Posts Tagged ‘retailers’
Hot Wheels die-cast metal cars were launched by Mattel in India in 1990. They were positioned as high speed international cars for boys 3-12 years old. By 1992, the brand has attained about 10% share with competition largely coming from smuggled goods of MatchBox and Corgi from Hongkong, Taiwan, and Singapore.
Mattel faced two main problems:
1. Repeat purchase of their Hot Wheels cars was low
2. Most retailers were not stocking Hot Wheels (priced at Rs. 25 each) as they preferred to stock high priced toys having more margins
So Mattel has to design a promotion programme to increase the repeat purchase and to increase the number of outlets that sell Hot Wheels cars.
Promotion Vehicle Chosen: Television Commercial (TVC), In-store display
A 15-second network TV commercial and in-store display material supporting the ad were designed for this objective. The promotion came up with a creative concept of giving driving license to kids. The TVC and the point-of-purchase (POP) material announced that during the two month period, purchasers of Mattel Hot Wheels cars will be given a driving license. The child receiving it was encouraged to paste a photograph of himself in the space provided, much as in an adult’s real driving license.
The driving license showed models of cars to be introduced in the following months, enabling the child to look out for these ask them by name. This is used to drive the repeat purchases of Hot Wheels and the consumer pull will eventually make the retailers stock the products. Also, along with the driving license the child was given a journey card encouraging him to note down how many miles did he drive. This brought the brand closer to the child.
Mattel has sold 3,00,000 Hot Wheels cars in two months and a huge increase in distribution is achieved as stockists who never stocked Mattel started to buy huge stocks. This is one of the best promotions involving both ATL and BTL created for the kid segment in India.
The typical chain for a grocer store FMCG product will be:
Manufacturing plant -> Company Ware House -> Regional Ware House -> Regional Stockist -> Super Stockist -> Stockist -> Distributor -> Retailer
Main Godown -> C&F Agents/Super Stockists -> Distributors as per the territories -> Wholesalers/Retailers
So, the retailers either buy from the distributor or they buy from the local wholesaler. Each has its own advantages and disadvantages. Distributor provides you with better servicing, replacement of spoilt products, credit facility of 2 weeks, etc. On the other hand, the wholesaler will give you more margins, but no credit facilities, and you don’t have compulsion of storing a set of SKUs, etc.
The inventory is under the ownership of the company only until it reaches the distributors by the C&F agents. The stockists are responsible to distribute to the retailers. Each stockist may serve around 500-1000 retailers in a proximity. Also, all the stockists are not the same in their storage. Every stockist may have his own set of categories which he can store the best, like a stockist can store rice, sugar, teapowder, biscuits, and snacks. Some may be specialists in handling premium products, and some in frozen foods. The company generally categorizes the stockists based on their specialty and allocates different super-stockists. For example, HUL categorizes them as U1 and U2 stockists, where U1 is general products and U2 stockists handle only premium products. The distribution network for premium products is different from that of discount and popular as they require much deeper distribution penetration unlike the premium products. Company categorizes based on their storage capacities where company has some standards that every stockist and distributor should have 2 months and 3 weeks of stock.
The stockists appoint salesman who take the orders from the retailers, and the delivery is made on a van. Each stockist may have 6-10 vans, and 10-12 people for the delivery process. The link between the manufacturer and the stockist is maintained by the manufacturer’s employees Area Sales Manager, Territory Sales Manager, Activation Manager, and the Re-Stockist Salesman (RSSM) manages all the distribution, purchases, labor management, and supervises the delivery process.Every month the sales targets are set by the company to all its salesforce – TSM, ASM, Sales InCharge, etc. and they handle all the relations with the distributor and sometimes push the stock onto the distributor to meet their sales targets.
Companies try to motivate the channel partners with workshops about business & marketing, good warehouse practices, and a lot of other incentives. They follow a strict rating mechanism with all its channel partners and evaluate them continuously on a set of parameters.
Though each company has its own distribution strategy and flow, most of the companies follow the above distribution framework.