6 Building Blocks--revised

6 Building Blocks to General Trade Development

Feb 2003

General Trade Academy--Asia

What is General Trade? To define GT, we need to define Modern

Trade….

 MT are self-service stores which primarily sell to

direct consumers on retail

 Usually, with at least 3 check-out counters  Includes Supermarkets, Hypermarts and Big Groceries

General Trade Academy--Asia

Any point of purchase that does not fall under this definition is part of General Trade!

General Trade Academy--Asia

What is General Trade? General Trade includes... Mom and pop stores, drug stores, wholesalers, street stalls, kiosks, cigarette stands, cash and carry stores, hawkers, ambulant vendors, public markets Stores in big numbers and wide reach

General Trade Academy--Asia

General Trade Academy--Asia

Reasons for buying in MT stores  Self-service  Wider variety/More choices  Cheaper than traditional stores  Located in business districts  Presence of other stores another forms of

entertainment  Comfort  Image  Special promotions

General Trade Academy--Asia

Reasons for buying in GT stores  Near homes, convenient  Well acquainted with shop owner  Buys on credit  Small item / amount of purchase  break-cases or individual units  Emergency purchases  Impulse purchase

General Trade Academy--Asia

Who shops in GT stores?  People who want convenience  People who buy very frequently  People with shoe-string budgets  People who need individual units or small packs  People in places where there are no MT stores  People who buy impulse products  People who need emergency items  THEREFORE…for certain shopping occasions,

Everybody still buys from General Trade!

General Trade Academy--Asia

6 Building Blocks of GT Development Training towards Field Execution

Outlet Leadership

Extensive, Effective Coverage Reach

Supportive Sales Systems and Structures

Mutually Beneficial Distribution Partnership

Consumer and Customer Understanding

Consumer, Shopper and Customer Understanding  Consumer Understanding translated to relevant products and

promotions  Who are the consumers who shop in these stores?  What are their needs?  How do they buy? How often? At what price?  How can you talk to them? Media that reach them?  What products appeal to them?  Competition?  GT Shopper research  Continuous Updating of Understanding and continuous Innovation to meet the changing needs

General Trade Academy--Asia

Consumer and Customer Understanding

 Customer understanding translated to effective channel

strategies  What are different types of trade channels, from the shopper’s point of view?  What are each one’s unique shopper value proposition? Why do consumers shop in this channel? What shopping occasion does each serve?  What are current and future trends on trade development?  What are the needs of each trade channel?  Pricing practices?  Merchandising and Promotions for each channel?

General Trade Academy--Asia

Consumer and Customer Understanding

 Customer understanding based on final customer

where consumers buy, not on Unilever strategy  Flow of goods

 Distributor and Coverage Models based on

relevance to trade environment

 How can each trade channel be reached?

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Extensive, Effective Coverage Reach

 Fixed salesmen’s schedule/PJP/Beat plan  each outlet covered same day, same time every week  Maximize direct coverage reach  Direct coverage reach stores covered regularly in a disciplined and controlled mode

 Coverage Model for each trade channel  Coverage Model for Urban and Rural

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Business Potential

Channel Coverage Strategy Modern OPPORTUNITY!

Trade Direct Accounts Regular Distributor Outlets

OPPORTUNITY!!!

Wholesaler-covered Accessibility (costs, distance, transport available…) General Trade Academy--Asia

Cost and Potential  Viability of Coverage

POTENTIAL

COST

Law of Diminishing Returns

As one goes further into coverage, costs increase while rate of return decreases.

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Coverage Models

Potential

HP/LA 1. Distributor -Low cost teams 2. Sub-distributor

HP/HA Distributor -Pre-selling teams -Split Teams

LP/LA Wholesaler

LP/HA 1.Small Distributor 2.Sub-distributor

Accessibility General Trade Academy--Asia

Extensive, Effective Coverage Reach

 Need to develop critical mass to expand reach,

especially in rural

 Do we have a viable portfolio?

 Lines sold per call do not increase as portfolio

increases (Average: 10-15 lines)

Ideal portfolio at 70-80 lines per team Split Teams beyond 80 lines

General Trade Academy--Asia

Some Facts  Average Lines per call:  Pre-selling----18-35  Ready-Stock--10-14  Average no. of SKUs In-stock

(Single team, F4)  Pre-selling----66-85  Ready-stock--49-68

(Single Team, F2) 36-52 18-34

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Mutually Beneficial Distribution Partnership

 Because of the goal to maximize direct coverage

reach, we need partners

 Distributors, Agents, Sub-distributors, etc.

 Terms of partnership in a contract  Clear Roles and Responsibilities  Expectations from each  KPIs

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ROLES

Role of Company

 Brand Owner and  

  

Manufacturer Pricing, Advertising and Promo Product Innovation based on consumer understanding Designs Distributor Network Designs policies, systems and standards Monitors distributor performance

Brand Owner and Strategy Provider

Role of Distributor

 Provides manpower,

 

   

finance and other resources Services outlets Implements merchandising plans and promotions Provides credit judiciously Breaks bulk Builds trade relationship Provides UL customer feedback and market info Service Provider and Implementer

What’s in it for the Partners? Benefits to Unilever

Benefits to Distributor

 Expanded reach to more

 Business that gives fair





   

customers Point of purchase merchandising Local market presence Cost Savings Market Development Reach with less risk Availability, Visibility in more stores

  

return Enhanced business image and clout Business knowledge Business that grows every year Long-term business that can be passed on

Growth and an Attractive Return on Investment

Syndicate Work  Given the roles and responsibilities of both

parties in the distributor partnership,

 What roles and specific tasks should Unilever Sales Executives do, to ensure both parties deliver on their roles?  What KPIs should each partner work on to make the partnership effective?

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Profitable Exclusive Distributors

 All aspects of Distributor’s business are

supervised and controlled by Unilever

 Coverage Plan  Field Operations  Merchandising strategy  Pricing and Trading Terms  Inventory Management/ Order-Booking  Reports and Systems  Costs and Financial Management

General Trade Academy--Asia

Mutually Beneficial Distribution Partnership

 Working towards mutual goals  Relationship that builds long-term partnership Joint business planning and regular performance review

 The need to monitor Distributor Profitability  Low-cost, Efficient operations that deliver coverage requirements Different models for different market situations

General Trade Academy--Asia

Mutually Beneficial Distribution Partnership

 Business gives partner a fair return on

investment and time

 The need to monitor Distributor Profitability ROI of at least 2X the regular bank rate Absolute profit is based on level of happiness and distributor profile Minimize Working Capital, Minimize Fixed Assets to reduce investment

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Supportive Sales Systems and Structures

 Effective Market Price Control  specific margins for specific trade channels  consumer price levels are similar across channels  Transparent Pricing Scheme  Supply Chain should be able to service

distributors at highest frequency to allow distributors to reduce inventory levels

 VMI/ Automatic Replenishment as best practice  Customer service based on needs

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Supportive Sales Systems and Structures

 Business Building Programs that support channel

strategies  Field-activation programs, that address local needs, especially rural  e.g. Rural Promotions Vans

 Performance-linked reward systems for sales

people

 Based on Secondary Sales; Never on primary sales

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What is the Last Mile?

Factory

Last Mile

{ CDC

Distributor

Stores

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Company Standards Up to the Last Mile  Because distributors are means for customer and

consumer reach, Unilever standards need to be enforced up to the time products reach consumers  Customer Service  Warehousing and Logistics, to preserve quality  Pricing  Trading terms

General Trade Academy--Asia

Outlet Leadership

 How do we win the consumer at each point of

purchase?

 Relevant products at a pricing level that appeal to shoppers  Product Visibility and Brand Development  Trade loyalty through relationship-building and offering customer service

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Outlet Leadership

 Consumer understanding translated to relevant

product development

 Not just small packs of premium products but products that “talk” to low-income consumers  GT-focused marketing mix

 Merchandising and Promotions that develop the

market and ensure steady growth  Best customer service and trade relations that build loyalty  Products that meet needs of shoppers for each trade channel

General Trade Academy--Asia

Factors that affect Distribution  Coverage Frequency  Coverage Team Type  Monitoring/Controlling measures  Number of lines required for distribution  Clear category/brand/channel strategies  What lines are worth pushing across channels?  One sales team to handle 60-80 SKU; Beyond 80 skus and a volume base, split!

General Trade Academy--Asia

Training towards Excellent Field Execution

 Training conducted at all levels of organization,

addressing needs of the organization  Field activities executed at the manner it was intended through regular performance monitoring  Field coaching as an important tool for continuous development  Distributor HR policies that retain and reward people based on performance

General Trade Academy--Asia

Our Focus for the Next 2 Days...

Training towards Field Execution

Dominating POS with Relevant SKUs

Extensive, Effective Coverage Reach

Supportive Sales Systems and Structures

Profitable Exclusive Distributors

Consumer and Customer Understanding

General Trade Academy--Asia

Syndicate Work 2  Within 30 minutes...  For each block, determine the following:  What current practices, systems or policies contribute to the delivery of the activities under this block?  What are the opportunities for each block?  What activities, practices, or policies should be implemented to address these opportunities?

General Trade Academy--Asia