Placement News Bulletin : 2019-20

Placement News Bulletin : 2020-21

the Oracle GD/PI Prep | FMCG & Retail

FMCG & Retail Terms Explained

• Primary Sales: These are sales from the company to the distributor e.g. the amount of product that a dis-
tributor purchases from the company.
• Secondary Sales: These are sales from the distributor to the retailer.
• 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 some market research agency like Nielsen.
• Beat: This is the route that a salesman follows on a particular day. For example, beat on Saturday is Loca-
tion X, and beat on Sunday is Location Y. If the salesman visits his every beat on every alternative day, all
the retailers/stores/outlets in his sales territory will be covered in two days. Thus, he will visit the same
outlet of his beat thrice per week.
• Stock Keeping Unit (SKU): This refers to a specific product/bundle size from a product category or brand.
For example, 100 gram, 250 gram and 1 kg Tata Tea packets are different SKUs of the same Tata Tea
product.
• Sales Representatives (SR) or Sales Officers (SO): SR/SO can be employed either by a company or by dis-
tributors depending on company policy who are responsible for collecting sales orders from their as-
signed routes. After collecting sales orders from the outlets of his assigned route, an SR/SO makes a sum-
mary of this total order and submits it to the distributor for delivery. Based on this collected order
(summary sheet) product delivery happens on the next day by DSR or Deliveryman of the distributor.
• DSR: Distributor's Sales Representatives are employed by distributors and act as salesmen who are re-
sponsible for selling the company's products to retailers. Typically where SR or SO concept is available,
DSRs are the delivery men who are employed to deliver the company's products to outlets according to
previously collected orders by SR/SO.
• Wholesalers: An outlet of a beat is considered as a wholesaler if that outlet contributes more than 50%
sales of that particular beat (this assumption may differ for different companies).
• Modern Trade: This refers mainly to the changes in supply chain wherein the retailers directly purchase
from manufacturers thus eliminating the middlemen.
• D2C: A new trend among manufacturers wherein they sell their products Directly to Customers by setting
up their own supply chain. This offers them the opportunity to interact directly with the customers,
which was absent in traditional trade and garner consumer insights which can be used for improving
product offerings.
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Placement News Bulletin : 2020-21

the Oracle GD/PI Prep | FMCG & Retail

• Trade Schemes or Trade Promotions: These are schemes that are given out in the market to boost sales
from time to time. Trade Schemes are designed for the trade i.e. Retailers/Wholesalers and the Distribu-
tors.
• Trade Promos are of two types:
• Quantity Purchase Schemes (QPS): To inspire the retailers to buy more, sometimes the company
offers QPS. These typically look like this: Purchase of 144 pieces at a time and get 8% discount Basi-
cally these are discounts offered on purchasing a particular quantity of products.
• Value Purchase Schemes (VPS): These are same as QPS, the only difference is that these are offered
on value purchased instead of quantity. These would look like this: Purchase of Rs 10,000.00 at a time
and get a 8% discount. These are discounts offered on purchasing products of a predefined value.
• Trade schemes are of two types:
• Sales Based: These incentives for the retailer are tied to the sales of the manufacturer’s products the
retailer is able to generate from his/her outlet.
• Non-Sales Based: These incentives are not tied to the sales made by the retailer but to a different
metric which can either be shelf-space, ordered quantity or display space.
• ROI (Return of Investment): This is calculated on a monthly/quarterly/yearly basis to understand the dis-
tributor's profitability. The ROI calculation is very important as it is a tool to negotiate with your distribu-
tor to manage/deploy required investments. The equation is simple: ROI= Return/Investment, Return =
(Earnings – Expenses).
• FOC: Free of Cost (Goods offered as free). Sometimes the company offers FOC goods to retailers as a part
of a special promotion.
• GOP/GWP: Gift on Purchase or Gift with Purchase is basically offering a free gift with the purchase of a
product. For example, offering a bat with purchase of Milo.
• Planogram: This refers to the shelf display of a retail outlet that a company pays for (can also be a floor
standing unit (FSU) in Modern Trade). The company usually hires the shelf space of an outlet on a
monthly rental basis to display its products.
• Strike Rate or Productivity: It is the % of all successful sales calls out of total calls made by a DSR. This is
generally measured on daily basis.
• ECO: It stands for Effectively Covered Outlet or Effective Coverage which means how many outlets out of
the total outlet of a route or market or territory are making at least one memo in a month. With ECO a
company measures active outlet number.
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the Oracle GD/PI Prep | FMCG & Retail

• Bullwhip Effect: The bullwhip effect is a supply chain phenomenon describing how small fluctuations in
demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distrib-
utor, manufacturer and raw material supplier levels.
• Multi-Brand Outlet: A retail outlet which sells products from various brands. Customers use MBOs to
compare between brands. Eg: Brand Factory
• Exclusive Brand Outlet: A retail outlet which sells products belonging only to a single brand. Customers
visiting exclusive stores are highly loyal to the brand. Eg: Apple Store
• Point Of Sales (POS): It is a way out of managing your physical store with ease. POS system helps retail-
ers to manage their products, inventories, customer details & order related information of their physical
store.
• Bundling: Bundling is a concept of selling two or more products together instead of a single one. This is
the perfect solution to combo up your slow-moving products with new ones. Thus, increasing your reve-
nue.