A distributor or a
CPG company sales executive is an important element in ensuring penetration of
CPG brands in the traditional mom and pop stores retail channel, especially in
emerging markets. With as many competing brands within each product category and
the peculiarity of each mom and pop retailer, the sales executive's task is
We present a few
field tips for the sales executive to improvise and sell to the traditional
retailer. These tips along-with sales history, inventory forecast, recommended
order quantity, brand sku prioritization and "what if " margin calculation
enabled by mobile technology and product training will enable the sales
executive to achieve targets in an efficient manner.
In emerging markets, a mom and pop retailer purchases
Consumer goods based on a host of factors such as perceived credibility of the
sales executive, time, space, working capital, consumer demand, margin and
credit period, attractiveness of competing brands, distrust in a new brand or
brand extension etc..
While considering all these factors, the distributor or
CPG company sales executive has to engage the traditional retailers in a
sustainable and profitable relationship and juggle with the entire portfolio of
brands keeping in mind the retailer preference, store size and location,
consumer profile, retailer working capital, schemes, new products, competing
Here are some often heard challenges that sales
executives face during their daily routine and some street-smart tips to
executive woes and tips to overcome them
offering better margins to trade......." "Net profit on product is marginal due to
price under-cutting by Retailers....." "Retailers always expect the same margin
if not more for the same order quantity, even in the absence of schemes or
Attack the Flanks:
Dominate in outlets where competitor presence is minimal.
Illustrate for impact:
Illustrate the margins made by the Top 25 outlets on the sale of these brands
at the same price.
Keep competitor intelligence handy: Know your competitor. Understand their trade schemes. Take
photographs of shop displays or marketing collaterals. If the offers are
genuinely better, concede. This will build trust. Inform your distributor.
Recommend the right price to sell to consumers and the risk of price
undercutting - margin loss and reduced perceived price of the product brand.
Negotiate Hard: Compare
margins with other retailers supplied by you or competing brands and show the
retailer that his deal is the best one can get. Convince him on his potential
to sell. Negotiate hard and do not drop your guard.
Compensate with additional incentive on other brands: Cover the perceived margin shortfall by offering additional
incentive or cashback on brands in other product categories.
"Retailers demand for extended
credit period in next ordering cycle, as product movement has been slow..."
Analyze inventory movement:
Extend credit period only if it is the last resort. Monitor stock movement on a
regular basis. Analyze the reasons for slow movement such as: No consumer enquiries, product complaints,
competitor offers, no display, retailer not promoting the brand etc.
Transfer stocks: If the
movement is genuinely slow, transfer stocks to other outlets where the movement
is relatively faster and move in other substitute brands.
Improve visibility: If the
Retailer is not proactively selling the brand, explore display through fixtures
or attractive presentation or bundle the stocks with other brands which are
Illustrate and provide confidence: Compare with a like product brand which has the same lifecycle
but was successful eventually and thus build Retailer confidence and avoid
"Unable to sell some of the
price variants"..." Almost impossible to sell less popular brands or brands with
Low Retailer preference...."Retailer is willing to stock but only as a pilot and
on consignment basis...."
Additional not substitutes:
Promote less preferred brands as necessary additional orders and not special
orders. Do not promote them as substitute brands. Explain on paper, the
additional margin that can be made from selling these brands.
Cross-sell with the Winner: Bundle
orders of less preferred brands with the power packs. Position them as
mandatory without budging.
Gradually step on the gas:
Increase order quantity and off-take incrementally until the desired order
quantity is met.
Be cautious about consignment stocks: Supply stocks on consignment only if you are confident about the
Retailer's credibility and ability to sell.
"Need to maximize orders to
achieve targets....." "Pressure to push stocks is leading to multiple invoices and
delayed payments..." "Appeal by Retailer to not push for payments as other
payments with higher priority have to be made first..." "Order quantity is same
on every purchase..."
Have your Hat in Hand:
Maintain a cordial relationship with the Retailer. Step into his/her shoes.
Empathize with his situation, provide recommendations to improve stock
rotations and tips to display and sell.
Challenge the regular ordering norms: Stretch the order quantity through rational explanation. Explain
the lost opportunity by not stocking sufficiently.
Stay within the retailer's radar and execute your promise: Watch out for the slightest opportunity to promote your brands
within the outlet. Ensure prompt delivery of order, participate if possible in
displaying stocks and in selling to customers.
Avoid salesman productivity paranoia: Before the cycle begins, get the Retailer buy-in for the planned
orders. Don't push the stocks too early to achieve your targets. Monitor the
sales and schedule the distribution as per weekly sales and coverage frequency
to gain Retailer trust.
Personalize every order: Communicate only those
promotions or schemes which will be relevant to the Retailer in the ordering
Optimize the orders:
Forecast and logically communicate the right order quantity based on past
history and current schemes.
Keep an eye on Competition at large: Monitor Competing brands new product introduction, volume, trade
schemes and pre-empt any move to reduce your volumes.
"Appeal by Retailer to not
push for payments as other payments with higher priority have to be made
Collect Partial payments: Split
the collection of larger invoices into convenient sums to ease the pressure on
Extend Credit period only where required: Collect partially and extend the credit period if required, for
the balance amount.
Distribute with exclusivity:
Don't generalize and push all product brands everywhere. Provide exclusive
schemes only to those Retailers who are willing to pay on time and those who
will provide the volumes that you had planned.
"Focus is always on few key
Retailers, hence less chances and time to play around with the trade budget or
stock to develop other Retailers..."
Improve penetration: Expand
the distribution network to remove dependency on a few retailers.
Create Clusters: Create
clusters of outlets with common characteristics. Plan schemes for targeted
clusters rather than one-fits-all schemes. Distribute incentive/promotion
budget across clusters over time.
Develop Mascots: Develop
a network of key retailers who can influence smaller retailers to join the
network and/or purchase the brands, thus improving the overall order quantity.
ICC rule on your sleeve: "Inform, Cajole &
Kasturi (KK) is a Principal Consultant Infosys Consulting.. He as 15 years of
cross-industry and cross-functional experience spanning Retail Sales,
Operations, Marketing and Business Consulting. He specializes in helping
Retailers and Consumer Good Companies in business process improvements and
building solutions in the areas of Sales Operations, Merchandising, Consumer
Insights, Loyalty program management and Brand Management. He can be contacted at Krishnakant_k@infosys.com.
Sriram.R is a Senior Consultant in the Industry Solutions Group of Infosys. he has 10 years of hands-on experience of Sales and Distribution of leading CPG cos. in the Indian Market and 5 years in Business Process Consulting. He specializes in Sales and Distribution Strategy and Merchandising. He can be contacted at R_Sriram@infosys.com.