FMCG Unlearning From 2011

The FMCG unlearning
shiv
Ver 3.0 - 12 th June 2011
Company Confidential
1 © 2005 Nokia fmcg unlearning / 2006-06-01 / shiv
We have loads of people from the
FMCG sector, is that good or bad ??
We have 55 pc people from fmcg
FMCG works on long held principles
• Stability in product pricing
• Building perception of performance vs actual proof of performance
• Width of Distribution is always a priority
• Quality issues are rarely a concern of the sales function
• There is a clear difference in approach between penetration pack sizes and consumption
pack sizes.
• Price drops are a one off activity
• Price protection of trade is rare
• Independent brand outlets are the privy of really premium brands
• Products and Advertising focus on solutions to generally known problems/emotions, eg
oiliness, stickiness, smelliness, dryness, shyness etc.
• Global pricing is not a common practice.
• There is no resale value of products
Unlearning # 1 : Width
of Distribution is not the
answer to every problem !!
In Mobiles, the top 10 pc of outlets account
for 60 pc of value.
Segregate Smart devices and dual sim at the
two ends. Smart devices need a lot more
than WOD, they need apps, they need
content, they need smart promoters.
Unlearning # 2 : In
price erosion industries, you focus
on improving top line and reducing cost in the
same breath. Volume increase does not
automatically mean a top line increase or a
profit increase !!
Need to look at four lines,volume, value,mkt
share and costs. Cost of sales is creeping up
today,watch it!
Unlearning # 3 : Poor
care hurts market
collection and distribution. Care is directly
attributed to the sales team by trade.
Care is expanding beyond repair now, it is
moving to be a information and sales
channel. It is good for everyone to visit care
centers on their trips
Unlearning # 4 : Cycle
times in fmcg are a few
decades. Cycle times in our industry are
dropping and closer to 6 to 12 months now.
So value creation in first twelve weeks and
minimising value erosion in the last 12
weeks of a model require being on top of
data and zero error execution.
Unlearning # 5 : Promoters
are an integral part of
advertising, demonstrating and showcasing the
product, the apps, and the brand experience !! Get
that right at all costs.
The average promoter productivity is between 15 to 20 lacs p.m. That’s
the size of a stockist in fmcg per month.A promoter costs us nearly 2 pc of
sales in an outlet, we treat it as another body!
Unlearning # 6 :Disruption
in FMCG comes
through pricing and superior advertising , in
mobiles, there is price disruption, trade
disruption and technology disruption.
Develop a sense for the disruptions, they
will not go away.
Unlearning # 7 : Stock
on shelves in fmcg is the
responsibility of trade, stock in durables is the
responsibility of the manufacturer till it reaches
the consumer home.
Inventory is a bad word in mobiles, Motorola
nearly went under with inventory of Motofone,
we have a few countries in Nokia who are in that
situation.
Unlearning No 8 : The eco system
rarely matters in fmcg. In Mobiles,
we need to have good equations
with operators, content providers
,app developers,OT.
Unlearning No 9 : Sub brands work
in fmcg. In Mobiles, sub brands date
the model and people don’t see it as
necessarily innovative. Some brands
have done this, the more dominant
logic is models and versions.
Unlearning No 10 : Education at the
time of purchase is a huge driver of
value in mobiles. People know what a
soap or a shampoo does, not what a
mobile does, especially in an apps world
and a discussion on OS.
Unlearning No 11 : Models move within
price bands and judging the success of a
model at a value point is a skill here.
The older trade partners are good at
this. This has to be a differentiating skill
for program teams, RGMs and RBCs.
Unlearning No 12 : The average life of a
successful model in mobiles is between
12 to 18 months. An unsuccessful model
lasts 6 days. Judging volumes for both is
key.LCM thinking for successful models
is still amateurish in the industry.
Unlearning No 13 : The time to react
in fmcg is in months or quarters, the
time of reaction in mobiles in
minutes and hours. Speed is KEY.
Requires leaders to know the details
and the industry.
Unlearning No 14: Share of
Voice is an fmcg concept and
that drives biz. In mobiles, Share
of Voice + Share of Shop = Share
of Palm. Share of shop is innovative
visibility+ knowledgable promoter+
tech experience+live devices.

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