Traditional Outlets vs Modern Trade , the scales tilt again

FMCG companies need to , and they are refocussing on traditional outlets since the sales in modern trade are slipping .

Companies have a marked increase in throughput from neighbourhood ,traditional stores . The advantages cited are

• fresh stocks , due to lower pipelines
• Better merchandised
• Very high CRM , due to personal interaction of the outlet owner/manager with the customer
• Increased margins are given by the companies which are getting passed on
• ease of "touch and feel"

Traditional sales for established FMCG companies like Dabur account for 95% of their sales , it continues to define and decide the market direction

Companies due to the non-uniformity / learning curve of the modern trade are encouraging traditional retailers with higher margins , credit terms .

The modern trade gets beaten on

• higher fixed costs (upto 30% higher) where they have to manage customer expectations of a more frill environment .
• increasing focus on private labels

Companies like Colgate,Dabur,HUL,ITC and several others have stepped up their discounts ,freebies, credit terms without resorting to price cuts for the traditional outlets. The efforts are to boost volumes and counter the regional players who are nibbling away-stated a recent Motilal Oswal report.

Dabur for eg last year has heightened , investments on brands with a strong rural franchise focus .It rolled out a special rural focussed sales initiative across seven states -UP,MP,Bihar,Punjab,West Bengal,Maharashtra,Gujrat -stepping up presence by going into villages with a population of under 3000 people .The company says this resulted in a 20% surge in growth in rural areas , ahead of urban markets.

The role of trade marketing is increasingly becoming relevant

• to address the need for companies and talk to the consumers
• ensuring that companies are always working with the traditional trade.

Pricing Strategy , a refresher

Very interesting ppt , thought I shall share . Read it , it is a good refresher

http://www.scribd.com/doc/16068462/Pricing-strategies

how often are we consious of what we do ? In India are we working out a pricing or are we reactive to the environment / competition of we simply just add a mark up on cost ?

Leadership Role in tough times , in fact at any time

According to a study, Indian employees continue to be the most engaged in Asia-Pacific, but with the current downturn it has taken a toll with the employee engagement dwindling –ref Watson Wyatt’s Work Asia survey for 2008-09

What are the reasons?

• Need for accountability /deliveries
• Pressure on bosses/ owners to demand deliveries at any cost .As a result they are also getting caught in a trap of reacting rather than evolving
• Lack of transparency at all stages
• Stress increases ,as employees get younger, more intelligent ,and their bosses /owners at such times are left handling changes in organizational structures.

All of this leads to reduced respect that employees have for the place where they work.

This is where the role of leaders at all levels comes in .NR Narayan Murthy says in his book “A Better India, A Better World “

• what is the task of a leader in energizing his people? It is creating a grand vision – a purpose which is noble, lofty and aspirational. It is a dream that should excite and energize everybody on the community /corporation. The leader has to craft and articulate a vision in which everybody sees a better future for himself. The vision has to be powerful enough to make every tired mind and body that leaves the office in the evening come back early the next morning saying “ I am proud to belong to this company and I will work hard to make it a better company “
• When the company was being formed I said – I want this to be the most respected software services company in the world, if you seek respect, you will not short change your customers, you will be fair to your colleagues in the company, you will be transparent with your investors, you will treat your vendor partners with care and understanding, you will not violate the laws of the country you operate and you will live in harmony in whichever society you operate in. My conviction is that such a pursuit will bring revenues,jobs,profits and market capitalization"

How many of bosses, owners are able to say this? Practice this with a hand on their heart? How many , have the courage to talk like this and walk the talk..This is a a true example

Evolving Distribution

The current structure popularized by the FMCG behemoths like HLL,ITC,Amul etc is multilayered going through various intermediaries before it reaches the consumers . At the last point of sale it fights for shelf space , share of investment of the retailer ,TOMA

The inventory levels of idle , in transit inventory are large. Typically any of the companies would at least have 3000 – 4000 retailers serving their products .

And all of them continue to struggle to develop world class infrastructure , services and all of them focused in increasing the pipeline of retail stock

The future is typically a scenario where product availability is not a USP any more . It is a given , one has to be available and it cannot be a point of differentiation.

Equipping the field force in this scenario requires superior training , better automated tools and higher point of sale communication targeted to the consumer

Consumer want fresh stocks for food items, for personal care products , for just about anything –Freshness is the buzzword. The days of inventory pumping are passé as dead / old inventory “from a consumer’s point of view “ are a strict , no-no

Uniformity of tax structures , better road infrastructure , reduced –efficient manpower will all lead to removal of the traditional structure of distribution.

The future will be lesser , efficient , intelligent more sophisticated distributors who are equally or more efficient than the best of FMCG companies . They have as their strengths , local knowledge , better warehousing , tighter networking , automation . From being distributors who are just involved with making the product available , they shall become logistics , marketing managers and future brand managers for their areas.

Organizations shall reduce the pipeline inventory of in-transit / godown –backroom stocks till the time comes when they become JIT and consolidate distributors . A typical situation of BAT in Bangladesh 8 / 10 years back was when their distributors were required to just go to a cntral warehopuse , order /pay for the stocks and they would be replenished by the evening . Inventory levels in their godowns was unheard of .The sales teams had small hand-helds to record retail inventory / factory ordering /replenishment norms.

Focus shall increase more on sell-out and less on selling –in and thereafter from a forecast based ordering of a sales team it shall be come demand led requirement from the consumers.

Tighter inventory shall result in lesser dead stock , higher margins and fresh rightly priced stocks to the consumer .

Service Marketing .. a quick snapshot

Hi a small ppt , which was shared with students /faculty in MDI , Gurgoan in a guest lecture session 

http://www.scribd.com/doc/16000068/Services-1

personality development

http://www.scribd.com/word/embed/5641037?slag=Personality-Development-Notes

read this..helps connect with the self and the world a lilttle differently