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FMCG companies need to re-examine channel roles and structures

FMCG BLOGS

Sep 2nd 2014, 13:50

Guest blog by Sane Mdlalose, associate consultant at Aperio, a business consulting company focused on accelerating growth of FMCG brands in South Africa and Sub-Saharan Africa. 

Channel marketing has evolved substantially since the 1990s as FMCG companies have realised the importance of enhanced shopper understanding to drive business growth. If channel marketing is to ensure the strategic agenda of the business is reached and category growth is realized, FMCG companies need to create stronger integrated, cross functional teams. 

In the 1990s most companies were organised according to key account teams and category and sales teams operating independently of each other. This later gave rise to a closer alignment between the category agenda and customer/shopper understanding.
At this time customer/shopper understanding was largely based on the format of an outlet. For example, large outlets such as hypers, were deemed to meet monthly shopping needs. However in the early 2000s research from leading research houses started to show that consumers were shopping across different outlet formats for the same shopper mission and outlets were meeting more than one shopper mission across a multitude of categories. This gave rise to the need to move from a category view of the world, to a shopper mission and channel based view of the market place.

The channel team’s primary focus is to understand shopper’s behaviour across a range of categories, within a set group of outlets, which are similar in structure and meet the needs of the shoppers, who they service.

FMCG companies need to re-examine what is the most effective and relevant role of channel in the business. Multinationals have led the approach to setting up channel teams with companies following suit, however one of the primary challenges is lack of clarity with regards to roles and responsibilities across marketing, channel, and customer teams.
Typically when a channel team is implemented companies tend to go for the “best practice model” but do not make any adjustment to the roles and responsibilities of the marketing and sales team. 

Developing an effective channel team requires a review of the other business units as well. In as much as sales and marketing are structure across business, channel is the same.
The consequences of not getting this right are that the channel/shopper team is less effective, can be ‘perceived’ as being incompetent and ultimately driving category growth becomes difficult.

An outline of  the most problematic areas: 

BTL & ATL

Traditionally marketing briefs Below the Line (BTL) promotional campaigns, but the briefs are not shopper focused. In addition, Above the Line (ATL) campaigns are not integrated with the shopper in mind. This dilutes the communication, impact and effectiveness of promotions.

Brands have to review the roles and responsibilities in terms of who briefs agencies and who owns BTL promotions. Should channel brief and get input from marketing? Or should channel lead this? Some companies have created joint briefing and review teams, using channel for strategy and input throughout the process, yet retaining the management of the agencies within the marketing teams. 

Strategy

On the other side of the coin when it comes to customer and sales; the strategy should be driven by the channel team. This means the strategic thinking role needs to be adapted. Companies need to break the line between consumer and shopper thinking, that in-store equals shopper. The strategic input from channel needs to be redefined. 

Resourcing

Another key issue is that the channel team takes the marketing strategy and adjusts it to maximise growth by influencing shoppers in outlets. This means that the calibre in terms of capability is directly proportional to the effectiveness of a channel team. 
Companies have a tendency of placing more junior people than marketing and customer teams into channel marketing. More often than not individuals in marketing and customer teams have a deeper knowledge of their area of expertise. 
Placing people who are less experienced into channel marketing, results in a situation where the channel team is not able to adequately engage, influence and implement the shopper agenda as they have do not have enough knowledge about consumer or customers, to drive growth.

Data and shopper information

Most companies “talk” shopper but the available information sources are either at a consumer or customer level, not a shopper level. This means there is very little understanding of what happens in channel and the shopper is not well understood.
Most IT database systems are organised according to the customer and they are not adjusted or reorganised according to shopper definitions. This creates non-alignment between what channel teams are doing and the rest of the business. The ability to analyse and use information is therefore undermined. 

Classification of outlets

How an organisation classifies their outlet into channels can undermine the channel team’s effectiveness. There are many ways to segment the outlet universe, but in having a one dimension view is risky. A multi-dimensional view of the consumer, customer, category and shopper is ideal, however the rest of the business and information sources, callage, structures, KPI’s and so on are structured differently, creating a disconnect.

Companies need to re-examine their internal processes to accommodate the requirements of the channel and shopper approach in the following ways:

Reviewing and clearly defining the roles and responsibilities of marketing, channel and customer teams. 
Revising channel segmentation to include more dimensions. 
Adjust IT systems and ways of working to capitalise on this new channel architecture and business structure.
Ensure that people placed in channel have equal to or higher capability then their marketing and/or customer counterparts - it is helpful when these people have had management experience in marketing and or in Key Accounts before being placed in channel.
Educate the marketing teams on the importance of a shopper approach.




ABOUT SANE MDALOSE:
 
Sane Mdlalose is an associate consultant at Aperio, a business consulting company focused on accelerating growth of FMCG brands in South Africa and Sub-Saharan Africa. 
Sane is a skilled marketing professional with 18 years’ experience in the FMCG sector. With a depth of experience in understanding consumer needs and reaching business objectives for brands, she has earned a reputation for developing highly effective market penetration solutions across formal and informal sectors.  She is best known for her strong influencing skills and ability to achieve results with, and through people.
 
 

MICHAEL WOOD

at Aperio FMCG Consulting
SECTOR: BRAND-MANAGEMENT

Michael Wood is co-founder and Director of Aperio, a business consulting company focused on the FMCG space in South and Sub Saharan Africa. Michael has many years international experience where he held the positions of Marketing Director, Sales Director & Managing Director with the Gillette company and Procter & Gamble....


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