International Distribution 1 st
week
Building an International network
Survey conducted by Mckenzie
on the 141 of the world’s leading
CPG manufacturer’s
The outperformers are best in class in
customer and channel managment.
• Customer managment
• Sales strategy
• Pricing
• Trade promotion
Five customer-managment
imperatives
• Identify pockets of growth and align resources
against them
• Overinvest in collaborative relationship with
more important customers
• Use deep insights and analytics to realise
greater returns from pricing and promotion
activities
Five global customer-managment
imperatives (cont)
• Translate distinctive consumer insights into-in
store advantages.
• Increase sales using optimised route-tomarket models
Company added value creation
Suppliers
processes
Production
process
• Quality control
• Logistic in
• Quality control
“market”process
• Marketing
• Sales and after
sales
• Logistic
Why to build an international
distribution network
Why to build an international
distribution network
• Is part of the process of internationalisation of a
company.
• Is a dynamic process ,with a continuous
evolution.
• To compete at International level will oblige the
company to make the right investments in order
to improve the productivity and to accelerate the
time to market of new products.
Why to build an International
distribution network
•
to take new opportunities and to reduce the
risks ( increase of the numbers of the markets)
• to exploit the full potential of the
brands/products decreasing the costs ( more
economies of scale ) and increasing the
efficiency and the rentability.
Different kind of Internationalisation
strategies
export
globalisation
delocalisation
Different kinds of internationalisation
strategies
• Based on the export
• Based on the decentralisation
• Based on a global model
Fundamentals for the success
• Configuration of the localisation of the
activities
• Managment of the activities ( level of control
and standardisation)
EXECUTION, EXECUTION
IMPLEMENTATION
In which markets to enter ?
In which country to focus the analysis
Analysis of the main indicators
Analysis of the demand
The competition
Internal
analysis of
the company
objectives
External
elements
Internal
elements
How to
enter
External elements
•
•
•
•
•
•
Political situation
Import duties
Dimension of the market
Competion structure
Infrastructure
Competencies level
Internal elements
• Products
• Human resources
• Financial resources
Two areas
• Business to consumer
• Business to Business
Business to consumer
Which consumer
Which area
Which outlet
Which consumer?
• Consumer segmentation?
CONSUMER SEGMENTATION
• To segment means dividing the markets in many
parts ( segments) ,in each of which are put
consumers who have some characteristics in
common and increasing in this way the
effectiveness of the marketing mix by underlining
,to the interested segments, the characteristic of
a product in which they are interested (USP )
Consumer segmentation
• Segmentation by income
• Segmentation by product characteristics ;
price ,usage ( personal , family , gifting…)
• Geographic Area
• Life style
• psycografic…….
Were our consumer is located?
• Urban area
• Rural area
Where your consumer is buying?
• Traditional shops ( papa’s&mama’s shops)
• Modern and organised trade ( CVS ,
supermarkets , hypers …
• Department stores and Malls
• E-commerce
• …….
POINT OF SALES
• The point of Sales is Key for the consumers
good .Is the main point of engagement with
the consumer.
• For a strong Brand in the mind of the
consumer ,the problems are starting when the
consumer is entering in to the “arena.” ( the
point of sales).
• What is missing?
Category of shops
Modern trade
Traditional trade
Hypermarkets
Papa&mama’ s
Super markets
Open markets
discounters
kiosks
Mini markets
CVS
Categories of shops in fashion
• ?
Categories of shop in fashion
• Multi brand stores
• One brand store ( owned by the company or
franchised )
• Department stores
• Super or hyper
• ?
Potential of the point of sales
• Is not always easy to define the potential of
the different point of sales.
• Some parameters can help; dimensions of
point of sales, type of area in term of income ,
presence of offices , range of the products…
• High medium and low potential (hyper ,
SM,MM, CVS ,…)
Importance of the categorisation of
the shops by potential ?
Investments by potential category
• Services ; number of deliveries per week,
number of visit per month…
• Support; merchandisers, promotions
• Incentives; listing fees, end year bonuses..
• How to displays the products; in shelf, out
shelves, dimensions of the displays
• Remuneration; margin
CHOICE OF THE SHOPS
Define the
target
consumer
Where rural
area or city
Modern trade
or traditional
and which
category
Route to market ;the process
Which
shops
Which
cost
Consumer
Which
services
How
many
Categorization of the point of Sales
• Range per period ( high seasonality, low
seasonality , festivities …)
How to increase profitability
More
customers
traffic
Target
undeveloped
segments
Shop more
frequently
Trips
More
occasions
Basket size
Address
barriers to
customers
Spend
more
How to increase profitability
Build
customer
loyalty
Premium
cards
Special
programs
Differentiate
with unique
new products
Special
displays
Temporary
exclusivity
Trade up to
higher margin
items
More point
of
engagement
Increase
sell-out
Coverage
• Numerical distribution ; The number of shops
selling a product category compared to the total
number of shops selling the same category of
products
• Weighted distribution; the total value of a
product category sold by a certain number of
shops compared to the total value of the product
category sold in the shops
• Visibility degree of visibility of a brand or a
preduct
POINT OF SALES
• In emerging markets in which the urban
population is higher in term of % the distribution
is more concentrated and the modern trade more
present.
• In the rural countries ( e.g. India )the distribution
is more fragmented and the largest part of the
shops is represented by papa’s and mama’s one’s
• In many emerging markets the CVS are very
present and can represent a large part of the
distribution (Taiwan 40% in some business as
confectionery )
POINT OF SALES
• In the emerging markets the Hyper markets
are in many cases an attraction .
• The consumer, especially the youngs, are
going there to see the new products
• Displays and promotion in the point of sales
are more important than in the advanced
countries
• The role of merchandisers is very important
POINT OF SALES
• In china 45 % of consumers make purchasing
decisions inside shops (24% in US ).
DISTRIBUTION IN CHINA
• Modern trade is important in China ;62%
• The concentration of distribution is still low;
the biggest chain has only 1% of the total sales
( 10% in US ).
Distribution In China
How the Chinese buy in the hyper
•
•
•
•
•
5 times a week
The average basket is $ 10-30
Mainly food and fresh food
40% of the shoppers are going by foot
The hyper is renting the space and not buying
( flexibility )
• Average space 10.000sq meters
• Sales per sqm only 40% of the us one’s
Modern Distribution %
•
•
•
•
•
•
•
•
India 2%
Indonesia 15%
Philippines 22%
Argentina 32%
Venezuela 40%
Thailand 41%
Turkey 46%
Brazil 50%
Modern Distribution %
•
•
•
•
Russia 53%
South –Africa 55%
Mexico 58%
China 62%
Degree of involvment in export
• Indirect process;
• Direct involvment of the company in the
process
Indirect involvment
• The export activity is done by a third part
organisation
• No direct connection of the company with the
different markets were the goods are
commercialised
Indirect involvment
• No direct contacts with the market for the
manufacturer means more difficulties on the
product in term of pricing, promotions which
can affect the value of the brand.
• Less financial risks and the costs involved are
becoming variable.
Different kind of third part
organisations
• Export companies
• Agents
• Trading companies
• consorzi
Export companies
• Is the simplest situation; the manufcturer is
selling to a company which will provide to
resell to customers in the a different markets
which are agreed between the parties ( over
inventories are in many case sold by this
category of exporters )
• The payment risk is handled by the export
company
Agents
• A person or a company specialised on products
line and markets which is used in the sales to
large customers e.g. dept stores , hypers or
supermarkets drugstores or CVS chains
• Is not owning the products the conditions of the
sale are fixed by the manucturer like the invoice .
• The payment risk is handled by the manufacturer
Trading Companies
• Genrally the so called Trading companies are
more sophisticated than the simple export
one’s
• They have an organisation which is following a
network of customers in different countries.
• The most advanced have all the structure to
develop arkets ( Logistic ,financial strenght,
sales organisation,marketing…)
Trading companies
• The advantage of using this kind of companies
is that all the activities relatede to the export
are made y the trading companies in
particular the choice and the follow –up of
the local distributors and the financial risks.
• The disadvantage is that the manufacturer
does not know the local customers and and is
not controlling the activities made ,in the
different markets, by the trading companies
Trading companies
• The trading companies are used also by the
big companies. In thes case they are using
them to develop the turnover in the non
strategical markets or in the secondary brands
( Whirlppo case or Ferrero )
Consorzia
• Is an aggregation between companies which
are making together some activities ,in
particular the one’ related to sales and
promotion of the products outside Italy
• Is mainly used by small companies which will
not be able to adress this activities alone.
Consorzia main activities
• Services in the logistic areas and import
activities ( duties ,fiscal, legal )
• Support in order to define and implement
the commercial strategy
• Informations on the differeny markets
• Promotional services ;participation to the fairs
,communication activities, market research…
• Sale of the products
Consorzia ;two kinds
• Pools buying the products and taking the
financial risks and acting as export or trading
companies
• Pools that are supporting the companies part
of the pool in the process of finding customers
or acting as agents
Some aspects of the consorzia
• Right competencies and activities with affordable
costs
• Need omogeneity in term of dimensions and
financial of the different partecipants
• Companies working in a similar area ( products
and region)