outlet classification and channel definitions

Outlet Classification &

Channel Definitions

Distributor

Retailers

Wholesellers

Planned ShoppingAd Hoc Convenience

Specialty Food & DrinkingNon Outlet Business

Partners

Channel Classifications

Channel Groupings

1. P

lan

ne

d S

ho

pp

ing

1.2 Large Groceries1.2.1 Self Service

1.2.2 Counter Stores

1.1 Key Accounts

1.1.1 Cash & Carry

1.1.2 Hyper Market

1.1.3 Super Market

Channel Groupings

Planned Shopping

Large Store FormatsWide Product AssortmentsShopper Mission – Weekly / Monthly Stock UpPre Planned Visits

Large Store with Selling Area more than 1000 sq ft

Must Have 2 or more cash counters

Normally Self Service but mixed type is also there

Wide Product Assortments

Key Accounts

Self Service outlets or chain of outlets with high sales turnover, modern shopping concepts, large shopper baseWide Product AssortmentsShopper Mission – Weekly / Monthly Stock UpPotential for growth & promotional activities

1. P

lan

ne

d S

ho

pp

ing



1.2 Key Accounts

1.2.1 Cash & Carry

1.2.2 Hyper Market

1.2.3 Super Market

Key Accounts

Cash & Carry Hypermarkets

Supermarkets

Sales & Trade Marketing Strategies

Dedicated Human Resource (Dedicated Department in companies, dedicated distributors or company direct selling)

Paid Contractual Agreements on Shelf Spaces & Displays

Prioritized Service Levels (Service levels and reorder levels discussed and locked in advance, for supermarkets prioritized services through distributions)

Planned BTL activations

Major Focus is Weighted Penetration

1. P

lan

ne

d S

ho

pp

ing



1.2 Key Accounts

1.2.1 Cash & Carry

1.2.2 Hyper Market

1.2.3 Super Market

Large Groceries

Stores with high Sales turnover & growth potentialCombination of self service & counter storesCarry wide variety of FMCG products with selective imported items

Self Service Counter Stores


Dedicated Human Resource (Dedicated Channel manager from Nestle, Dedicated Distributor Sales Force)

Paid Contractual Agreements on Shelf Spaces & Displays

Prioritized Service Levels (Twice to Thrice Weekly Service by the distributor)

Planned BTL activations

Major Focus is Weighted Penetration

2. A

d H

oc

Co

nve

nie

nce 2.1 Small Stores

2.2 Petromarts

2.3 Tobacco Kiosks

2.1.1 Small General Store

2.1.2 Small Karyana Store

2.1.3 Rural Small Stores

2.2 Petromarts

2.3 Tobacco Kiosks

Channel Groupings

Ad Hoc Conveniance

Smaller retail formats which offer convenience for shopping with limited or selective range of products

Shopper mission is stock up, instant need or impulse

Primarily unplanned shopping

2. A

d H

oc

Co

nve

nie

nce 2.1 Small Stores

2.2 Petromarts

2.3 Tobacco Kiosks

2.1.1 Small General Store

2.1.2 Small Karyana Store

2.1.3 Rural Small Stores

2.2 Petromarts

2.3 Tobacco Kiosks

Small Stores

Stores which cannot be walked into. Products mostly available in smaller formats.Largest number in PakistanServing the affordable consumer (BOP)

Small General Stores RuralKaryana Stores


Dedicated Human Resource (Dedicated Channel manager)

Mostly weekly service levels

BTL activities very limited which mostly involves display incentives

Major focus is on Numeric Penetration as these shops are the major chunk of trade universe

Petromarts & Tobacco Kiosks

Petromart Pan Shop


Extremely important for Tobacco, beverages and other impulse / on the go categories

Mostly weekly service levels but for tobacco service levels are high

BTL activities very limited which mostly involves display incentives and shelf locking

3. S

pe

cial

ty F

oo

d &

Dri

nks

BakeriesChain

Fragmented

PharmaciesChain

Fragmented

Channel Groupings

Bakery Chains

Bakeries & Pharmacies

Pharmacy Chains


Bakery channel is rapidly growing in urban with huge opportunity for FMCG companies

The service level varies from weekly to thrice weekly depending upon the sales turnover.

For Bakeries vast opportunities for BTL activities as customer traffic is high and includes higher SECs and all gender types

Pharmacy is very important for pharma and nutrition related companies

Mainly driven by prescription from doctors

Very low opportunities for BTL and branding as certain restrictions by government and WHO codes

4. N

on

Ou

tlet

Bu

sin

ess

P

artn

er

Wholesale

Channel Groupings

Wholesale

These stores act as an intermediary in the distribution chain

Buy product in large quantity and sells it into smaller quantities to small retailers

They operate as RTM where 80% of their sales are made to retailers

Limited counter sale to end shoppers

These wholesalers supplies product to rural

retailers. Products supplied included branded &

loose (unbranded items)

Traditional Rural Distribution System

Distributor

Retailers

Wholesellers

Wholesale Channel Playing

Dominant Role in Untapped

Trade Universe


Focus is on increasing weighted penetration through targeted loyalty programs

Wholesale invests in items with high sales turnovers as the model focussed on absolute profit and not percentage profit

Many companies are leveraging wholesale as an RTM e.g. local juices and beverages model like Maza, Gourmet etc relies heavily on wholesale for numeric penetration

IMTs has strong penetration in wholesale due to their competitive pricing and bundle offers

Managing Channels Strategically

• Prioritise channels where we best can connect with target shoppers

• Focus resources and time towards the biggest channel opportunities

• Invest in channels with profit and growth potential

• Maintain our business in channelswhere we are strong

• Manage our resources in channelswith no future

Channel Prioritization – Why Do It?

Channel profitability

Zone

Europe

36

Premiumness Dehydr. /pasty mix fix

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Volume (in units)

Pric

e p

er u

nit

Suggested template –

Premiumness (Backup)

BACKUPILLUSTRATIVE

Knorr Nestlé PL 1 PL 2

25 M units

11.3 M

14 M 13 M

Premium

(~60%)

Value

(~40%)

Price spread branded

products vs. PL (70%)

Average price branded products

Relative Market ShareRelative market share for culinary products

0 1 2 3 4

RMS 2006

Recipe mixes

Mashed potatoes

Flavour solutions

Hot & cold sauces

Pasta

Soups

Others

Channel size

Capabilities

Channel growth

Relative growth Relative profitabilityRelative profitability

Ability to win in the channel

Att

racti

ven

ess o

f ch

an

nel

Prioritize Channel – Attractiveness &

Ability to Win

Channel profitability

Zone

Europe

36

Premiumness Dehydr. /pasty mix fix

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Volume (in units)

Pric

e p

er u

nit

Suggested template –

Premiumness (Backup)

BACKUPILLUSTRATIVE

Knorr Nestlé PL 1 PL 2

25 M units

11.3 M

14 M 13 M

Premium

(~60%)

Value

(~40%)

Price spread branded

products vs. PL (70%)

Average price branded products

Relative Market ShareRelative market share for culinary products

0 1 2 3 4

RMS 2006

Recipe mixes

Mashed potatoes

Flavour solutions

Hot & cold sauces

Pasta

Soups

Others

Channel size

Capabilities

Channel growth

Relative growth Relative profitabilityRelative profitability

Small

Stores

Ability to win in the channel

Att

racti

ven

ess o

f ch

an

nel

Prioritize Channel – Attractiveness &

Ability to Win (Example)

Giving shoppers:

o What they are looking for

o In a way that is easy to shop

o At a price that reflects value to them

Define excellent in-store execution standards that will positively influence shopper behaviour

Developing Channel In-Store Vision

PromotionProduct

AssortmentPlacement

Channel Planning

Price

POP Communication

A range that meets the needs of most of the shoppers most of the time and gives choice

Make the category easy to shop

through optimising the availability and

visibility of products

Implement the right promotions

that will positively influence the

targeted change in shopper behaviour

Offer the range of products at a price

that represents “fair value” to the

shopper

Product

Assortment Placement Promotion Price

POSCommunication

Communication of key category (brand &

segment ) messages to drive …..

.... awareness, interaction and purchase of the

category

The Lever’s of Channel Planning (4P’s)

outlet classification and channel definitions

Business

paid contractual

shelf spaces

displaysprioritized

sales amp

1 cash amp

planned shopping

products

category