ARE YOUR “FEET ON STREET” ADEQUATELY ENABLED?

 Have you been wondering as to Why your “route to market” (RTM) strategy is not generating desired results? Why does it take long lead times to roll out fresh RTM initiatives to the field? What is preventing a rapid store penetration in certain markets? If you are facing any such questions, it is probably time to take a closer look at how enabled the last man on the ground is - the distributor salesperson (DSR), who is expected to execute all that you planned for as your RTM strategy.

Serving well over three fourth of the total market, the general or traditional trade channel holds a critical share of the Indian Consumer Product Goods (CPG) industry. It is therefore prudent to analyze weather the distributor salesperson (DSR) has received due importance in your plan and have the below aspects been adequately addressed. 

1. Who is covering the channel: Traditionally, many Indian FMCG organizations left the appointment and upkeep of field sales force to the distributors without making any significant contribution. Many times, this has resulted in deployment of less qualified, inexperienced, and poorly paid feet on street with a sole mandate to collect orders and payment from the stores. Today’s RTM strategy demand much more from every store visit and would find such workforce out of place. It is important, therefore, that CPG organizations make investments to ensure DSRs with minimum qualification & experience, train them to adhere to RTM processes and be able to use sales force automation & other technology tools for an effective in- market execution. 

Industry Considerations:

• Prescribe DSR experience and qualification guidelines to the distributors. 
• Prepare DSRs to align with your RTM objectives through continuous training on processes & technology and change management to ensure its rapid adaption. 

2. How is the coverage represented:  A single DSR representing entire product range visiting an outlet or multiple DSRs representing specific lines of businesses. Which is a more effective approach? Some CPG organizations consolidated multiple product lines to be covered by a single DSR as an effective means while many others taking a contrary view by effecting multiple calls to a single outlet by multiple DSRs representing specific lines product lines.

Industry Considerations: 

• In view of diverse market dynamics across our country it cannot be a one size fit strategy for pan India coverage. A careful analysis of each region/state/city characteristics should determine whether a single salesman or multiple salespersons be deployed to perform outlet wise visits. 

3. Is the coverage well enabled: An effective in-market execution goes way beyond just collecting orders and outstanding. Each call made at the outlet should be generating valuable insights for your organization. It is essential to have technology and process that empower the sales force to become smarter and more productive. Below are a few must have DSR enablement areas to watch out for.

• A clear view of daily activity plan for each DSR at day beginning. 
• A 360 deg outlet view enabling DSR to improve quality of call.
• AI/ML enabled store-wise suggested orders to maximize lines per order.
• Outlet specific product activations and merchandising activities.
• Capture competitor activities and market intelligence.
• Integrate DSR activity plan with ongoing market development programs like rural outreach and other marketing campaigns.
• Integrate DSR beat plan with alternate ordering channels like distributor app, tel sell, van sales etc. to maximize yield.
• Empower DSR with on-the-spot returns/ damages settlement etc.

Industry Considerations:  

• Ensure sales force automation with a comprehensive use case coverage.
• Introduce incentive driven store NPS programs.
• Have robust sales force performance management systems in place.

 Are your trade promotions PLACED correctly?

 

Have you been wondering as to Why your sales promotions are not delivering the planned lift? Why do you take longer to launch new promotions while the competition is quick at it? Why are your channel partners generally unhappy with the trade promotions launched and exhibit a lack trust in claims settlement? 

 

In case you have realised any of the above as real issues, its time you look at revamping the trade promotions function at your organisation.

 

     Some of the common challenges that may lead to the above issues are:

 

·       Inadequate process and technology enablement to design promotions at the lowest granularity of geography, product hierarchy and channel hierarchy.

·       Inability to collaborate with the channel partners effectively (distributors and retailers) for planning trade promotions bottoms up.

·       Inability to measure promotions efficacy accurately and identify levers for trade optimization for the next cycle .

·       Asynchronous promotion activities at regional and corporate level.

·       Poor execution of trade promotions at various levels of the organisations including field sales force , logistics and channel partners.

·       Delayed and inaccurate claims settlement blocking channel partners’ working capital.

 

To address these challenges IBM proposes a comprehensive trade promotion framework across trade promotion management, post event analyses and optimization

 

    ©2022 IBM Corporation | IBM Consulting 

A typical CPG organisation’s spend on trade promotions range close to 12~18% of the gross revenue . This makes the performance of trade promotion business function a critical contributor to both top line and the bottom line for the organisation

 

Addressing the abovementioned challenges have the potential to show immediate and long term benefits in the form of :

 

a.     Increase in the average lift achieved from each type of promotion.

b.     A clear view of performance and gaps to enable design the most optimised trade promotions in each subsequent cycle. 

c.     Ability to defines schemes with complete flexibility and a superior in market execution.

d.     Enable collaboration across all stakeholders for planning trade promotions.

e.     Maximise benefit to consumers & channel partners and fostering a greater trust of channel partners towards the principal organisation.

 

IBM Trade promotions management framework enables organisations realise the maximum potential of their trade promotions spend through a comprehensive integrated approach addressing all aspects of the operating model, people, process and technology.

 

 

 

 

Rajesh Bhambani                                 Associate Partner - Distribution Sector                       IBM Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

And the Store Next Door – Wins!

  

As the second wave of Covid 19 receded, more than ten million Kirana stores of our country yet again re-enforced the fact they are indeed the lifeline for the Indian CPG industry. Although the profitability of general trade channel is lately dented due to rapid digitization of retail, the Kirana stores however were quick to adapt to the changing business environment and helped sustain the supply chain and distribution for the industry during the most testing times of the pandemic. 

 

1.     Adaption of Digital Sourcing by Kirana Stores

 

The CPG industry have always laid a significant emphasis on distribution through facilitating distributors with sophisticated distributor management systems, sales force automation and tools enabling the distributor sales force with enhanced market coverage. However, during the pandemic the beat/route coverage of the distributor salesperson got complemented with alternate channels like tele ordering and retailer ordering applications. Hindustan Unilever Limited (HUL) ‘Shikhar’ and ITC “Channel Kart” applications enabled the retail outlets to seamlessly place orders and make payments. Besides the retailer apps, tele-ordering channels were also established as efficient alternate secondary sales channel.

 

Industry Considerations: 

·       The fact that a Kirana owner has to transact on multiple retailer applications (provided by every CPG organization) may not be sustainable on a long term. A common unified ordering platform for adopted by all major industry players could be a future in sight for our industry.

·       Alternate secondary sales channel like Tele-ordering to be strengthened and operationalized to co-exist with the traditional permanent journey plans (PJP) of the distributor salesmen.

 

2.     Hyperlocal Delivery Model facilitated by Kirana Stores

 

While the onset of lockdown did not impact the overall demand for consumer goods what remained daunting was making them available to the consumers in a highly constrained logistics environment. The deeply penetrated Kirana stores acted as fulfillment partners for large format retail outlets and online retailers like “Bigbasket , Grofers etc. thus facilitating a hyperlocal distribution network. Organizations like Unilever with deep presence and investments in the General Trade Channel sailed through the pandemic challenges far smoothly as compared to organizations less penetrated, clearly demonstrating the might of the local kirana store. Additionally, investments on programs like Unilever’s Shakti Amma for rural outreach further helped organizations sustain business during the pandemic.

 

Industry Considerations

·       Sustained use of hyperlocal delivery model developed in collaboration with general trade channel.

·       With over 85% of CPG share with the traditional trade channel, investments in increasing the general trade footprint shall continue to remain a strategic effort for the Indian CPG players.

 

3.     Kirana stores adapted to an e-commerce service model for their customers.

 

The orders which always arrived on a “Parchi” (handwritten list of items) simply got replaced with a WhatsApp/ SMS message followed by a phone call, payments received through UPI platforms (PayTM , PhonePe etc.) and door step deliveries executed by storekeeper’s cyclists in their respective catchment areas was almost a seamless transition to an efficient e-commerce model within no time. The transition was effortless as as most components of this model were in practice already- home deliveries to the customers, credit being extended, items returned unquestioned were practices business as usual even in pre-pandemic times. 

 

Industry Considerations

·       Enable the retailers through trainings for use of digital interactions and payments platforms 

·      Focused trade promotions enabling small retail outlets in general trade channel.

Considering Connected Cars

Increasing customer need for connectivity is well recognized by the Indian auto industry. A Connected Car therefore has become a key experience factor that has to be delivered to the customer along with the product. Indian auto OEMs intending to pursue this inevitable industry trend, however are confronted with some basic contemplation.

1.      Is there a Business Case to this investment?

It is hard to quantify the magnitude of direct/indirect benefits from a connected cars initiative and formulate a solid business case for this investment. There is however enough opportunity for auto OEMs to monetize the data received from connected cars. Enhanced service revenue through malfunction detection & service reminders to the customers, cost savings by capturing vehicle performance as input to warranty and R&D teams and potential sales push by offering an enhanced customer experience with a whole range of connected cars functionality are just a few examples that could drive value for the auto OEMs.

As custodians of the car probe data the OEMs also have opportunity to monetize it by sharing anonymized data with partners like map service provider who could possibly enhance their live traffic navigation service, mobile network operators to help them spot issues with their network and other third parties like traffic police who can leverage this data to improve traffic management.

2.      Is there a matured partner ecosystem which can build and run a connected cars service?

Connected cars solution typically encompasses a relatively large ecosystem of partners. The IOT (internet of things) platform provider, telematics device manufacturer, map services provider, mobile network operator and the overall system integrator (to develop customer facing applications and integration with enterprise systems) are key players of a connected cars solution ecosystem. Dependence on multiple partners with no single one offering end to end solution capability increases complexity for the auto OEMs.

Auto OEM’s are progressively engaging with single partner who bring with them relevant implementation and run experience of a connected cars service. Large system integrators offering a reliable inhouse IOT platform, and who can partner with other solution providers to offer an end to end solution are increasingly becoming a choice as a single solution implementation and partner.

3.      Is there enough consumer readiness to adapt and use the connected cars solution?

A connected car offering brings a whole gamut of features including advanced navigation aid using weather and traffic data, remote vehicle controls, emergency services in case of breakdown and crash and a whole set of alerts for theft, tow away, overspeed, security etc. Institutions and fleet owners use driving behavior data for monitoring and check the drivers driving patterns.

Maximizing the solution adaption and its usage will be the key to the success of a connected cars program.  The endeavor of the OEM’s should be to scale up the usage by continuously offering  new connected cars features offering safety, security and convenience to the customer.

Cost recovery from customer for the connected cars service, which currently is the key direct revenue source will increasingly diminish. Data collection and its monetization through enhanced usage of the solution will take priority over charging the customer for the services.

4.      Is there an adequate Infrastructure to support advanced connected cars features and enable the ecosystem to reap its benefits?  

The envisaged benefits of the future connected car can be reaped with adequate vehicle to infrastructure interaction (V2I). Government initiatives to integrate highway toll gates, electronic road pricing, charging stations and emergency services will be a true manifestation of the benefits from connected vehicles.

The auto industry is also seeking greater government support for instance availability of radio frequency channels for v2V and V2I communications for next generation connected cars and autonomous cars using Advanced Driver Assistance System (ADAS) to function.

Conclusion: Key considerations for your connected cars initiative

a.      Data monetization opportunities will take precedence over direct cost recovery from customers for connected cars service. Key is to achieve scale of solution usage and maximize data accumulation to reap benefits from it.

b.      Organizations offering proven technology platforms with an experience to implement and run such initiatives and can partner with other solution providers to offer an overall solution will be partner of choice to implement and run connected cars service for auto OEMs.

c.      OEMS will have to consciously work towards increasing the solution adaption and usage by the customers through introducing new features offering safety, security and comfort.

d.      Auto industry has to be future ready by keeping an outlook on the next level of ADAS capability for connected cars and the internal and external capabilities needed for it.