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JOINT ACCOUNT PLAN
July 2014
Collaborating to increase sales, profit and growth
I. Introduction
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• Consumer buying attitudes are changing. Although the overall market demand remains stagnant, volumes are shifting from traditional to modern trade channels. With a proliferation of channels, consumers want the convenience of buying the right item at the right time regardless of the means of purchase—and value continues to remain uppermost in their minds.
• Other consumer trends are taking hold; an increasing number of consumers are seeking green products and packaging. And brand loyalty is eroding as the number of private label purchases grows. Although a strong contingent continue to shop for leisure, many more consumers are making targeted purchases.
• Clearly, consumers are shopping across a variety of channels to suit their circumstances, special interests and wallets, making it more difficult for both retailers and consumer packaged goods (CPG) companies to predict consumer needs and behavior.
• To cope with these changes, retailers and CPG companies have increased investments in trade initiatives and efficiently optimized trade spend. Yet the benefits these tactics can bring are limited if each company looks at its own sales and revenue results in isolation.
• TMC believes that if retailers and CPG manufacturers are to achieve high performance in the new consumer landscape, they must redefine the rules of the game, forming an integrated view of the opportunities and challenges before them and pushing the boundaries of collaboration to unprecedented levels.
• The first step in doing so is to work together at the strategic business planning stage to put the consumer at the center of their business, get closer to buyers and attain greater knowledge of consumer behavior.
II. Project Objectives
Identify the maximum Business Potential by Category and Store
Improve understanding of the account business dynamics: shopper behavior, category performance and store operation.1
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3 Strengthen business relationship between Supplier and Account by driving a joint approach for the plan development
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III. Methodology and Action Plan
The project development is carried out through 5 stages, in which TMC consultant team interacts closely with the Account, Supplier and Store teams.
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Knowledge and Information gathering
Store Audit by Category
Opportunities and Critical Issues Map
References by Category
Strategies and Action Plan by Category
Joint Account PlanJAP
I
II
III
IV
V
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Stage I. Knowledge and Information gathering
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CREATING COMMON GROUND TO SEIZE MUTUALLY BENEFITIAL OPPORTUNITIES
Stage I. Knowledge and Information gathering
At this stage, the consulting team will map all available documents, reports and systems with information about the following areas:
• Account: current store´s segmentation, retail strategy, category guidelines, operational guidelines, total sales and by category, gross margin per category, etc
• Consumer Understanding by Category: who consumes, when, what, where, why and how often. Typically this information is provided by Suppliers.
• Industry/Market trends by Category
• Shopper Understanding: any recent information about profile, when do they shop, how often do they shop, destination vs impulse categories, shopper decision tree by category, length of shopping visit, shopping sequence. Average Ticket Value and Quantity.
To achieve this goal, this stage has been divided into three phases, which are described below:
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Kick Off & Team Conformation
Approach key sources of information
Knowledge and Information GAPS
Stage I. Knowledge and Information gathering
TMC offers 3 solutions to update/enrich Shopper and Category Dynamics in Retailer:
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SHOPPER BEHAVIOR BY CATEGORYQUANTITATIVE INTERVIEW
1. Update Outlet Segmentation:
• Shopper Profile, Mission & Frequency
• Destination vs Impulse
2. Increase Sales and Value:
• Missing products, Shopping barriers, competitors
3. Retail Communication effectiveness: ad and copy awareness. Buy or Not.
4. Promotion Effectiveness: Mechanics vs Incentive. Net impact and ROI.
• Decision Tree, Barriers, shopping time, sequence and flow.
15min Interview/25 stores/30 per store/5 cities
125 observations/25 stores/5 per store
BASKET ANALYSIS
• Avg Ticket Value, Sales concentration by working period, by week days and by Category. Trends
• Product correlation and Sales Concentration: top selling and most profitable products. Week day, Working period
25 stores/1 day per month - week vs. weekend/ 3 monthsSTORES x CITIES:
BH 2
CTB 3
RJ 5
PAL 3
SP 12
Stage I. Knowledge and Information gathering
TMC will contribute during the first phase with some relevant information for all players:
BASKET DRIVEN STORE SEGMENTATION IN STORE TRAFFIC FLOW
Most visited areas, corridors and category sequence
ILLUSTRATIVE
8
Stage I. Knowledge and Information gathering
TMC will contribute during the first phase with some relevant information for all players:
SHOPPER BEHAVIOR AT THE CATEGORY SECTION
38% 49% 85% 92%…of shoppers go through the beverage section
…of those who goes through…stop to take a look at the section
…of those who stop by, interact with the planogram
…of those who interact with the planogram end buying
Source: Shopper Insight 2013. Argentina -Brazil-Colombia-México-USA
ILLUSTRATIVE
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BETTER UNDERSTANDING OF STORES OPERATION TO MAXIMIZE FIT OF SOLUTIONS
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Stage II. Store Audit by Category
Stage II. Store Audit by Category
The objective is to provide enough information to identify critical opportunity areas in the way stores are working per segment and Region.
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Definition of stores and coordination of visits
Store AuditAnalysis, Consolidation of results
• Financial reports to be sent to central office
• Store Audit at 10 stores to implement Operational Assessment Tool (OAT)
• Interviews with Store Mgr and Staff
• Audit a sample of stores per segment and regions
• Cost structure and distribution.
• Financial performance
• Store organizational structure
• Management and store process
• Field force support tools and KPI´s
• People: objectives, profile, skills and capabilities by role
• System & Information: quality and quantity of information
Tools, Skills &
Capabilities
Organizational Structure
In Store Operation
Marketing Programs
Operational Processes &
KPI´s
Operations & Logistics
Information System
The analysis and consolidation of the results will be presented by business variable to facilitate understanding and implications by function. TMC will define the initial set of Issues & Opportunities to be prioritised in the next stage.
IN STORE OPERATIONS
ISSUES & OPPORTUNITIES
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Stage II. Store Audit by Category
Stage II. Store Audit by Category
A set of Metrics (Performance Indicators) will be compared across regions and will be used to set National Objectives. A highly effective Joint Account Plan must be supported by an enriched, comprehensive view of the joint commercial profit and loss data, including brand and category classification, on-shelf prices, sell-out data and other store specific KPI’s
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ILLUSTRATIVE EXAMPLES:
ILLUSTRATIVE
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SECURING COMMITMENT FROM ALL SIDES ON MOST CRITICAL BUSINESS ISSUES
Stage III. Opportunities and Critical Issues Map
Stage III. Opportunities and Critical Issues Map
In this phase TMC will collate and integrate the point of view of most relevant players in the Retail Business Operation:
ACCOUNTSUPPLIERS
STORE
TMC will conduct in-depth interviews with Store Managers
and Staff in audited stores
TMC will coordinate individual meetings with key players from Central
Office (Marketing, Retail Operation, Finance) and One Group session in SP
with Field Force team
TMC will hold conversations with Industry leaders from most
relevant categories
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Stage III. Opportunities and Critical Issues Map
Results will be presented in simple charts to facilitate understanding of Business Implications:
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ILLUSTRATIVE
KEY CATEGORIES PER STORE CATEGORY SALES TREND
+ =
CATEGORY PRIORITIZATION
Stage III. Opportunities and Critical Issues Map
Results will be presented in simple charts to facilitate understanding:
ILLUSTRATIVE
SALES CONCENTRATION SALES CORRELATION BY TICKET
+ =
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Stage III. Opportunities and Critical Issues Map
Results will be presented in simple charts to facilitate understanding:
ILLUSTRATIVE
NET INCREMENTAL RESULTSOPPORTUNITY AREAS
• INVENTORY• ASSORTMENT• PROMOTIONAL
ACTIVITIES• PLANOGRAM• OPERATIONAL COSTS• PRICING
+ =
FULL POTENTIAL RESULTS
Readiness
Urg
ency
Readiness vs Urgency vs Business Impact
Prioritization will allow to focus on most relevant issues during the planning period.
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BRINGING ALTERNATIVE SOLUTONS TO CRITICAL ISSUES BY CATEGORY
Stage IV. International References by Category
Stage IV. International References by Category
In this phase TMC will run a Desk Research for top priority issues by category and store and store segment. It will include C-Store good retail practices and experts recommendations.
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Category Management: role of each category, sales & profit representation, space, planogram and location. Strategic direction by Category
Big Data and Knowledge Management
Store Performance: margin, profit, rotation, growth, Ticket Value, # of Tickets, Debts, Cash Flow, etc
Shopper Activation and Loyalty
People skills and capabilities
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Stage V. Strategies and Action Plan by Category
DEFINING A COLLABORATIVE PLAN TO DELIVER AGREED BUSINESS OBJECTIVES
Stage V. Strategies and Action Plan by Category
At this stage, the consulting team will run a 1 day WORKSHOP with Account and Supplier to agree on realistic targets, strategies and Plans for the most critical areas to be covered in the followed 2-3 years period:
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ACCOUNTSUPPLIER
STORE
1
2
4
3
5 6
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Core initiatives involving all players, such as Trading terms and conditions, Category Captaincy, Price, Assortment per store, Functional Merchandising, etc
Corporate Plans affecting Store’s operation and logistics: Franchise model, ERP Systems, Policies, People profile and skills, Cost Reduction programs, etc.
Actions that can be agreed and coordinated directly between Stores and Suppliers such as Staff Training, temporary merchandising, etc
Centrally driven plans between Retailer and Suppliers such as Bonus, R&D investment, etc
Supplier/Industry specific strategies and plans to address Portfolio, Brand, Product performance at the Account (collated in previous interviews by TMC)
Account Corporate strategies and actions that can affect Retail Business such as Merge and Acquisition, change in the Organizational Model, Corporate investment priorities, etc
Franchisee specific actions and plans
1
2
3
4
5
6
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Identify areas of potential collaboration agreements, objectives, strategies and plans
Stage V. Strategies and Action Plan by Category
Each Plan will have clear Objectives, Roles, Responsibilities and Deadlines
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Understanding that Full Potential of each topic was previously defined as Business Impact, at this stage it will be defined the size of the opportunity to be set as objective for the planning period.
1. OBJECTIVES
2. RESPONSIBILITIESBy using the TMC model, it is easy to assign and distribute responsibilities between Store, Central office and Suppliers for each task.
3. DEADLINESDeadlines should be tied together with variable compensation and negotiation terms and conditions.
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IV. BENEFITS OF JOINT PLANNING
The more closely aligned and targeted the planning, the easier the execution and monitoring and the better the results and insights. Joint Account Planning offers a number of tangible and intangible benefits that impact Retailer and Top Categories business performance.
INTANGIBLE BENEFITS
1. Increased transparency and visibility of business
2. Increased trust and better relationship
3. Joint plan ownership responsibility
4. Shift from data reconciliation to analysis and strategy execution
5. Reduce negotiation time and improve quality of agreements
TANGIBLE BENEFITS
1. Joint event development
2. Increasing planning effectiveness of Innovation launches
3. Improved responsiveness to opportunities
4. Increase sales forecast accuracy
5. Optimize spending of trade spending levers
6. Out of Stock reduction
DRIVING SALES AND OPERATING MARGIN
Project Team – JUAN MANUEL DOMINGUEZ
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• Consulting– Since 1996 is CEO of TMC Consultores, based
in Valencia, Spain.
Extensive Experience across:
– Consumer Products and Retailers
– Latin American markets
– End Market, Regional and Global structures
– Trade channels with focus in Convenience stores.
Key Specialities include:
– Sales and Distribution models
– Trade channels development
– Trading terms and conditions
– Retail Operations and Finance
– Optimization of organizational structures
• Line Management and Background
– British American Tobacco (BAT) 7 years
– VP Business and Professor EEG
– Professor of Post graduation in Marketing – UNIMET
– Professor IESA: Key Account Management, Trade Marketing and Sales Planning
– Bachelor of Science in Arizona State University – Marketing and Business Administration
Extensive functional and line experience in Marketing and Sales:
• Group Brand Manager – Seagram’s and Mavesa, Venezuela
• Trade Marketing Development Manager – British American Tobacco, Venezuela
Speaks Spanish (native tongue) and English fluently
Project Team – CARLOS ALFONZO
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• Consulting– Associate Consultant of Kantar Retail, Grupo
361 USA and Compass Mkt since 2011
– Recently assigned as Director of TMC Brazil.
Extensive Experience across:
– Tobacco and Beverage Industry
– Latin American markets
– End Market, Regional and Global structures
– Trade channels with focus in Convenience stores.
Key Specialities include:
– Shopper Marketing and retail communication
– Category Management
– Strategic Planning and Insights
– Customer Segmentation
– Negotiation
• Line Management and Background
– British American Tobacco (BAT) 16 years
– BA Industrial Engineering (UCAB) with Master in Marketing (IESA)
Extensive functional and line experience in Marketing and Sales:
– Regional Business Development and Key Account of Americas – Brazil
– Head of Global Customer Engagement - UK
– Head of International Brands - Brazil
– Head of TMD, Strategic Planning and Insights - Argentina
– Head of TMD – Venezuela
Speaks Spanish (native tongue), English and Portuguese fluently
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