GROUP 7 SALES AND DISTRIBUTION MANAGEMENT

Case Analysis
Uniglobe’s Small Local Stores
Dilemma
PRESENTED BY GROUP 7
B Sanjay Kumar 230102098
Divij Chawla 230101070
Kinjal Khandelwal 230103105
Parv Mittal 230101142
Rishi Gupta 230103168
Sakshi Singh 230103193
 Marketing + Channel Strategy | Analysing the Convergence
Strenghts
Remote Area Access enabled
through the Van Network ~ Vast
Small Store Connectivity
Robust solution to the
REACHING
UNDERSERVED Fragmented Retail Landscape
MARKET of Philippines
CONTROL
Aligns with the Marketing
Strategy of Broadening Market
Share & Brand Presence
Challenges Opportunities
Brand Messaging: Difficulty in
maintaining consistency while Building clear communication
working with intermediaries ENHANCED & regular connections ~ share
COMMUNICATION market/consumer insights +
consistent messaging.
Customer Experience: Minimal
LIMITED control over how products are
presented/sold
Defining the right metrics to
DEEPER track effectiveness ~ SKU level
Data Collection: Challenging to PERFORMANCE
MEASUREMENT Sales Growth + Brand
analyse Consumer Behavior in
Awareness & Sentiment
remote areas ~ affected by the
intermediary layer.

Middlemen with Local Ground Experimenting with Alternate

The SLS Tension |
Knowledge ~ potential to offer PILOT PROGRAMS Approaches: Collaborating
Reaching Remote Areas > Maximising
resonating marketing efforts. directly with Store Owners
Profit

Targeting & Pricing Strategies

TAILORED PROFITABILITY
Personalised for Regional APPROACH Marketing: Reaching a Wider VS REACH
Markets Market, Boosting Brand Awareness Middlemen + UniGlobe ~
DATA SHARING
& Capturing Large Market Share AGREEMENTS Valuable Consumer Insights to
Deeper Partnerships & refine & tailor marketing efforts
Business Relations with Store Channels: Distribution Efficiency
Owners ~ Ensure Product and Profitability
Visibility & Availability
Redistributing SLS Volume: Pros & Cons
Inc. volume by 50% could strengthen UniGlobe's wholesalers in the market.
Increased reach and
Improved negotiation power with retailers.
clout for mainstream
Increased sales and profitability for both UniGlobe and its wholesalers.
wholesalers Broader distribution of UniGlobe products, reaching a wider customer base.
Pros
Eliminating the management of the complex SLS channel could lead to:
Reduced operational Lower administrative costs.
costs for UniGlobe Streamlined operations.
Increased efficiency in product distribution.

The potential decrease in ROI from 15% to 12% would directly impact UniGlobe's
Uniglobe’s Decreased profitability.
profitability

Handing over SLS volume to wholesalers means UniGlobe would lose direct
Cons Loss of control over control over: Pricing and promotion of products in the SLS channel.
the SLS channel Quality and service standards in the channel.
Customer relationships with small retailers and middlemen.

Negative impact on:

Impact on small
Small retailers who rely on the channel for access to UniGlobe products.
retailers and
Middlemen who lose their income from distributing UniGlobe products
middlemen through the SLS channel.
Shift Volume from Other Channels to SLS
Shifting volume from wholesale/supermarkets to SLS results in a higher unit
Increased SLS unit margin of $1.55, compared to the current margin of $1.10.
margin The increase in margin directly translates to improved profitability for the
company on each unit sold through the SLS channel.
Pros
Focusing on SLS allows the company to expand its market reach and tap into
Potential for new customer segments.
increased sales By targeting customers who prefer purchasing through the SLS channel, the
company can gain access to a previously untapped market segment.
The shift towards SLS may result in higher demand for the company's
products as it caters to the preferences of a new customer base.

Shifting volume from wholesale to SLS may upset existing wholesale and
Risk of upsetting supermarket partners.
higher margin Wholesale and supermarkets currently offer higher margins per unit
channels compared to SLS.
Cons Neglecting current partners could lead to strained relationships and
potentially reduced profits from these channels.

SLS distributors may lack the infrastructure to handle increased volume

Capacity limitations effectively.
This could lead to delays in delivery or stockouts, resulting in customer
dissatisfaction and potential harm to the company's reputation
Distributing Low-Margin SKUs through SLS: Pros & Cons
Reduced risk of losing shelf space, due to lower price products.
Easy to convince Increase in flexibility of the business due to reduced reliance towards high-
retailers margin producing SKUs, this would help in using the resources towards
pushing high-margin SKUs in other channels.
Pros
Increase in flexibility to push NPD products due to reduced burden of
Helps in pushing producing higher margins.
NPD Products Opening the opportunity for NPD products to move into Wholesale channels
once they become established.

The potential of SLS generating profits through high-margin SKUs is

Losing profits on
underutilized as any retailer would prefer to sell a high-margin SKU, here
high-margin SKUs
assuming the product to be well established.

The Wholesale and other channels are put under pressure to generate profits
Over reliability in
with the high-margin SKUs and compensate the SLS channel, irrespective of
wholesale channels to
Cons produce profits in high-
their higher/lower market price.
Every retailer might not wish to keep a higher market price SKU, irrespective
margin products.
of the margin enjoyed.

Negative impact on distributor margins and the willingness to sell the low-
Upsetting Distributors
margin SKUs.
profits and increasing
The incentive policy of UniGlobe towards the distributors is affected due to
overhead costs.
the increase in overhead costs, leading to a drop in sales.
Incorporating the SLS Operation In-House
Increased control
Increased capital investment
Improved management of pricing, promotion,
quality, and service standards. UniGlobe would need to invest significantly in:
Stronger relationships with small retailers and Infrastructure and personnel to manage the
middlemen. SLS operation internally.
Training and development of new staff for the
Pros
Improved brand image and customer
experience in the SLS channel. channel.

Increased profitability Increased fixed costs

Eliminating middlemen commissions would
Bringing the SLS operation in-house would
directly increase UniGlobe's profits in the SLS
lead to higher fixed costs associated with:
division by 2.5% annually.
Salaries and benefits for new hires.
Alignment with business model
Bringing the SLS operation in-house would
Cons Overhead
department.
costs for managing the new

align it with UniGlobe's standard corporate

model, potentially leading to Increased
operational efficiency and consistency.
Improved decision-making through direct
access to market data.
Spin Off: Pros & Cons
By taking off the control over the distributors for SLS, the company can
Cost elimination to eliminate the cost that was born to manage this aspect. The distributors will
manager distributors enjoy more freedom and will collaborate with UniGlobe. Company can use the
time and resources for other channels.
Pros
Retention of SLS and Higher number of retailers will join UniGlobe as the company won’t be looking
into the business of the distributors and they enjoy a free hand for all their
product availability
operations. By this Spin Off decision, they still retain the channel and hence
across country their products will still be available to mojority of population(Urban & Rural).

The profits of 2% to 3% that is enjoyed by the company will be taken away in

the long run as the distributors will be selling at higher margins and as a
Products could be
result the final product price will be higher. The company will only be earning
sold at higher prices profit by directly selling to the distributors and the distributors will enjoy a
Cons higher profits.

The high price sensitive consumers may shift to other substitute products.
Market share of the
The 32% of the population i.e. approx 25.5 million people with high price
company may be
sensitivity may be lost and the market share of the company may be reduced
impacted negatively as a result. The whole channel will be impacted and may result in closure.
Recommendations

1 Conduct a thorough Cost-benefit Analysis: This will provide a

clearer picture of the potential financial impact of the decision.

2 Pilot the In-house Model in a selected region: This will allow UniGlobe to
gain experience, assess feasibility, and identify potential challenges in a
controlled environment before potentially facing nationwide issues.

3 Develop a Comprehensive Implementation Plan: This plan should address

key aspects such as:
Staffing requirements and training programs.
Integration of the SLS operation with existing systems and processes.
Communication strategy with small retailers and middlemen.
Thank you!