A distributor or a CPG company sales executive is an important element in ensuring penetration of CPG brands in the traditional mom and pop stores retail channel, especially in emerging markets. With as many competing brands within each product category and the peculiarity of each mom and pop retailer, the sales executive’s task is complicated.
We present a few field tips for the sales executive to improvise and sell to the traditional retailer. These tips along-with sales history, inventory forecast, recommended order quantity, brand sku prioritization and “what if ” margin calculation enabled by mobile technology and product training will enable the sales executive to achieve targets in an efficient manner.
In emerging markets, a mom and pop retailer purchases Consumer goods based on a host of factors such as perceived credibility of the sales executive, time, space, working capital, consumer demand, margin and credit period, attractiveness of competing brands, distrust in a new brand or brand extension etc..
While considering all these factors, the distributor or CPG company sales executive has to engage the traditional retailers in a sustainable and profitable relationship and juggle with the entire portfolio of brands keeping in mind the retailer preference, store size and location, consumer profile, retailer working capital, schemes, new products, competing brand offerings.
Here are some often heard challenges that sales executives face during their daily routine and some street-smart tips to overcome them.
Sales executive woes and tips.
“Competition is offering better margins to trade…….” “Net profit on product is marginal due to price under-cutting by Retailers…..” “Retailers always expect the same margin if not more for the same order quantity, even in the absence of schemes or special incentives…”
· Attack the Flanks: Dominate in outlets where competitor presence is minimal.
· Illustrate for impact: Illustrate the margins made by the Top 25 outlets on the sale of these brands at the same price.
· Keep competitor intelligence handy: Know your competitor. Understand their trade schemes. Take photographs of shop displays or marketing collaterals. If the offers are genuinely better, concede. This will build trust. Inform your distributor.
· Communicate risk: Recommend the right price to sell to consumers and the risk of price undercutting – margin loss and reduced perceived price of the product brand.
· Negotiate Hard: Compare margins with other retailers supplied by you or competing brands and show the retailer that his deal is the best one can get. Convince him on his potential to sell. Negotiate hard and do not drop your guard.
· Compensate with additional incentive on other brands: Cover the perceived margin shortfall by offering additional incentive or cashback on brands in other product categories.
“Retailers demand for extended credit period in next ordering cycle, as product movement has been slow…”
· Analyze inventory movement: Extend credit period only if it is the last resort. Monitor stock movement on a regular basis. Analyze the reasons for slow movement such as: No consumer enquiries, product complaints, competitor offers, no display, retailer not promoting the brand etc.
· Transfer stocks: If the movement is genuinely slow, transfer stocks to other outlets where the movement is relatively faster and move in other substitute brands.
· Improve visibility: If the Retailer is not proactively selling the brand, explore display through fixtures or attractive presentation or bundle the stocks with other brands which are imperative.
· Illustrate and provide confidence: Compare with a like product brand which has the same lifecycle but was successful eventually and thus build Retailer confidence and avoid extended credit.
“Unable to sell some of the price variants”…” Almost impossible to sell less popular brands or brands with Low Retailer preference….”Retailer is willing to stock but only as a pilot and on consignment basis….”
· Additional not substitutes: Promote less preferred brands as necessary additional orders and not special orders. Do not promote them as substitute brands. Explain on paper, the additional margin that can be made from selling these brands.
· Cross-sell with the Winner: Bundle orders of less preferred brands with the power packs. Position them as mandatory without budging.
· Gradually step on the gas: Increase order quantity and off-take incrementally until the desired order quantity is met.
· Be cautious about consignment stocks: Supply stocks on consignment only if you are confident about the Retailer’s credibility and ability to sell.
“Need to maximize orders to achieve targets…..” “Pressure to push stocks is leading to multiple invoices and delayed payments…” “Appeal by Retailer to not push for payments as other payments with higher priority have to be made first…” “Order quantity is same on every purchase…”
· Have your Hat in Hand: Maintain a cordial relationship with the Retailer. Step into his/her shoes. Empathize with his situation, provide recommendations to improve stock rotations and tips to display and sell.
· Challenge the regular ordering norms: Stretch the order quantity through rational explanation. Explain the lost opportunity by not stocking sufficiently.
· Stay within the retailer’s radar and execute your promise: Watch out for the slightest opportunity to promote your brands within the outlet. Ensure prompt delivery of order, participate if possible in displaying stocks and in selling to customers.
· Avoid salesman productivity paranoia: Before the cycle begins, get the Retailer buy-in for the planned orders. Don’t push the stocks too early to achieve your targets. Monitor the sales and schedule the distribution as per weekly sales and coverage frequency to gain Retailer trust.
· Personalize every order: Communicate only those promotions or schemes which will be relevant to the Retailer in the ordering cycle.
· Optimize the orders: Forecast and logically communicate the right order quantity based on past history and current schemes.
· Keep an eye on Competition at large: Monitor Competing brands new product introduction, volume, trade schemes and pre-empt any move to reduce your volumes.
“Appeal by Retailer to not push for payments as other payments with higher priority have to be made first….”
· Collect Partial payments: Split the collection of larger invoices into convenient sums to ease the pressure on the Retailer.
· Extend Credit period only where required: Collect partially and extend the credit period if required, for the balance amount.
· Distribute with exclusivity: Don’t generalize and push all product brands everywhere. Provide exclusive schemes only to those Retailers who are willing to pay on time and those who will provide the volumes that you had planned.
“Focus is always on few key Retailers, hence less chances and time to play around with the trade budget or stock to develop other Retailers…”
· Improve penetration: Expand the distribution network to remove dependency on a few retailers.
· Create Clusters: Create clusters of outlets with common characteristics. Plan schemes for targeted clusters rather than one-fits-all schemes. Distribute incentive/promotion budget across clusters over time.
· Develop Mascots: Develop a network of key retailers who can influence smaller retailers to join the network and/or purchase the brands, thus improving the overall order quantity.
Wear the ICC rule on your sleeve: “Inform, Cajole & Coerce” !
Source : www.infosysblogs.com