STRATEDGE 2009
Choose your challenge!
Case 1: Cracking the Rural Distribution
Conundrum
OR
Case 2: Winning the Impulse Game
Your Voice, Your Innovation, Big Results
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
CASE 1: CRACKING THE RURAL DISTRIBUTION CONUNDRUM
INTRODUCTION
Live Life Ltd is a leading marketer of Foods and Over the Counter Products in
India. It is either number one or number two in most of the categories that it
operates in.
CATEGORIES OPERATED IN AND PRODUCT PORTFOLIO OF LIVE LIFE LTD.
Live Life Ltd. leads distribution in most of the categories and the challenge is
to push the bar further on distribution.
Figure 1: Product Portfolio
Live Life
Company
Over The
Counter (OTC)
Foods
Health Food
Drinks
Biscuits
Hoshiar
Badshah
Energy Bars
Tasty
Treats
Analgesics
Power Bite
Antacids
Alpha +
(For Fever)
Pain Balms
Rahat
Beta +
(For Headache)
Omega +
(For cold)
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
Roshan
THE CHALLENGE
SITUATION
Live Life Ltd. has recently changed its go to market model by moving to a two
tier model of Sub Distributor and Distributor. This has provided immense
benefits by increasing the reach and penetration of the company products and
by reducing complexity of operations.
Figure 2: Flow of Goods
Live Life Ltd
C&FA
Super
Distributor
Distributor
Wholesale
Sub Distributor
Retailer (Urban + Rural)
Note: Any party that wants to deal in OTC products must have a valid drug license.
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
Demand for Live Life Ltd. products exists in the rural market and currently
rural contributes to 22% of foods sales and 30% to OTC sales. Currently the
fragmented rural market is being covered by vans of identified distributors.
However this model of van coverage has the disadvantage of not being scalable
nationally.
The wholesale channel is another means through which products reach the
rural markets. However there is a need for better understanding of the
wholesaler’s practices and operations which will help Live Life Ltd. devise a
stronger re-distribution strategy for rural.
TASK
1) A commercially feasible and scalable approach needs to be devised to
increase the reach of its products to the rural population. This will cover
the entire portfolio of foods and OTC.
To be able to achieve this Live Life Ltd. must draw insights from what
is currently happening in the rural space. Benchmarking what
other
FMCGs are doing to drive rural distribution and re-distribution
will
be important.
It will also be worthwhile to observe best practices of sectors like
telecom, durables and agro products in the rural space.
2) What are the emerging trends in pack sizes and price points in rural?
3) How must Live Life Ltd. leverage the wholesale channel to improve rural
re-distribution?
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
ANNEXURES FOR CASE 1
1) Channel-wise Foods Sales of Live Life Ltd.
5%
20%
15%
5%
5%
50%
Chemists
Modern Trade
Wholesale
General Merchant
Self Service
Bakery
2) Channel-wise OTC Sales of Live Life Ltd.
40%
60%
Retail
Wholesale
3) Channel-wise Sales of Total Alpha+, Beta+ and Omega+
0%
100%
Chemists
StratEdge 2009
Non-chemists
GlaxoSmithKline Consumer Healthcare Ltd
4) Channel-wise Sales of Rahat
30%
70%
Chemists
Non-chemists
5) Channel-wise sales of Roshan
30%
70%
Chemist
Non-chemists
6) Hoshiar pack sizes and price points
SKU
Price (in Rs) Remarks
500 gms Jar
135
Refill 500 gms
125
200 gms Jar
67
Refill 200 gms
59
90 gms
20
18 gms
5
StratEdge 2009
Top selling SKU in urban and in rural
Top selling SKU in rural
GlaxoSmithKline Consumer Healthcare Ltd
7) Badshah pack sizes and price points
SKU
Price (in Rs) Remarks
500 gms Jar
135
Refill 500 gms
128
200 gms Jar
67
Refill 200 gms
59
90 gms
20
18 gms
5
Top selling SKU in urban and in rural
Top selling SKU in rural
8) Tasty Treats pack sizes and price points
SKU
Price (in Rs)
72 gms
5
144 gms
10
189 gms
15
288 gms
20
9) Rahat pack sizes and price points
SKU
Price (in Rs)
Bottle
46
Sachet
5
10) Roshan pack sizes and price points
SKU
Price (in Rs)
5 gms
10
10 gms
20
20 gms
35
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
CASE 2: WINNING THE IMPULSE GAME
INTRODUCTION
Live Life Ltd. is a leading marketer of Foods and Over the Counter Products in
India. It is either number one or number two in most of the categories that it
operates in.
CATEGORIES OPERATED IN AND PRODUCT PORTFOLIO OF LIVE LIFE LTD.
Live Life Ltd. leads distribution in most of the categories and the challenge is
to push the bar further on distribution.
Figure 1: Product Portfolio
Live Life Ltd
Over The
Counter (OTC)
Foods
Health Food
Drinks
Biscuits
Hoshiar
Badshah
Energy Bars
Tasty
Treats
Analgesics
Power Bite
Antacids
Alpha +
(For Fever)
Pain Balms
Rahat
Beta +
(For Headache)
Omega +
(For cold)
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
Roshan
FLOW OF GOODS
Figure 2: Flow of goods
Live Life Ltd.
C&FA
Super
Distributor
Distributor
Wholesale
Sub Distributor
Retailer (Urban + Rural)
THE CHALLENGE
SITUATION
Historically, Live Life Ltd. has been in categories where trends are predictable,
where the company has enjoyed high dominance. Buying decision of the
consumer is not based on impulse but mostly on pre decided criteria. The
categories do not usually see rapid innovations in products & competition is
restricted to few large players.
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
Live Life Ltd.’s expansion plans see it entering into un-chartered territory
where the stakes are high and the gains even higher if successful. With the
introduction of products like Power Bite energy bars and Tasty Treats biscuits,
Live Life Ltd. faces stiff competition from well entrenched players and from
the unorganized sector. The competition is quick to respond to changes in the
category and innovations are churned out faster than in the category that Live
Life Ltd. has functioned in traditionally.
The “impulse” category is also where the consumers have many substitutes
available for our products and switching brands is not necessarily a long and
well thought out decision. Hence it is absolutely essential for Live Life Ltd.’s
new products to be available at the time & place where the consumer wants
them and at the right price.
TASK
1) Live Life Ltd. needs to raise the bar to help the company succeed by gearing
up:
a) Its Channel Management Approach
b) Its Field Force’s outlook and competence to sell
c) Its Distributors Approach
2) What BTL strategy should Live Life Ltd. adopt to succeed in the impulse
category?
3) What levels of investment (as a %age of sales) should Live Life Ltd. consider
to succeed in the market?
4) What are the channel dynamics in the impulse segment, channel
peculiarities and buying behaviour?
StratEdge 2009
GlaxoSmithKline Consumer Healthcare Ltd
ANNEXURES FOR CASE 2
1) Channel-wise Foods Sales of Live Life Ltd.
5%
20%
15%
5%
5%
50%
Chemists
Modern Trade
Wholesale
General Merchant
Self Service
Bakery
2) Channel-wise Sales of Power Bite
2% 3%
10%
20%
40%
25%
Bakery
Modern Trade
Wholesale
StratEdge 2009
General Merchant
Self Service
Chemists
GlaxoSmithKline Consumer Healthcare Ltd
3) Channel-wise sales of Tasty Treats
10%
3%
20%
10%
5%
52%
Bakery
Modern Trade
Wholesale
General Merchant
Self Service
Chemists
4) Region-wise sales of Power Bite
25%
45%
10%
20%
North
East
West
South
5) Region-wise sales of Tasty Treats
0%
45%
55%
0%
North
StratEdge 2009
East
West
South
GlaxoSmithKline Consumer Healthcare Ltd