Over The Wall

Sales Case Study

Ankur Patel
Past : Business Analyst, Capital One
Graduation : IIT Delhi, 2012
Zineet Kumar
Past : Operations Analyst, Cypress
Graduation : NIT Trichy, 2011
Executive Summary
1
1
Both Kirana & Modern retailers contribute to our
bottom line and hence no one can be compromised
at the cost of other
2
Communicate with Retailers association regarding
actual impact of Walmart and Maricos minor role
4
Collaborate by empowering Kirana & modernizing
their stores for win-win relationships
3
Negotiate and agree upon different SKU supply by
package size to Walmart and Kiranas
Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
Information gap & economic issues are leading to the deadlock with retailers
Conflict
Lack of
Communication
Uncertainty
High level of
interdependence
Perceived Goal
Incompatibility
What is the
conflict
Retailers want Walmart to shut down and hence require Marico to stop supplies
vs
Marico would want to continue relationship with Walmart for higher profits and good relations


Economic Impact

Lower Sales
Stress on margins
Impacts relationship
with manufacturers


Frame

Overestimating impact
Fear of share loss
Not aware of Maricos
position


Why
How to Resolve
Communicate

Present Clearer picture
of reality
Explain constraints


Reinforce

Identify weaknesses
and promise help
Collaborate to create a
win-win situation


Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
Kirana & Modern Retail - Both are equally important for Maricos business
3 3
Behavioral Low involvement, Light users
Psychological Time starved
Profile Rural, Semi-urban, Low income

Behavioral High involvement, Heavy users
Psychological Value conscious
Profile Urban, High income

Consumer
Segment
Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
Goal
Resolve the current deadlock by appeasing the Kirana Retail Association and develop
business strategies for both in the upcoming changing environment
79%
69%
58%
50%
45%
21%
31%
42%
50%
55%
0%
20%
40%
60%
80%
100%
5 10 15 18 20
P
r
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c
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e
d

f
u
t
u
r
e

%

c
o
n
t
r
i
b
u
t
i
o
n

Years from now
Kirana Modern Retail
CAGR 23.7% 36.7%
86%
14%
Current Contribution to business
Kirana
Modern Retail
Bottom Line Average Margin Loss over cost 18.64% Average Margin Loss over cost 8.64%
Kirana Modern Retail
Marico should ensure proper communication and quickly implement the
resolving strategy by July15
4
Communicate

Showcase how their concerns are
due to less analysis of information
Inform about Maricos constraints
and lack of power to tackle Walmart
head on
Explain how immediate impact of
Walmart entry is on modern
retailers and not on Kirana

Negotiate

Suggest differentiation of SKUs to
suit their demand
Ask them to elect their
representatives for further
communications
Win their confidence by highlighting
similar margin in Maricos products
as for Walmart

Collloborate
Offer collaborative strategies to
strengthen them against the
upcoming challenge
Help them in getting advanced
technology and systems
Reinforce relationships by
increasing inter-dependency
Sep14
Oct14
Oct14
Oct15
Timeline
Stakeholders
Retailers
Abhinandan
Retailers
Representative
Marico Regional team
Marico Regional Team
Marico Management
Retailers
External services
Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
In short term, Marico should discuss providing separate SKUs & direct
supply to Kirana stores
5
Solution Rationale Impact
1
Different
SKUs
2


Differentiate Kiranas and
Walmart supplies by
package sizes in short term
After negotiation, agree to
supply only large Suffola
packs, combos of Zatak,
Parachute, Revive etc. to
Walmart



Support them to create a
regional Retail organization
that can buy directly from
Marico
This would increase their
margins and arm them to
compete with Walmart


Direct
Supply
SKUs
1: Family packs now account for 75% of total sales at Big Bazaar and Food Bazaar outlets Economic Times
2. Kiranas strike back Business Today

According to reports
1
,
consumers shopping in
modern trade are likely to
buy large volume while they
buy smaller sizes from
Kirana
This will reduce direct
competition with Walmart

Better inventory
management with Kirana
Easy resolution with least
business impact
No impact on relationship
with Walmart


There are examples
2
like
Rajkot where retailers have
united to bulk buy from
suppliers
This will eliminate distributor
and increase margin for
both Marico and Kirana
stores


Win-win for both Marico and
small retailers
Margins across all products
should increase by 5%
although there might be
some inventory and
distribution issues early on


Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
In long term, help Kirana stores in modernization and managing inventory
6
Provide help in transforming to self-service
stores
Higher Credit support and provide
inventory management solutions
Hire consultant team to suggest re-
orientation of prospective stores with high
sales and store area

Consultants can also conduct market
research and guide store regarding Marico
products for better sales at the same time

Provide exclusive modern racks for Marico
products

Create an online portal for ordering to
facilitate inventory management and
credit support tracking

Leverage Distributor and phone
ordering for less educated
storekeepers

Use past information to provide higher
credit support to the needy

Strategy
Implement
Business
Impact

Marketing Costs will increase from current levels of 2-6% of sales

Revenue to increase by ~20%

Better product and brand visibility for Marico

This will also strengthen our long term relationship with Kiranas

Conflict
Assessment
Conflict
Solution
Negotiation Consolidation
Conflict
Definition
7
Thank you