Channel Analysis: Intensive Distribution

INTENSIVE DISTRIBUTION:

Distribution - process of placing product on a point of sales (POS) shelf. Distribution can be horizontal and vertical, weighted and numerical.
Horizontal - distributing portfolio of the products. Increasing horisontal implies an increase in the range of brands/SKU in current POS.
Vertical - distributing though different channels. Will cover channels types later on.
Weighted - bigger POS have more weight in calculation.
Numerical - simple counting of POS you present of total.
Example:
POS A - selling 100$ per month
POS B - selling 50$ per month
POS C - selling 25$ per month
My company present only in POS A. Weighted distribution equal 100/(100+50+25) = 57%
Numerical distribution equal 1/3 =  33%

RETAIL CHANNELS OF DISTRIBUTION

Channels can be direct and inderect.
Way in direct simple: Producer - customer. You are buying directly from manufacturer.
Indirect implies 3rd party side to deliver from plant to the homestore.
P&G distribution example:
Producer - retailers - customer (P&G - Metro cash&carry - you)
Producer - distributor - retailer - customer (P&G global - P&G local - Metro C&C - You)


PROFESSIONAL DISTRIBUTION CHANNELS

professional distribution vs retail

• Hospitals 
• Tenders
• Clinics

More characteristic for Pharmaceutical industry, where level of MD's recommendation matters.

Government tenders for medical equipment purchase will be tender channel of distribution

Clinics also can distribute drugs, medical goods and some kind of FMCG products.

DISTRIBUTION BY TYPE OF DELIVERY:

Online trade (less <5% of total sales go thought):

• e-commerce
• social media

Via online stores like amazon and e-bay thousand of products selling right now, social media channel use for marketing communications, advertising.

Traditional trade (>95% of the market):

• Modern trade
• Pharmacy and care 
• Drug stores
• Single stores (not chained) 

Traditional trade also usually means indirect distribution with wholesaler and retailer - very long logistic chain, time delivery and government regulation.

For channel analysis basis is to segment you sales by type of incoming (placement)
After this you can measure:
- channel share of total revenue
- distribution level for each channel
- weighted distribution threshold (80/20 rule tells that 20% numeric distribution makes 80% turnover)
- growth trends of online channel vs traditional
- investment vs incoming by each channel (ROI) etc.

And last tip is to make SWOT analysis for each channel you present. Each action gives you wide variety of choice and can be applied to the channel strategy  

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Gap analysis: tool of business analysis

GAP definition is simple for understanding: wanted target - current performance = GAP.
In business analysis GAPs will represent not only full picture but clusters, regions and channels.

Key point of GAP analysis is "what placement need to be taken as zero point"

GAP analysis example:
Total revenue of the company consists of 3 regions (A,B and C) and 2 channels (Y and Z). For simplicity lets imagine than all regions has Y ans Z channel.

Annual targets:
A=10
B=5
C=5
Y=15
Z=5
Total company =20

Real annual results:
A=12
B=3
C=5
Y=15
Z=4
Total company=19

gap analysis template:
Region "A" GAP is -2 (target 10 - real 12)
Region "B" GAP is 2 (target 5 - real 3)
Region "C" GAP is 0
Channel "Y" GAP is 0
Channel "Z" GAP is 1 (5-4)

Conclusion: Total company annual GAP is 1, was driven by region "B" and channel "Z"
By analogy you can go deeper to region "B" and compare its target vs actuals to find reasons generated GAP.

Tip: try to use Excel pie chart to represent different angel of GAP analysis tools and SWOT analysis.

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Reporting pt.3 :Placement as regions, channels and markets

What is a region? Region definition is geographic location broadly divided by physical characteristic. What does region mean for analytic? In a sense of analytics it can be virtual division of a territory.

Short reminder - full analysis consist of 4 directions: Period, Product, Measurement and Places. Two of them are already covered in this blog (check the link if you miss).

Placement as part of reporting in FMCG companies and Pharma industry sectors answering the questions: "Where"/"What"/Which"
- Where we are selling?
- What region performs better?
- What places drive customer's switching?
- Which retail market and retail sector is bigger?
- Which region was covered by promo activities?
Placement is Region, area, client, channel, markets, clusters.
Placement can have multifiltering options: both region and channel, area and client or market and region.
If channels aren't selected - all channels data will be seeing.
You need to decide what will be selected as you Placement and what size of detalization you need.
Example: some companies looks only on regions level, some drill to POS (point of sales) level.

For compiling industry profile, it's better to combine market opportunity analysis and SWOT analysis

Reporting pt.1

Reporting pt.2

Reporting pt.4

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Reporting pt.2: Products analysis fundamentals; what is marketing?

Obtaining analysis fundamentals knowledge and period analysis, go deeper for product analysis. Key approach here is reporting "segmentation" in a way of zoom-in

FMCG and Pharma-Healthcare industry
(manufacturer point of view):

1. Market 
2. Category
3. Subcategory
4. Brand 
5. Stage\line 
6. SKU 
7. Promo SKU

Example 1 - Manufacturer: Danone Baby Nutrition 

1. Market: Baby food nutrition 
   
2. Category: Breast milk substitutes
3. Subcategory: Premium value
4. Brand: Nutrilon
5. Stage\line: Infant formula (0-6 months)
6. SKU: Nutrilon 1 (400g size pack)
7. Promo SKU: Nutrilon 1 (400g) + cereal sample

Example 2 - Manufacturer: Henkel Cosmetics 

1. Market: laundry and cleaning products 
2. Category: Washing powder 
   
3. Subcategory: Value-for-money (very sensitive to the prise) 
4. Brand: Persil 
5. Stage\line: Liquid Gel 
6. SKU: Persil Expert Gel (1 litter bottle size)
7. Promo SKU: none

IT industry (with example):

1. App Type (mobile app \ web app \ desktop)
   
2. Platform (iOS, Android, Blackberry, Windows phone)
3. Category (fitness trainers)
4. Sub cat (running assistants)
5. SKU (RunKeeper)

Retailers / Distributors point of view:

Category - Subcategory - Manufacturer - Brand - stage\line - SKU
or Category - Subcategory - stage\line - Manufacturer - Brand - SKU
depends on category management rules

You need to think what "zoom-in" order suits specificity of your business.
Strongly recommeded to read SWOT analysis examples.
Reporting pt.1

Reporting pt.3

Reporting pt.4

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Reporting pt.1: Analysis of periods (YTD, MAT, RR...)

To build reporting system and obtain data for decisions, you need to know this:

YTD (Year-To-Date) - the most used. Describes a period, from the first day of current year, and up to the present day. Progressive one: upgrades every day you creating report.
Example: today is 7th of February. YTD counts January and 7 days of February = 38 days of current year.
YTD-1 the same as YTD but year before current one.
YTD vs YTD-1: very representative comparison. Useful when targets are annual. Shows performance this vs last year (like-for-like). "Like-for-like" means: we comparing apples vs apples, seasonality rate is excluded.
Example: (38 days from 1st Jan this year / 38 days from 1st Jan) -1= % of growth/change.
MAT (Moving Annual Total) - finance and marketing guys adore this one. MAT is moved back and sum 12 period from current month. Very useful and tricky: you need to know all facts driving it month-by-month.
Example: today is 02/07/15. We take only full months. Jan'15 + Dec'14 + Nov'14 + Oct'14 + Sep'14 + Aug'14 + Jul'14 + Jun'14 + May'14 + Apr'14 + Mar'14 + Feb'14 = MAT.
MAT -1. By analogy with YTD-1. Not this year but year before current. Do not exclude seasonality but gives right spot to comparison vs MAT.
Example: Jan'14 + Dec'13 + Nov'13 + Oct'13 + Sep'13 + Aug'13 + Jul'13 + Jun'13 + May'13 + Apr'13 + Mar'13 + Feb'13.
MAT vs MAT-1. When you have data for it - its brilliant! Update is every month and you will have strong picture of performance.
Example: by analogy to YTD vs YTD-1

Rarely used:
QTD vs QTD-1/2/3 (quarter-to-day) - for targets based on quarter results
MQT vs MQT-1/2/3 (moving quarter total) - quick glance on your quarter performance

Very handy:
TM vs TM -1 : this month versus last month. Full month to full month. Be careful with seasonality and fluctuations
Example: Jan'15 vs Dec'14
RR 3M vs RR 6M (running rate 3 months vs running rate 3 months ) - my favourite one. Was stolen from finance manager ;-) shows health of you performance by comparing different periods. One include another.
Example: (Jan'15 + Dec'14 + Nov'14) / (Jan'15 + Dec'14 + Nov'14 + Oct'14 + Sep'14 + Aug'14)

Interesting fact:
Nasdaq YTD and Dow Jones YTD periods calculation comes from basis analysis and reporting.

Read more on this topic:

Reporting pt.2

Reporting pt.3
Reporting pt.4

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AC Nielsen and OLAP analysis approach

AC Nielsen the most popular global data provider. They providing: marketing research, competitors info, distribution channel comparison etc.
The basis is OLAP metrics. To create of generate every OLAP report you need 4 constituting:

1. Period. In what period of time. Data "from" "to". If this field is blank, period = all possible data.
2. Product. What are you selling. It can be: brand, SKU, category. Blank = all types of products.
3. Placement. Where are you selling. Channel, region, area, country. Blank = everywhere.
4. Measurement. Sales/revenue units. It can be: pcs, value, volume. Can't be blank.

Hope you found this info useful.
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