the art of fmcg ( part two )
TRANSCRIPT
To all my dear friends ,, brothers ,,
colleagues ,, managers ,, team who
support me , motivate me ,, gave me the
true beloved advice ... Who learn me to
be an ambitious and curious to learn ,,
search for the goals and hungry to know
a lot about all the fields in my life ....
Through more than 8 years of working
in FMCG i learned that the success and
progress didn't come by luck but by the
hard work and challenge your self and
ur obstacles ...... The more u work and
learn ..... The more u can achieve your
targets .....Thank u .... I appreciate all of
ur efforts
First You must see this video
https://www.youtube.com/watch?v=mA
7ms-6wTeq
Neuromarketing !
What is Neuromarketing? Neuromarketing aims to better understand the impact of marketing stimuli, by
observing and interpreting human emotions. The rationale behind
neuromarketing is that human decision making is not so much a conscious
process and the idea of the “homo economicus”, basis for the majority of
economic models around, is out dated. Instead, there is more and more prove
that the willingness to buy products and services is an emotional process
where the brain uses a lot of short cuts to accelerate the decision making
process.
Neuromarketing studies which emotions are relevant in human decision
making and uses this knowledge to make marketing more effective. The
knowledge is applied in product design, enhancing promotions and
advertising, pricing, store design and the improving the consumer experience
in a whole.
The field lies on the intersection of neuro economics, neuroscience, consumer
neuroscience and cognitive psychology.
Neuromarketing in different areas of marketing Neuromarketing in Market Research
The vast majority of companies under the umbrella of neuromarketing are
active in the market research domain. These companies are experts in
evaluating commercials, ads, new products, or even measure audience
responses to media like broadcasting or movies. Neuromarketing in Product Design and Packaging
How a product looks, feels and functions is affecting the consumer experience in a
whole. Applying neuromarketing principles and neuromarketing testing can provide
insights on the emotional effects of design choices.
Neuromarketing in Pricing
Marketers know for a very long time, that price is an important variable in the success
of product and service. Knowledge on how price information is perceived and
processed is the added value of neuromarketing in this part of the marketing process.
Neuromarketing in Store Design
If every in-store decision was taken rationally, your weekly groceries would take up
to eight hours. The success of retailers depends on how consumers experience their
stores and services, how easy they can navigate and how products, price and
promotions are presented (and perceived). Shopper marketing can be enriched by real
time measurements of participants’ emotions in a lab or in-store situation. Retailers
can also apply the scientific principles of neuromarketing in their retail environments.
Neuromarketing in (Professional) Services
The (professional) service industry depends largely on human interactions. How
(B2B) consumer experience the quality of these services is basically an emotional
process. This explains why the best offer for the best price does not always win the
quote. Neuromarketing brings in some heuristics on how to act for a better quality. Or
for a better perceived quality, because most of the time the decision is taken before
the service is delivered.
Neuromarketing in Advertising
Neuromarketing applied to advertising uses neuromarketing principles to develop ads
and campaigns. While advertising is mainly a creative process, neuromarketing can
add value by a better understanding the effects of ads on human beings.
Neuromarketing is well developed in ad-testing on effectiveness. Predicting how well
it is related to likability and sales.
Neuromarketing is currently looking for ways to apply the knowledge around to apply
knowledge on ad effectiveness in an earlier stage of the creative process.
Neuromarketing in Consultancy Neuromarketing consultants use their knowledge
from consumer neuroscience and apply it in consultancy jobs in the different areas of
marketing. Neuromarketing in 'Business to Business' it is rather unusual to state that
purchase decisions in B2B environments are (at least partly) emotional. But these
purchase decisions are made by the same brains as consumer decision making and it is
unlikely that the principles for consumer decision making suddenly disappear once
entering the office. Although there is currently not so much research around on this
topic, it is expected that neuromarketing in B2B will grow in this
Look in Video
https://www.youtube.com/watch?v=Ajg0ypDD7i0
Trade marketing
Trade marketing is a discipline of marketing that relates to increasing the
demand at wholesaler, retailer, or distributor level rather than at the consumer
level. However, there is a need to continue with Brand Management strategies
to sustain the need at the consumer end. A shopper, who may be the consumer
him/herself, is the one who identifies and purchases a product from a retailer.
To ensure that a retailer promotes a company's product against competitors',
that company must market its product to the retailers as well. Trade marketing
might also include offering various tangible/intangible benefits to retailers. The
alignment of sales and marketing discipline to profitability can be another
explanation for trade marketing.
Introduction
76 percent of shopping decisions are now made at the trade or what marketing
practitioners refer to as "point-of-purchase" This new trend leads to the greater
importance of merchandising and shopper promotions than consumer directed
programs.
Targets of trade marketing Distributor/Dealer
Distributor/Dealers are channel trade partners who act as a medium to ensure
stock delivery/availability for the consumer across the geographies. The role of
these entities is absolutely critical as they help in ensuring that the product is
widely distributed and available for the end consumer. The key benefit of these
entities is in ensuring that the distribution costs are lower for the manufacturer
and simultaneously the products are available for the end consumer. The
distributor and dealers operate on a base trade margin (factored in the cost of
the product by the manufacturer). Along with the base margin the trade
partners also get additional schemes/incentives which keep on varying from
time to time and product to product. The dealer could be a Retailer (selling to
end consumer directly), wholesaler (selling to other retailers primarily) or a
modern retailer (i.e. self-service stores like the carfour . panada etc. which are
into both the consumer retailing and wholesaling).
sales outlet
Sales outlet means a retailer. A retailer is also one of the customers in trade
marketing targets. Plans of trade marketing is targeting customers and
shoppers. Therefore, trade marketing should provide sales outlets with
customer & shopper-based value creation plans. Sales outlets (customers) are a
place that manufacturer can meet shoppers and consumers.
Methods of trade marketing
Basic method of trade marketing is focusing on sales fundamentals, such as
Distribution, Display, Promotion and Price. With data and knowledge of sales
fundamentals, trade marketing develops market strategy aligned with brand
strategy. In order to deliver sales volume and value, trade marketing support
sales forces with well-designed fundamental enhancement plans.
Current trends in trade marketing
Shopkeepers and retailers are becoming more and more profit margin
oriented.They try to extract maximum margin from a particular Company by
quoting higher margins being given a competitor company. Retailers demands
higher display rent as well for the front section and appears to be a mess of the
same.
Shopper marketing
Shopper marketing may be included in trade marketing, therefore the shopper
being another target for trade marketing managers, while it can also be
considered as a separate discipline. Some of the activities to increase demand at
shopper level include setting the right planogram, price announcements such as
inserts, use of point of purchase materials, alternatively called promotional
material.
KPI Trade marketing
active customer base - distribution, sales outlets which buy
products of company
middle order from a sales outlet
share trade shelf
fullness on trade shelf
regular presence of must stock
right representation planograms
accommodation POS
additional space for products of company
lack of OOS
low level of commodity rests
knowledge about product in sales outlets
Market share
Market share is the percentage of a market (defined in terms of either units or
revenue) accounted for by a specific entity. In a survey of nearly 200 senior marketing
managers, 67% responded that they found the "dollar market share" metric very
useful, while 61% found "unit market share" very useful
"Marketers need to be able to translate and incorporate sales targets into market share
because this will demonstrate whether forecasts are to be attained by growing with the
market or by capturing share from competitors. The latter will almost always be more
difficult to achieve. Market share is closely monitored for signs of change in the
competitive landscape, and it frequently drives strategic or tactical action
Increasing market share is one of the most important objectives of business. The main
advantage of using market share as a measure of business performance is that it is less
dependent upon macroenvironmental variables such as the state of the economy or
changes in tax policy. However, increasing market share may be dangerous for
makers of fungible hazardous products, particularly products sold into the United
States market, where they may be subject to market share liability
Purpose
Market share is said to be a key indicator of market competitiveness—that is, how
well a firm is doing against its competitors. "This metric, supplemented by changes in
sales revenue, helps managers evaluate both primary and selective demand in their
market. That is, it enables them to judge not only total market growth or decline but
also trends in customers’ selections among competitors. Generally, sales growth
resulting from primary demand (total market growth) is less costly and more
profitable than that achieved by capturing share from competitors. Conversely, losses
in market share can signal serious long-term
problems that require strategic adjustments. Firms with market shares below a certain
level may not be viable. Similarly, within a firm’s product line, market share trends
for individual products are considered early indicators of future opportunities or
problems.
Research has also shown that market share is a desired asset among competing firms.
Experts, however, discourage making market share an objective and criterion upon
which to base economic policies. The aforementioned usage of market share as a basis
for gauging the performance of competing firms has fostered a system in which firms
make decisions with regard to their operation with careful consideration of the impact
of each decision on the market share of their competitors.
It is generally necessary to commission market research (generally desk/secondary
research) to determine. Sometimes, though, one can use primary research to estimate
the total market size and a company's market share.
Construction
"Market share: The percentage of a market accounted for by a specific entity."]
"Unit market share: The units sold by a particular company as a percentage of total
market sales, measured in the same units]
Unit market share (%) = 100 * Unit sales (#) / Total Market Unit Sales (#)
"This formula, of course, can be rearranged to derive either unit sales or total market
unit sales from the other two variables, as illustrated in the following]
Unit sales (#) = Unit market share (%) * Total Market Unit Sales (#) / 100
Total Market Unit Sales (#) = 100 * Unit sales (#) / Unit market share (%)
"Revenue market share: Revenue market share differs from unit market share in that it
reflects the prices at which goods are sold. In fact, a relatively simple way to calculate
relative price is to divide revenue market share by unit market share]
Revenue market share (%) = 100 * Sales Revenue ($) / Total Market Sales
Revenue($)
"As with the unit market share, this equation for revenue market share can be
rearranged to calculate either sales revenue or total market sales revenue from the
other two variables
Market share can be decomposed into three components, namely: penetration share,
share of customer, and usage index. These three underlying metrics can then be used
to help the brand identify market share growth opportunities
Methodologies
"Although market share is likely the single most important marketing metric, there is
no generally acknowledged best method for calculating it. This is unfortunate, as
different methods may yield not only different computations of market share at a
given moment, but also widely divergent trends over time. The reasons for these
disparities include variations in the lenses through which share is viewed (units versus
dollars), where in the channel the measurements are taken (shipments from
manufacturers versus consumer purchases), market definition (scope of the
competitive universe), and measurement error
SKU ?!
SKU (stockkeeping unit, sometimes spelled "Sku") is an identification, usually
alphanumeric, of a particular product that allows it to be tracked for inventory
purposes. Typically, an SKU (pronounced with the individual letters or as SKYEW) is
associated with any purchasable item in a store or catalog. For example, a woman's
blouse of a particular style and size might have an SKU of "3726-8," meaning "Style
3726, size 8." The SKU identification for a product may or may not be made visible
to a customer. SKU numbers can sometimes be seen in online e-commerce sites.
Short for stock keeping unit, SKU is a unique numerical identifying number that
refers to a specific stock item in a retailer's inventory or product catalog. The SKU is
often used to identify the product, product size or type, and the manufacturer. In the
retail industry, the SKU is a part of the backend inventory control system and enables
a retailer to track a product in their inventory that may be in warehouses or in retail
outlets
in the field of inventory management , a stock keeping unit or SKU is a
distinct type of item for sale such as a product or service, and all attributes associated
with the item type that distinguish it from other item types. For a product, these
attributes could include, but are not limited to, manufacturer, description, material,
size, color, packaging, and warranty terms. When a business takes an inventory, it
counts the quantity it has of each SKU.
(POS display) ?!
A point-of-sale display (POS display) is a specialized form of sales promotion that is
found near, on, or next to a checkout counter (the "point of sale"). They are intended
to draw the customers' attraction to products, which may be new products, or on
special offer, and are also used to promote special events, e.g. seasonal or holiday-
time sales. POS displays can include shelf edging, dummy packs, display packs,
display stands, mobiles, posters, and banners. POS can also refer to systems used to
record transactions between the customer and the commerce
Examples
Usually, in smaller retail outlets, POS displays are supplied by the manufacturer of
the products, and also sited, restocked and maintained by one of their regular
salespersons. However, this is less common in large supermarkets as they can control
the activities of their suppliers due to their large purchasing power, and prefer to use
their own material designed to be consistent with their corporate theming and store
layout.
Common items that may appear in POS displays year-round are batteries, soft drinks,
candy, chewing gum, magazines, comics, tobacco, and writable CDs and DVDs.
These displays are also useful in outlets with limited floor space, as there tends to be
much wasted space around counters.
The displays are normally covered with branding for the product they are trying to
sell, and are made out of cardboard or foamboard, and/or a covering over a plastic or
Perspex/Plexiglass stand, all intended to be easily replaceable and disposable. This
allows designers to make full use of color and printing to make the display visually
appealing. Some displays are fixed or non-disposable; these may include lighting to
make the display more visible and may also contain a cooler, e.g. for drinks or ice
cream. Some are no more than a metal basket, with no design on the outside, simply
showing a price; these types of display are easier to refill
Lightboxes
In the field of POS displays, a "lightbox" is a display fixture (or a modular component
of a larger POS display structure) that contains a translucent graphic film with lamps
that transmit light through the graphic, thus "backlighting" the graphic message for
increased visibility, brightness and contrast relative to its surroundings. By definition,
the artwork or backlit graphic film (aka "duratrans") in a POS lightbox is replaceable
without discarding the lightbox or any of its other components.
Lightboxes have historically been lighted with fluorescent lamps due to their (a)
cooler operating temperature than incandescent; (b) relatively efficient power
consumption; and (c) inherent diffusive property. However, as in most commercial
lighting applications, there has been a significant industry-wide shift in the late 20th
and early 21st century toward LED lamps in POS lightboxes, for not just the
universally-acknowledged benefit of economy but also of practicality, as LED lamps
are more durable and impact-resistant in shipping, handling and public applications
such as Point-of-Sale.
Note: the definition of "lightbox" as it relates to POS displays is similar to but distinct
from that of a lightbox in the Photography and Graphic Arts industries. The similarity
is that they both contain lamps whose light is diffused to uniformly backlight a
translucent image; the distinction is that a POS lightbox is a permanent or semi-
permanent fixture used to display an advertising message in a retail space, while a
photography lightbox is usually a portable or table-mounted appliance used for image
quality analysis and/or tracing in a photography studio, graphic design studio,
graphic/print production shop or similar environment
ROMI ?!
Return on marketing investment
Return on marketing investment (ROMI) is the contribution to profit
attributable to marketing (net of marketing spending), divided by the marketing
'invested' or risked. ROMI is not like the other 'return-on-investment' (ROI)
metrics because marketing is not the same kind of investment. Instead of
money that is 'tied' up in plants and inventories (often considered capital
expenditure or CAPEX), marketing funds are typically 'risked.' Marketing
spending is typically expensed in the current period (operational expenditure or
OPEX). The idea of measuring the market’s response in terms of sales and
profits is not new, but terms such as marketing ROI and ROMI are used more
frequently now than in past periods. Usually, marketing spending will be
deemed as justified if the ROMI is positive. In a survey of nearly 200 senior
marketing managers, nearly half responded that they found the ROMI metric
very useful
History
The relatively young ROMI concept first came to prominence in the 1990s.
The phrase "return on marketing investment" became more widespread in the
next decade following the publication of two books Return on Marketing
Investment by Guy Powell (2002) and Marketing ROI by James Lenskold
(2003 )In the book "What Sticks: Why Advertising Fails And How To
Guarantee Yours Succeeds," Rex Briggs suggested the term "ROMO" for
Return-On-Marketing-Objective, to reflect the idea that marketing campaigns
may have a range of objectives, where the return is not immediate sales or
profits. For example, a marketing campaign may aim to change the perception
of a brand
Purpose
The purpose of ROMI is to measure the degree to which spending on
marketing contributes to profits.[1] Marketers are under more and more
pressure to “show a return” on their activities.
Construction
Return on Marketing Investment (ROMI) =
[Incremental Revenue Attributable to Marketing ($) * Contribution Margin (%)
- Marketing Spending ($)] /
Marketing Spending ($)
A necessary step in calculating ROMI is the estimation of the incremental sales
attributable to marketing. These incremental sales can be 'total' sales
attributable to marketing or 'marginal.
Methodologies
There are two forms of the Return on Marketing Investment (ROMI) metric.
Short term
The first, short-term ROMI, is also used as a simple index measuring the
dollars of revenue (or market share, contribution margin or other desired
outputs) for every dollar of marketing spend.
For example, if a company spends $100,000 on a direct mail piece and it
delivers $500,000 in incremental revenue, then the ROMI factor is 5.0. If the
incremental contribution margin for that $500,000 in revenue is 60%, then the
margin ROMI (the incremental margin for $100,000 of marketing spent is
$300,000 (= $500,000 x 60%). Of which, the $100,000 spent on direct mail
advertising will be subtracted and the difference will be divided by the same
$100,000 . Every dollar expended in direct mail advertising translates an
additional $2 on the company's bottomline.
The value of the first ROMI is in its simplicity. In most cases a simple
determination of revenue per dollar spent for each marketing activity can be
sufficient enough to help make important decisions to improve the entire
marketing mix.
The most common Short Term approach to measuring ROMI is by applying
Marketing Mix Modeling techniques to separate out the incremental sales
effects of marketing investment.
Long term
In a similar way the second ROMI concept, long-term ROMI can be used to
determine other less tangible aspects of marketing effectiveness. For example,
ROMI could be used to determine the incremental value of marketing as it
pertains to increased brand awareness, consideration or purchase intent. In this
way both the longer-term value of marketing activities (incremental brand
awareness, etc.) and the shorter-term revenue and profit can be determined.
This is a sophisticated metric that balances marketing and business analytics
and is used increasingly by many of the world's leading organizations (Hewlett-
Packard and Procter & Gamble to name two) to measure the economic (that is,
cash-flow derived) benefits created by marketing investments. For many other
organizations, this method offers a way to prioritize investments and allocate
marketing and other resources on a formalized basis.
Long term ROMI models will often draw on Customer lifetime value models to
demonstrate the long term value of incremental customer acquisition or
reduced churn rate. Some more sophisticated Marketing Mix Modeling
approaches include multi-year long term ROMI by including CLV type
analysis.
Long term ROMI models have sometimes used Brand valuation techniques to
measure how building a brand with marketing spend can create balance sheet
value for brands (or at least for brands that have been transacted, and therefore
under accounting rules can have a balance sheet value). The ISO 10668
standard sets out the appropriate process of valuing brands and sets out six key
requirements, transparency, validity, reliability, sufficiency, objectivity and
financial, behavioural and legal parameters. Brand valuation is distinguished
from brand equity by placing a money value on a brand, and in this way a
ROMI can be calculated.
Note: No return on marketing investment methodologies have been
independently audited by the Marketing Accountability Standards Board
(MASB) according to MMAP (Marketing Metric Audit Protocol) .
Cautions
Direct measures of the short-term variant of ROMI are often criticized as only
including the direct impact of marketing activities without including the long-
term brand building value of any communication inserted into the market.
Short-term ROMI is best employed as a tool to determine marketing
effectiveness to help steer investments from less productive activities to those
that are more productive. It is a simple tool to gauge the success of measurable
marketing activities against various marketing objectives (e.g., incremental
revenue, brand awareness or brand equity). With this knowledge, marketing
investments can be redirected away from under-performing activities to better
performing marketing media.
Long-term ROMI is often criticized as a "silo-in-the-making"—it is intensively
data driven and creates a challenge for firms that are not used to working
business analytics into the marketing analytics that typically determine
resource allocation decisions. Long-term ROMI, however, is a sophisticated
measure used by a number of firms interested in getting to the bottom of value
for money challenges often posed by competing brand managers.
However, it is often unclear exactly what it means to 'show a return' on
marketing investment. "Certainly, marketing spending is not an 'investment' in
the usual sense of the word. There is usually no tangible asset and often not
even a predictable (quantifiable) result to show for the spending, but marketers
still want to emphasize that their activities contribute to financial health. Some
might argue that marketing should be considered an expense and the focus
should be on whether it is a necessary expense. Marketers believe that many of
their activities generate lasting results and therefore should be considered
'investments' in the future of the business."]
ROMI across mediums
The difficulty of measuring ROMI varies across mediums. Results of a recent
North American survey show the ROI associated with one-way, traditional
media (e.g. television and radio) is more difficult to measure than interactive,
web-based digital media such as permission-based email marketing or social
media marketing.[6] In 2013, Black Ink introduced Eye On, the first SaaS
designed to measure enterprise ROMI across all mediums.]
With the rise in Digital Marketing, the opportunity is available for marketers,
or even business owners to run rough calculations of what their approximate
ROI may be for their campaigns, before they even start investing.
Based from statistical research, and all things being equal, the business owner
can calculate their current Digital Marketing ROI via their website and web
analytics software to understand their :
Current Traffic
Conversion Rate and
Average Sale.
Add in readily available information on potential traffic from the Google
Keyword Tool, and surveyed costs to acquire that traffic, the business owner or
marketer can estimate the potential ROI if that traffic is acquired, and even
measure it against other marketing methods
Whats CLV ?
In marketing, customer lifetime value(CLV) (or often CLTV), lifetime customer value
(LCV), or life-time value (LTV) is a prediction of the net profit attributed to the entire
future relationship with a customer. The prediction model can have varying levels of
sophistication and accuracy, ranging from a crude heuristic to the use of complex
predictive analytics techniques.
Customer lifetime value can also be defined as the dollar value of a customer
relationship, based on the present value of the projected future cash flows from the
customer relationship. Customer lifetime value is an important concept in that it
encourages firms to shift their focus from quarterly profits to the long-term health of
their customer relationships. Customer lifetime value is an important number because
it represents an upper limit on spending to acquire new customers. For this reason it is
an important element in calculating payback of advertising spent in marketing mix
modeling.