Off the Shelf provides a platform for Retailers and Consumer Packaged Goods companies to discuss and gain insights on the pressing problems, trends and solutions.

Main

August 7, 2015

Inform, Cajole, Coerce - Field tips for CPG distributor sales executives to sell their brands to Mom and Pop retail outlets in emerging markets

Abstract

 

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 complicated.

 

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.

 

Overview
 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 brand offerings.

Here are some often heard challenges that sales executives face during their daily routine and some street-smart tips to overcome them

Sales executive woes and tips to overcome them

 "Competition is 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 special incentives..."

·         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.
·         Communicate risk: 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 imperative.
·         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 extended credit.

"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 cycle.
·         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 first...."

·         Collect Partial payments: Split the collection of larger invoices into convenient sums to ease the pressure on the Retailer.
·         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.

 

Wear the ICC rule on your sleeve: "Inform, Cajole & Coerce" !

About the Authors 

 

Krishnakant 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.
 
 

 

December 18, 2014

Sales-Consultant, not Salesmen in the brave new Digital World

 

Picture this scenario - a passionate photographer wants to buy a high-end laptop for his work. He goes to websites of all the top manufacturers like Dell, HP, Lenovo, and Asus, and compares various products within his price range. This enables him to short-list his query to 4 laptops. He goes to various e-commerce websites to check the offers present there, and reads up all the 350 odd reviews across the 4 products. But since he intends to buy a high end laptop, he prefers to buy it from the shop, as he wants to see the product before he buys it, and even though price is slightly higher in-store by 1-2%., He  also wants to see which other add-ons are suitable for him.

This customer is what an omni-channel customer looks like. They enter the store with consideration-set ready and researched, and they come in ready to buy, unless the store is giving him a reason not to buy.

The salesman in this case will need to be well-versed with different makes, significance of technical specifications, advantages of having higher RAM over a better processor, and details of after-sales service. He would also need a tablet wherein he can compare the laptops and discuss if the customer needs better Video-RAM or a better Hard-disk capacity. In case the salesman knows a bit about photography, he can even convince the customer to buy a good quality printer/scanner along with the laptop.

Thus, an omni-channel customer looks for a shop where he can find sales consultants, and not salesmen. These sales consultants need to be aware of what is being said by the reviewers across platforms, and need to be aware of the latest technologies. They need to know not only the price of Xbox-One and PS4, but also the price of games popular on these machines.

In case the customer is happy with his experience, this shop will be his first visit when he wants to buy an upgraded lens for his camera, or when his younger brother needs a new laptop for his MBA.

Every retailer knows the importance of the Lifetime Value of a customer. The importance of Life Time Value is probably best explained by using the Amazon Kindle example. A Kindle Fire costing $200 has components worth $165 according to estimates*. The margin is no-where close to covering the R&D expenses. Yet an average Kindle owner spends $433 extra per year on Amazon**, making Kindle a very profitable business.

Thus, providing -customer-centric information, without actively selling, can convert a walk-in into a repeat customer with high Life Time Value which results in a satisfied customer and a satisfied retailer too.

 

 

To know more about how retailers and sales associates can leverage all forms of innovation to decipher and deliver on customer needs and wants, meet our experts at Retail's Big show 2015 (Jan 11 - 13, 2015). Schedule a meeting now. Visit www.infy.com/NRF15

November 13, 2013

See Your Customers In High-Definition

Guest Post by

Santhanalrishnan.R, Senior Principal, Infosys

 An old statesman once said that "all politics is local." The same could be said about retailing. We live in an exciting age - big box stores offer us every product under the sun in their modern, beautifully furnished outlets. Those chains have achieved admirable economies of scale and can therefore pass the savings on to their customers.

When you take a closer look at each store - you tend to come to a startling revelation. None of these outlets is equal, beyond a point. They all have distinct inventory issues, consumer buying habits, and market vulnerabilities. Only when retailers realize that all stores are local will they get the data-driven insights for which they're constantly searching.

As suppliers to the stores, Consumer Packaged Goods companies (CPGs) are one step removed from the customers who shop up and down the aisles. But they are an important element to the overall effort to achieve the best store-level insights. To many of us, "store level insight" means snapshots of data from the sales force or the sharing of data from retail customers. Other conventional sources of retail insight might be syndicated point-of-sale scanner data and consumer panel data, but neither of these sources is typically store level.

Continue reading "See Your Customers In High-Definition" »

November 12, 2013

Finding Excellence From Within

Guest Post by

Anil Venkat, Marketing, Infosys

"It is astonishing as well as sad, how many trivial affairs even the wisest thinks he must attend to in a day; how singular an affair he thinks he must omit."


Who knew that the 19th-century writer Henry David Thoreau could be a 21st-century retail management expert? I say this because retailers and the Consumer Packaged Goods companies (CPGs) that supply them would do well to simplify their mission. When they strip away all of the complexities and minutia of big box retailing, their customers face a fairly simple proposition: Either they find the product they're looking for ... or they don't.

Think of the outlets that pour enormous amounts of time, energy, and money into creating stores that offer thousands of products and are backed up by the latest retail technologies. If the end result isn't the ability to ensure that popular products remain in stock at all times, it's time to conduct a self-assessment. Chances are your store has all of the excellence and talent it needs within its four walls. You simply need to know how to find it.

The new State of the Store survey by Infosys reveals that nearly 70 percent of customers experience an out-of-stock-out product at least once every three months. Half of these consumers are quick to change to another brand. Consumers aren't the only ones dissatisfied with the out-of-stock experience. The survey shows that 72 percent of retailers readily acknowledge the need for help in improving their on-shelf availability levels. Two-thirds of retailers believe that an effective in-store execution strategy is what makes a successful CPG company.

Continue reading "Finding Excellence From Within" »

November 10, 2013

How To Engage Consumers Everywhere

Guest Post By

Anil Venkat, Marketing.

An alert to all Consumer Packaged Goods companies: Your most loyal, longtime customers are up for grabs.
 
The "culprit," if you will? Other CPGs. The days when a handful of large CPGs dominated the marketplace are a distant memory. There are hundreds of nimble branded suppliers out there vying for precious space on the shelves of big box retailers. That's because just a meter or two on the shelf of a big box chain can translate into enormous global exposure for any brand.
 
Consumers now have endless options. And their brand loyalties lie wherever they can get good deals, experience targeted promotions, and find quality products immediately. A CPG can no longer operate under the assumption that consumers will wait and come back to the store again if they can't find their preferred brands. They'll buy whatever is on the shelves at that moment. Rival CPGs are working harder than ever to woo those fickle consumers away from brands that have until recently stood up against every test in the marketplace.
 
It's time for CPGs to re-evaluate how they do business. First and foremost is a re-assessment of their relationships with retailers. In the recent State of the Store survey by Infosys, 97 percent of retailers said support from their suppliers is vital to ensuring a customer-centric business model. There are so many opportunities to strengthen brand loyalty and the frequency of purchase simply by collaborating in such a way that the retailer and CPG are aligned in meeting the expectations of customers. To be sure, creating a new branding experience is a challenge for CPGs that continue to depend on old business models. In fact, the Infosys survey shows that 40 percent of consumers are no more compelled to make purchases because of existing promotions than they were two years ago.

Continue reading "How To Engage Consumers Everywhere" »

September 16, 2013

"The Journey to Data Centricity" with Infosys and Unilever

Guest Post by
Frisco Chau, Practice Engagement Manager, Infosys

We jointly hosted a networking event including discussion and debate on Sept 12th with Unilever at the Infosys Experience Centre in London and were joined by Rachel Bristow, Vice President Global Media Data and Analytics as the guest keynote speaker, who gave a talk about what the journey to becoming a truly data-driven company looks like at Unilever. This high-touch forum was attended by a select group of marketing and IS leaders from retail and consumer packaged goods industries.

Our host, Peter Sieyes (AVP Head of Consumer Marketing and Innovation) emphasised the sentiment of the evening was one of openness (in shared experiences and learnings) and debate (around solutions and approach).

Rachel shared Unilever's experience from the beginning of the programme, as a formative marketing data strategy around connecting with consumers and some of the catalysts for this change, through to some of the learnings and pitfalls when it came to aligning internal and external stakeholders and implementation of the required infrastructure, process and people talent.

As a synopsis of discussions around the subject matter, as expected, the room of experienced practitioners largely agreed on the key challenges and success factors faced in their organisations:
• Clarity of business-driven requirements
• CMO/CIO alignment
• Data quality and integrity
• Finding new insights from the data (without knowing the question)
• Simplifying complexity using simple visual representations of core transformation concepts/benefits
• Talent recruitment/management

Continue reading ""The Journey to Data Centricity" with Infosys and Unilever" »

May 27, 2013

Orchestrating consumer demand in a fast paced world

Guest Post by Keats Sukumar, Marketing, Retail, CPG and Logistics, Infosys

 

The path to purchase is more volatile than ever before. Today, companies need to be ahead of competition to understand, influence, engage and convert consumers. Consumers who absorb and transmit real- time information are easily influenced by brands and companies that convert their 'demand-moments' into 'purchase moments'.  While on one hand companies must understand their consumers; on the other hand they must be prepared to respond swiftly to demand moments.

Continue reading "Orchestrating consumer demand in a fast paced world" »

November 28, 2012

Global Business Dominance for Consumer Product companies through Enterprise IT

Guest Post by Nakul Srinivas, Assistant Marketing Manager, Retail, CPG & Logistics, Infosys

Enterprise Resource planning figured in the top 3 for IT Budget allocations for CPG (Consumer Product Goods) companies in 2012 in a 2011 Gartner forecast (Pragmatism Marks Consumer Products Companies' IT Spending Plans, Published: 21 December 2011 by Janet Suleski - http://www.gartner.com/id=1881224). This clearly shows that ERP implementations are a top priority for CPG companies worldwide. ERP refurbishing may be necessary to achieve the level of coordinated agility companies need to achieve, to respond quickly to market opportunities or threats.

Continue reading "Global Business Dominance for Consumer Product companies through Enterprise IT" »

July 31, 2012

Paradigm Shift in Loyalty Card Programmes: Win-win for Retailers, CPG Brands and Customers

Guest Post by

Srinivasan Nithyanandam, Manager, Client Services for Retail,  CPG and Logistics - Europe , Infosys

 

Battling slow economic growth and high costs in a difficult market, retailers are competing aggressively to increase their customer's wallet share and mindshare. The new breed of digital consumers, who want convenience, personalization, and promotion-based pricing, has made winning in this environment even more challenging. Operating within the tight confines of single-digit-percentage operating margins, retailers must continuously innovate to increase consumer foot falls and clicks. In such an environment, personalised offers, rewards, targeted communications and promotions can help heighten customer interest and encourage repeat shopping.

Continue reading "Paradigm Shift in Loyalty Card Programmes: Win-win for Retailers, CPG Brands and Customers" »

April 26, 2011

Self-Check out: Will it be the future of Indian retail stores?

Last weekend on Saturday, my mother asked me to accompany her for the monthly grocery purchase to the closest retail store from our home-'D-Mart'. We went to the store in mid-morning around 11am thinking it would be relatively less crowded. But I guess, everyone's thought process was exactly like us and the retail store was buzzing with people. Yet, due to effective and now well placed self-service practice in organized retail stores in India, we did not take too much time to finish purchasing our grocery (Just 30 mins!!). But then it was the time for the herculean task of standing in serpentine queue of billing. It took us approximately 50-55 minutes to finally reach the counter and pay the bill. Though there were 5 different counters with cashiers working as fast as they could, the waiting time was still very high.

Suddenly my mother asked a very innocuous question- "Why do we need to stand in queue? Why can't we have a system where we can swipe the product as and when we purchase, pay the bill on our own and then go? We are spending (or wasting) more time standing in queue than it took us for purchasing items".

It triggered my thinking. 'Check out' being last point of contact with consumers; convenience and pleasure at this point can surely improve satisfaction of consumers by few folds. How can Indian retail stores leverage this opportunity? How can this convenience be provided?

Self-checking out can be one option. So what is Self-Checkout mechanism? In colloquial term, it can be defined as any machine/scanner/system which will allow consumers to scan products themselves while picking them up from shelves.

Some form of self-checking out mechanism has a presence in western world. However, same cannot be said for India. But yes, with invasion of organized retailing and consumers embracing the usage of technology, there is a need and requirement of provision of a self-operating scanner or a self-checkout machine.

In my opinion; the way advent of ATMs minimized total time spent at a bank, in similar fashion; installation of Self-Checkout system will also minimize time spent at a retail store. This will in turn be a key to improve the consumer service and satisfaction.

However, like any other IT implementation, a self-checkout mechanism will have its own advantages and disadvantages. Let's put it down:

Advantages

·         Reallocation/freeing of store employees. Thus they can focus on other operational aspect of store

·         During hurry or lesser number of items to buy, faster payment and check out for consumer

·         Another School of thought: Self-Check out/Payment may not be as fast, but the active participation of consumer in the scanning process will surely result in time appearing to pass faster. Thus a happy consumer J

·         Form of privacy for some consumers in buying some personal items/products/goods

Disadvantages

·         Inefficiency of consumer to operate the machine

·         If there is no re-allocation of store employees then possibility of loss of labor

·         Security issues with the self-checkout machine

·        Self- checkout not feasible for huge/big items (e.g.: electronic gadgets like TV/Refrigerator)

 

So what do you think? Will 'Self-checking out' be the future of Indian Retail?

Leaping ahead, as the buzz word all around is Mobile, will 'Mobile-check out' or 'M-check' out also be a thing to look forward to in Indian Retail scenario?

Continue reading "Self-Check out: Will it be the future of Indian retail stores?" »

December 22, 2010

Better shopper experience and loyalty with QR codes

A casual glance at the soft drink bottle or a can of juice running a loyalty program shows that the whole process and experience of earning loyalty rewards is antiquated. Imagine the number of people who will actually note down the website address and the rewards code, login to the website, register and enter the code to win rewards or loyalty points. The conversion rate must be abysmally low also leading to erosion of brand affinity. What if you could effectively bridge the gap with a simple bar code?

 

QR codes are the answer. With a smart phone and a QR code reader, consumers can scan the code from an ad, a catalog or the product packaging and get automatically redirected to the website or send an SMS with their entry.

 

Continue reading "Better shopper experience and loyalty with QR codes" »

December 18, 2009

Enhance Customer Loyalty at the Final moment of truth

In this age of discerning and value chasing shoppers, Customer Loyalties can change in a single moment and gaining or retaining loyalty is a marketing warfare. Store is the final frontier where products are given equal opportunities to see, evaluate and choose the brand. Brands can be made or broken in these last few minutes of life span a shopper will give to your brand. It is then highly imperative for the brands to make best use of these last few minutes and ensure that the customers stay loyal. Here are 3 basic strategies, Retailers and CPG companies can look at to enhance customer loyalty.

Continue reading "Enhance Customer Loyalty at the Final moment of truth" »

Subscribe to this blog's feed

Follow us on

Blogger Profiles

Infosys on Twitter