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The ART Of
FMCG part 7
Ahmed Alaa
Executive MBA at Alexandria University
Ahmed.a.eid86@gmail.com
To all my dear friends ,, brothers ,,
colleagues ,, managers ,, team who
support me , motivate me ,, gave me the
true beloved advice ... Who learn me to
be an ambitious and curious to learn ,,
search for the goals and hungry to know
a lot about all the fields in my life ....
Through more than 8 years of working
in FMCG i learned that the success and
progress didn't come by luck but by the
hard work and challenge your self and
ur obstacles ...... The more u work and
learn ..... The more u can achieve your
targets .....Thank u .... I appreciate all of
ur efforts
First You must see this video
https://www.youtube.com/watch?v=mA
7ms-6wTeq
Brand Strategy (FMCG)
Some of the major strategies adopted by FMCG companies for making their
brands outstanding compared to competitions are as follows: (i) Multi-brand
Strategy (ii) Product Flanking (iii) Brand Extensions (iv) Building Product
Lines (v) New Product Development (vi) Product Life Cycle Strategy (vii)
Taking advantages of wide distribution network.
The success of an FMCG depends greatly on its marketing strategy. An FMCG
marketer pursues a wide combination of strategies.For instance, when prices
are competitive, the company would use an extensive distribution network,
design suitable advertising and sales promotion schemes from time to time.
Following are some strategies adopted by FMCG companies
for making their brands outstanding compared to
competitors:
(i) Multi-brand Strategy:
A company often nurtures a number of brands in the same category. There are
various motives for doing this. The main rationale behind this strategy is to
capture as much of the market share as possible by trying to cover as many
segments as possible, as it is not possible for one brand to cater to the entire
market.
Hindustan Lever have introduced many brands like “Dove” in premium
segment, “Lifebuoy” for economy segment and “Lux”, “Liril” and “Rexona” in
the intervening segment, meaning thereby, the company has not left any
segment untouched.
(ii) Product Flanking:
Product flanking refers to the introduction of different combinations of
products at different prices, to cover as many market segments as possible. It is
basically offering the same product in different sizes and price combinations to
tap diverse market opportunities. Shampoos in small sachets, Pan masala in
small pouches and premium detergents (Tide, Aeriel etc.) in small pouches are
examples of this strategy.
(iii) Brand Extensions:
Hindustan Lever’s Lifebuoy soap’s brand extensions are Lifebuoy Plus,
Lifebuoy liquid and Lifebuoy Gold, since these brands have been positioned at
different segments. Similarly, Amul butter, Amul ghee, Amul cheese and Amul
chocolates are various brand extensions of regular Amul Brand. Companies
make brand extensions in the hope that the extensions will be able to ride on
the equity of the successful brands.
(iv) Building Product Lines:
Hindustan Lever has added product lines one after another starting from
Lifebuoy, Lux, Liril, Dove etc. Similarly, Britannia Industries have related
biscuits as differed product lines. Companies add related new product lines to
give consumers at the products they would like to buy.
(v) New Product Development:
Proctor and Gamble is shown as the number one company in the world reputed
for new products development. Companies that fail to develop new products
would expose themselves to great risk and might face stagnation in future.
The existing products are vulnerable to changing consumer needs and tastes,
new technologies, shortened product life cycles and increased domestic and
foreign competition. A company can develop new products either through
R&D in-house or by acquiring other company or both.
(vi) Product Life Cycle Strategy:
An FMCG has short life cycle whereas an industrial product has long PLC.
According to PLC, companies plan to develop new products after abandoning
the old product which has experienced the decline stage of PLC curve. For
example, existing models in products like automobiles, motor cycles, TV sets
and watches etc. in India have experienced good demand whenever new option
have been offered.
(vii) Taking advantages of wide distribution network:
A very simple way of increasing an FMCG company’s market share is by
developing a strong distributions network, preferably in terms of more
locations. An extensive distribution system can be developed over time, or the
company may acquire another company which has an extensive distribution
network. Coca-Cola and PepsiCo’s wide distribution network systems have
made them market leaders.
You can improve your retail sales
1. Know Yourself
Having your own business is more than just creating a job for yourself. Your
basic roles are in marketing, finance, administration, and the responsibility of
personnel. To get the best results, it is rare for one person to play all these roles
equally well. You must know which parts you can handle yourself and which
parts you're going to need help with.
2. Plan Ahead
Many stores are run by well-intended people but who don't have all the
information they need to do their job. This includes a clear idea of market
segment, target markets, customer service, product selection, marketing mix,
promotional activities and pricing tactics. If you want to succeed you need a
well thought out business plan that helps you make the right decisions.
3. Know The Industry
You can gain the greatest competitive edge if you have an intimate knowledge
of your business. To thrive and prosper, you must be committed to learn and
have the desire and energy to accomplish your goals. These are five main
reasons why most businesses fail:
1. Lack of Industry Knowledge
2. Lack of Vision
3. Poor Market Strategy
4. Failure to Establish Goals
5. Inadequate Capitalization
4. Understand Your Customer Make it your business to give your customers what they want, and they will do
business and buy from you. The products and services you provide should
reflect your customers needs and wants. Think in your customers' terms; buy,
show, sell, and say things that interest them, not just what interests you.
Remember, it is the customer that determines whether or not you succeed.
5. Keep Good Financial Records
If you don't know where your money is going, it will soon be gone. The "game
of business" is played with computers -- and the score is evaluated in dollars
and cents. Good financial records are like the instruments on an airplane, they
keep you posted of your height, direction, and speed. Without them you're
flying blind with no controls to guide you to your destination.
6. Manage Your Cash
It doesn't matter how unique and wonderful your store is,your business can't
survive without-cash flow . Money coming in your store is the vital component
that keeps your business financially healthy. If you budget wisely and know the
interval of your monthly income and expenses, you won't have to worry about
running out of money.
7. Use Sound Management Practices As a store owner, you are also a manager. You have to make decisions, offer
customer service, manage time and resources, and know how to merchandise
and run the business better than anyone working for you. Give your employees
the opportunity for growth, treat them fairly, pay them what they're worth, and
they will help make your business successful.
8. Develop A Distinctive Image Your image is important and is a function of your marketing efforts and
materials. Customer's create their perceptions of your business from your
name, web site appearance, store location, products, prices, visual
merchandising, signs, displays, business cards, newsletters, advertising
material, customer service and anything else that relates to your business.
9. Control Your Inventory
All retail stores need to manage inventory. It is your money sitting on a shelf
and represents a large portion of your business investment. The retailer who
merely watches the store's shelves can't maintain a proper balance between the
right amount of merchandise and probable customer demand. Without adequate
control, slow-moving inventory becomes dated and very costly.
10. Buy and Price For Profit To understand retailing, one must start with the concept that the price of your
merchandise is nothing more than a temporary estimate of what the customer is
willing to spend. In devising your overall pricing strategy, a practical approach
can be based on the function of supply and demand. To be more competitive,
join buying groups and seek out manufacturer discounts that allow you to
purchase merchandise below wholesale prices. By offering better values, you'll
be able to attract more customers, and offer more opportunities to shop at your
store.
11. Learn From The Pros
In today's explosive markets, making the right moves is absolutely essential,
there is little room for error. Without knowing how to navigate through these
fast-moving times, it can be a tricky and even a self-destructive experience.
Because of the emotional and sometimes difficult decisions that must be made,
the crucial difference is having fresh ideas with an impartial business position.
12. Ask For Help When You Need It Remember, getting results is what counts! Don't be too proud to ask for help,
we all need help sometimes. It is important to recognize that what you don't
know can end up costing you money, hurt the odds of success, and greatly
reduce the chance of achieving your business goals. Hiring an expert with
specialized skills can be the most profitable decision you can make to protect
both your business and financial future.
The Science Behind Shopping
( FMCG )
The Science Behind Shopping
a. Shopping activities. Until the proliferation of the Internet shopping depended on
physical stores being located near potential shoppers. Now consumers are purchasing
product from around the globe and having it shipped right to their door via the
Internet. Consumers can also purchase in other non-traditional ways such as vending
machines and the use of their Smartphones to make a purchase from anywhere. There
are usually one of four reasons why consumers go to a store (or visit a shopping
website):
i. Which direction do customers turn when they enter the store?
ii. Where are the sale items located?
iii. How long do customers linger in a store/given area?
iv. Which areas of the store are the most/least crowded?
v. What impediments to shopping are there?
vi. How long are lines?
d. Theory of the Butt Brush
i. During an early study of Bloomingdales in New York City, by Paco Underhill
(author of The Science of Shopping) he put a camera in one of the main entrances of
the store hoping to study how shoppers negotiated the doorway during its busiest
time. Instead, they noticed that shoppers – especially women – don’t like being
brushed from behind. They noticed this by looking at the tie rack that was located
right near the doorway they were studying. People would go to the rack and browse
through the ties that were on display. Then they would be bumped by people heading
in and out of the store. After a few bumps the shopper would leave the rack. Paco told
this to his client and his client noted that the sales of the ties were lower than usual.
They moved the tie rack and sales went up quickly and substantially.
b. Four Types of Shopping Activities
i. Acquisitional Shopping—Customers go to the store intending to make purchases
and acquire product or services.
ii. Epistemic Shopping—Customers shop to obtain information about the products
they intend to purchase in the near future.
iii. Experiential Shopping—Recreational activities to satisfy the customer’s need for
fun and relaxation. Sometimes people shop just for the experience or due to boredom.
iv. Impulsive Shopping—Spontaneous shopping that leads to a need for self-
fulfillment. Consumers often purchase things without thinking and don’t consider the
consequences.
c. Anthropology (behavioral science) has devoted a branch to the study of modern
shoppers…. It studies shoppers interacting with retail environments (and not only
stores – this includes banks and restaurants), so this means they study every rack,
counter, display, entrance, exit, cashier line, parking lot… every nook and cranny that
you could imagine of a retail environment. Research in the study of shopping is not
high-tech. The most important research tool is a person called a tracker. A tracker is a
field researcher of the shoppers. Trackers make their way through stores following
every little move a shopper makes. They follow a shopper around inconspicuously
and record virtually everything the shopper does – such as how many ties they pick up
or how many towels they may touch. The trackers notice things about the retail
environment that a normal employee wouldn’t notice. They apply extreme attention to
a specific area and then analyze what could make that retail space better for the
shopper and more profitable for the retailer
merchandisers strategy FMCG
Welcome to the world of Merchandising.
In any trade and for any product merchandising plays a very important role in
final sale of any product from a shop. Shop or an outlet or a counter is final
place where a consumer and the products meet. Shop is the place the consumer
visits to buy products to satisfy or meet his needs or the needs of his near and
dear ones.
It is an open secret now that if you want to ensure faster sale of your products
from shops or outlets then ensure effective merchandising of your products.
Merchandising means ensuring visibility of products by putting up attractive
display of products or some other promotional material related to product,
highlighting attributes or other salient features of products in the shop or sales
counter. This promotional material can be in the shape of poster or a sticker or
a dangler or shelf card or wobler or shelf strip pasted or put up in a shop.
With increasing competition and with most of companies offering more or less
similar products with less differentiation from the products being offered by
their competitors, visibility has come to play a very prominent role in ensuring
the off take or sale of the products from retail shelves of the outlets.
Now flashback and recall that in most of circumstances of impulsive or
unintention buying “Visibility of products” made you buy those products.
So Now you understand the power of visibility. Need any other proof.
Better and effective merchandising plays a big role in increasing the sales of
products or ensuring trials of new products. A company which goes out of its
way to ensure better visibility of its products thru creative, attractive and
strategic merchandising of its products can outsmart its competition and can get
necessary eyeballs for its product and induce more no of customers who visit a
shop into trying (read buying) its products.
So powerful role merchandising plays in today’s competitive world that it can
make winners out of rank new companies , provided products being offered by
them are of good quality. In today’s stiff competition with old and experienced
well entrenched companies in the market place, new companies can score over
these experienced competitiors by ensuring trials of their products thru better
visibility of its products by creative and effective merchandising in the shops or
retail counters.
It is because of this huge impact of merchandising on the sales of their products
that all companies offering any kind of products be it books, CDs, or cosmetics,
or personal care products, or food items or snack or confectionary products, or
fashionwear are paying a lot of attention to better display of their products thru
better and effective merchandising.
All well established companies are going out of their ways to get necessary
eyeballs for their products by ensuring better visibility of its products at almost
all the strategic locations that their target customer might visit. So next time
you visit your gym and see Posters/sticker/ of Healthy Snacks or Healthy Milk
or Muscle building products there then be clear about the motive of that poster.
It is in this backdrop that almost all good companies have made provision for
and recruit Merchandisers in their team. The main role of merchandisers is to
ensure top of mind visibility for the products of their company by putting up
displays or stacking products of their company in the retail shelf or ensuring
that the Glow Sign board of their company is well lit in the night etc etc.
Let us discuss better and effective ways for merchandising and role of a
merchandiser from perspective of FMCG companies.
All retail shops or sales counters realize the importance of merchandising and
they know the role it plays in increasing sales of products of company.
Powered by this knowledge nowadays shopkeepers demand a monthly fee from
companies for allowing companies to display their products. Shopkeepers
“Rent out” shelfs in their shops to companies for allowing companies to put up
display for their products. They even charge money from companies for
allowing them to highlight their product at the cash counter.
Rules for Better Merchandising:
“Seek Permission First”
With new companies entering almost every month in all product categories
value of space in the outlet has increased. Now to meet demands of his
customers a shop keeper has to stock more no of skus (packsizes) of more no of
products or more no of companies in his outlet. It is in this backdrop that the
shop keeper has become aware of strategic value of every inch of space of
space in his shop. Some shopkeepers do not allow utilisation of POP/POS of
any company in their shop as pastering of POP/POS on their retail counter or
shop walls affects the quality of their counter or walls. As after the POP/POS is
removed it can leave stains or other dirty marks on shop counter or shop wall.
Because of this the first rule of merchandising is to take permission of the shop
keeper or manager for utilising POP/POS of your company’s products. Also
taking prior permission from the shop keeper or manager helps you win his
trust and he may suggest you a better place for putting up POP/POS of products
of your company. This first positive impression puts a good impression of your
company’s products on shop keeper or manager’s mind.
But on the other hand if POP/POS is put up in shop without permission of the
shopkeeper or his manager then he may get angry on your POP/POS spoiling
newly whitewashed or newly prepared retail counter or his well maintained
shop interiors.This bad experience of shop keeper or manager may put up a
negative impression on his mind about your products.
So repeating again “Take permission first”
“Eye Level is the best Level”
POP/POS ( meaning Poster or dangler or sticker or inflatable) of any product
should be pasted or hung at “Eye Level”. Eye level means a space in the shop
or sale counter where any visitor to the shop can easily view it. A poster or
dangler pasted or hung “too High” or too low in the shop may not be noticed by
the customer who visit the shop. So to get desired mileage the POP/POS should
be used at Eye Level.
Most strategic location for pastering or sticking poster or sticker of a product is
the Wall behind the place where the shop owner or manager of shop or mall
sits. And as is the case most of times world wide a shop owner or manager of
shop is stationed at the cash counter. Cash counter is the place that the
customer has to visit to pay the bills. A product staring out of poster or sticker
pasted on the wall behind cash counter can hardly escape attention of the
customer.
Most of shop owners or manager may demand money for putting up POP/POS
behind cash counter but with persistent request and better relations this can be
done without paying any money.
Do not put POP/POS of your products on the POP/POS of
other companies products.
Normally most of sales staff or merchandisers of most of companies put up
POP/POS of their company’s products on the POP/POS of other companies. It
should not be done. It is not ethical.
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