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Sales and Distribution Management of Bayer Crop Science Limited

Technical Report · August 2009

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 (Project of Sales and Distribution Management)

By

Manoharlal Bundhel (RB09020), Asokendu Samanta (RB09035)

Shuchi Kumar (RB09050), Renu Shetty (RB09121)
Arif Khan (RB09168)

Group No. 20
Centre: Powai and Juhu, Mumbai

August 16, 2009

 Sales and Distribution Management of Bayer Crop Science Limited

Contents
Contents 1
Abstract 2

1.0 Introduction 2
2.0 The Company 2
2.1 Product Category 3
3.0 Sales 5
3.1 Sales Organization 5
3.2 Sales Strategy 5
3.3 Sales Force 6
3.4 Recruitment and Induction Process 7
3.5 Territory Allocation Process and Strategy 8
3.6 Reporting Structure and Systems 8
3.7 Compensation Structure 8
3.8 System of Evaluation 9
3.9 Training and Development 9
4.0 Channel and Distribution Strategy 10
4.1 Channel Environment 11
4.2 Channel Strategy 11
4.3 Channel Design 11
4.4 Managing the Channel Members and Conflict 12
4.5 Appraisal and Evaluation of Channel Members 15
4.6 Analysis of marketing channel structures 15
5.0 Conclusions 17

References 17
Acknowledgement 17
Appendix: Interview With Manager (Sales) of Bayer Crop Science 18

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 1
 Sales and Distribution Management of Bayer Crop Science Limited

(Project of Sales and Distribution Management)

Manoharlal Bundhel (RB09020), Asokendu Samanta (RB09035)

Shuchi Kumar (RB09050), Renu Shetty (RB09121)
Arif Khan (RB09168)

Group No. 20, PGCBM 15, XLRI, Center: Powai and Juhu, Mumbai
August 16, 2009

Abstract: Go-to-market systems, with multiple marketing channels that link suppliers with their
customers, have radically evolved beyond simple advertising or salesperson marketing channels.
The present report discusses on the sales and distribution management of Bayer Crop Science
Limited, who has been producing various products in the filed of crop protection for more than a
century. Data on sales and distribution of Bayer are collected through a face to face interview
(shown in Appendix) with the Manager, Sales and Support of Bayer. The pros and cons of the
system are discussed, critically analyzed and findings are listed in conclusions.

1. INTRODUCTION
The tactical goal of the marketing is to get people to buy the company’s products or services and
make sure that they are available in the market. Here is where Sales and Distribution play a
significant role in a company. Sales represent a major investment for many companies with huge
amount of money are being spent on sales staff salaries, incentives, information systems, and
other sales-related expenses. Improving the productivity of the sales will help companies increase
its financial performance. To support the products and services availability, go-to-market strategy
should be formulated and distribution channels should be managed carefully.

2. THE COMPANY
Bayer, one of the world leaders in Healthcare, Crop Science and Material Science, was originally
established in Germany in 1863 by Friedrich Bayer and Johann Friedrich Weskott. The objective
of the company was to manufacture and sale of synthetic dyestuffs.

Subsequently ‘Farbenfabriken Bayer and Co. Ltd.’ was set-up in Mumbai in 1896 and heralded
the beginning of the history of Bayer in India (Fig. 1). Bayer has mainly three divisions,

i) Bayer Health Care

ii) Bayer Crop Science and
iii) Bayer Material Science.

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 Sales and Distribution Management of Bayer Crop Science Limited

Fig. 1 ‘Bayer House’ located at Powai, Mumbai is the head office of Bayer Crop Science in India

The acquisition of Aventis CropScience has helped catapult Bayer CropScience to one of the
premier organizations in the world in the areas of crop protection, seeds biotechnology and non-
agricultural pest control.

Bayer plans to attain leadership position in these areas in the years to come. With a sizeable
existence in 122 countries and 22,000 dedicated employees, Bayer CropScience is never too far
from its customers.

Bayer Crop Science Limited constitutes the core cropscience company and has production
facilities at the Bayer sites in Thane, Himatnagar and Ankleshwar. With the acquisition of
Aventis Cropscience Limited worldwide, Bayer is the undisputed leader in the Crop Protection
business in India.

2.1 Product Category

Bayer Crop Science has three products (Fig. 2)

Crop Protection: It has an impressively wide range of effective solutions at hand to tackle the
problems of farmers more (Fig. 3).

Environmental Science: It offers solutions to control pests and weeds efficiently and to improve
the quality of life of professional users and consumers.

Bioscience: It is a global player in the research, development and marketing of seeds and
solutions derived from modern plant technology

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 Sales and Distribution Management of Bayer Crop Science Limited

Bayer Crop Science

Environmental Crop Bio Science

Science Protection

Products

Insecticides Fungicides Herbicides

TopStar WhipSuper
Confidor Fame (Rice) (Soybean)
(Cotton, Mango) (Rice, Cotton)

Baycor Antracol
(Fruits, Veg) (Fruits, Veg)

Fig 2. Products of Bayer Crop Science

Fig 3. Bayer’s products are used for crop protection

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 Sales and Distribution Management of Bayer Crop Science Limited

3. SALES
Sale is an important activity in an organization. Strategic sales management involves effective
and efficient handling of systems and processes towards successful sales. An effective sales
process is key for closing more sales and generating more repeat business. For this careful
management, following is required.

 Sales force - An efficient and effective salesforce is required for enhancing the sales
productivity of an organization.
 Sales territories – These are important to get good customer coverage, more sales, lower
costs and performance evaluation.
 Sales accounts - Key account management would involve nurturing and cultivation of
strong customer relations in turn building customer loyalty with time.

The mission statement for Bayer CropScience is concise:

“Bayer: Science for a better life”

Bayer wants to enable access to improved agricultural tools for farmers who cannot currently
obtain them through commercial channels.

3.1 Sales Organization

To support the sales strategy, a solid sales organization is vital. It helps in the smooth realization
of sales targets and ensures perennial sales productivity. The organization and structure of the
sales force depends on several factors. Bayer has a geographical based sales organization and is
structured in a way that enhance their “go-to-market” effectiveness and efficiency, which
normally involves the establishment of appropriate channel/distribution and sales management
practice. Also, there is a clear defined authority at each level. Hierarchy in the sales activity of
Bayer Crop Science Limited is shown in Fig. 4.

3.2 Sales Strategy

Sales strategy is nothing but selling products as solutions to the customers. Sales are about
prospecting, sales process, and after sales service. The consumer forecasting team at Bayer
CropScience gathers Point of Sale (POS) and other consumer data from channel sales and
category marketing to generate an 18 month unit forecast.

The company offers an outstanding range of products and extensive service backup for modern,
sustainable agriculture applications. To sustain its market share, the Company is focusing heavily
on post sales services and technical support to customers. The Company sponsored several
symposium and conferences to actively interact with the scientific community.

The sales process includes managing and directing the sales force, planning of sales activities,
methods of reaching out to clients, competitive differences and resources available. This is
discussed in details here.

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 Sales and Distribution Management of Bayer Crop Science Limited

CEO at HO in
Germany

Europe North Asia Latin Africa

America America

India
(Country Head)

North South West Zone East Central Andhra

Zone Zone (Zonal Manager) Zone Zone Zone

North Western South

Maharashrtra Maharashrtra Region Maharashtra
Region (Regional Manager) Region

Territory
(Territory In-charge)

CHANNEL NETWORK
for territory comprising of
distributors, dealers and retailers

Fig 4. Hierarchy in the sales activity of Bayer Crop Science Limited

3.3 Sales Force

The primary function of professional sales is to generate and close leads, educate prospects, fill
needs and satisfy wants of consumers appropriately, and therefore turn prospective customers into
actual ones. They are the face of the company. Hence it becomes very crucial for the company to
carefully recruit and select their sales force, keep them motivated and retained, develop and
nurture them.

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 Sales and Distribution Management of Bayer Crop Science Limited

Bayer CropScience respects and values the ethnic and cultural diversity of their sales workforce
and understands that success is founded on their skills and their commitment. They are supported
in both their professional and their personal development. Sales force blends their knowledge and
experience across ethnic and geographical boundaries and provide for a unique mixture of
approaches and backgrounds. Bayer Crop Science places great value on their qualification, and
also commitment to company values.

3.4 Recruitment And Induction Process

Sales force recruiting is where a company can really look to improve bottom line results. By
effective sales force hiring, the path to more robust results becomes a straighter one. Building a
sales force of high-performing salespeople is a crucial strategy for long-term growth and
profitability. Recruitment is a process of searching of prospective employees and stimulating
them to apply. In Bayer CropScience, the need of recruitment of sales personnel is captured from

i) Inputs from the country head, zonal and regional managers

ii) As a result of planned expansion
iii) As per the need based on employee status available by the HR department

The job analysis of ‘sales position’ shows the following tasks and skills required by Bayer.

i) To achieve sales as per target set by superior

ii) Good teamwork and team spirit
iii) Local language proficiency
iv) Good communication skills

Below are the external sources of recruitment.

i) Campus recruitments from agricultural colleges of India

ii) Advertisement in the newspapers
iii) Scanning from internet by HR department
iv) Through company website (interested candidates apply directly through Bayer’s website)

Bayer CropScience HR does the screening and filters are applied as per the recruitment company
policy.

The assessment is then based on 3 rounds of interview.

First round is based on the subject matter.

Second round is with the Country Head or Zonal Head or Regional Head depending on position.
The third round is with the HR department

The sole purpose of evaluating job is to predict, or forecast, how they will perform on the job
before they are added to the payroll. In Bayer CropScience this is based on the technical
knowledge in Agricultural science, local language proficiency and communication skills.

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 Sales and Distribution Management of Bayer Crop Science Limited

3.5 Territory Allocation Process And Strategy

A sales territory is geographically defined area for a particular product and for potential
customers. Dividing the entire sales region into a number of smaller sales territories facilitates in
smoothing the sales management operations. The territory is assigned to a salesperson who is
responsible for the sales management activity in the region.

Bayer CropScience has one territory having a couple of districts which is based on market. The
Agricultural survey conducted by a team and expert forecasts contributes in designing of a
territory.

Based on agricultural economy of the country, a country is subdivided into zones which may
comprise of one or more states. Zones are further subdivided into regions comprising of many
districts. Regions are further subdivided into territories comprising of a few districts as per
convenience. Territory boundaries are defined by grouping small geographic units together into
larger areas called sales territories. For this workload method is used. A workload model defines
the amount of selling time that should be optimally allocated to an account (no more, no less) to
achieve a targeted sales goal. Historical call data, sales data, and field sales management
judgment is normally used to support the quantification of the work load model. Once total
workload has been determined, the process of creating sales territories involves the assignment of
both accounts and prospects to salespeople.

Territory Planning is the process a sales team uses to analyze and plan around key accounts and
opportunities within their assigned sales territory. One of the important tasks of sales
management is allocation and to ascertain the sales force size to be deployed in a particular sales
territory. The sales territories are allocated in Bayer on the basis of infrastructure and ease of
access to reduce travel time. Availability of distributors, dealers and retailers is also taken into
consideration while ascertaining the size of sales force.

Bayer CropScience has identified Andhra Pradesh as a huge market and hence considered it as a
separate Zone. Territory mapping in Bayer CropScience is based on the bottom-up forecasting.

3.6 Reporting Structure And System

The reporting structure defines how power and control is cascaded throughout the organization;
who reports to whom or, who supervises whom. One could report to someone administratively,
functionally or both. Also, organizations may be like tall pyramids in which there are many levels
with a person at each level controlling as few as three people, while flatter organizations will
have fewer levels, but with as many as 30 people reporting to one person.

Bayer CropScience follows a hierarchical, flat reporting style.

3.7 Compensation Structure

The compensation of the sales force is an important tool to boost the motivation-level of the sales
personnel. The sales force incentive compensation plan influences sales force behavior. This can
affect the productivity. Designing an efficient compensation program for the sales force is,
therefore, an essential requirement. A good sales compensation plan should be economical yet
competitive and should attract and sustain deserving sales personnel.

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 Sales and Distribution Management of Bayer Crop Science Limited

Bayer CropScience gives a large fixed salary with less variable pay (fixed: variable = 70:30
ratio). Also, it does not believe in giving any bonus or sales incentives. However to motivate its
sales force rewards are given in form of promotions and sponsored foreign trip.

3.8 System Of Evaluation

Assessments of the sales force are crucial to the company as the sales force productivity affect the
entire selling organization. Targets are set for the sales force and evaluation is done against it. In
Bayer Crop Science, the targets are set based on the following points.

i) Territory potential
ii) Past market performance and growth trends
iii) Introduction of new product brands in same channel

To measure, both qualitatively and quantitatively, Bayer Crop Science has set certain criteria.
These are:

i) Sales performance
ii) Assigned targets achievement

One very unique strategy of Bayer CropScience for evaluation is that it sees common values and
leadership principles to be essential for every employee’s daily work. The values include a will to
succeed; a passion for the company’s stakeholders; integrity, openness and honesty; respect for
people and nature; and the sustainability of the business’s actions. The Assessment of
performance on the basis of defined leadership principles helps to ensure adherence to these
values throughout the enterprise. Bayer CropScience has a yearly appraisal cycle. The appraisal is
done by the supervisor and does not follow a 360 degree appraisal.

3.9 Training And Development

To have a productive sales force, firms must provide their salespeople with sales training.
Trainings are crucial for building a sales force for growth of the organization. Conducting regular
sales training programs help impart crucial skills in salespeople and define new roles and
responsibilities for them. Bayer CropScience gives training to its sales force on product
knowledge which is given by product managers. Following trainings are also given.

i) Extensive on the job training

ii) Training by product managers
iii) Training by expert faculty from reputed agricultural colleges
iv) Training on soft skills, product knowledge

Training is a continual process. The need of training is captured by senior and through
evaluations in Bayer CropScience. Sales training helps socialize the new hires. It makes a sales
trainee feel competent and accepted as a working partner. Bayer Cropscience has an induction
training session for 3-4 days at regional or zonal level. Also, there are familiarization sessions
with product manager and development teams where the new joinee works with a senior for
sometime before being assigned task solely.

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 Sales and Distribution Management of Bayer Crop Science Limited

Summary: An effective sale teams can be built that pays its own way, enhances the company
sales and increases the value of any business. Bayer CropScience has an effective hiring
method, evaluation technique and training program for the sales people to motivate and retain
them.
However, in terms of incentives as a way of motivation is lacking. Also, the appraisal is
only once a year and only through the supervisor. This probably needs to be modified into a
bi-yearly appraisal or an in-formal appraisal during the year.

4. CHANNEL AND DISTRIBUTION STRATEGY

Channel partnerships are frequently considered an essential part of an organization’s product
sales and distribution strategy, which makes this a challenge for many sales organizations.
Recognizing that a successful channel is critical to continued corporate growth, many suppliers
have tried to sell through channels without fully realizing that it requires a management model – a
model involving structured selling processes, a common language, and an approach to managing
relationships. In this section, Channel strategy (Fig. 5) of Bayer is studied.

CHANNEL NETWORK
Company’s Territory
In-charge

Distributor Distributor
Number: 3,000

Dealer 1 Dealer 2 Dealer number:

18,000 to 20,000

Retailer number:
One Lakhs
Consumer
Retailer 1 Retailer 2

Consumer

Consumer Consumer Consumer Consumer

Fig 5. Bayer’s Channel Structure

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 Sales and Distribution Management of Bayer Crop Science Limited

4.1 Channel Environment

The customers are mainly farmers and workers related to agriculture industry as the particular
range of products are for pesticides, fungicide and herbiside. They are not so well educated hence
the company has to take various initiatives to educate them, promote their product, and explain
the usage and benefits of the products and builder mutually beneficial and lasting relationship.

The farmers will prefer to use the products if they prove to be cost effective in the specific
country context and beneficial. The product is also promoted through word of mouth and the
territory manager and the channel partners have to be very customer friendly.

There is competition from Rallis, Syngenta and other players. The market is well defined and
mature. If Bayer has to launch a new product it has to provide availability, education and support.

As the products are related to agriculture, hence the demand is seasonal. The company is in the
business for a long time and based on previous years sales, the demand can be near accurately
forecasted. Since the company has divided to the lowest unit a territory, it will be easy for the
company to predict the right forecast.

4.2 Channel Strategy

Channel strategy is a process that can allow an organization to concentrate its limited resources
on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
The company has divided the entire country into zones, regions and territories for effective and
efficient coverage for sales. Channel partners are assigned at the territory level. The distributor is
at the top. Under the distributors are dealers and under them the retailers.

Products are to be sold under license. Hence for any customer needs, they are directed to the
nearest dealer or the retailer.

The territory in charge interfaces with channel partners at all levels of product promotion, sales,
appraisal, rewards and incentives. In Bayer, channel strategy is that the distributors have to
achieve a pre defined target.

4.3 Channel Design

The channel design is nothing but the decisions associated with forming new channel or altering
an existing one. These design decisions are critical as it influences the marketing strategy. Also
channel is the means through which the organisation can venture into business, communicate to
the customers and physically deliver the product.

4.3.1 Strategy

The three main strategies on which Bayer’s Channel design are based on are
 Relationship with channel members
 How should the marketing mix be used
 Evaluation and Motivation of the Channel members.

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 Sales and Distribution Management of Bayer Crop Science Limited

4.3.2 Framework to Design the Channel Structure

Bayer CropScience has based its channel structure (Fig. 5) on

 Customer Segmentation – The market has been split into the end-user. The relevance of
this to channel structure is in the way the company relates to the development and service
of their products. The end-users are poor farmers, farm owners etc. Based on the
segmentation, Bayer CropScience has various channels to target the consumer.

 Sales Distribution

4.3.3 Channel Selection

Channel selection and deployment are one of the most critical issues the companies are facing today.
Consumers are in the drivers’ seats, as they should be, when it comes to the buying relationship. Powerful
products and great brands no longer provide sustainable differentiation to consumers. Increasingly, the
sales channel creates the most powerful and sustainable differentiation in delivering superior value to
consumers.

The consumer for Bayer CropScience are mainly uneducated and poor farmers of India living in villages
where there is a monopoly and an unwritten law. Here it becomes very difficult to break into for the
company and hence is heavily dependant on the channel. This it becomes very important to have a very
strong policy and criteria’s for selecting the channel. Bayer CropScience takes the following three factors
into consideration for channel selection.

 Demand from consumers

 Variable cost involved
 Competitors

4.3.4 Design of Distribution Channel

Buyer CropScience has multiple distribution channels. These multiple channel models focuses on
providing information, purchase/ fulfillment orders, educating the farmers, after sale servicing,
and technical support. As a proactive strategic move, the Company has entered into agreements
with key corporate retailers.

Multi-Channel

An initial step in building a successful multi-channel strategy involves segmenting customers

which Bayer Crop Science does as part of their Channel design framework. In the multi-channel
framework the customer segmentation scheme is developed based on how customers use various
channel offerings and how Bayer Cropscience can manage their relationships with them. The
multi-channel distribution channel is vertically integrated to allow for firm’s control over the
distribution.

Multiple products through the same channel

Bayer Cropscience distributes multiple products through the same channel also. As the company
distributes multiple products through the same channel, Bayer Cropscience maintains stock
balance for all products by

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 Sales and Distribution Management of Bayer Crop Science Limited

 Low distribution cost

 Inter branch transfers – whenever one branch has excess products than required.
 Stock replenishment - The Company is well integrated through one of the best IT
solutions and SAP ERP.

Bayer Cropscience’s crop protection products are marketed either via wholesalers or directly
through retailers by means of a two- or three-step distribution system, depending on local market
conditions.

The products of the Environmental Science Business Group are addressed to both professional
users and consumers in the non-agricultural segment and are distributed through different
channels. Bayer Cropscience green industry, pest control and vector control products are
marketed directly to professional users, while home and garden products are sold to consumers
through specialized retailers.

Duplicate safety stock at branch locations

Company calculates the demand (which is seasonal based) in advance based on past experience
and accordingly distributes the product to the regions. They do not keep any safety stock at
branch location. However, if there is an additional demand of a particular product in a particular
region and the same is available in excess in nearby region, product may be redistributed from the
nearby region.

4.3.5 Marketing mix

Price

For Bayer CropScience, the Price and the Product are the relevant Marketing Mix areas. Demand
for agricultural chemicals depends mainly on demand for various crops, which in turn depends on
crop prices. Price realization is one of the key molecules of Bayer Cropscience as there is intense
competition from low cost manufacturers and from importers at substantially low prices.

Product

Bayer Cropscience realizes that distribution of seeds along with crop protection products is going
to make the Company a stronger player in the market with a much broader portfolio of
agricultural solutions. The success of Bayer Cropscience depends on its ability to offer new and
effective solutions to the farming industry. To add true value for the customers newly evolving
pest problems have to be solved and older products need to be replaced by more modern crop
protection products. It is Bayer’s goal to introduce two to three new compounds to the market
every year,

The successful integration of Bayer CropScience, which was formalized before the main crop
season in India, resulted in a complimentary range of products for the company, as well as a
wider distribution network. In 2003, four new products were introduced into the market.

The company offers an outstanding range of products and extensive service backup for modern,
sustainable agriculture and for non-agricultural applications.

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 Sales and Distribution Management of Bayer Crop Science Limited

4.3.6 Channel Partners

Bayer in India has a network of distributors, dealers and retails.

Bayer selects it channel partners based on

 Product knowledge
 Willingness
 Financial capability

Channel partners must be experts in sales representation in terms of product knowledge. They
must have good financial strength and probably related to the industry. Credit limit is based on
financial strength. Candidates with good financial strength would be given all range of products if
desirable or it can be restricted as per evaluation and need. However if a person is not so solvent
financially, but has knowledge in product and willingness, Bayer may still choose him/her a
channel partner with limited product stock.

In some places, the dealer and the retailer are the same. Each retailer ought to have a separate
license to stock the Bayer products. Queries are generally resolved through the internet. A
prospective consumer is directed to the nearest retailer or office based on the need. Sales are not
done through the internet medium.

4.4 Managing Channel Members And Conflict

4.4.1 Managing The Channel Members

Partnership is the foundation of Bayer CropScience customer philosophy. Bayer’s customers are
more than simply clients who buy products. They are partners with whom Bayer CropScience
strive to build a durable relationship based on trust and a positive, mutual return.

The channel members are managed by the territory incharge. Managing the channel members
consists of assigning distributors, dealers and retailers. There should have proper licenses for
selling the products as per government regulations. The channel members should stock only items
for which the company has given permission to stock. They should give a higher priority to sales
for the company and recommend to clients and customers.

The company promotes a spirit of cooperation among channel members in the same territory in
the sense that if a particular retailer does not have a particular product then the other nearest
retailer should cooperate to make it available subject to sufficient stock levels. The territory
incharge is the designated single point of contact. It collects the feedback and grievances from the
channel members. It is also the spokesperson for the company who communicates company
product policies, schemes, incentives and rewards.

4.4.2 Managing The Channel Members Conflict

There can conflicts between the channel members when there are differences between the
objectives of the channel and the company. At Bayers the most common conflict would be
between two or more channels which compete against each other to sell to the same market.
Channel member perceives another channel member(s) as preventing or impeding it from
achieving its goals. Conflict arises also from incompatible desires and needs.

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 Sales and Distribution Management of Bayer Crop Science Limited

Such a competition can lead to decline in the performance of both the channel members. The
indicators of channel conflict would be

 Low channel productivity

 Deterioration of channel relationships
 Poor customer relationships
 Competition for sale in the same geographical area.

To avoid such situations Bayer follows two basic principles

 Territory in charge looks after any issue

 By maintaining clear boundaries for authority and operation

4.5 Appraisal And Evaluation Of Channel Members

Getting the right channel partners is an essential component of effective channel management.
Effective partner recruitment is a critical component to the channel strategy so that one can
ensure a strong market penetration and a healthy pipeline

Like most companies Bayer evaluation criteria is base on qualitative and quantitative measures.

 Meeting the sales targets

 Customer Relationship
 Financial Discipline
 Inventory Management
 Selling Abilities

Channels can be divided according to their efficiency as

 Level 1 (Novice)
 Level 2 (Competent)
 Level 3 (Proficient)
 Level 4 (Expert)

They also have channel motivation schemes such as, ‘Provide Training and counseling if needed’
and ‘Schemes during peak season’. Bayer CropScience has launched ‘elitia’ a very exclusive
distributor loyalty program which offers an exciting array of benefits to its customer/channel
members..

4.6 Analysis Of Marketing Channel Structure

There are approximately 3,000 distributors based in big towns and cities. Under the distributors
are the dealers.

There are 18,000 – 20,000 dealers. Each distributor has around 1,000 dealers covering 30-40
villages.

Each dealer has 15-20 retailers. The number of retailers is very large and in lakhs.

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 Sales and Distribution Management of Bayer Crop Science Limited

The channel structure is managed by the territory incharge of the company. The territory is the
lowest subdivision of sales and distribution organization. The framework behind the design of the
Channel Structure is based on Customer Segmentation and Sales Distribution. Demand from
customers plays a very vital role on channel selection. Bayers follows a multiple vertical
integrated distribution channel for it product distribution.

11%

9%
BAYER

Syngenta
7%
Rallis

Others

73%

Fig 6. Market share of Bayer

The company has only 11 % market share (Fig 6) and there is a scope of vast improvement and
growth of the channel structure to command a larger market share. This can be achieved through
initiatives channel participation in organizing the gathering, educating the farmers and students
even in the agricultural colleges. The company should reach out to zones and regions which do
not perform well as compared to other to break the barriers of traditional thinking, educate those
farmers of the benefits of using the company products, quantifying the losses incurred due to
avoidance of pest control, the need for quality products in the market and opportunity to avail
better prices and export destinations for quality crop.

Summary: Many companies drive their channel strategies based solely on financial criteria,
namely cost of selling, not treating their sales channels as investments which are expected to
produce a reasonable return. However, Bayer CropScience realizes the ability of the channel
to reach the right customers at the right time with the right solutions. It has also realized that
channel partnership and maintaining relationships with channel partners are key to growing
and sustenance.

Bayer CropScience has also invested in two main areas to provide the value proposition to the
consumers/customers. One is launch of new innovative products every year and second is
educating the consumer and providing after sales service. Bayer CropScience is a customer
oriented company, committed to a partnership approach, through products and services that
provide clear benefits to the customers.

However, Bayer Cropscience needs to bring out a process for Channel conflict
management. Although they have not faced any major problems yet, however since they
have a multi-channel and multi-product-same distribution channel, they are at a high risk of
channel conflicts.

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 16
 Sales and Distribution Management of Bayer Crop Science Limited

5. CONCLUSIONS
i) Market Leader - Bayer Crop Science is the market leader and one of world’s major suppliers
of crop protection products, seeds and plant technology. To maintain its position, Bayer
constantly innovates new products through its research.

ii) Well-defined Sales and Distribution Channel - Bayer has a well defined sales and
distribution department for each of the 120 countries the company operates in. For each country
they have a country head, zonal head, regional head and the territory in charge. They have a rich
channel network comprising of distributors, dealers and the retailers being mainly looked after by
the territory in-charge at the lowest level.

iii) Sales-force - The salesforces are mainly procured from the agricultural colleges and through
the job portals and the consultancies. The product manager and the research team provide product
based training to the sales force. Training is also imparted in soft skill and IT systems. The
company arranges trainings from experienced faculty of agricultural colleges on need basis.

iv) Compensation - The company provides a high fixed salary component comprising 70% of
emoluments and low variable components (30%). Bonuses and rewards are given in the form of
promotion and sponsored foreign trips. However, in terms of incentives in order to motivate
salesforce is lacking.

v) Appraisal System - The appraisal system is only once in a year and only through the
supervisor. This probably needs to be modified into a bi-yearly appraisal or an in-formal
appraisal during the year.

v) Product Awareness - The company arranges product awareness programs among poorly
educated farmers who do not use modern methods and techniques of crop protection and seeds by
organizing gatherings and demonstrations. The company creates a repeat experience for the
farmers through keeping in touch with them, collecting their feedback and reusing it in research
to server the customer better and to satisfaction.

vi) Managing Channel Conflicts - Bayer Cropscience needs to bring out a process for Channel
conflict management. Although they have not faced any major problems yet, however since they
have a multi-channel and multi-product-same distribution channel, they are at a high risk of
channel conflicts.

References
[1] Class Note on Sales and Distribution Management, by Prof. Sanjeev Varshney, XLRI,
Jamshedpur, 2009.
[2] Venugopal P., Sales and Distribution Management, Response, New Delhi, 2008.
[3] Official website of Bayer [http://www.bayer.co.in, http://www.bayercropscience.com]

Acknowledgement: The authors would like to acknowledge Mr. Sourav Banerjee, Manager,
Sales Support of Bayer Crop Science Limited, Powai, Mumbai, for his help in giving suggestion
and providing information on sales and distribution.

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 17
 Sales and Distribution Management of Bayer Crop Science Limited

Appendix

Interview with Manager (Sales) of Bayer Crop Science

[These information on sales and distribution of Bayer Crop Science Limited are collected through
face to face personal interview with the Manager - Sales Support of Bayer, Mr. Sourav Banerjee
on 4 August 2009 (10:45 a.m. to 12:00 noon) at Bayer head office, Hiranandani Garden, Powai,
Mumbai.]

A. Introductory Information
1. Name of the Organization: Bayer Crop Science

2. Year of Inception: 1863

3. Ownership of the Organization (Please tick the appropriate):

i) Public Sector ii) Private Sector

iii) Joint Venture (public & private) iv) Joint venture (private & private)
v) Public Limited Company

4. Locations of Business: i) Single location ii) Multi location

5. Nature of Business (tick the appropriate):

i) Automobiles ix) Hospitality
ii) Banking x) IT
iii) Cement xi) ITES
iv) Chemicals & Fertilizers xii) Petrochemicals
v) Electronics & Telecommunications xiii) Power
vi) Engineering xiv) Processing
vii) Pharmaceutical xv) Retail
viii) FMCG xvi) Textiles
xvii) Others (Pesticides)

6. Main Product Category:

i) Insecticides (Confidor®/ Admire®, Calypso®, Decis®, Temik®, Oberon®)

ii) Fungicides (Antracol®, Baycor®, Folicur®, Monceren®)
iii) Herbicides (Atlantis®, Basta®, Topstar®, Whip Super®)

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 Sales and Distribution Management of Bayer Crop Science Limited

B. Sales Management

1. Sales Organization

Please give the hierarchy of the sales organization

i) CEO at Head Office in Germany

ii) Whole world is divided into five Segments (Europe, North America, Latin America, Asia,
and Africa)
iii) Each segment comprises of a few countries.
iii) Every country is headed by a Country Head
iv) Each country is divided into Zone and is headed by Zonal Manager (i.e., India is divided
into six zones, East, West, North, South, Central and Andhra zone)
v) Each zone is subdivided into Region and is headed by Regional Manager (i.e.,
Maharashtra is divided into three region, North Maharashtra, South Maharashtra and
Western Maharashtra).
vi) Each region is sub divided into Territory and is headed by Territory in-charge.

2. Recruitment and Induction Process

a) How is the requirement for new sales person captured?

i) Inputs from the country head, zonal and regional managers

ii) As a result of planned expansion
iii) As per the need based on employee status available by the HR department

b) What is expected from the Sales Person who wants to join the company?

i) To achieve sales as per target set by superior

ii) Good teamwork and team spirit
iii) Local language proficiency
iv) Good communication skills

c) What are the sources for recruitment?

i) Campus recruitments from agricultural colleges of India

ii) Advertisement in the newspapers
iii) Scanning from internet by HR department
iv) Through company website (interested candidates apply directly through Bayer’s
website)

d) Is the selection just based on only interview, or are there any other set of evaluations?

The candidates are filtered by HR as per company policy of recruiting for particular
position and selections are bases on interviews organized by the HR department.

e) How many rounds of interview happen?

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 19
 Sales and Distribution Management of Bayer Crop Science Limited

Three rounds.

i) One with subject matter expert

ii) Next with Country Head or Zonal Head or Regional Head depending on position.
iii) The last one with the HR department

f) What is he judged on? What qualities? (Ex. Past experience, communication skills, education
etc). Please give the order.

i) Candidate should have technical knowledge in agricultural science

ii) Local language proficiency
iii) Must possess good communication skills

g) After joining, what is the procedure of induction? Any training imparted to new joinee?

Company arranges the following training sessions

i) Induction training (3-4 days) at regional or zonal level

ii) Familiarization sessions with product manager and development teams

3. Territory Allocation Process and Strategy

a) How is a territory designed (population size, area wise, ability to serve market etc)?

One territory consists of a few districts (1-2 districts). This depends on

i) Agricultural market survey conducted by the team

ii) Expert forecast

b) What method is used for deciding sales territories (i.e., Breakdown method, Geographical,
Workload etc.)

Sales territories are divided using the workload method. Based on agricultural economy of
the country, a country is subdivided into zones which may comprise of one or more states.
Zones are further subdivided into regions comprising of many districts. Regions are further
subdivided into territories comprising of a few districts as per convenience.

c) How are these territories allocated?

Territories are allocated based on infrastructure and ease of access, availability of

distributors, dealers and retailers.

d) What territory mapping process do they follow?

Company maintains Bottom-up process.

4. Reporting Structure and Systems

Hierarchical, with a flat style of working.

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 20
 Sales and Distribution Management of Bayer Crop Science Limited

5. Compensation Structure

a) What is the framework for designing the compensation package? (i.e., Fixed salary, incentive
based or territory, variable salary etc.)

Large fixed salary with less variable component (70% fixed salary + 30% variable).

b) Are any monetary benefits given outside salary?

Bonuses and rewards are given in the form of promotion and sponsored foreign trips.

6. System of Evaluation

a) How does the appraisal of the sales force happen?

Appraisal is done once in a year by the supervisor. Bayer does not follow 360 degree
appraisal.

b) Are any targets set for the sales force each year/month/half year/quarterly etc?

Yes, targets are set for individual sales force.

c) What are the criteria for setting the targets?

i) Territory potential
ii) Past market performance and growth trends
iii) Introduction of new product brands in same channel

d) What are the evaluation criteria? Is it result oriented completely or product wise or territory
wise etc? Or is it based on where the product is in as per Product lifecycle?

i) Sales performance (both quantitative and qualitative)

ii) Assigned targets achievement

7. Training and Development

a) What trainings are given to sales force?

i) Training on product knowledge

ii) On job training by senior sales persons to enhance selling skills, communication skill and
to build confidence level.

b) Are the trainings based on evaluation?

Yes they are based on evaluation too.

c) What motivational activities are taken by the department for motivating the sales force?

Promotion and sponsored foreign trips.

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 21
 Sales and Distribution Management of Bayer Crop Science Limited

d) How is the exceptional sales force personnel further developed?

i) Extensive on the job training

ii) Training by product managers
iii) Training by expert faculty from reputed agricultural colleges
iv) Training on soft skills, product knowledge

C. Channel Management
1. Channel Environment

a) What are the channels for this product category?

Distributors - Dealers - Retailer

2. Channel Strategy

a) What is the strategy?

Distributors have some target to achieve.

3. Channel Design and Structure

a) What is the process of designing/deciding a new channel?

Channel partner is selected mainly based on

i) Product knowledge
ii) Willingness
iii) Financial capability

However if a person is not so solvent financially, but has knowledge in product and
willingness, Bayer may still choose him/her a channel partner with limited product stock.

b) What is the channel structure and how many for each level?

Bayer’s channel structure is three tiers

i) Distributors (approximate number: 3000)

ii) Dealers (approximate number: 18,000-20,000) and
iii) Retailer (approximate number: more than lakh)

c) What is the framework to design the Channel Structure? (Buyer need, Customer segmentation,
distribution etc)

Customer Segmentation and Sales Distribution

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 22
 Sales and Distribution Management of Bayer Crop Science Limited

4. What Is The Basis Of Channel Selection?

i) Demand from customers

ii) Variable cost involved
iii) Competitors

5. What Is The Design Of Distribution Channel?

i) Single
ii) Multiple

6. If Multiple Distribution Channel Exits, Which Of The Below Does The Company Follow?

i) Vertical Integrated
ii) Horizontal Integrated

7. Are There Multiple Products Distributed Through The Same Channel?

i) Yes
ii) No

8. Which Of The Marketing Mix Is More Relevant To Them?

i) Price
ii) Place
iii) Product
iv) Package

9. Does The Company Believe In Maintaining Duplicate Safety Stock At Branch Locations?

Company calculates the demand (which is seasonal based) in advance based on past
experience and accordingly distributes the product to the regions. They do not keep any
safety stock at branch location. However, if there is an additional demand of a particular
product in a particular region and the same is available in excess in nearby region, product
may be redistributed from the nearby region.

10. Incase Of Multiple Product Distributed Through Same Channel, How Does The
Company Maintain Stock Balance For All Products?

i) Low distribution cost

ii) Inter branch transfers - This is possible if one branch has excess products than required.
iii) Stock replenishment - The Company is well integrated through one of the best IT
solutions and SAP ERP.

11. Managing The Channel Members And Conflict

How are channel members conflicts resolved?

i) Territory in charge looks after any issue

ii) By maintaining clear boundaries for authority and operation

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 23
 Sales and Distribution Management of Bayer Crop Science Limited

12. Appraisal And Evaluation Of Channel Members.

a) What are evaluation criteria of channel members?

i) Based on qualitative and quantitative

ii) Sales and target achievement
iii) Distribution reach
iv) Cooperative nature
v) Whether helpful and supportive

b) Are there any channel motivation schemes? (Customer oriented, goodwill, margins, alliance
based, trainings etc)

i) Schemes made available especially in peak season,

ii) Provide training and counseling if needed

Group No. 20, PGCBM 15, XLRI, Jamshedpur, Centre: Powai and Juhu, Mumbai 24

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