Haris Naved Ahmed ERP 08708 | Consumer Behavior |
WAC-WIPRO Consumer Care Merchandisin !or "uccess A""I#NMEN$
WAC-WIPRO Consumer Care Merchandisin !or "uccess
Question How is VM related to channel management? What are the benefits of VM for the manufacturer and channel members? What are the pros and cons of operating the VM model through the distributor and manpower models? Calculate some of the key parameters that will help in comparing these models?
Answer %isua& merchandisin '%M( is a si&en) se&&in )echni*ue )ha) he&+s )o reduce )he em+&o,ee mi and increase +er s*uare !ee) re)urns and can !ur)her he&+s in reducin mar.e)in /ude)s $he ac)ivi), and +ro!ession o! deve&o+in )he !&oor +&ans and )hree-dimensiona& dis+&a,s in order )o maimi1e sa&es%M is )he use and mani+u&a)ion o! a))rac)ive sa&es dis+&a,s and re)ai& !&oor +&ans )o enae cus)omers and /oos) sa&es ac)ivi), In visua& merchandisin2 )he +roduc)s /ein so&d are ),+ica&&, dis+&a,ed in such a 3a, as )o a))rac) consumers !rom )he in)ended mar.e) /, dra3in a))en)ion )o )he +roduc)4s /es) !ea)ures and /ene!i)s $he overa&& +ur+ose o! visua& merchandisin is )o e) cus)omers )o come in)o )he s)ore and s+end mone, %isua& merchandisin inc&udes ho3 merchandise is +resen)ed as 3e&& as )he s)ore4s )o)a& a)mos+here Channe& manaemen) is a )echni*ue !or se&ec)in )he mos) e!!icien) channe&s or rou)es )o mar.e) !or +roduc)s and services2 and derivin )he /es) resu&)s !rom )hose channe&s /, a++&,in a++ro+ria)e !inancia&2 mar.e)in or )rainin resources %M is a mean o! e!!ec)ive channe& manaemen) ie reachin )he &are consumer /ase /, +resen)in +roduc)s in such a 3a, )ha) i) mo)iva)es )he consumer )o s+end mone, and /u, )he +roduc) Distributor Model !"#
$he inves)men) re*uired in )his mode& is s.im+, $he recrui)men) can /e done /, )he dis)ri/u)or himse&! $he inves)men) can /e !ur)her cur)ai&ed i! )he dis)ri/u)or ma.es a ood dea& o! /usiness /, sharin )he e+enses
C"$#
$he dis)ri/u)ors 3i&& no) under)a.e ini)ia)ives as )he, are no) oin )o rea+ direc) /ene!i)s $he indirec) /ene!i)s are no) so sini!ican) and +a&+a/&e )o )he dis)ri/u)ors As sa&es are )he +rimar, !unc)ion o! )he dis)ri/u)ors )he, sha&& no) +a, much heed )o )he +romo)iona& ac)ivi)ies HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
$erri)or, a&&oca)ion o! )he sa&es )eam 3i&& /e a cum/ersome 5o/ and *uic. re+&acemen) in case o! a))ri)ion doesn6) seem &i.e&,
Manpower Model !"#
$he hirin +rocess 3i&& /e easier as !i&)ra)ion is done /, )he )hird +ar), As )he )eam o! )eam &eader and merchandisers are in )he +a,ro&& o! )he aenc,2 )he +rocess 3i&& /e easier $he aenc, sha&& ensure *uic. re+&acemen) o! merchandisers in case o! a))ri)ion or com+&ain)s !rom )he com+an,
C"$#
$he e+endi)ure 3i&& /e ver, hih $he aenc, ma, no) )a.e )he o3nershi+ as i)s ro&e is &imi)ed )o s)a!!in $erri)or, division and o)her cum/ersome o+era)iona& 3or.s sha&& remain )he onus o! )he sa&es )eam $he .e, +arame)ers )o consider 3hi&e eva&ua)in )he )3o mode&s are -Num/er o! Merchandi1er re*uired -Cos)s associa)ed 3i)h each Merchandi1er
Wi)h )he iven in!orma)ion in case ca&cu&a)ion o! )he +arame)ers men)ioned a/ove2 cos) +er s)ore associa)ed 3i)h visua& merchandi1in under dis)ri/u)ion mode& is Ru+ees 79 +er mon)h Man+o3er Mode& is Ru+ees ::; 'Re!er Anneure : !or com+u)a)ions(
Question Compare the proposals of the two outsourced agencies% Calculate some of the key parameters that will help in comparing these agencies%
Answer Marin
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
and a sense o! /e&onin2 3hich ma.es much sense As i) is com+ara)ive&, ne3 )o )he /usiness2 a rea) sense o! o3nershi+ sha&& ru&e2 as much is a) s)a.e 3i)h )he +ro5ec) Pu) in a nu)she&&2 )he averae mon)h&, !ied cos) )o )he com+an, +er s)ore ma, no) +ro5ec) a ros, +ic)ure2 so !ar as Marinme da)a ca+)ure ca+a/i&i)ies ; Re&evan) indus)r, e+erience ? Re+or)in Mechanisms Based on a/ove +arame)ers2 cos) +er s)ore !rom each service +rovider has /een eva&ua)ed Marindi1e services cos) around Ru+ees :@0 +er s)ore and %isua& &everae Ru+ees :7 +er s)ore each mon)h 'Re!er Anneure 9 !or com+u)a)ion(
Question &nder what sales 'alue (or other) conditions is the mo'ement from the distributor model to the manpower model and further on warranted? De'elop a sensiti'ity model based on the information gi'en in the case% Assume that the a'erage profit margins on secondary sales (net of distributor*s margin to the retailer) is +,- for WCC./0 that the retailer margin is +1-0 and the a'erage credit to the retailer is !s%20111 at a gi'en point in time%
Answer $o de)ermine )he sa&es va&ue 'or o)her( condi)ions2 )he movemen) !rom dis)ri/u)or mode& )o )he man +o3er mode& can on&, /e sues)ed i! )he %M mode& enera)es +ro!i) in ecess o! i)s cos) ie /rea.-even +oin) 3here/, cos) incurred is e*ua& )o +ro!i) enera)ed nder )he assum+)ion o! WCC=# +ro!i) marin o! :@2 re)ai&er marin2 :0 and %M e+enses +er s)ore each mon)h in
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
$he minimum sa&es va&ue is ca&cu&a)ed )hrouh )he !ormu&a #ales3Additional rofit4rofit Margin of WCC./%
Wi)h ca&cu&a)ions a))ached in Anneure ;2 !o& has /een conc&uded •
•
•
•
Achieve a /rea.-even +ro!i)2 sa&es o! a) &eas) Rs@;@ +er s)ore is /e achieved +er mon)h )o ma.e )he
Question De'elop an action plan for /upta based on the information pro'ided% Answer
Wi)h )he !our o+)ions2 inc&udin )3o mode&s 3here ei)her )he com+an, or i)s channe& +ar)ners manae )he e&emen)s o! %M2 and )3o mode&s 3here %M is ou)sourced )o s+ecia&i1ed aencies2 #u+)a ac)ion +&an can /e as !o&&o3s /ased on )he com+u)a)ions made ear&ier •
•
se Man+o3er mode& /, ou)sourcin )he %M ac)ivi)ies )o Marindi1e $his is /ein sues)ed as cos) +er s)ore !or Marindi1e is Rs:@0 each mon)h aains) a /ude) o! Rs:7@2 )he ma5or manaemen) !unc)ions ie o+era)iona& manaemen)2 ana&,)ic and re+or)in and HR manaemen) harmoni1e )oe)her )ha) 3i&& even)ua&&, increase e!!ec)iveness Dur)her2 /, ou)sourcin )he %M ac)ivi),2 com+an, 3i&& /e a/&e )o u)i&i1e i)s )ime in o)her areas o! im+or)ance )ha) re*uire a))en)ion Dur)her2 )o chec. )he success o! )he sues)ed +&an2 a +i&o) +roram on se&ec)ed s)ores shou&d /e run !or a) &eas) 8-:0 3ee.s 3i)h a dedica)ed )eam c&ose&, moni)orin )he +rocess !or a&& hih &o3 +oin)s
HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
Question Consider a scenario where the increase in sales per outlet is not able to 5ustify the increase in costs per outlet when the model mo'es from distributor to agency% #hould the agency model be discarded in such a situation?
Answer
$he o/5ec)ive o! %isua& Merchandisin is essen)ia&&, increasin sa&es !or )he com+an, I! )he increased cos) o! movin !rom dis)ri/u)or mode& )o ou)sourcin )he %M ac)ivi)ies )o an aenc, resu&)s in hiher cos) +er ou)&e) as aains) a sa&es +er ou)&e)2 )he aenc, mode& shou&d /e discarded and )he com+an, shou&d reconsider i)s s)ra)e, !or %M ac)ivi)ies
HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
Anne6ure7+ 8otal Merchandi9er !e:uirement
Mon)h&, Bude) +er s)ore 'PR (
:7@
Num/er o! ")ores
:@000
$o)a& Mon)h&, Bude)
929@2000
$o)a& Fear&, Bude)
;:2@002000
No o! Re)ai& ")ores
:@000
No o! visi)s +er s)ore +er mon)h $o)a& No o! %isi)sGmon)h
9 ;0000
No o! visi)sGMerchandiserGda,
:@
No o! 3or.in da,sGmon)h
9?
No o! visi)sGMerchandiserGmon)h
;0
No o! Merchandisers re*uired
8;;;
Distributors Model
E+enses Rs "a&ar,GMerchandiserGmon)h
72000
$rave&&in A&&o3anceGMerchandiserG mon)h
800
Consuma/&es cos)Gmon)h
902000
"a&es .i) /a cos) GmerchandiserG mon)h
No o!
Merchan diser !or each dis)ri/u)o r
$o)a& no o! Merchan diser
=are
9
9
Medium
;
"ma&&
;8
@00
"a&ar, G Cos) +er mon)h
$rave&&in cos) +er mon)h
"a&es .i) /a cos) +er mon)hs
@8
?02000
?2?00
92000
:
;
97;2000
;:2900
:2@00
:
;8
92000
;02?00
:2000
$o)a&
:;@
?@2000
:082000
72@00
Ru+ees HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
+er s)ore cos) $o)a& Fear&, E+enses
:;0::000
Cos) +er ")oreG,ear
87
Cos) +er ")oreGmon)h
79
Anne6ure72 Man ower Model
No o! Merchandisers Re*uired
8?
No o! MerchandisersG$eam =eader
:9
No o! $eam =eaders Re*uired
7
"a&ar,GMerchandiserGmon)h
:92000
"a&ar,G$eam =eaderGmon)h
902000
"a&ar, Cos) +er mon)h
:2:?82000
$rave& E+enses +er mon)h
9002000
Consuma/&es cos)Gmon)h
902000
"a&es .i) /a cos) GmerchandiserG mon)h
@00
"a&es .i) /a cos) G mon)h
?9000
Aenc, Dee
:@
"ervice $a
:9;
Aenc, Cos)Gmon)h
:792900
"ervice $a Cos)Gmon)h
:?:28;
Fear&, E+ense
90292::?
Cos) +er ")oreG,ear
:2;@:
Cost per #tore4month
++;
Merchandiser cos)
Margindi9e
Visuale'erage
:097000
9?000 HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
$eam =eader Cos)
:92000
:0@000
@02000
80000
OE Cos)
7@2000
::@000
NMO Cos)
:8000
:000
Proram Manaer Cos)
@0000
@9000
Av Mon)h&, E+ense
?002000
@00000
Re+or n cos)
:02000
;00000
Ce&& +hone Cos)
?00000
800000
Aenc, !ee
:89@0
:?9@0
"ervice )a
:;
:009
a( Bac.-end o!!ice e+enses Warehouse
02000
0000
Main)enance
;02000
;0000
/( Consuma/&es
902000
90000
c( i) /as Cos) ',ear&,(
7000
8?000
$rainin Cos) ',ear&,(
:00000
:00000
$o)a& Fear&, cos)
98;87
;:@7??
In Mi&&ions
97
;9
Cos) +er ")oreG,ear
:27
9::;
Cost per #tore4month
+,1
+<=
Anne6ure ; #>$#8V8@ A$A.@##
WCC=# Pro!i) Marin
0:@
Re)ai&ers Marin
0
%M E+ense +er s)ore +er mon)h '
79
%M E+ense +er s)ore +er mon)h 'Man+o3er4s Mode&
::;
%M E+ense +er s)ore
:@0 HARIS NAVED AHMED
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WAC-WIPRO Consumer Care Merchandisin !or "uccess
+er mon)h 'Marin
:7
Model
Additio nal rofit per store per month
WCC./ rofit Margin
#ales Value for WCC./ (+,- profit Margin)
!etailer rofit Margin
#ales Value for !etailer (+1- profit Margin)
79
:@
?89
:0
@;@
Man+o3er Mode&
::;
:@
7@:
:0
8;?
Aenc, Mode& 'Marin
:@0
:@
:0
:2:::
Aenc, Mode& '%isua=everae(
:7
:@
:2:7?
:0
:2;0?
HARIS NAVED AHMED
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