DISTRIBUTION SYSTEM

From the factory, when the cigarette manufacturing process finished and then after
stocking period, then there is a stage when it is to be shipped and delivered to the
customers. In this whole system following parties are involved:
 Area sales managers
 District sales managers
 Head office
 Factory manager
 Godown incharges
 Transporters
 Distributors
 Whole sellers
 Retailers

PROCEDURE
First of all it is the responsibility of the area sales managers to evaluate the
demand of the market of his own area and sets the targets of the distributors. He
sends this target report to the district manager who moves it next to the head office
Karachi. Then after the complete documentation the head office send requisition to
the factories. From the factories the stock is transferred to the company godowns
in all the district head quarters. Then godown in charge on the order of the
distributor make him delivery by the companies own transportation. Then finally
distributor delivers the stock to the wholesalers, retailers and direct to the
customers.

PROMOTION OF THE BRANDS

The next major function performed by the marketing department is the sales
promotions. For this purpose, a team of sales promoters goes practically to the
field and performs the sales promotion functions. The sales promoters help in
placing posters and other temporary merchandising materials. They have to go to
the every retailer of the area and have to decorate the shop not only with posters
but also buntings and other sales promotion stuff that is given to him, according to
the currently going on promotion activities.
 LTC is very well aware of importance of promotion and for this purpose
different campaigns are run periodically. SDS/MDS has to participate / sponsor
various promotion events in order to implement the agreed sales promotion plan
by exploiting various promotional opportunities in the territory. Following steps
are taken by SDS/MDS.
 Participate in all major Melas/Fairs in the territory.
 Identify plan and organize special events like sports, tournaments,
exhibitions, sponsorship and musical concerts.
 Maintain contacts with local authorities for organizing sales promotion
activities.
 Devise/invent new methods and concepts for promotion.
Sales promotion is based on the marketing activities, other than personal selling,
advertising and publicity. This stimulates consumers to buy. The examples are the
displays, shows, exhibitions, demonstrations and various non-current selling
efforts not in the ordinary routine.
Lakson Tobacco Company in also involved in sales promotion activities. It offers
different schemes not only for retailers but for consumers as well. In these
schemes, the company offers different type of incentives to both retailers and
consumers.

STRATEGIES FOR SALES PROMOTION

 Identify the brand to be promoted keeping in view the market and consumer
profile.
 Operate joint consumer promotion with melas, circus and magic shows.
 Consumer promotion like lucky draws and other gimmicks to be organized
melas through stalls.
 Discount coupons scheme pertaining to different brands is introduced.
 Scheme awareness is done through banners, posters, and through sales
promoters.
Head Office approves the budget for the merchandising and promotional
activities. The MSPO sends the proposal to Head Office. In the proposal all the
activities are listed related to the merchandising and promotion aids. After seeing
the proposals the Head Office sends a final budget then MSPO works out his
activities accordingly.
SALES PROMOTION TOOLS FOR
CONSUMERS
Lakson Tobacco Company gives incentives to consumers as well. The purpose is
to make the consumer more familiar with the Company’s brands with the objective
of increasing the sale.
Here the sales force selects different spots to establish a direct contact with
consumers. The sales persons meet different consumers and have a talk with them
and then offer different gifts to make a strong relationship with the company and
the consumers.

Publicity
Publicity is any form of non-paid commercially significant news or editorial
comment about ideas, products or institutions.

According to the Company, the following things are used for publicity purpose.
• Posters
• Shop banners
• Road banners
• Buntings
• Mobiles

MARKETING OF CIGARETTES
As we now that by marketing a product can flow from producers to
consumers. All cigarette manufacturing organizations spending lot of money for
advertising and other promotional activities. Now a days in Pakistan cigarette
advertisement in TV is banned during prime time. So there are lot of difficulties
are being faced by tobacco companies for the promotion of their brands.
For this purpose they are heavily spending on merchandising and on other
promotional activities so that people should know about their brands. For these
purposes LTC spend money for Cricket events, arranges Meals in village’s etc.
This all is being done to create good will among the people about the LTC and its
brands.
 TARGET MARKET
Target market for different products is different. Identification of target market in
tobacco industry is likely to be very difficult. People have misconception about
market segmentation on the basis of income. To segment the market just on the
basis of people’s income is not correct in all situations. Theoretically, people with
higher income are supposed to smoke high-priced cigarettes, yet it is not the case
in all contexts. For instance, many students who tend to smoke Gold Leaf have
little money.
Actually, the isolation of target market is dependent upon the blend of tobacco.
Different people want different blends of tobacco in cigarettes. Each brand of
cigarette has its own distinct blend and each brand has its own target market. For
example, some people dislike K-2 or Royals due to their strong blend of tobacco.
Lakson Tobacco Company has launched a new brand of Diplomat for a segment
of people who like light blend of tobacco.

During the internship, I found out that people had the same liking for blend of

tobacco in one particular geographic area. For example, Royals Kings gives higher

sales in Muzafar Garh and Multan area than in any other area of Pakistan.

PERSONAL SELLING
Lakson Tobacco Company. Of course, is using personal selling as a promotional
tool in its promotional mix. The company understands its need and considers it as
an important element in promotional mix. In personal selling, the Company’s
Merchandising Department plays an important role. Here the term merchandising
does not mean as it is used in Accounting, but this department that is concerned
with personal selling is called the merchandising department. The sales person
meets different retailers during their visit to make their relationship more strong
with them and in this way they make their salesmen convenient.
During their visit, salesmen give some gifts to retailers. These gifts are specially
prepared for the purpose of personal selling.
These gifts include liters, key rings, telephone directories, pens, and many other
things. On these gifts, the different brand names of the Lakson Tobacco Company.
are written to get more popularity not only among the customers but also among
retailers themselves.
The sales persons are consistently doing the personal selling to retain their
customers. Area Sales Manager also helps his sales force by himself visiting
retailers and customers.
District Sales Manager is also involved in personal selling. He himself visits the
spots along with Area Sales Managers.

MERCHANDISING
As we know promotional activities play an important role in the failure or
success of any product. If these are designed in a perfect manner then it will not be
wrong to say that the product for which these activities have been designed, will
get good position in the mind of people and vice versa. LTC is aware of this fact
and for this purpose management designs periodical promotional campaigns in
which Tele advertisements print advertisements and merchandising, etc. are
included. Also LTC conduct certain shows, concerts and competitions.
In every district there is an MSPO which is responsible for all
merchandising and promotional activities. He also has to develop sales promotion
plans. The execution should be carried out in effective and efficient manner so as
to exploit the sales potential and image of brands of LTC consequently leading to
the overall profitability and long-term growth of company.

RESPONSIBILITIES OF MSPO.
 Designs and implement merchandising and sales promotions plan.
 Ensures the display of brands at every outlet with the help of its staff.
 Checks the maintenance of merchandising material of outlets.
 Prepares decentralized communication budget for the merchandising and
promotion activities.
 Planning
 Managing People
 Merchandising
 Promotion
 Trade Offers
 Public Relations
 MERCHANDISING ACTIVITIES
The merchandising installation is based on segmentation of brands volume,
e.g. if a specific markets highest selling brand is Morven Gold, then outlet in that
market will not be merchandised with K-2 or any other brand of LTC. Following
are the “types of merchandising”.

TEMPORARY MERCHANDISING
It includes posters, wobbles, stickers, mobiles etc.

PERMANENT MERCHANDISING
It includes Fascia, Counter, and Wall Clock etc.

OUT DOOR
The material placed at streets, roads are outdoors merchandising. It includes
Hoarding Wall Painting, billboards etc.

IN STORE
The merchandising material placed in side of a shop is called in store
merchandising. It includes, modular tube, counters etc.

OUT STORE
The material, which is placed out of the outlet. It includes Fascia,
nameplate, Neo signs etc.

MAINTENANCE OF MERCHANDISING
MATERIALS
It is also ensured that all the merchandising material and fixtures are properly
maintained in top-notch condition. For this purpose retailers are encouraged to
clean their modular, tube shades, etc. regularly. In addition, MDS’s also take part
in cleaning exercises. If repair work is needed such as, changing of modular sheet,
or replacement of tube lights, MDS ensure that things are fixed up in no time.
MSPO periodically visits such retail shop and assess the merchandising and the
maintenance work. If need be, quick action is taken pertaining to maintenance
work.
 DISTRIBUTORS
Lakson tobacco company has a wide distribution network to cover the whole
country. LTC has divided the whole country into five regions and there are about
more than 1000 distributors.
A person heaving the rights given by company for making the goods of company
available at wholesaler’s outlet and retailer’s outlet.

WORKING OF DISTRIBUTORS
The distributor is the cigarette agency called in general. The functions of
distributor includes following.
1- To purchase the stock from the company and to sell it to the whole sale and
retail market.There are following kinds of sales.
1. DD Trivans (tricycle) or Vans
2. S/S Shop Sale
3. VDD Village Sale
4. W/S Wholesale sale
2- To keep all the sales record and maintain all the documents that are
required and asked by the company. These records include following
main categories.
1- Daily sales summary
2- Monthly record of sales in the register
3- Cash Memos
First week I was deputed at distribution to get knowledge about the basic terms of
the sale point of the company. I spent the second week of my internship program
with the salesmen.
There are four distributors in the Faisalabad town.
My first attachment was with the distributor for Faisalabad (a). The distributor
shop and godown is located at Allama Iqbal Road near Ghanta Ghar, Faisalabad.

The main functions of the distributors are

• Visits to outlets periodically.
• Making sure the availability of all the products.
• Helps LTC in promotion campaign.
• Introduce the retailers and wholesalers with schemes.
In the first week I was attached with the distributor of LTC here in Faisalabad
named Haji Muhammad Amin And Co.
The office staff at distribution office is
Md Haji Muhammad Naeem
Manager Mr. Umair
Casher Mr.Muhammad Raza
Sales Supervisors Mr Abdul Sattar
Mr Intakhab Alam
Godown Incharge Muhammad Riaz
I also had a chance to observe the working in the distributor’s office. I was shown
different documents such as OCF, stock register form, retailer/wholesaler cash
memo, ledger and salesmen voucher.
 OCF is the order control form; it gives information about when to place
orders. Usually the distributors keep the safety stock of three days then
place the order.
 Stock register form, is the document in which daily stock statements were fed
into details.
 Retailer/wholesaler cash memo is the document in which stock sold to the
retailers and wholesalers is kept and bill is charged.
 Sales men voucher, is a document, which provide information about how
much stock was issued to sales men and how much stock was returned.
 Also documents such as weekly sales report and monthly sales reports were
shown to me.
There were two sales supervisors in the distributor’s office. Their main job was to
make sure that salesmen supply stock at each shop properly on the specified day.
They also manage and control the sales men.
The job of the cashier was to deal with cash i.e. receive cash from salesmen,
deposit it in the bank, and note down the detail of cash in the financial book.
Manager was responsible to control all the activities and working of the staff.

Salesmen
A distributor has number of salespersons that supply the product from distributor’s
shop to the outlets.
My next attachment was with the salesmen.
There are 10 salesmen to supply stock in the Faisalabad (A) market. Salesmen use
van, motorcycle carriage and tricycle vans to distribute the product of LTC. Seven
salesmen use tricycle vans; two use motorcycles, and one use delivery van, each
sale man visits the shop twice in a week. Routes for salesmen are well defined and
planned. Every salesman visit his own territory.
Every salesman is issued stock in the morning and it is noted in the salesman’s
voucher. When salesman return godown keeper receives the unsold stock and he
again notes it in the salesman voucher. If salesman can sell all the stock and he
needs more stock, then it could be delivered on desired location on demand.
Salesman makes contact to the distributor on phone line and asks for the desired
stock.
I visit seven local areas with the salesmen during my attachment. These include all
the bazaars around Ghanta Ghar, GTS, bus stand, vegetable and grain market, and
timber market and Lal Mill Bazaar,Ghang road and Rehmania Chock. I got the
opportunity to visit these areas along with the experienced salesmen. I observed
the working off salesmen very keenly. Salesmen were very efficient in taking
orders, delivering stock and receiving cash. Salesmen spent 4 to 5 minutes in each
shop and then moved to the next shop.

WAREHOUSE
My next attachment was with Mr. Muhammad Anees, who is warehouse in-
charge.
Distributors fax or hand over the cash voucher or draft to warehouse along with
the order. LTC has account in all the branches of UBL in all over the country.
Distributors transfer cash to the LTC account and then send this receipt to the
warehouse in-charge. The company management for the company transport
vehicles that makes the supplies very systematic defines specific routes.

INVENTORY SYSTEM
The distribution manager of the godown told me that they are using the perpetual
inventory system; it means that they record the transactions as they occurred.

FIFO(FIRST IN FIRST OUT METHOD)

Mr. Muhammad Anees told me that all the depots of the company are using FIFO
method for the sake of inventory management.
 REASONS FOR USING FIFO
 He told me following reasons for using this method for the record of inventory the
inventory that are cigarettes is perishable products. With the passage of time
inventory can loose its taste and quality so FIFO method is most favorable for the
company because in this method the production that first comes go out first.
 The second reason of using the FIFO method is that cigarettes are the products that
are easily convertible into cash, we can say that these are cash products and prices
of the cigarettes always go for rising not falling so it is highly advisable for such
products to use FIFO methods to avail the opportunities which increase the
company's profits.
 The third reason for using the FIFO is that in case of FIFO method for Tobacco
products, this method is helpful for reduction of taxes and excise duties.