the no.1 player even today.
Theirdistribution channel and network location is very efficient that even in a hillstation or in any rural part of India or in any jungle, consumers can buy anAirtel sim card, open a new connection and can get access to Airtel’s network.The Distribution Channel of AirtelAirtel has customised their distribution channel as per thetype of population (rural and urban). But in both the rural and urban model,Airtel follows a long distribution chain wherein the chain of flow is from theproducer, to the distributor, then to the field sales executives, to theretailers and then to the customers. The field sales executive is a person whois directly appointed by the distributor.
He is given a certain specificboundary of sales. He collects all the products from the distributor and hesells it to various retailers in that specific zone of sale and also hecollects feedback from the retailers regarding the customer feelings and willreport it to the distributor of that zone. Airtel has clearly definedhierarchies so as to avoid confusions and to efficiently manage the system ofoperations.
In every part of the chain the players or intermediaries are beingallocated specific region of sale and they are being paid on the same. Types of distribution channel1) Urban Distribution ChannelIn Urban trade, the products are passed onfrom the production site to the urban distributors. The field sales executiveof different sales regions would collect the products from the distributors andwill sell it to the retailers. They are paid depending on the sales targetthey’re given to fulfil every month by Airtel. They in turn, would report tothe sales manager of that particular region and the sales made is noted. Theretailers sell the final product to the consumers.
Some of the retail shopsexcluding the Airtel exclusive showrooms will be recharge only shops, rechargeand sim providers, mobile phones and accessories shop, Kirana shops, pan shops,stationary shops, etc.., 2) Rural Distribution Channel The model adopted here is almost the sameas that of the urban trade model, but the only difference here is that thedistributors and the retailers are from the rural areas.
Airtel has customisedthe model based on the urban and rural criteria, so as to optimise thetransportation costs and to ensure that their service is reachable to any partof the world. In this model also, we have field trade executives who will buythe products in bulk from distributors and will sell it to the rural retailers.They would in turn sell it to the customers.
3) Modern Distribution Channel These are some of the Airtel exclusive shops which are primarily meant forcustomer service. But at times, they also act as a distribution channel. Theseshops are generally franchises which are owned by dealers who may or may not bethe same distributors.
4) Online Distribution Channel The online channels are mainly used for recharging purposes and they aregenerally the company’s official website as well as sites like freecharge,paytm, etc.., Sales management of the companyAirtel has divided India into 23 circles and based on thepopulation level, purchasing power (based on income) and the penetration (thatis, the level of customer awareness and usage of Airtel), they have furthermade A, B and C categories with these circles. The sales managers are alsoallocated circles regarding this categorisation. Most of the south Indianstates are given “A” category, the middle part of India falls under “B”category and the northern states are given “C” category.1) Sales hierarchyThere is a CEO for every district who willmake decisions regarding the growth in that particular district. The Sales headwould directly report to this CEO and help him in making decisions. The nextperson in the hierarchy is the Zonal Business Manager.
He will take care of thesales in that particular zone. He is also allowed to make strategic decisionsfor that particular zone which he is in charge of and he will report to thesales head. Then comes the Zonal Sales Managers who will see to the individualsales in every district.
They report to the ZBM. The last one in the hierarchyis the territory sales manager (TSM). They take care of the individualdistributors and they help them in their work. They as well help thedistributors to appoint the field sales executives and they manage the FSEs intheir daily operations. TSMs would fix sales targets to the distributors who inturn, would fix sales target to the FSEs.
2) Sales Process in the Distribution ChannelAirtel directly appoints the distributors andsends all the products to them from the production unit. Distributors would inturn appoint field Sales Executives, who will collect the products fromdistributors and will sell to various retailers in the zone allocated to themfor sales. The number of Field Sales Executives appointed actually depends on thenumber of shops in that area allocated to that distributor. The TSMscommunicate frequently with the distributors and the FSEs in order to set theirtarget and discuss about the various activities to be done. In addition tothis, the TSMs also take feedback of the previous day from the FSEs. The TSMsalso ensures whether proper stock is maintained with the distributors or not.
ConclusionAirtel gives its best in order to ensure that all itscustomers get access to Airtel’s products and network, wherever they are from.But still, there are some customer grievances reported on the same in somewebsites review pages. A new innovation of Airtel that is, the “Do-it-yourself”machine has come. By this, customers can insert money for payment of theirpostpaid services and also they can recharge their phone for prepaid services.This is a very efficient technology and saves time for the customers. Airtel isalways known for its continuous innovation and hard work.
Hough they might behaving a tough time now, we can expect so many such innovations from Airtel inthe near future and they would never cease to amuse us.