Fascinated by retail. Avid follower of Retail news. Keen observer as a customer.

(IMP: All comments and opinions voiced in this blog are purely based on my understanding of things. I do not intend promote or defame any particular brand/company.)

Thursday, October 27, 2011


Of course you have noticed the board that says discount!! Ever wondered what all goes behind extending that discount to you?

Before we get into the promotions we should know theses promotions can be interpreted in two ways based on who is extending the promotion? Is it the vendor or the retailer?  It makes a hell lot of difference.

Possibility 1: Customer oriented promotions

Who gets the discount- The end customer

The retailer communicates with the Vendor, informs him/her about the event calendar (which logs all the events/promotions to take place in the outlets) The vendor either decides to participate or not to participate in these promotions. If the vendor is willing to participate he/she will have to inform the retailer the nature of promotion, on what SKUs/items is the promotions being offered, for how long and for which specific retial outlets? That’s not all, also the advertising inside the stores and the kind of racks and display of the product is decided in advance and the vendor pays for those ads.  So, the retailer is getting benefited too. Not only that, the vendor may also choose to offer his products at a lower price to the retailer if achieves a specific sales target. e.g if Big Bazaar sells,  4lakh packs of Oreo, Ores will waive off a small percentage of the cost price to Big Bazaar.

Possibility 2: Vendor Promotions

Who gets the discount-The Vendor

There are many scenarios where this could happen but I will explain with one example. A retailer is expanding his product portfolio. If a specific product has a high brand value the retailer will approach the vendor of that product and offer a price at which he/she will purchase the product to stock it in their retial outlets. This is a plain vanilla explanation there is more to it but lets keep it simple for now. The retailer will offer some freebies like free in-house publicity for a month, Central display for two week without additional cost a higher margin percentage and so on. So the vendor is offered a benefit. This usually happens only when the vendor product is on high demand and the retailer is not large enough. Also, there may or may not be a benefit for the end customer.

There is more to come on this topic.


Monday, May 23, 2011

Noodles segment in SOUP!

I couldn't help but get back to write a little bit more about the Noodles segment in India! While the noodle kings and new entrants are sweating it out to push a pack of noodles the Indian consumer is playing a spoilsport! They are equipped with the knowledge of nutrition, the easy preparation, the different tastes,  what more.. noodles with soup- all is out in the market and he/she is too bored if you have nothing new to offer. Adding to the misery of the established brands are the Private Labels that are luring customers with attractive prices and schemes. They have a clear advantage in the following ways:
  • They can stock anywhere they want- home shelf advantage?? [:P]
  • They have observed and understood the consumer behaviour - The customer strolls around and makes choices, walk in and out of their premises a million times- Pan India! [What better Market research?]
  • Higher Margins- More flexibility in terms of cost
  • Existing reach- and robust supply chain!

While all this action is happening. I am was a maggie loyal who switched to some other brand. The new brands played on my mind and stole me from maggie! Now lets see.. what all maggie tried and how I can firmly say- it will be pushed aside with a bowl of two minute noodles toppled over it's head if it doesn't pull its socks up!

The flavour fiasco- Rememeber when maggie changed its flavour? The angry loyals ditched the brand and it had to run a campaign (look at next point) to win them back! Why change the base flavour..? Isn't there something known as line extension or adding new variants..? Well, they did that too.. just a little late in the fleeting market!

Meri Wali  Maggie- Good move for short term. Now the nostalgia won't do the trick anymore as the loyals are reaching their mid twenties to sixties (it has been here for decades!) while the fresh blood in the target segment -the kids.. have got tongue teasing flavours and more to choose from other brands entering the segment. Meri Wali Maggie - is grandma's tale now!

Maggie sitting over Soupy noodles- While the consumers and loyals were crying out loud as to they like to lick the maggie noodles masala.. maggie which also has a soup segment infact it is the 2nd leading brand of soup in India sat on the idea till Knorr( Market leader in soups) came up with soupy noodles and  swept away the market!Remember how maggie had to save its den by adding vegetable atta noodles for the growing health conscious consumers..? What did they do with the soup segment?   Knorr also have the advantage of being associated with healthy food- soups. They had to be an INSTANT [:P] hit!  They are selling noodles.. in disguise! Open your eyes! They have carved out a comfort zone in the cluttered market and have positioned themselves in the minds of the consumer as a healthy trusted alternative!

Guess the flavour? - Have you seen this...? No..? Rush to a MORE or BigBazzar and stand near the noodle stand. You will see packages with question marks[?].. It says- guess the flavour. I was amused by the idea I must say... but a little thinking could have worked in favour of the company. Imagine a maggie loyal or maggie customer. He/she is aware of  "2 min noodle" and it is engraved in his/her brain! Now, they pick guess the flavour.. head home open the pack when hungry to make the 2 min noodle completely unaware of what it would taste like or hoping it would taste like the flavour of their choice. A slight deviation leaves them hungry, angry and with a bowl full of noodles they can't throw nor eat..?  There could be better ways...! 

So why have I grumbled so much..? I am just frustrated by clutter! :P


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