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StratEdge 2009 GlaxoSmithKline Consumer Healthcare Ltd

STRATEDGE 2009

Choose your challenge!

Case 1: Cracking the Rural Distribution

Conundrum

OR

Case 2: Winning the Impulse Game

Your Voice , Your Innovation, Big Results

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Live Life

Company

Foods

Health Food

Drinks

Hoshiar

Badshah

Biscuits

Tasty

Treats

Energy Bars

Power Bite

Over The

Counter (OTC)

Analgesics

Alpha +

(For Fever)

Beta +

(For Headache)

Omega +

(For cold)

Antacids

Rahat

Pain Balms

Roshan

CASE 1: CRACKING THE RURAL DISTRIBUTION CONUNDRUM

INTRODUCTION

Live Life Ltd is a leading marketer of Foods and Over the Counter Products in

India. It is either number one or number two in most of the categories that it

operates in.

CATEGORIES OPERATED IN AND PRODUCT PORTFOLIO OF LIVE LIFE LTD.

Live Life Ltd. leads distribution in most of the categories and the challenge is

to push the bar further on distribution.

Figure 1: Product Portfolio

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THE CHALLENGE

SITUATION

Live Life Ltd. has recently changed its go to market model by moving to a two

tier model of Sub Distributor and Distributor. This has provided immense

benefits by increasing the reach and penetration of the company products and

by reducing complexity of operations.

Figure 2: Flow of Goods

Note: Any party that wants to deal in OTC products must have a valid drug license.

Retailer (Urban + Rural)

Live Life Ltd

C&FA

Distributor SuperDistributor

Sub DistributorWholesale

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Demand for Live Life Ltd. products exists in the rural market and currently

rural contributes to 22% of foods sales and 30% to OTC sales. Currently the

fragmented rural market is being covered by vans of identified distributors.

However this model of van coverage has the disadvantage of not being scalable

nationally.

The wholesale channel is another means through which products reach the

rural markets. However there is a need for better understanding of the

wholesal er s practices and operations which will help Live Life Ltd. devise a

stronger re-distribution strategy for rural.

TASK

1) A commercially feasible and scalable approach needs to be devised to

increase the reach of its products to the rural population. This will cover

the entire portfolio of foods and OTC.

To be able to achieve this Live Life Ltd. must draw insights from what

is currently happening in the rural space. Benchmarking what otherFMCGs are doing to drive rural distribution and re-distribution will

be important.

It will also be worthwhile to observe best practices of sectors like

telecom, durables and agro products in the rural space.

2) What are the emerging trends in pack sizes and price points in rural?

3) How must Live Life Ltd. leverage the wholesale channel to improve rural

re-distribution?

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40%

60%

Retail Wholesale

100%

0%

Chemists Non-chemists

ANNEXURES FOR CASE 1

1) Channel-wise Foods Sales of Live Life Ltd.

2) Channel-wise OTC Sales of Live Life Ltd.

3) Channel-wise Sales of Total Alpha+, Beta+ and Omega+

15%

50%

5%

5%

20%

5%

Chemists General MerchantModern Trade Self ServiceWholesale Bakery

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30%

70%

Chemists Non-chemists

30%

70%

Chemist Non-chemists

4) Channel-wise Sales of Rahat

5) Channel-wise sales of Roshan

6) Hoshiar pack sizes and price points

SKU Price (in Rs) Remarks

500 gms Jar 135

Refill 500 gms 125 Top selling SKU in urban and in rural

200 gms Jar 67

Refill 200 gms 5990 gms 20 Top selling SKU in rural

18 gms 5

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7) Badshah pack sizes and price points

SKU Price (in Rs) Remarks

500 gms Jar 135

Refill 500 gms 128 Top selling SKU in urban and in rural

200 gms Jar 67

Refill 200 gms 59

90 gms 20 Top selling SKU in rural

18 gms 5

8) Tasty Treats pack sizes and price points

SKU Price (in Rs)

72 gms 5

144 gms 10

189 gms 15

288 gms 20

9) Rahat pack sizes and price points

SKU Price (in Rs)

Bottle 46

Sachet 5

10) Roshan pack sizes and price points

SKU Price (in Rs)5 gms 10

10 gms 20

20 gms 35

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Live Life Ltd

Foods

Health Food

Drinks

Hoshiar

Badshah

Biscuits

Tasty

Treats

Energy Bars

Power Bite

Over The

Counter (OTC)

Analgesics

Alpha +

(For Fever)

Beta +

(For Headache)

Omega +(For cold)

Antacids

Rahat

Pain Balms

Roshan

CASE 2: WINNING THE IMPULSE GAME

INTRODUCTION

Live Life Ltd. is a leading marketer of Foods and Over the Counter Products in

India. It is either number one or number two in most of the categories that it

operates in.

CATEGORIES OPERATED IN AND PRODUCT PORTFOLIO OF LIVE LIFE LTD.

Live Life Ltd. leads distribution in most of the categories and the challenge is

to push the bar further on distribution.

Figure 1: Product Portfolio

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FLOW OF GOODS

Figure 2: Flow of goods

THE CHALLENGE

SITUATION

Historically, Live Life Ltd. has been in categories where trends are predictable,

where the company has enjoyed high dominance. Buying decision of the

consumer is not based on impulse but mostly on pre decided criteria. The

categories do not usually see rapid innovations in products & competition is

restricted to few large players.

Retailer (Urban + Rural)

Live Life Ltd.

C&FA

Distributor SuperDistributor

Sub DistributorWholesale

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Live Life Ltd. s expansion plans see it entering into un-chartered territory

where the stakes are high and the gains even higher if successful. With the

introduction of products like Power Bite energy bars and Tasty Treats biscuits,

Live Life Ltd. faces stiff competition from well entrenched players and from

the unorganized sector. The competition is quick to respond to changes in the

category and innovations are churned out faster than in the category that Live

Life Ltd. has functioned in traditionally.

The impulse category is also where the consumers have many substitutes

available for our products and switching brands is not necessarily a long and

well thought out decision. Hence it is absolutely essential for Live Life Ltd. s

new products to be available at the time & place where the consumer wants

them and at the right price.

TASK

1) Live Life Ltd. needs to raise the bar to help the company succeed by gearing

up:

a) Its Channel Management Approachb) Its Field Forces outlook and competence to sell

c) Its Distributors Approach

2) What BTL strategy should Live Life Ltd. adopt to succeed in the impulse

category?

3) What levels of investment (as a %age of sales) should Live Life Ltd. consider

to succeed in the market?

4) What are the channel dynamics in the impulse segment, channel

peculiarities and buying behaviour?

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15%

50%

5%

5%

20%

5%

Chemists General MerchantModern Trade Self ServiceWholesale Bakery

10%

40%25%

20%

2% 3%

Bakery General MerchantModern Trade Self ServiceWholesale Chemists

ANNEXURES FOR CASE 2

1) Channel-wise Foods Sales of Live Life Ltd.

2) Channel-wise Sales of Power Bite

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25%

10%20%

45%

North East West South

20%

52%5%

10% 10%

3%

Bakery General MerchantModern Trade Self ServiceWholesale Chemists

0%

45%

0%

55%

North East West South

3) Channel-wise sales of Tasty Treats

4) Region-wise sales of Power Bite

5) Region-wise sales of Tasty Treats