快消行业发展分析报告 Bain贝恩咨询课件.ppt

China FMCG industry RTM and WS development practice,Bain presentation (draft)November 2013,Summary of key messages (1/2),FMCG companies face a series of challenges in selecting and managing RTM models when they pursue growth in China Sheer size of opportunity (universe of outlets)Managing pricing is particularly difficult in China, because Chinese shoppers are “repertoire” and because of complexity of markets/channelsNeed to balance execution effectiveness, and cost to serve with increasing reachMost successful FMCG companies in China need to be good at managing multiple RTM models at the same time as a sustainable competitive advantage. There is no one size fits all approachDirect selling (controlled model): Core strength of some MNCs (including KO) for organized and even fragmented trade but Chinese FMCG players increasingly adept at this modelIndirect selling: commonly utilized by Chinese FMCG players given speed, reach and lower cost but many models with varying roles and levels of controlThe most successful MNC and Chinese FMCGs tailor direct and indirect selling models to different market and channel/customer priorities, with strong internal capabilities and systems to manage conflicts between models,3_85,1,2,3,Summary of key messages (2/2),Managing hybrid models (combination of direct selling and indirect selling) is a dynamic process. Successful FMCGs continuously evolve their models along with different stages of developmentAdapt to market dynamics e.g. urbanization, industry consolidation, channel mix evolutionOptimize costs with increase in scale and internal capabilities, without sacrificing controlMany FMCGs invest in building dedicated internal capabilities and systems for each model. For indirect selling: wholesaler management capabilities and systems critical but so are network of scaled, capable and loyal WSManagement tools and detailed playbooks to manage pricing transparency, margin pool, transshipment, optimize cost to serve etc.WS reps dedicated to recruiting, setting targets, incentives, upgrading/training W/S, increasing loyalty and occasionally restructuringFully integrated with sales systemsFor many FMCG companies, there is a large size of the prize from successfully managing the complementary indirect selling model,3_85,5,6,4,Agenda,11_89,Managing multiple RTM models in ChinaKey success factors for managing indirect selling models in ChinaSome implications for KO,FMCG companies in China face a series of challenges in selecting and managing RTM models,Sheer size of opportunity, universe of outletsComplexity of managing different markets and channelsDifferent drop size and economicsManaging pricing is particularly difficult in ChinaConstantly evolving market and competitive dynamicsLarge and fragmented network of distributors/ wholesalers to manage; size & capabilities vary significantlyEvolving internal capabilities and costs pressures,3_85 6_84,1,FMCG companies in China need to be good at managing multiple RTM models at the same time,32_84 42_84,Preliminary,2,Full control over POS display and activationLarge initial investment in infrastructure and teamHigher cost to serve,Control over POS display and activationDistributors with right logistic capabilities for drop size economicsRelatively high cost to serve,Can have varying levels of control over distributors/WS, and POS executionQuality of distributors/WS can varyTypically lower cost to serve,Example: Want Want developed combination of indirect and direct sales models to sustain growth,Note: Most revenue is from China MainlandSource: Company annual report; Analyst reports; Literature search,Want Want RTM development,2,67_85 76_85,90s,Quickly expanded across China through indirect sales and distribution model for general trade (same RTM for snack food only manage tier1 DTs25 sales offices in China Very limited sales rep. #, only responsible for collecting money from tier 1 distributors,00,12,05,Growth constrained by varying quality of wholesalers and relatively weak internal sales capabilities,06,10,Built up direct sales model and internal capabilities & teams for modern trade and key city GT300 sales offices & 4-5k own sales rep.KA and “He Want” (direct selling/indirect distribution) grew to 60%+ of revenues,Built up indirect sales model for E&D with focus on increasing penetration,Preliminary,Example: Want Want relied on indirect sales and distribution model to drive quick expansion in 90s,Source: Company Annual Reports; Expert Interviews; Literature Searches,41_85 129_84 6_84,2,Mainly sell through W/S markets25 sales office in ChinaVery limited Want Want own sales peopleOnly responsible to collect money from T1 DTsNo visibility on T2 DTs or below,Want Want,T1 Distributors,T2 DT / WS,Indirect selling & indirect distribution(95% of sales),Mostly GT outlets,Selling,Delivery,Preliminary,Example: Want Want built up direct sales model for MT and key cities from 2006-2010,Source: Company Annual Reports; Expert Interviews; Literature Searches,64_85 68_85 83_84 87_84 122_84,2,Global and national KA retailers,Want Want,KA sales,T1 Distributors,“He Want” sales,T2 DT / WS,Direct selling & distribution(20% of sales),Direct selling & indirect distribution(40% of sales),Indirect selling & indirect distribution(40% of sales),Regional and local MT, key city GT,Fragmented trade,Directly sells and delivers to 20 global & national KAsManaged by 200 Want Want KA salesDelivery by own delivery fleet or through 3rd party logistics providers,“He Want” model covers 1M retail outlets in 2008Established 300 sales offices4-5K Want Want own sales people and 10 -15K DSRs for both “He Want” & DT mgmt. in 200815K DT/WS nationwide with monthly sales ranging from a few thousands to 100M RMB,Selling,Delivery,Preliminary,Example: Want Want then built up E&D indirect sales model to accelerate beverages starting in 12,Source: Company Annual Reports; Expert Interviews; Literature Searches,40_85 41_85 17_84 18_84 58_85 79_84,2,Global/ national & selective regional KA retailers,Want Want,KA sales,Retail T1 Distributors,“He Want” sales,T2 DT / WS,Direct selling & distribution(20% of sales),Direct selling & indirect distribution(35% of sales),Indirect selling & indirect distribution(35% of sales),Regional and local MT,General trade,Extend KA coverage to largest regional MT chains200 Want Want KA salesDelivery by own delivery fleet or through 3rd party logistics providers,Expanded to over 350 sales offices in ChinaStabilized # of own sales people and increase # of DSR and in-store push-girlsIntroduced “Liang Want” project to strengthen in-store executionStream down to 8K high quality DT/WS nationwide (only a small % through T2 DT),Selling,Delivery,Focus on E&D outlets,E&D T1 Distributors,Indirect selling & Indirect distribution(10% of sales),Started to recruit E&D dedicated DTs with territory exclusivitySupported DTs with segmented entry toolkit for different E&D types (layout, promo plan, etc.),T2 DT / WS,Preliminary,Example: Wrigley as an MNC company adept at managing indirect and direct selling models,3_85 10_84,2,RTM model,# ofcities,Product/ brand portfolio,Channel mix,Phase I: DEVELOPING REPEATABLE MODEL(93-02),Phase II: Horizontal growth (02-11),Phase III:Vertical growth (since 11),Preliminary,FMCGs tend to use different RTM models tailored to different market and channel priorities/dynamics,6_85 11_84,3/4,Geographic,Geographic and channel priorities,Channels,Different mix of RTM models, driven byNature of categoryMarket scale/share (thereby cost/economics)Internal capabilitiesContinuously evolve RTM models along with different stages of developmentAdapt to market dynamicsOptimize costs with increase in scale and internal capabilities, without sacrificing control,Illustrative,and other considerations,Example: Wrigley tailors its RTM models with differential focus on key cities and TT,*Carrefour, Wal-Mart, Auchan, RT-Mart, Lotus, Metro C Literature Searches,Key cities(50 key and provincial cities),B cities(200 prefecture cities),C, D cities & rural(smaller prefecture cities, counties, towns),Global 6 KA*(10% sales),Other MT(40% sales),TT(50% sales),Direct selling & distribution*,Mix of direct and indirect selling; Indirect distribution,Indirect selling & distribution,Wrigley covers 3M outlets in China and have visibility on 800K outlets where their 2,000 sales reps and 3,400 DSRs sell intoCentralized sales database of these 800K outlets, and T1 distributorsFocus on top 50 cities, with strong sales presence in market,Outlet reach and flexibility,3/4,White space(no control),Developed market(greater level of control),54_84 60_84,Stage 2,Stage 1,Contract/conditionality,Compensation model,No contract; purely transactional,Basic 2 party contract, subject to renewal each year,Mark up + rebates on vol. target,Mark up + rebates on vol. target & conditions,Level of POS control/visits,Infrequent visit by DSRs,Not known,ILLUSTRATIVE,Category exclusiveContract with sales target & high level execution KPI,Floor price mark up,Visibility/ tracking,Only sales to wholesaler,POS visibility through route coverageAudits on wholesaler,Visited by DSRs and some by sales,Markup+ Rebates based on vol. target & product availability,Annual contract, subject to basic conditions,.,Tracking of 2nd tier WS utilized by wholesaler,Tracking of 2nd tier WS and POS covered,More frequent visit by DSRs,Fragmented trade: Indirect selling model evolution with increasing local scale,Example: Wrigley continuously evolves its RTM model with local scale to assert greater control,3/4,Example: Beverage Co. evolves from indirect selling model to direct model as its local market share increases,Market entry: Indirect selling with little control,Developing stage: Evolves towards direct selling,Stronghold: Direct selling, strong control, moderate cost,Ontrade & TT,FMCG co.,Master WS,T2 WS,FMCG co.,Master WS,New Channel,Ontrade 1,Ontrade 2,TT,Territory 1,Ontrade 1,Ontrade 2,TT,Territory 2,FMCG co.,Territory 1,T1 WS,T2 WS,Sales planning,Sales target planning,Sales tactic planning,Sales rep management,Distribution & warehousing,Ordering & Invoicing,Post-sales services,Channel development,Channel maintenance*,Sales target planning,Sales tactic planning,Sales rep management,Distribution & warehousing,Ordering & Invoicing,Post-sales services,Channel development,Channel maintenance*,Sales target planning,Sales tactic planning,Sales rep management,Distribution & warehousing,Ordering & Invoicing,Post-sales services,Channel development,Channel maintenance*,Channel mgmt.,Logistics,Source: Bain experience,WS in charge,FMCG co. in charge,# of sales rep,5 per city in early stage (key role is to develop WS),30-50 per city in mature stage (# of outlets vs. # of sales rep = 200:1, key role is to manage and supervise T1 WS),# of WS,1-2,10-20,10-30 per city (# of outlets vs. # of sales rep = 40-50:1, key role is to visit outlets, manage activation and W/S management),Ontrade,TT,Territory 3,T1 WS,T2 WS,Ontrade,TT,T1 WS,T2 WS,T1 WS,2-5,T2 WS,Ontrade & TT,Ontrade & TT,T1 WS,T2 WS,Ontrade,TT,Territory 2,T2 WS,3/4,W/S focused only on new channel,Agenda,11_89,Managing multiple RTM models in ChinaKey success factors for managing indirect selling models in ChinaSome implications for KO,Some key considerations for roles and type of indirect selling and distribution model,5,Do we have resources, capabilities, and relationship network to attract exclusive & financially capable distributors?Attractive returns: gross and net margins, sales turnover, trade terms, logistics cost as % of total cost, etc.Brand strengthKnowledge transfer: business and infrastructure setup, systems, etc.,Are there large, loyal and scalable distributors within companys existing distributor network? If yes, how many and where are they located?Alternatively, are there non-FMCG company distributors which are large enough and non-bounded by exclusive arrangements available to work with company?,Do we have the capabilities to manage the complexity of having large number of distributors?Do we have the resources, capabilities, and relationship/trust to grow our distributor network and manage their daily operations?Sales force training, daily/weekly planning meetings, performance tracking, etc.,What are the roles of different RTM models by geography/channel and stage of development?How to manage indirect and direct selling models at the same time?,Ability to get the economics right to attract distributors,Availability of scaled/scalable distributors,Capabilities,Capability to manage multiple models,4_85 5_85 6_85 8_85,5,Flywheel of W/S mgmt. capabilities & system that overtime result in network of scaled, capable and loyal WS,34_84,Optimization/restructuring,Fully integrated,Cost-to-serve &optimization,Wholesale Management capabilities & system,Wholesaler development,Performancetargets,Recruitment,Performancemgt.,Scale and loyaltymgt,KPIs/scorecard,Pricemgt,Marginpoolmgt,Productportfolio,Territorydefinitionand roles,Example 1: Wrigley has developed a leading W/S mgmt. system,5,Pricing transparency & control,Advanced distributor database,Sales Information mgmt system,Systematic tracking mechanism to ensure transparency and control over trade pricing“DNA program” since 2004 to minimize impact from transshipment and counterfeit goods (through bar code tracking)Severe punishments if distributors break the rules,Tier 1 DTs automatically linked into national distributor database from order to cashSales, inventory, wholesaler capabilityCustomer hotline for all wholesalersOrder placement and fulfillmentInventory management and replenishment historyFreight & delivery status,Sales system that links distributor information with sales/route plansTrack sell-in on daily basis, by key SKUTrack distributor KPIs and performanceTrack transshipment, counterfeit and other complaints/issues with plans to intervenePlans to link into SAP systems over time,10_84 15_85 16_85 17_85,Logistics capabilities:Small vans & electric-powered bicycles to enhance productivity6-sided stand to store and display productsEasier to transportEarn a more prominent display spot at the outlet (e.g. next to cash register)Easy to spot when stock is low to prompt replenishment orderKPIs:Sales targetsIn-store display requirementsOn-time payment collectionDT sales reps: On average, each DSR/SR can cover 20-30 outlets per day*300-500 outlets covered per monthMonthly salary 2,000 RMB (inclusive of base + commission),Example 1: Wrigley has over time developed and trained broad network of DTs and DSRs,5,Typical profile of WWY distributor covering TT,11_84,*Includes revisits of the same outlets within a month,Example 2: Want Want has developed a dedicated system to manage its 8K wholesalers in China,5,Preliminary,Source: Company annual reports; Literature searches,Systematically manage W/S performance,with greater support of good performing, scaled W/S,Clear W/S segmentation criteria based on performanceTransparent to all the W/S throug