group a-14 distribution channels antonio’s big night in tokyo presented by antonio patron boenheim...

Group A-14Group A-14

Distribution Channels

ANTONIO’S BIG NIGHT IN ANTONIO’S BIG NIGHT IN TOKYOTOKYO

Presented byPresented by• Antonio Patron Boenheim Antonio Patron Boenheim • Thierry ZeddaThierry Zedda• Katsuya NakamuraKatsuya Nakamura• Renata Peregrino de BritoRenata Peregrino de Brito • Simi GambhirSimi Gambhir March 29, 2004March 29, 2004


12 Hours of Agony


First Day: Tokyo Sightseeing

A Castle!!!

The Bullet Train!!!


At a Sumo Match

Tower of Tokyo!!!

First Day: More Sightseeing


Second Day: “The Interview”

Where the @$%/ is that hotel?

At my cheap hotel room

At the Interview Trying to find my hotel


Front Desk

Second Day: Night out

Flowers Alcohol

Food & Coffee

Smokes & CondomsForgotten or unavailable Items

You can find everything

“around the Corner”


Just around the corner…

Beer Flowers Underwear T. paper Food Cigarettes


Ubiquitous VendingUbiquitous Vending


Marketing Context

• Example of nonstore selling (direct selling, direct marketing, buying service)

• CONVENIENT!

• 24 hours, 7 days a week

• Low service cost

• Can serve a captive audience

What is AUTOMATIC VENDING?


Manufacturer

0-level 2-level 1-level

Consumer Consumer Consumer

Retailer Retailer

Wholesaler

Manufacturer Manufacturer

Marketing Channels


Sales and Breakdown by Vending Machine (2002)

Financial Data

# of Vending Machine in JP 5.6m

Persons per Machine 23

GNP$71b: Philippines

$66b: Chile

$57b: Czech$56b: Pakistan$54b: Peru$51b: New Zealand

$66.7b

Salesfrom

VendingMachines

inJapan

Sales

6.8%

24.0%

28.2%

40.0%

•Beverage•Alcoholicbeverage

Other

Tickets, etc

Cigarette

1.5%: Foods

(Source: Japan Vending Machine Association)

(Source: International Financial Statistics Yearbook 2002)

$22.6b

$13.8b

$1.5b

France Germany U.S. Japan


41% 20% 25% 14%Beverage Market

in Japan

52% 15% 23% 10%Coca-Cola Grp

20% 35% 30% 15%Ito-en

88% 11%

1%

Dydo

VendingMachine

ConvenienceShop Supermarket Other

(Source: Weekly Diamond Japan)

Preferred Channels

(Sales share% by channel)

Preferred Channels by Selected Brands


Preferred Channels

A Brand that Uses Vending as a PRIMARY Channel

FABO is a local Japanese producer of canned coffee


60

14.4

27.6

60

12

6

24

18

Product Cost

•Marketing•Logistics•Other

Location Fee

Profit

18Retailer’s

Margin

Discountby Retailer

Product Cost

•Marketing•Logistics•Lease or Depreciation•Other

Vending machine Channel Supermarket Channel

Retail Price (Yen)

(Source:Japan Vending Machine Association)

Financial Data

Profit

120(Yen) 108

(Yen)

120(Yen)

Vending vs. Supermarket Channels


Net

(500)

154 154 154 154 154 154144135125117110

0 1 2 3 4 5

•Vending Machine•Setting Cost

Cash-out Flow

Cash-in Flow

NPV:

785

(K Yen)

(Year)

Discounted Payback: 2.5yearsIRR: 34.3%

(Source: Weekly Diamond Japan)

Financial Data

..

• Annual Revenue per Machine in Average: 1.1million Yen ($10,000)• Durable years: 5 years• No terminal value• Discount rate: 7%

A Good Investment!


• Geographic• Economic• Socio-cultural• Technology

Are these factors applicable to other countries?

Critical Factors for Success

Why does this work?


19.3 29.7 35.7

106.3

333.6

462.9

Brazil UnitedStates ofAmerica

Colombia France Japan Netherlands

Geographic Constraints

Population Density (per km2)

+ only 30% of land can be utilized

Source: Food and Agricultural Organization of The UN

High cost of landHigh cost of land

Low stock kept at the home

Low stock kept at the home

Frequent buyingFrequent buying

Convenient channelsConvenient channels

V.M. utilize small spaces efficiently & profitably

V.M. utilize small spaces efficiently & profitably

What impact does this have?


Economics

2.6 2.91.6

2.23.4 2.8

1.62.00.7 0.5

1.7 1.91.9 2.0 2.0 2.2 2.53.5

1.70.7

-0.3 -0.7 -0.7 -0.9

15.8

6.9

3.2

4.9

7.0 6.8

8.4

14.7

18.7

10.9

8.07.1

2.32.32.8

2.11.61.21.81.7

2.8 4.5

2.2

-0.3

0.1-0.10.7

6.3

9.2

18.5

20.2

23.8

21.0

(5)

0

5

10

15

20

25

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

2075.9

66.0

(%)

Cha

nges

in C

onsu

mer

Pric

es

Brazil

Netherlands

Columbia

U.S.

France

Japan

~~

~~

(Source: IMF International Financial Statistics)

High inflation rates can lead to:

• High stocking

• Continuous price changes

• Currency change


Socio-cultural

12.3

7.06

4.93

4.6

2.05

1.58

1.41

1.41

0.02

0.01

0.04

Spain

Chile

Costa Rica

South Africa

Mexico

United Kingdom

Venezuela

United States

Japan

India

Thailand

Crime: Robberies per Capita (2000)

Source:http://www.nationmaster.com/cat/cri

Low vandalism and respect for public property leads to….

• Machines not confined to private spaces

• Further potential for expansion


Socio-cultural

“A Shared Refrigerator Between Neighbors”- Katsuya Nakamura


Technology

Helping sustain Japan’s vending culture

PRODUCT REPLENISHMENT REQUIRED

Wireless communication between machine and owner• Monitor sales activity• Inventory control and refill scheduling


SMART PAYMENTMobile phones and smartcards increase convenience and purchase of expensive items

Technology

SMART MACHINES• ID checking for underage consumption• News and weather information• Up next? Digital kiosks (ATM, Internet)


So what happened?

Magazine! Lots of Beer Fortune

Sad & Lonely A Familiar Place


JOB – don’t give up but start thinking of a title for your research project HEALTH – stop eating at Maria’s Cantina LOVE – you won’t get lucky if you take a girl to a vending machine

Fortune

YOU DIDN’T GET LUCKY IN JAPAN!


QUESTIONS?QUESTIONS?

group a-14 distribution channels antonio’s big night in tokyo presented by antonio patron boenheim...

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