How to increase consumer offtake from retail shops?

Offtakes (Tertiary Sales): These are sales from the retailer to the customer. While offtakes are not tracked by the company, trends of offtakes are tracked by  market research agencies.

Consumer off-take refers to purchases by consumers from retailers, as opposed to purchases by retailers or wholesalers from their suppliers. When consumer off-take runs higher than manufacturer sales rates, inventories will be drawn down

FMCG industry is extremely competitive in nature.

The FMCG industry is at the edge of change. This sector is seeing some rapid changes in customer tastes and preferences- be it food & beverage sector, personal durables or household care. The evolution of purchasing habits and the rise of cutting-edge technologies are changing the way we communicate with customers.

The economic environment for FMCG Industry during H1 2018 was 40%. Increasing implementation of digitalization techniques along the procurement and distribution cycle, a growing e-commerce market, and changing lifestyles in developing markets drive the FMCG market.

Sales of an FMCG Business are similar to a see-saw, where both the side need to be balanced properly. Here the price and the volume are the main objects to meet the sales target.

The Indian retail market is predominantly offline as online retail just accounts for around 5% of overall retail business. Hence, offline retail research becomes extremely essential in order to formulate winning strategies. Retail research is important for start-ups to identify potential of a segment while for established firms, it is important to have awareness about the as-is scenario in order to maintain or improve their standing among competition.

Retailer channels across many retail segments and suggests the following 5 essential metrics to track:

Category Penetration: Category penetration is the availability of the category/segment in relevant retail stores. Low penetration does not necessarily mean that the category is unexplored and hence have potential, it might also be due to non-preference by target consumer or presence of alternate categories fulfilling the need of the consumer. 

Competition Intensity: Competition intensity is the number of competitors present in the retail environment. The magnitude of category penetration (Penetration) and competition intensity (Intensity) can present various strategic directions for a product as follows:

High penetration, Low intensity: Increase availability

High penetration, High intensity: Introduce augmented product with advanced features

Low penetration, Low intensity: Increase availability & retailer push

Low penetration, High intensity: Increase availability

Share of shelf: Share of shelf is the space occupied by various brands present in a category. It is calculated by considering a brand’s width i.e. no. of variants present & depth i.e. no. of SKU’s present in each variant. Brands which either have strong consumer demand or good relationship with retailer enjoys reasonable width & depth.

Offtakes: Offtakes are sales – can either be category sales or brand sales. Offtakes are also measured with respect to share of brands present, share of variants, price segments, pack types and sizes.

Trade terms & Retail schemes: Trade terms & retail schemes is the most important driver in predominantly unorganized markets. Trade terms include minimum order quantity (MOQ), booking to delivery cycle, margins, credit terms (cash/credit), credit period etc. Retail schemes are quantity discounts, offers, freebies and are very common in segments with high competition intensity.

The above key metrics must be tracked regularly in order to introduce relevant strategies timely.

What are the best sales strategies for a FMCG product?

It is the basic of sales, M.A.D.

Marketing

Advertising

Distribution

Assuming that you have already done a feasibility study and clearly outlined your product’s competitive edge, you have to tell your potential buyers about the virtue of your product through Marketing and Advertisements. Apart from conventional print or audio visual media, social media forum is also a huge platform for such marketing these days.

Distribution has to be one of the most important factor here, a strong supply chain management will ensure that your product is in within visual range of potential buyers across cities, town and villages.

Brand behaviour is very different and depends on various aspects like price, store location, store type, consumer profile etc. However, if you want me to be as generic as possible. I would suggest to follow these steps,

 Simple but effective in the beginning. Work on getting outlet reach. Spend on sales team or network through which you are planning to sell. Spread you products in a large area or city.

 Now that you have done this, do store sampling on weekends and put banners/posters etc. (POS). You can also do a little digital marketing in the locality (targetting) to support this. See the product offtake and learn from the process.

 Now that you have learned from above process, expand to a larger territory. And now that you have a larger number of store do little ATL mixed with BTL to get sales. Use newspaper ads per locality, society activation, event sponsorship etc. To move the products.

In-store promotion

In-store promotions include temporary price discounts, bonus packs, and special purchases such as buy one get one free. Point of sale advertising is also included here. These methods of promotion are generally good for increasing a brand’s market share quickly but will not sustain this growth in the long term. Therefore, it is important to focus on developing more sustainable sales campaigns once the initial surge has been achieved.

 Promotional allowances/incentives

Promotion allowances compensate retailers for their promotional efforts under a salary-type arrangement or by giving them a fixed amount per unit sold above a set target.

 Coupons or cash-back offers

Coupons or cash-back offers have been used since the early days of consumer marketing to “sweeten” the deal for consumers by offering them something of value at no cost. In return, they are agreeing to purchase a product they might not otherwise have purchased. This strategy is most successful when targeting brand loyalists, who represent both more profitable customers and those most likely to spread good word-of-mouth advertising about your products.

 Point of purchase promotions

Retailers can increase sales by displaying promotional materials near checkout counters, impulse bins, carts, and self-serve displays in high traffic areas within their – especially eye level (customers are more likely to notice something that is at the same level as their eyes) – these are also known as POP displays.

 Public relations

Public relations can help you generate interest in your product, engage consumers with your brand and boost sales by showcasing the positive impact your products have on society, communities, or individuals. A celebrity spokesperson can be an effective way to reach a high-demographic consumer who may not be aware of your product already, but the endorsement needs to come off as authentic for this strategy to work.

 Consumer incentives

Offering giveaways, contests or samples are all great ways to attract new customers and incentivize them into trying your products for free or buying multiple units at once. The goal here is to give the customer a taste of your product whilst upping brand awareness, establishing trust, and encouraging word-of-mouth advertising.

 Retail strategy

Maintaining shelf space is essential to sales success; make sure you are visible by affixing signage above, below, or on the side of your competitors’ products. Placing your products at eye level will make them the most easily accessible for customers who like to grab items off shelves quickly without much deliberation, whereas placing them low down may help you resist stockouts once they prove popular with shoppers.

Maximise exposure

Whether co-marketing with another business or hosting an event at a local venue, this strategy can prove extremely effective in raising both brand visibility and sales numbers. The trick is to find new ways of promoting the products that will be accessible to both you and your target market.

 Use social media to create brand awareness

From Facebook to Twitter, Pinterest, and Instagram, using the web is an important way for growing companies to share their message with a wide range of people. This can be done through paid or organic marketing, but whatever method you choose it’s vital that your company’s online presence reflects its market persona. You can learn more about creating effective social media campaigns here.

 Get involved in local communities For growing companies who want to maximize sales while doing something different at the same time, this strategy could prove particularly attractive. Whether hosting an event on behalf of an associated charity or just participating in a local sporting match, involving yourself in the community will not only look good but can also be beneficial for your company.

 Set up your own website If you are looking to sell any products or services online, it is vital that you have an official website of your own. Even if you don’t sell anything on this site, having an official domain name for your business will help customers to trust you and be more willing to engage with you.

There are many brands that have failed even after advertising. And there are many brands that are over 500 Cr. with advertising. This also goes to say is that Sales and Distribution is the key. Therefore, in my approach I am suggesting to increase the outlets first and then doing marketing activities.

How do we design a Route to market plan to increase sales in FMCG industry?

Create a DSR beat wise plan. Then create a DSR for product’s sku wise. Check it weekly for a proper implementation and execution. For next month, fill the infos in advance. Also keep your Primary Dispatch Plan ready for everyday’s working in advance. Be in the beat/market as per schedule.

Plan Of Action

Route to market – Meaning how to launch a product

Rout to market – Coverage of a certain area

Both require specialized experts to design them

Route to market (1) involves planning which markets to go, by understanding what category u are launching, what segment you are launching, who is your consumer, which outlets to go, what products to go, what strategy to adopt for the outlet, what support to the team, what support and margins to the trade partners, how many products etc.

Route to market (2) means how to cover the city, based on the products how much to sell, what days, which markets, treatment of wholesellers, what logistics, how many calls a day, what productivity so that you reach maximum outlets as planned.

You can not do it yourself if you dont have experience as each product is different, for different consumers & markets. Understanding that and devicing a strategy is not easy.