unilever distribution channels - project
Post on 10-Feb-2017
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190COUNTRIES IN
WHICH OUR PRODUCTSARE SOLD
GLOBAL TURNOVER OF
€49.8 BILLION
AT END OF 2013
EMPLOYEES GLOBALLY
174,0007,500
EMPLOYEES IN THE UK & IRELAND
UNILEVER FAST
FACTS
Unilever VisionGrowing the business
•Sales•Margin•Capital efficiency
Improving health and well-being•Nutrition•Health and hygiene
Enhancing livelihoods
•Fairness in the workplace•Opportunities for women•Inclusive business
Reducing environmental impact
•Greenhouses gases•Water•Waste•Sustainable sourcing Unilever aim to achieve consistent,
Competitive, Profitable and responsible growth
COMPANY PROBLEM The problem
Decline in Personal care products (Dove family brand ) market share value and volume by 600 pbs during last 4 quarters in Drug stores channel
Personal care categories:-Deodorant- Hair Care- Skin cleansing- Skin care – Oral care categories)
This decline happened due to majors troubles in distribution channel system.
Dove Distribution Channel
Modern Trade General trade Drug store
Key retailers
Supermarkets
Hypermarkets Pharmacies
BoutiquesExpress market
Manufacture
DirectIndirect
Unilever has 33 authorized distributors responsible for distribution Food & beverage and personal care products including (Dove beauty brand)Across all regions
**And distribute to Modern trade channel is directly ( No intermediaries)
Distributors
Service outputs
Service outputs Demand Level Descriptor
Bulk breaking High Dove brand has high bulk breaking Ex Shampoo Dove 700ML,400,200ML to satisfy target shopper needs (family or individuals)
Spatial Convince High Shoppers need to buy Dove products from nearest pharmacy ,so all dove product has high level of distribution in more than 10K Pharmacies and boutiques in Egypt .
Waiting and delivery time
Medium The shopper mission in this channel is Top up mission so shopper can`t wait more time till deliver the dove specific variant
Sharing information Medium Shopper needs more information about Dove new products and what is the variant that deliver the best solutions
Customer service Law Dove is a convince product and their is no need for after sales service
Assortment and variety
High Dove as a brand has a fairly large breadth and depth. Under the family of personal care the brand offers skin care, hair care, deodorants and such. Ex:The depth under the subcategory of hair include 8 variants for each size
SWOT analysis
Strengths Strong product line with large breadth and depth Highest profitable channel among all other channel.1st Distribution channel system in Egypt vs competitorsStrong customer relationship (CRM )providing monthly trade activities for customer and shopper.brand knowledge sessions for pharmathistes .
dedicated sales force team (high capabilities).
CCFOT system to enhance customer service .
WeaknessHigh ECP(end consumer price) & high dist. cost
Supply chain availability issue & OOS
lack of focus on PC distribution to this channel from distributor manager side.( more focus on wholesale)
Threat
Economic recession and decreasing purchasing power
New competitor distribution channel system
Change in competitors sales terms
Gray market
Opportunity
Rout to Market (coverage expansions some rural areas) Using technology hand held system to boost channel performance and accelerate growth .
high level of demand on PC product in pharmacies and boutiques .
Drug Channel Definition
Drug Stores : An outlet selling personal care or beauty products and sometimes medicines, although small amounts of.
Examples: AS Watson, Mercury Drug (Mainstream Drugstore) Premium Beauty/Cosmetic format)
Drug Channel Role
Unilever’s ambition is to be the world’s leading personal care business, helping people look good, feel good and get more out of life. Drug Channel plays a unique role in delivering Unilever’s personal care ambition
Drug channel objectives achieves
Consistent and profitable growth
Increase the effective coverage CRM
Achieve competitive edge Perfect store USLP
Drug channel redesigning alternative
Based on channel marketing segmentation and target customersWe identifies 2 major alternative to enhance the performance of channel
Alternative 2Alternative 1
Outsourcing wholesaler for PC Channel distributionAs ELMotahed, Farma,
Ebn Sina)
Redesigning the current distribution channel by
making exclusive distributors for Drug stores
channel
Cost effective but out of company control- not
effective for end user Cost effective
Cost effective and more benefits for all channel
members
Manufacture
Drug stores
Distributors
Cairo Alex Delta UE
1 2 3 4 5 6 7 8 9 10
11
12
1 1 1 1 1 1 11 1 1 1 1
24 Contact line
Manufacture
Drug stores
Distributors
Cairo
1
1 1 1
16 Contact line
Exclusive distributors
Current Dist. system
Alex
2
1 1 1
Delta
3
1 1 1
UE
4
1 11
Types and number of intermediaries
Responsibilities for each channel member
Channel Functions
Manufacture Distributors Drug stores End User
Physical Possession & Ownership
Has 2 main warehouse
–Food & Beverage-Home Personal care
-Third party company for transportation Company
.- Receiving weekly bulk of products based on primary sales plan.
-responsible for distribute the products to all outlets using SAS system
Receive the products and make it available with all variety to end consumer
End users finally own the products
Promotion Channel Captain is responsible for preparing all promotional tools:-monthly trade letter -Schemes -promotions-new innovations
- Distributors manager cascade all activities to the sales force and follow up them to ensure achieving all KPI`s .
- Sales force deliver all
activities to outlets such as
- Consumer and trade promotions
- Slabs
Finally end users receive all product benefits
Negotiation
Manufacture and distributor negotiate the product availability and sales forecast – volume
Sales person negotiate the sales plan , prices, activities ,with Drug store manager
The sales person inside outlet offer all activities to shopper (promotion-information)
May be little negation from end-user side
Responsibilities for each channel member
Channel Functions
Manufacture Distributors Drug stores End User
Financing
Mainly about payments terms with suppliers
-Inventory turn over -payments terms with Drug stores
Receive the orders pay within 15 days for
Risk Risk of increasing the cost of raw material- Risk of barraging of supplier
- Risk of low turnover for some items .- Risk of returns allowances between Dist and Drug stores
-Risk from law demand due to economy situation
-Risk of expire date.-Return policy
The end user may switch to another competitors because of the price.
Sharing information
Manufacture provide product informationTo distributor sales force as ingredients -benefits
Dist. sales force attend sessions and share info with customers
Pharmacist attend brand knowledge session t provided by company new innovation & new brands
Sharing info to end-users by Pharmacist Printed flyer'sUshers
Ordering and payment
Manufacture received the required orders from dist. Using auto replenishment system
Dist. receive the sales plan divided to 4 weeks And pay weekly to company
The sales person make orders to drug stores every 2 weeks
Finally, The End user pay the required price.
Efficiency Template
Functions Importance Weights for Flows Proportional Flow Performance of Channel MembersTotal
Channel Flow Cost Benefit Potential Final Weight Manufacturer Wholesaler Retailer End-user
Physical possession 25 High 35 25 25 25 25 100
Ownership 12 Medium 15 25 25 25 25 100
Promotion 20 High 8 60 20 20 0 100
Negotiation 5 Low 4 20 25 50 5 100
Financing 15 Medium 20 25 25 25 25 100
Risking 5 Low 2 20 25 50 5 100
Ordering 6 Low 6 20 50 25 5 100
Payment 7 Low 6 20 20 50 10 100
Information Sharing 5 Low 4 25 20 30 25 100
Total 100 N/A 100 N/A N/A N/A N/A
Normative Profit Share N/A N/A N/A 27% 26% 33% 14% 100%
Level of intensity
A brand can be purchased from many drug stores or outlets.
A brand is kind of convenience goods.
The manufacture is always seeking to maximize coverage and availability for his brand to be available to end user at drug stores or outlets.
The channel captain deal with many outlets to carry the offers to distributes and drug stores to avoid Shifting end user to another competitors.
The manufacture uses Resale price maintenance (RPM) that help the distributes and drug stores to get the acceptable margin and be highest profitable channel among all other channel.
Finally, The conflict is always that The Manufacture prefers Intensive, On the other hand the distributes and drug stores prefer exclusivity for the products.
The needed level of intensity of distribution is Intensive distribution because:
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