reigniting apac growth through improved traditional trade performance - accenture

Re-igniting APAC growth

through improved Traditional Trade performance

September 2016

2Copyright © 2016 Accenture All rights reserved.

The opportunity for a $1 Bn CPG…

CPGs can significantly grow sales at lower costs

2

1 Grow sales by $100-

200 M…

...while reducing

spend by $30-50M…

Reach beyond traditional marketing channels

Improve consumer and trade engagement

Increase coverage of traditional trade

Reduce marketing wastage

Improved measurement of promotions

Sales force control and self-enabled retailers

Improved distributor mgmt and activation of trade

…expanding the view

on MROI

3Focus on total returns on market facing investments


Global CPG: FY15 Revenue

(USD bn)

The top 15 CPG generate $350 Bn in revenue from

Emerging Markets

14%

DiageoKraft

Heinz

18.3

18%

82%

Danone

25.6

43%

57%

L’Oréal

27.4

38%

62%

Mondelez

29.6

39%

61%

ABInBev1

43.6

53%

47%

Coca-

Cola

44.3

27%

73%

Unilever

57.9

58%

42%

Pepsico

63.1

27%

73%

Nestlé

89.0

37%

63%

70.1

J&J2

15.3

18%

82%

43%

45%

55%

57%

KelloggBAT

13.5

19.3

86%

ColgatePMI

16.0

50%

50%

73.9

36%

64%

P&G

72.5

35%

65%

Emerging Markets

Developed Markets

Note: Only included revenues for CGS MNCs (regional companies e.g. COFCO etc excluded). Emerging markets as defined by the company, if not available APAC, LatAm, Middles

East and Africa used as a proxy.

Data is for the FY15 if not available latest reported FY. 1ABInBev is currently undergoing a merger w ith SABMiller- revenues above include ABInBev only; 2Included Asia Pacif ic &

Africa revenues (other emerging markets w ere diff icult to segregate)

Source: CapitalIQ, and Company reported f inancials


• 10-20% Sales Uplift Potential

– Reach more traders 2X+

– Increase engagement w/each trader

– From 6/mins /week to daily

– +10% store visit frequency

– +10% increase in drop size

• Extend reach into rising consumer base

Unreached Potential

Significant growth can be generated from extending

reach and engagement

~ 20%Coverage

CPG Distribution Customer Consumer

Traditional

Distribution

Model

(PUSH)

60%Trade Spend

Visibility

80%

Unserved traders

due to traditional

channel complexity:

large number of

small stores

organised in a

layered micro-

distribution

Limited

targeting of

advertising due

to lack of

consumer

visibility

Enterprise CRM

(SFA, DSD

and DMS)

W/SaleC&C

3bnConsumers

10mCustomers

~ 60%Reach

(through

traditional

mass

advertising)

Direct

In Direct

Growth

opportunity


Emerging markets in 2019(1)

For example, CPG’s could generate significant sales by

more effectively covering Thailand’s 800K mom & pops

Trader opportunities :

• COVERAGE – Increase coverage by using

direct promotions to new traders

• PRODUCT PULL – Use direct, targeted

promotions as a pull tool with Mom & Pop

shops

• SALES COST – Reduce sales calls for

small traders which can be reached and

can order through their mobile

Thailand store coverage by select

MNC’s(2)

>55%

>5000

24,509

38,300

41,013

47,100

221,000

225,000

>600,000

0 200,000 400,000 600,000 800,000

Total Stores

~10-20% average coverage

Source: (1) Planet Retail; Euromonitor International 2016(2) Accenture Research and Analysis

Traditional trade sales - Thailand


Limited Distribution – select client example

HUGE Uplift Potential: Sales via distributors to 200,000 outlets

illustrate that 80 percent of the sales came from 20 percent of the

outlets covered – 4% of the total outlet universe

• The top 20 percent are a mixture

of retail chains, wholesalers, and

cash and carry

• Long tail, the last 100,000 (51%)

outlets, have a low sell-in,

generating average sales of

US$200 or less

• Opportunity to establish direct

connection with customers who

purchase via cash and carry or

larger stores

• Opportunity to acquire new outlets

• Opportunity to register existing

outlets and generate sales uplift

via targeted and more frequent

messaging

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

105

110

115

120

125

130

135

140

145

150

155

160

165

170

175

180

185

190

195

200

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

$50,000

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Average sales of top 20,000 outlets grouped by 1,000 outlets

Average sales of remaining 176,000 outlets grouped by 5,000 outlets

Top 10% (20,000 outlets) 65% of sales

Top 20% (40,000 outlets) = 80% of sales

Top 35% (75,000 outlets) = 90% of sales

Last 65% (125,000 outlets) = 10% of sales


Increasing trader coverage with trader self-service solution:

Trader’s capabilities will enable CPGs to increase their

trader coverage with a full trader self-service solution

BRANDTONE

“Pull”

NEWSPAGE

“Push”

Trader• Expand ordering reach

• Reduces cost to sell

Trader synergy:

• Create incentive to sign-up

• Create incentive to order

Cost to

sell

Trader Coverage

Low

High

0% 100%50%

Medium

Self-service

efficiency+ demand pull incentive

20%

Direct selling Indirect selling


Driving this impact will require CPGs to re-focus

$200-400 M of market facing investment per $1 Bn sales

Typical spend on $1 Bn sales Current challenges Opportunity

Advertising

Promotions &

premiums

Sales

force

Trade

terms

• Reach limited to 60%

• Wastage spend in over-exposure

• Lack of consumer

engagement

• Inconsistent performance and often negative ROI

• Field sales only covering 10-

40% of mom & pop stores

• Poor

• Unconditional discounts with

little impact on sales

• Trade spend absorbed before reaching retailers

Reach 20-40% more of

consumers in a 2-way connection

Engagement with the

consumer across activities

Self-service and sales

force control to cover >40% of traditional trade

Better activate

traditional retailers

$50-100M

$50M

$50M

$50-200M


Saving levers

For every 1 BN EUR in revenue, CPG’s can potentially

save and redirect 30M – 75M to fund growth initiatives

This is based on past collaborations with:

Marketing Potential

savings

Wo

rkin

gN

on-W

ork

ing

Brand Events

Brand Promotion

Sponsorship

Packaging

Product Dev

Agency Fees

Ad Production

Digital Production

Market Research

Other Marketing

Premiums

Sales Samples

10-15%

5-15%

2-5%

5-15%

5-10%

2-5%

10%

-

10-25%

15-20%

10-15%

5-15%Merchandiser

Point of Sales

Sales Brokerage

Commercial Rel. Mgmt

Sales Demos & Promoters

Trade Events

Sales Events

Sales Incentives

5-30%

5-15%

5-15%

2-5%

5-10%

-

5-25%

5-10%

Sales Potential

savings

Efficient Operations

Business Building

Other terms

5-10%

10-15%

10-20%

Trade Spend

Media

TV Media Buying

Digital Media

Outdoor Media

Sponsorship

15-20%

Potential

savings

http://www.underconsideration.com/brandnew/archives/ab-inbev_logo_detail.jpg

http://www.underconsideration.com/brandnew/archives/ab-inbev_logo_detail.jpg


Efficient and Effective Reach in Traditional Trade

CPGs are deploying sophisticated tools to better serve traditional

trade and achieve higher penetration at a lower cost

Generate profitable growth

Uplift at existing stores

Increase sales

Push (via sales force)

Targeting and Analysis

Salesforce automation/enablement

Pull (via increased demand)

Direct messages/offerings

Online portfolio availability

Reduce costs

Trade spend

Reduce leakage

Reduce poor performing promotions

Sales force costs

Reduce calls

Switch low-sales outlets to self-serve

Acquire new stores

New sales

Push (new) Canvasing

Pull (indirect) On-case promotions

Save costs Trade spend

Better used trade spend

Reduce wastage

Objectives How to meet them


CPG Colombia case study – using Trader Connect*

In Colombia a CPG client generated a 5 percent revenue uplift from

TraderConnect enrolled stores Vs non-enrolled stores; the highest

increase coming from the hardest to reach smaller stores

• Launched initially with 15,000 traders and rolled

out to 70,000 in less than 6 months

• 70 percent of total GT universe recruited in 45 days

• 2.7 million contacts made with traders

• Trader Connect enrolled stores on average had a

higher response rate for similar promotions

• Trader Connect enrolled stores achieved 9.2 percent revenue uplift Vs prior year, mainly driven

by increased frequency of purchase

12.6%11.0%

5.5%7.7%

4.1%2.0%

Trader Connect enrolled stores Other stores

Personal Care Home Care Other consumer

12.8%11.7%

7.6%6.5%

4.5%5.8%

3.8% 4.3%3.1% 2.9%

Trader Connect enrolled stores Other stores

$0-100k $100-200k $200-300k $300-400k > $400k

Revenue growth across all categories

Revenue growth across trader clusters (by revenue)

de Col

No. of stores

26.2k 1.8k 15.9k 7.6k 5.1k 2.1k 2.2k 1.8k 3.0k 0.9k

*Financial performance, including ROI, was calculated by the client’s Colombia team


Trader Profiling

Profiling the trader base would allow us to provide valuable

insights and supplement existing data set

How many people visit your store

daily?

a) Up to 50

b) Up to 150

c) Up to 300

Do you stock Competitor Brand A

at your store?

Do you stock Competitor Brand B

at your store?

How do you expect your business

to grow in the next 12 months?

a) Positive sales growth

b) Stay the same

c) Slowing sales volumes

Profiling would

allow us to

segment the

trader base

according to

your business

priorities

Volume(Group

A) Sales Growth

(Group

C)Mix(Group

B)

Trader


Engaging with Traders

Increased and targeted engagements with CPG’s customers would

facilitate incremental sales growth in your traditional trade

business

Segment traders and create sales pull offers

Segment A

Segment B

Segment …

1

Ongoing conversation driving J&J awareness and

participation

2 3

Brand:

Buy five units of

Brand and win two boxes of Product

for free!

Trader earns their reward for complying with the

terms of the offer

4

Sales growth for offered products is validated

through Trader Connect

reporting

Enhanced profiling enabling highly targeted calls to action

Communicated directly to the traders on their mobile

Enabling an ongoing permissioned conversation with the trader


Targeted messages keep traders engaged and drive

further sales

Regular

updates halved sales rep

visiting times

Motivational

messages drive sales uplift

Education

drives increased

assortment

upliftRegular updates

and timely rewards

increase loyalty

Hi Beth. Remember to buy more

than PHP4,000 of any product in August to earn great rewards

Hi Beth. You have purchased

PHP2,000 worth of stock for August. Buy PHP2,000 more before the end

of the month to earn your reward!

Hi Beth. Did you know that Ultra Thin

is now the most popular with consumers? Order yours today and

receive 10 percent off your first

order.

Hi Beth. Congratulations you have

earned your rewards for August. Your store discount will be on your

next invoice.

Motivate

Update

Educate

Reward


Trader Engagement Journey

Creating a one-on-one relationship with traders with

meaningful engagement would drive loyalty

Beth receives an update text: “Hello

Beth, halfw ay to this month’s target

already. Buy another PHP2,000 by

August 31 to earn great rew ards”

Beth receives a text message from : “Hello

Beth, congratulations on your performance

last month. This month, buy PHP4,000 to

earn great rew ards”

At her store, she makes her

f irst order from distributor

First

delivery of

PHP2,000

worth of products

Time for the

next order.

Beth orders

PHP1,000 this

time.

Second

delivery

Last reminder: “Hello

Beth, just a w eek to

go. Order PHP1,000

by August 31 to earn

great rew ards”

Time for the last order. Beth orders

PHP1,500 w orth of goods.

Month End:

“Congratulations Beth. You

have exceeded your arget

this month. Your discount

w ill be provided on your

next invoice.”

Beth owns a sari-sari store in Pampanga. She has owned the shop for more than 10

years. She values being able to receive

loyalty updates so that she can get the best

deals on the products her customers like to

buy from her.