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Introduction:
In the fast-moving consumer goods (FMCG) industry, an effective distribution strategy is crucial for success. Competitors may implement various strategies, and here, we will analyze and propose a comprehensive approach to optimize FMCG distribution, focusing on market expansion, efficiency, and growth.
Understanding Distribution Opportunities:-
Identifying Market Gaps and Efficiency Improvement:
To unlock incremental market share, a data-driven three-step approach is essential.
Step 1: Concentration Curve Analysis
Evaluate the concentration of category sales and efficiency gaps.
Prioritize stores in top-performing categories using a concentration curve analysis.
Step 2: Prioritizing Markets
Segment regions based on opportunity gaps, focusing on key provinces.
Identify promising stores concentrated in specific provinces for efficient resource allocation.
Step 3: Targeting Key Wards and Communes
Analyze top-performing stores using store profiling parameters.
Identify unique traits of high-performing stores in specific wards and communes for targeted distribution efforts.
Best Practices for Identifying Growth Opportunities:
Analyze category concentration and efficiency gaps for informed decision-making.
Prioritize markets based on gaps, segmenting regions for efficient resource allocation.
Target micro-markets using store profile parameters for direct control over distribution.
Reinforcing FMCG Channel and Distribution Strategy:
Nine-Step Formula:
A robust channel strategy is the foundation for successful distribution. To reinforce the FMCG channel and distribution strategy, consider the following steps:
Identify Relevant Channels:
Modern Trade (MT), General Trade (GT), Horeca, Specialist, Vending, Wholesale, etc.
Include both online and offline channels.
Measure, Monitor, Report, and Reward:
Align organizational focus with channel strategy.
Implement measurement and reporting mechanisms to drive performance.
Competition Analysis:
Identify growing channels across the industry.
Utilize external data for unbiased insights.
Size & Trend Evaluation:
Understand market share and trends in each channel.
Recognize likelihood of success in each channel.
Success Recognition:
Leverage specific strengths in different channels.
Understand the potential of success in each channel.
Profitability Mapping:
Analyze gross margin across each channel.
Understand total cost to serve (TCTS) for effective decision-making.
Portfolio Examination:
Set SKU distribution targets by channel.
Consider past and future market trends by channel.
Prioritize Channels:
Set channel and geographic priorities based on analysis.
Make strategic decisions aligned with priorities.
Identify Distribution Partners:
Choose partners aligned with channel priorities.
Consider levels of involvement, activities, and infrastructure.
Distribution Strategy in Emerging Markets:
Challenges and Opportunities:
Poor infrastructure, price sensitivity, and counterfeits are challenges.
Understanding pricing, consumer behavior, and market dynamics is essential.
Choosing Distributors and Models:
Five operating models based on supplier involvement: Team, Fly-in, Light touch, Active distribution, Light touch plus.
Types of distributors: Pure traders, large established distributors, small but focused distributors, niche distributors.
Three-Step Methodology for Distributor Selection:
Identify Potential Candidates:
Distributors in product lines, adjacent product lines, and priority channels.
Perform Rigorous Assessment:
Assess loyalty, experience, reach, warehousing capacity, and alignment with the company’s strategy.
Additional Criteria:
Evaluate strategic fit, market rates, and compensation alignment.
Golden Rules for Choosing a Distributor:
Ensure a significant portion of the distributor's business is dedicated to the supplier.
Avoid dependency on a single distributor.
Maintain a balance of mutual benefit.
Assign a dedicated manager to work closely with the distributor.
Regularly be in the market to understand activities on the ground.
Marketing in Emerging Markets:
Attributes for Success in African FMCG Market:
Dense population, spending power, understanding brand competition, supporting infrastructure, and last-mile distribution.
Example in Nigeria:
Utilizing digital technology for distributor support, monitoring orders, and tracking sales performance data.
Optimizing FMCG distribution involves a comprehensive approach, addressing market gaps, choosing the right channels, and selecting distributors strategically. A data-driven, three-step approach, a robust channel strategy, and an understanding of challenges and opportunities in emerging markets are key to success. By adopting these strategies, FMCG manufacturers can achieve efficient, growth-oriented distribution and expand their market share.
Optimize Your FMCG Distribution with Strategii At Work
Elevate your FMCG distribution strategy with Strategii At Work, your trusted FMCG Consultant in market expansion and growth. Our seasoned team specializes in identifying market gaps, implementing data-driven approaches, and reinforcing channel strategies tailored to your business objectives.
Choose us for our proven nine-step formula, addressing everything from identifying relevant channels to profitability mapping. In emerging markets, we offer tailored solutions, ensuring your brand overcomes challenges and selects the right distributors through a meticulous three-step methodology.
Strategii At Work isn't just a consultancy; we're strategic partners committed to maximizing your brand's reach and impact. Join us to navigate the complexities of FMCG distribution, optimize your market presence, and take your brand to new heights. Contact us today and embark on a journey of distribution excellence!
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