Process – A newer addition to the traditional 4Ps

So you have a great product and you have defined and validated your target audience(consumer segment). How do you deliver your brand/SKU to the customer(brick & mortar/online) and make it available for your target consumers to buy? The next P, Process, covers this aspect.

The sales process followed in any organisation influences execution in store and how the brand/product is perceived by the consumer. As for your customers, it is crucial to make sure you’re easy to do business with, meaning you’re efficient, helpful and timely. 

The sales process followed directly impacts execution, including delivery of your brand/SKU to customers, in-store availability, placement on shelf, how communication with the customer is managed, new product launches and so on. An effective sales process will include all aspects of the 7Ps and describes the series of actions or fundamental elements that are involved in delivering the SKU to the customer, for the consumer to buy.

By making sure your team has a good sales process in place, you will also save time and money due to greater efficiency, and your standard of service to customers will remain consistent and high, which is excellent for developing a great brand reputation and to build a great relationship with the customer.

The more seamless and personalised your sales processes are, the happier your customers will be. Customers typically feel frustrated or dissatisfied by late shipping, additional costs, poor communication or a lack of support and when brands/SKUs run out of stock in store.

Every part of the customers’/consumers’ journey has to be seamless and efficient. 

Regularly assessing, adjusting and adapting your sales processes will help to structure your sales efforts so that your team can function at optimal efficiency. A great way to do this is to borrow from the tech industry. Map your customer and consumer journey on a regular basis. How does your brand get to the final user? What are the various steps in the journey to the final user/consumer and what process do you have in place that facilitates this? Prioritise elements that overlap with the customer/consumer experience.

The more specific and seamless your sales processes are, the more smoothly your sales teams can carry them out. If your sales team isn’t focused on navigating procedures, they have more time to build great customer relationships, enabling the business to grow.

Some elements to consider are as below: 

  • Is your customer carrying the right levels of stock? If too little, how much more needs to be ordered and why? If too much, how can you help the customer reduce this before stock needs to be destroyed/written off?
  • Is your logistics solution cost-efficient and timely? What does your scheduling and delivery logistics look like?
  • Will your customers run out of product at critical times?
  • If you are an e-commerce business, do items ship reliably from your website?
  • How often do you meet with the customer’s team and how do you communicate price changes, POS artwork changes and packaging changes to customers?
  • What technology do you use? How can your customer access it? Do they need access?

If you get more than one complaint about any element of the sales process, understand what’s going wrong and develop a solution. 

When you get your sales process right, your sales team will

  • be more productive, manage more customers and also have better relationships with customers as a result.
  • maintain or gain market share for your brand. Fewer customers delist your brand/SKUs as your team responds immediately to consumer needs/feedback.When people love your products, they experiment less and so remain loyal to your brand.
  • receive feedback from customers and consumers, and ensure it reaches relevant decision makers within the organisation. Feedback helps you change what needs to be changed, and helps your business grow.
  • sell and deliver the right volumes of your brands/SKUs so your customers are neither overstocked nor understocked.

This includes any technology sales teams use in their normal course of work. This ranges from sales intelligence solutions teams use to calculate sales volumes through to merchandising apps that monitor shelves.

If your sales process is efficient and any sales technology you use is in keeping with the process and with market conditions, your brand thrives and so does your business.

If you’d like to learn more about how to set up an efficient sales process or how to maximise sales team productivity using the right sales technology and tools, email me on veena@salesbeat.co

Product – the most important element of retail execution & the marketing mix

Product is, probably, the most crucial component of the 6Ps. It originates directly from your consumer through an unmet need that they have.

This can be a physical item, a service, a platform or software. It is produced at a cost and is made available to the target audience at a price to help fulfil the need. Whatever the nature of the product, it always follows a lifecycle. A company can increase its competitive edge by ensuring a thorough understanding of the potential lifecycle of the product for proactive launches of product extensions or timely re-launches. Re-launches help the brand/product to remain relevant in a changing market or at the end of its lifecycle.

Product lifecycle

The 4 commonly used stages are introduction, growth, maturity and decline.

We like the hubspot model as it breaks this down into 6 stages – development, introduction, growth, maturity, saturation and decline.

Development: The development stage of the product life cycle is the research phase before a product is commercially launched for wider consumption. In the FMCG context, this is when the innovation team develops/conceptualises the product and the branding in collaboration with the R & D team, with key consumer focus groups providing feedback.

Introduction: The introduction phase is when a product is commercially launched. In the FMCG context, this is when marketing teams begin building product awareness amongst consumers and sales teams reach out to potential customers. Typically, when a product is introduced, sales volumes are low and demand builds slowly. This phase is dominated by advertising and marketing campaigns educating both the consumer and the customer (supermarket/wholesaler/distributor etc).

Growth: During this stage, consumers have accepted the product in the market and customers are beginning to buy in. This is the stage when competition begins developing.

During this phase, marketing campaigns often shift from getting customers’ buy-in to establishing a brand presence so consumers choose them over developing competitors. Additionally, as companies grow, they’ll grow distribution at existing and new customers.

Maturity: Once the brand/product gains strong foothold in market, it enters the maturity phase, with gradual slowdown in sales. The brand/product is already the market leader and demand grows only at the replacement rate.

Saturation: This means that a majority of the brand’s/product’s target households will own or use the product. At this stage, sales grows more or less on par with population. Price competition becomes intense and the brand/product teams focus on retaining shelf space and even their listings at stores.

Decline: If the product/brand doesn’t become or retain its position as the preferred brand for consumers, it enters the last stage – decline. Usually, this happens to strong brands only in the case of industry transformation. Eg. Kodak. Sales will decrease during this time and the only way to win at this stage is to innovate and launch a new or transformative solution.

It goes without saying that functionally, the product must be able to perform its function as promised and it must be available when the consumer needs it.

At this moment in time, availability in store is proving to be a bigger challenge than others. This is driving consumers to look towards what they already have for solutions and in the cases of some products/brands, is speeding up the onset of the ‘decline’ phase before the products/brands even get to the ‘saturation’ phase.

Why is availability at risk?

2021 has been a challenging year for the grocery sector. While the HGV crisis was not specifically driven by the pandemic, it only made it worse. This has caused unprecedented levels of stock outs in supermarkets. And then there is the legacy of COVID on consumption behaviour.

Covid has had a lasting impact on our lives, from the increase in home based working (driving higher consumption of toilet paper and cleaning products at home vs the office) to cooking meals at home instead of eating out (increased demand for oil, salt, cooking ingredients at the supermarket vs at wholesalers/distributors to the on-trade). People have realised that cooking at home during the pandemic has helped significantly with savings. The same goes for consumption of beer, wine & spirits at home instead of at the on-trade. These are behaviours that are expected to last, especially as the impact of price inflation is felt at home.

The above changes, combined with just in time ordering and production followed by retailers and by suppliers in this sector is putting pressure on availability.

As 2020 demonstrated, at one point, availability trumps price and brand loyalty. And, at the risk of using an over tired idiom, out of sight, out of mind.

Reducing stock outs in stores

This blog focusses on how sales people can reduce out of stocks at supermarkets by considering their target consumer behaviour over the last year and how likely this is to change.

Due to the sheer volume of out of stocks we’ve seen on shelves in the last few weeks across several supermarkets, we’ve decided to focus on how FMCG sales people can reduce out of stocks of their brands at their customers’ stores.

Breakfast category

This is a common sight at most grocery stores now. Popular brands and flavours out of stock on shelves and in retailer warehouses. And when customers switch brands as a result, this is highly likely to result in loss of share. How can this be prevented? Keep the consumer in mind when discussing orders with buyers. What are your consumers doing now? How do you/your family eat breakfast now? On the go or at home? How can this impact sales of your brand and should you be discussing larger orders as a result?

Milk alternatives, sugar & sweeteners

These are the shelves you never expect to see low on stock (except during panic buying) in the normal course of events. We take it for granted that your local store always has milk/milk alternatives, sugar and honey. However, since consumer habits underwent a radical change during the pandemic, more people make coffee/tea/their beverage of choice at home now instead of making/buying at work or on the go. This has driven a higher rate of sale of this category. Sales people working for brands within this category should take into account how many of these out of home consumption occasions have been replaced by at-home consumption. And their brands share of those occasions.

Condiments & Carbs

These are photographs from 3 different stores. You may wonder if these are stock photographs from 2020, but these were from different supermarkets just this last weekend (8/9 May). While some of you may attribute some of this to Brexit (Olive Oil & Pasta), the rice, frying oil and Asian condiments are not imported or packaged in the EU and so Brexit should not have an impact. When selling brands/SKUs in this category to customers, consider how consumers have been eating during the pandemic. Are they expected to continue this behaviour or will lockdowns easing have an impact?

Confectionery & snacks

Confectionery and snacks have seen varying impacts during the past year. While brands in the mint and gum category have seen a drop in demand, the remainder of the category has seen a significant rise party due to stress eating and partly due to substituting holidays for treats. As lockdowns ease this is the one category that is likely to see a swing in demand. Consider consumer motivations and drivers for this category when discussing orders. More social occasions = more mint/gum sales. More social occasions = drop in sales of snacks as well. However, home/office working also has a significant impact on sales of snacks. The quantum of change for each brand depends on the brands, their consumption occasions and how many industries/companies decide on a return to work vs continuing remote work.

Beverages

Non-alcoholic & alcoholic beverage brands have experienced stock outs over the past few weeks/months. While some of this may be attributable to supply chain constraints around aluminium cans, why are the same products in bottles not available in greater quantity? Why not use the empty space for the same brand in other formats/packaging? For brands not constrained by this, why limit sales to pre-pandemic levels? Consider how your target consumer has changed his/her way of consumption over the past year and how likely it is to change.

The pandemic has forced us all to behave and consume products differently over the past year. This has now become a habit and habits do not change easily. So if you are a sales person selling FMCG products that are not in any of the above, think of the impact of the last year on the brand/product. Has the consumption occasion changed? If so, how has it changed? For example, consumers buy and use more cleaning products and personal hygiene products now than they did before the pandemic. This is now an ingrained consumer behaviour that is unlikely to change in the medium term.

Not unless there is another significant event that forces us to behave differently.

12+ months after Covid fuelled panic buying

More than a year after Covid fuelled stockpiling of necessities and grocery staples, we still see empty supermarket shelves.

Many assume this is because of an increased focus on online sales by the large grocers, especially in the US, as evidenced by this article in Insight Grocery Business in March 2021. We’ve also seen similar instances in the UK, but in the UK, we’ve blamed these stock-outs on Brexit. There have been recent articles on similar instances in the Middle East & in several EU countries too.

An increased focus on online shouldn’t lead to empty shelves in store. Especially as those who pick stock for online orders through external providers pick products off the shelf currently. This is especially so if orders are placed on Instacart (US), Uber eats or Deliveroo (UK). And Brexit shouldn’t cause stock outs of brands made in the UK using materials sourced in the UK.

So what is really going on?

As we mentioned in our previous article on the 2021 Easter egg shortage in the UK, supermarkets, and brands that sell into supermarkets, typically use last year’s sales volumes as baseline for current year orders.

Buyers have exercised some judgement this year by not ordering sanitisers, cleaning products, kitchen cupboard products (pasta, rice, flour, canned vegetables etc), cleaning products & toilet paper in line with last year’s sales, when consumers were stockpiling in anticipation of supermarkets running out of these staples due to lockdowns. However, they did not exercise the same judgement when they ordered other brands/products (confectionery, small format beverages etc). Even less so when it came to the beer, wine & spirits inventory in store.

Despite increased sales across confectionery and beverages during the later stages of the pandemic, supermarket orders were placed for similar sales volumes as last year during the same time.

So now you see stock-outs across categories and markets.

The only thing in common across categories and markets is the impact of covid on consumer behaviour and choices.

As supermarkets still order on the basis of previous year volumes, they’ve had to exercise their judgement when placing these orders. This is difficult when everything the buyer knows about consumption habits has changed, after more than a year of living under pandemic conditions/lockdowns.

A google search on habits and how long it takes to form a habit runs the gamut from 14 days to 54 days, with the most cited number being 21 days. A study by the University College of London found that it takes 66 days for a habit to form. If the new behaviours were easy, it took 20 days (the example they cite is drinking a glass of water after breakfast every day) and, based on how disruptive the new habits were, ranged to 254 days.

Many of us have lived in lockdowns/pandemic conditions for more than 254 days. Depending on where we live, this has ranged between 75 days and 270 days. Enough time for new habits to form.

Add in significant variations in weather due to climate change, and (almost permanent) changes to how and where we work and/or study. No wonder retailers/FMCG companies are struggling!

If you’d like to understand how best to leverage data to arrive at optimal order volumes for your supermarkets/brands, email me on veena@salesbeat.co

The FMCG industry & data

The fast moving consumer goods industry needs data driven decision making in every function on a daily basis to ensure a sustainable advantage vs competition. However, this industry is very sporadic in its use of data.

Historical internal data is the driving force in the FMCG industry. This industry and external data have a contentious relationship. While they use (external) data driven insights to craft marketing & category strategies and to develop new products and brands, their use for (external) data in day to day operations and in sales has been less than optimal.

It is the complex nature of how external data impacts the business, which makes it hard to adopt on a day to day basis in the industry. Today, let us look at data driven insights for supply chain and production.

This process happens primarily through regular risk management meetings/updates by the supply/production planning team. These updates/meetings happen on a periodic basis and are reviewed then for impact on the business and for any action that needs to be taken.

However, we are living the perfect storm – a time when climate change, pandemics, access to information and easy cross border travel are all influencing not just what consumers want but what goes into making what consumers want and how they buy/access it.

It is key, now more than ever, that companies in this industry use external data, that monitors supply chain risks, regulatory compliance and sustainable alternatives to current sources, in everyday decisions much like tech companies do, so they can achieve the same agility in business that the tech industry does and the FMCG industry aspires to.

Top reasons why Food & beverage start-ups and NPDs fail (continued)

So last week we spoke about what could go wrong with new product launches and we are continuing that theme this week. You’d be surprised how many things can trip you up close to launch date, after launch or even well after launch.

  1. Bad customer experiences: Your customer has been very specific about the configuration of the cases and pallets of your brand. But unfortunately, your manufacturer has not heeded instructions and delivered your first order the way they have always done things, which is quite at odds with your customer requirements. They do this a second time. They get this sorted out the third time, but by then your customer has made a note of this. The next time something goes wrong, they delist you. 
  1. Bad consumer experiences: Your first two weeks of launch have gone great. Your brand has been flying off the shelves. You know the third week may not be great, as your first two weeks have gone splendidly. Your fourth week should go well. But it doesn’t. Your sales drops. Your fifth week sees almost no sales and in the sixth week, the category manager tells you that unless your sales rebound, they are considering delisting your brand in favour of a competitors. So what went wrong? Your brand obviously fills a gap, but consumers just did not come back to buy more. It became difficult to drive trial too. Did you look at whether you were getting bad word of mouth? Did you get feedback from any of your consumers from the first two week? Anything can go viral these days and all you need is one or two people who dislike the product to start a social media campaign. Maybe someone got a bad batch or just did not like the taste.
  1. Weather and seasonality: ‘The weather, really?’ you are thinking. Yes, the weather and the season play a very important role in the success of seasonal or weather dependent foods. For example, the best time to launch an ice-cream or frozen dessert brand is during the summer, when your consumers will be open to trying new brands and products. During winter, if a consumer is buying ice cream, he/she already has a favourite and she/he’ll go for that brand/flavour. The same goes for beer in winter and mulled wine, mince pies and winter soups in wummer. Any of you who launched your ice cream brand during unseasonably cold summers will know what I am talking about!