Please click on any of the following case studies to learn more
The Situation
Canada’s largest tobacco company, and one of Canada’s largest companies in the consumer goods sector, was losing share and profits. Predatory pricing by Competition was the cause. Since it had such a large market share, it stood to lose immense revenues if it followed suit with price reductions. In a mature market environment, the Supply Chain was inflexible and rested on wholesalers and large integrated accounts such as Loblaws, Sobeys, and Metro. Convenience retailing was also significantly integrated, though Independents still formed a significant proportion of the Retail universe. The question was – how could the Company leverage its size and resource to create discontinuity in the market and a sustainable competitive advantage for itself?
The Solution
The solution was in the development of a direct to store delivery model for the Supply Chain – one that the Competitors would find difficult, to follow.
Narrative and Analysis
The success of the strategy rested on three clearly defined goals:
If these goals were realized the Company stood a chance of aggressively pushing its brands at Retail and stabilizing market shares from what appeared at the time, a terminal decline.
What happened?
All three strategic goals were realized, though, despite simulations, the initial implementation was sloppy, since both the IT backbone and the back end ‘pick and pack’ facility at the Company’s warehouses took time to settle in.
A MORE DETAILED ACCOUNT OF THIS CASE IS TO BE FOUND IN THE GOWER PRESS PUBLICATION – FROM GREAT TO GONE, WHY FMCG COMPANIES ARE LOSING THE RACE FOR CUSTOMERS, BY PETER LORANGE AND JIMMI REMBISZEWSKI. (CHAPTER 4 – EXTERNAL BARRIERS TO INNOVATION, PAGES 105 – 111)
The Situation
Nigeria has been one of the largest economies in Africa. I had the opportunity to set up the largest independent distributor in the country for exclusive distribution of the leading tobacco company’s products as well as products for other Consumer goods companies in the Food, Wine and Spirits, Confectionary/ Biscuits and Personal Care sectors. The issue was that given a traditional supply chain with low levels of innovation in route to market in Nigeria, how was this to be done, in a manner that met the expectations of world-class consumer goods companies?
The Solution
The solution lay in starting on a clean slate, and developing a professional, fit for purpose integrated sales and distribution company. This was accomplished over a period of a year.
Narrative and Analysis
The project went through three distinct phases:
Outcome
They say the proof of the pudding lies in its eating. 17 years on, this Group remains one of the most successful sales and distribution companies in the Nigerian market.
The Situation
In early 1990 s I was given charge for North India. Our Company had historically a low market share, though we dominated the premium segments with share of consumer spend well over volume share. The challenge was – how to expand market share and further strengthen the premium segment. All this in a climate when marketing freedoms were under threat.
The Company operated through Distributors, who covered the market through a combination of direct to store sales and wholesale market coverage. The Company’s sales force focused on Trade Marketing.
The Solution
The solution was in macro and micro changes:
Narrative and Analysis
This was a time when we were under threat to lose our marketing freedoms. A time therefore to realize some goals:
The other challenge was to grow market shares and improve on our historical performance in North India
Output
In terms of output both goals were realized. Market shares grew in the years that I spent there from circa 27/28% to circa 41/42%.
The Situation
The Tobacco segment faced tremendous existential challenges and the existing models of communication with the consumer were no longer permitted. As the consumer was also, in the main, the shopper, point of purchase became a key pathway to the consumer. However, this pathway had mainly utilized traditional merchandising and trade promotion tactics – all of which were either no longer allowed in many markets across the world. How was this challenge to be faced?
The Solution
The solution lay in developing a template to communicate with existing consumers since mass communication that targeted a large spectrum of Consumers and others was no longer possible. In other words the model called for moving from a brand centric to a consumer centric approach to Marketing and aligning this with the Corporate responsibilities of the Organization.
Narrative and Analysis
The Consumer activation model relied on the funnel – Awareness, Consideration, Trial, Repertoire, Loyal as a sequential set of steps. However in the model we developed we moved from a sequential to a parallel approach – in other words moving from awareness to trial / repertoire (as would be the case in many on-line purchases), and combining this with a Customer activation model. Based on numbers of Consumers and Customers, and knowledge of the footfall per Retailer, numbers could be modeled with some accuracy.
Outcome
Marketing restrictions and their impact on the Supply Chain, and Route to Market model can be viewed as a challenge to the existence of the Industry. Equally the challenge can met and a competitive advantage created for our brands and products for as long as these remain relevant to Consumers.
In many ways this Consumer engagement approach is far more targeted and far more effective than the mass marketing models of the past that relied on traditional advertising.
The Situation
In the mid to late 1990 s my Organization was keen to commence local operations in several new markets, particularly in East Europe and East and Central Asia, where its products had traditionally been exported through middlemen. What support could the global Centre provide management in Operating Companies (eg in Russia, Korea, Uzbekistan……..) to help them decide the best route to market for our brands?
The Solution
The solution was the development of a template that was implemented by local management, in each Operating Company. Given its success, since 1998, this template is a common platform across the Group and OpCo’s are encouraged to revisit it cyclically, every few years, to determine their optimal route to market.
Narrative and Analysis
Initially I travelled extensively across the ‘Developing’ markets (Russia, Poland, Hungary, Turkey, Romania, Uzbekistan, Kazakhstan, Korea, Malaysia, Indonesia) to analyze the secondary supply chain, in order to work out the optimal route to market for our brands in each market. On an ad hoc and case by case basis, we set up projects to drive their route to market strategy covering, at point of consumer / shopper purchase, brands availability, visibility, freshness, fair price and basic in-store merchandising. Over time it became apparent that we were facing the same set of issues in each market.
Accordingly, I put together a team of experts from Best Practice markets (Germany, USA, Brazil, Central America, Mexico – (and I had extensive knowledge of India and several developing markets)), for a three-week workshop in Mexico. The shell of the template was developed at this workshop. Later, over a period of months, I put flesh on the template – created user guides, facilitation guides, and detailed notes on implementation. The template was piloted in Russia, and following the successful pilot began to be rolled out.
How does it work?
The template works with and through the management team and a project is established with the Executive normally being the Company’s Marketing Director. The project goes through 3 phases:
Diagnostic;
Planning:
Implementation.
In more complex implementations third party consultants support the implementation. More often the local management supported by experts from the Centre, are adequate, since the template is fundamentally sound.
Whereas the precise template is obviously not available we have sufficient knowledge of the process and content to drive fresh projects.
The Situation
Right after their merger, a global tobacco company in Korea had a potentially successful brand but the brand coverage in Retail, was only 30%. The product was distributed through two combined systems – one of direct sales and the other of tele sales. The Company was confused about where to support the growth of sales and distribution. The management had realized that optimizing the distribution system was a key priority to its market share growth and had approved and supported the route to market project.
The solution
The solution was to find an optimized distribution system that is simple, focused and easy to implement so as to expedite the growth of retail coverage. The project team was formed comprised of internal sources in trade, marketing, finance, supply chain, corporate affairs and legal with support provided by the global centre. TG was Trade Marketing and Distribution Director of Korea and Rahul was the global centre facilitator.
Narrative and Analysis
TG led the project and 2 workshops were conducted following a global template with facilitation provided by Rahul. The 1st workshop was to diagnose company situation based on market and competitor analysis. The 2nd workshop was to do a planning for the future and to conclude an optimal route to market model.
The final output was to convert to 100% direct distribution by eliminating tele sales and the implementation was to be completed within a short period of six months. These were massive changes involving redundancy on the one hand, and large- scale recruitment and change management on the other hand. Despite the short time frame, the process went through smoothly and was completed within planned costs and with no major hurdles.
How does it work?
The route to market project was a tremendous business success and retail coverage had more than doubled within a year. Retailers rated the company as the No.1 service provider in the tobacco category. Company market share had grown 20 times for the following 5 years with profits up 100 times.
Korea was included in the list of top 10 markets of the Group and the route to market project was benchmarked as a best practice. Business growth led to building a tobacco factory in Korea. The project proved that getting the product into consumers’ hands is key, and prior to marketing and promotion expenditure being committed. For TG, successful delivery of the route to market project has become a once in a lifetime experience.
The Situation
Hong Kong has around 6000 Tobacco retailing outlets, out of which the 2 biggest convenient chains have slightly more than 3000 outlets combined, or just over 50% of the retail universe. These 24-hours convenient stores are usually very small but with very high traffic, crowded and busy most of the time. When we implemented DSD, direct-store-distribution, how to effectively cover and service these stores became a big challenge.
The solution
After a lengthy negotiation, we finally convinced one of the two Key Account players to implement an EDI – electronic data interchange program where we are allowed access to their data-base including daily sales and inventory per store. With pre-agreed safety inventory level, and replenishment rate, we were able to monitor the sales trend, and automatically generate order quantity per store per week without any manual intervention.
Narrative and Analysis
The first month after the implementation, we saved the sales force about 30% time, and simultaneously, sales off take increased by 8%, whilst out of stocks were reduced to almost 0%. Also the Key Account reduced their overall inventory by about 15%, significantly reducing their working capital. The counter staff effectiveness also went up since time was released from inventory management. Six months after the implementation, the second Key Account chain also joined the program.
How does it work?
The key is to delivery total system efficiency that could generate a win-win situation for both parties. A single sided efficiency gain, is not considered a true gain.