IMPULSIVE SELLERS

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Company Background

Predominantly a dairy product company,

producing

• Milk Powder
• Butter
• Indian Dessert mixes
• Milk drink – Revv up

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Takeover of Green Food in 1980s ….

Green Food was a vegetable and food

Processing company producing

• Jams
• Pickles
• Chutneys
• Frozen vegetables

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Launch of Funsip …..

• Funsip was a branded fruit drink being

researched and developed in Green Foods
• After acquisition, Kremmer launched Funsip.
• Initial launch was in Gujarat during Navratri,
and it was a big success.
• The next successful launch was in Chennai.
Subsequently by the year end, Funsip was
available in all the metros and poised to
enter the mini metros.
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Funsip life cycle …..
• Funsip acquired 33% market share
initially.
• There was a high brand recall.
• Kremmer targeted double production and
sales.
• The first hit came when the sales team saw
sudden slowness in sales. The sales became
stagnant.
• In the second year of operation, which
was a loss, the brand had to be with drawn.
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What went wrong ?
• Market Segmentation not addressed.
• Distribution system was same as for the
food business. Thus missed the impulsive
buyers (60% of the market) who constituted
a different segment altogether.
• No focus to the product due to the faulty
organizational structure.
• Shortage of funds leading to lack of
aggressive marketing req. in Impulsive
segment.
• Faulty expenditure proportions on advertising
and promotions. 6
The Big Question
Should “Funsip” be re launched???

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 Conditions in favor…….
 Prominent and reputed food business.
 Better food processing facility.
 Synergy with food business.
 More money available. Other products have
become cash cows.
 Brand recollection.
 Learning from failure.
 Rapidly growing sector.
 Changes in psychographic environment. 8
 Conditions against…….
 High entry cost.

 Increased competition.
 Poor Distribution system.
 No channel Synergy.
 Brand withdrawn more than 10 years ago.
 Emotional scars.

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DISTRIBUTION

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FUNCTIONS
 PHYSICALLY DELIVER THE PRODUCT
 PRODUCT INFORMATION
 BULK BREAKING
 ASSORTMENT
 AFTER SALES SERVICE
 INFORMATION FLOW TO THE CO.

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COMPONENTS

 TRANSPORTATION & LOGISTICS.

 CHANNEL DESIGN.
 CHANNEL MEMBER MANAGEMENT
 FIELD FORCE MANAGEMENT.

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FORMAT OF SESSION

 UNDERSTAND HOW CONSUMERS’

BUYING BEHAVIOUR IS AT THE HEART
OF EVERY DISTRIBUTION DECISION.
 UNDERSTAND THE KEY VARIABLES.

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FMCG PRODUCTS

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BUYING BEHAVIOUR

 LOW LEVEL OF INVOLVEMENT.

 BOUGHT AS A BASKET OF GOODS.
 SOME ARE BOUGHT ON IMPULSE.
 SOME ARE BOUGHT ON CRISIS.

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 WHAT DO THESE 4 ASPECTS ADD UP
TO?

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THE KEY RESULT AREA

 THE MOST CRITICAL VARIABLE IS

AVAILABILITY – AND THIS BECOMES
A KEY RESULT AREA WHICH
SEPARATES THE GOOD COMPANIES
FROM ORDINARY ONES.

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CHANNEL DESIGN

 THE OBJECTIVE FUNCTION: TO GIVE

EASE OF AVAILABILITY – DEPTH AS
WELL AS WIDTH.
 CONSTRAINT LINE 1: GEOGRAPHIC
DISPERSION IS HIGH.
 CONSTRAINT LINE 2: LARGE NUMBER
OF OUTLETS, LOW SALES.

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IMPLICATION

 THE CHANNEL HAS MANY LAYERS

AND MANY INTERMEDIARIES.

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DISTRIBUTION

 STARTING POINT - FACTORY

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INTERMEDIARIES
 CLEARING & FORWARDING AGENTS.

 THIRD PARTY GODOWN FACILITY.

 DOES NOT TAKE TITLE OF GOODS.
 PAID HANDLING CHARGES.
 PERFORMS “BULK BREAKING”.

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INTERMEDIARIES
 STOCKIST/DISTRIBUTOR

 THIRD PARTY BRANCH OFFICE.

 ON A COMMERCIAL CONTRACT.
 A SYMBIOTIC RELATIONSHIP.
 PROTECTING HIS ROI IS IMPORTANT.

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INTERMEDIARIES
 WHOLESALER

 A FREE BIRD IN THE CHANNEL WHO

SELLS TO RETAILERS.
 THIN MARGINS, HIGH TURNOVER.
 USES PRICE BUNDLING.
 USES CREDIT TO ENSURE DEBT
TRAPS.

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INTERMEDIARIES
 RETAILER

 SELLS TO END CONSUMER.

 SMALL PARTIES – USUALLY IN A BIND
FOR WORKING CAPITAL.
 LOW BARGAINING POWER – UNLESS
YOU ARE A SUPERMARKET.

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TYPES OF SALES

 PRIMARY SALE = SALE BY COMPANY

TO STOCKIST.
 THIS IS WHAT COMES IN THE
COMPANY FINANCIAL STATEMENTS.

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TYPES OF SALES

 SECONDARY SALE = SALE BY THE

STOCKIST TO WHOLESALER OR
RETAILER. THIS TRANSACTION
APPEARS IN THE BOOKS OF THE
STOCKIST – NOT THE COMPANY.

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TYPES OF SALES

 OFFTAKE = SALE BY THE RETAILER

TO CONSUMER. THIS TRANSACTION
APPEARS IN THE BOOKS OF THE
RETAILER – NOT THE COMPANY.

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DATA

 DATA ON PRIMARY SALES AND

SECONDARY SALES IS ACCURATE.
 DATA ON OFFTAKE IS BASED ON
ESTIMATES (ORG RETAIL AUDIT).

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IMPORTANCE OF PROTECTING
ROI

 YOU ARE ONE OF THE INVESTMENT

ALTERNATIVES FOR THE STOCKIST.

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IMPORTANCE OF
PROTECTING ROI

 THE STOCKIST IS INVESTING IN

YOUR BUSINESS (VEHICLES,
GODOWN SPACE, STOCK AND
RECEIVABLES).

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IMPORTANCE OF
PROTECTING ROI

 THE STOCKIST IS INVESTING IN

NON-MONETARY ASPECTS (TIME AND
EFFORT) – WHICH REPRESENTS AN
OPPORTUNITY COST.

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IMPORTANCE OF
PROTECTING ROI

 LACK OF CONTINUITY CAN CAUSE

PROBLEMS FOR THE COMPANY – AND
MAY LEAVE GAPS FOR COMPETITION
TO EXPLOIT.

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MAXIMISING ROI

 HOW CAN WE MAXIMISE THE

STOCKIST’S ROI?

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HOW ROI IS MAXIMISED
 BRAND PULL.
 MARGINS.
 QUALITY OF SERVICING.
 MERCHANDISING.
 CREDIT.
 PROTECTING TERRITORIAL
INTEGRITY.

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TERRITORY

 A STOCKIST SELLS STOCK IN

ANOTHER STOCKISTS’ AREA. THIS IS
KNOWN AS “POACHING”.

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TERRITORY

 A STOCKIST SELLS TOO MUCH STOCK

TO WHOLESALERS – WHO WILL SELL
WHERE THEY WISH TO. THIS FINDS
ITS WAY INTO OTHER STOCKIST’S
AREA. CALLED “OFFLOADING”.

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INNOVATIONS

 NIRMA’S METHODS TO REDUCE

TRANSPORTATION COSTS.

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THE CHANGES.
 SUPERMARKETS ARE CHANGING THE
FACE OF DISTRIBUTION.
 THEY ARE RETAILERS WITH HIGHER
OFFTAKE AND MORE DATA. THUS,
THE BARGAINING POWER WITH THE
COMPANIES IS HIGHER.
 HOWEVER, THEY STILL REMAIN A
SMALL SPECK ON THE MAP.

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ISSUES IN DISTRIBUTION

NON – FMCG PRODUCTS

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CND AND CD PRODUCTS

 LIKE ALWAYS, WE START BY LOOKING

AT THE KEY BUYING BEHAVIOUR
CHARACTERISTICS.
 WHAT IS THE BASIC DIFFERENCE IN
BUYING BEHAVIOUR VIS-À-VIS
FMCG?

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CHARACTERISTICS

 HIGH LOI.
 ELEMENT OF RISK AVERSION.
 HIGHER VALUE/VOLUME RATIO.

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 WHAT ARE THE IMPLICATIONS OF
THESE CHARACTERISTICS?

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IMPLICATIONS

 PROXIMITY OF OUTLET IS NOT THAT

IMPORTANT.
 DEALER CAN “UNSELL” A BRAND.
 TRANSPORTATION COSTS AS A % OF
TOTAL DISTRIBUTION COSTS IS
LOWER.

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CHANNEL ASPECTS
 COMPARED TO FMCG, CHANNEL HAS
FEWER INTERMEDIARIES –
DISTRIBUTOR AND DEALER.
 KEY FACTOR IS LOCATION AND
AMBIENCE RATHER THAN CAPACITY
TO REDISTRIBUTE.
 MANAGING THE DEALER – VERY
IMPORTANT.

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B2B PRODUCTS

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B2B - CUSTOMISED

 WHAT ARE THE KEY BUYING

CHARACTERISTICS OF SUCH
PRODUCTS?

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CHARACTERISTICS

 V. HIGH LEVEL OF INVOLVEMENT.

 USUALLY INVOLVES MULTIPLE
DEPARTMENTS AND PEOPLE.
 LONG LEAD TIMES.
 DECISION MAKING: WITH TOP MGT.

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 WHAT ARE THE IMPLICATIONS OF
THESE CHARACTERISTICS?

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IMPLICATIONS

 KEY RESULT AREAS ARE THE

PROBLEM SOLVING SKILLS AND
TECHNICAL COMPETENCE OF THE
SALES TEAM.
 ARTICULATION, COMMUNICATION
AND LISTENING SKILLS ARE VERY
IMPORTANT.

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CHANNEL ASPECTS

 USUALLY, NO INTERMEDIARIES.
 ROLE OF INTERMEDIARY IS MORE TO
LIASION AND DO ROUTINE
ADMINISTRATIVE MATTERS THAN TO
TAKE PART IN THE SELLING
PROCESS.

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B2B (NON-CUSTOMISED)

 WHAT ARE THE KEY BUYING

CHARACTERISTICS OF SUCH
PRODUCTS?

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CHARACTERISTICS

 USUALLY STRAIGHT AND SLIGHTLY

MODIFIED REBUYS.
 HENCE, HIGH DEGREE OF
FAMILIARITY FOR THE BUYER.

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CHANNEL ASPECTS

 LOWER SKILL REQUIREMENTS OF THE

SELLER.
 USING A CHANNEL INTERMEDIARY
WILL MAKE SENSE.
 USAGE OF DEALER OR AGENT.

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