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Sales channels to reach your customers

Selling through retailers, wholesalers and other distributors
Selling through an intermediary may be a more cost-effective way of reaching your end-customers than selling to them directly.

If you are targeting business customers who prefer to deal with large suppliers, selling directly to them may not be a realistic option. Instead, you might aim to supply wholesalers who have existing relationships with those businesses.

If individual consumers buy low value quantities of your products, the best option might be to target retailers that sell similar products. Or you might choose to focus your efforts on a relatively small number of wholesalers who can in turn supply your products to many retailers.

Other distribution channels may also reach your end-customers. For example, technology suppliers often sell to resellers who can configure and install the technology to suit end-users’ particular needs.

Managing your distributors
You need distributors who will value your product. If they sell competing products, what will make them push yours?

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Think about how you set your prices. Distributors will be more enthusiastic if they can make a large profit – but setting too low a price will eat into your own margins.

Effective advertising and promotions can be vital. As well as marketing to the distributor, you can promote your products directly to end-customers. Distributors will be keener to stock and sell products that their customers are asking for.

The key terms of the supply relationship should be covered in a written contract. Key issues might include:

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how much stock the distributor will hold
what the distributor will do to promote your products
how quickly you can resupply and minimum order levels
whether the distributor has exclusive rights to your product (for example, in a particular territory)
what happens if either you or the distributor want to end the relationship

 

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FMCG Business Expansion – Stage by Stage Approach

Have written this post specifically for regional FMCG companies and FMCG manufacturers who are planning to extend their footprints in different geographies in different markets.Let me explain this stage by stage:1. Category Feasibility: Before you decide on the markets to expand, it is critical to analyze the category construct and trends. Let me start with some examples. In dish wash category, there are 3 key segments – Powder, Bar and Liquid, dominated by Bar sub-category. Now here the first step is to see the trends in each sub-category. In this case, Powder is a dying category, Liquid is an upcoming & fastest growing category and Bar is already established. Baris dominated by Vim with a market share of 70%. Liquid was dominated by Pril, but Vim Liquid is also catching up. Post this contribution analysis is required, where i will compare all three sub-categories and may conclude that Liquid is more profitable. Also as the urban lifestyles are changing and are moving towards evolved products. With this you will also do an exhaustive competition analysis. At the end, you may decide to expand with Liquid Dish Wash Category.2. Differentiation/ Innovation: Once you freeze on the category to enter, the next step is to do a positioning mapping of all brands in the category (What do they all stand for in the consumers mind? What are their key proposition?) Rather than making a me-too product, it is also advisable to provide differentiation in the product. The differention may be in form of product improvements/ benefits etc or may be packaging innovation, which comes from someconsumer insights. At the end, the consumer should find some value addition in the product. Last year, Dabur enterted into floor cleaning category with Dazzl, which has a unique ‘Dirt Trap Technology’, which ensures that the muddy solution settles down in the bucket, offering a clear solution every time for mopping. This is something, which consumers may find different from other products. The differentiation may be marginal or exponential. But its paramount.Otherwise the brand will die its natural death.3. Distribution: Once you are confident of your Offer, the next step is to increase the increase your distribution depth. There can be multiple approaches to it. First is to roll-out pan India in all markets. But here you should have strong distribution network, which is possible for big FMCG companies like HUL, ITC etc. Second is to identify the right markets for the category. The right markets can be the top markets for the category. Lets take an example of aerateddrinks. The biggest selling market is North, especially the prosperous towns like Ludhiana etc. Here even if you capture a market share of 5%, you can have big volumes, as compared to 20% market share in Kolkata. I think the best indicator to look at is the sale per outlet per month. The volumes in a town may be high because of the geographical spread (No. of target outlets), which is not the right indicator. The sales per outlet per month in Ludhiana is much higher than Kolkata. So logically, i should enter into Ludhiana. But thats not all. You also need to look at other things like competition, consumer experimentativeness etc. So the point i want to make here is that, before increasing your footprint, you need to assess the right markets to enter.Labels: Business Expansion

 

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