Mit Case Study

BCG †Join BCG †Interview Prep †Practice Cases †Distribution†¦ http://www. bcg. com/join_bcg/interview_prep/practice_cases/dis†¦ The Boston Consulting Group Home > Join BCG > Interview Prep > Practice Cases > Distribution Strategy Distribution Strategy Crafting a Distribution Strategy for a Sugar Cereal Manufacturer Your customer is the sugar grain division of Foods Inc. , a U. S. - based wholesaler and producer of bundled nourishments. As indicated by the division president, Foods Inc. ‘s customary quality has been with markets, which despite everything represent most of its $1. billion in sugar grain deals. Yet, Big M Mart, a markdown chain, has been developing at a solid pace of very nearly 15 percent for each year and has now become Food Inc. ‘s biggest client. Your customer isn't sure how to respond, and has approached BCG for help with its circulation system. Build up Understanding of the Case First, let me ensure I comprehen d the issue. Our customer has some expertise in sugar grains customarily disseminated through supermarkets. Deals to Big M Mart, a markdown chain, have been developing at 15 percent for every year, and the chain has as of late become the biggest wholesaler of the customer's item nationwide.We are here to help assess the dispersion technique considering Big M Mart's development. That is right. Might you be able to disclose to me how markets contrast from markdown stores? Sure. Markets for the most part represent considerable authority in food, just as selling some family merchandise and over-the-counter pharmaceuticals. Rebate stores, then again, offer food close by a wide assortment of product, including garments, home hardware, and housewares. Does Big M Mart advertise its food items uniquely in contrast to do supermarkets? Markdown stores promote lower costs for a wide assortment of nourishments, especially staple, durable foods.Could I pause for a minute to compose a couple of no tes to myself? If it's not too much trouble feel free. Set Up the Framework Before making proposals, I figure we would need to assess whether deals development at Big M Mart is positive or negative for Foods, Inc. To do that, I would initially take a gander at how its sugar grain execution at Big M Mart contrasts and that in other dissemination channels. Second, I would take a gander at its exhibition at Big M Mart corresponding to contenders' presentation. Next, I would figure out what drives client buys. At long last, I would need to comprehend the flexibly chain.That absolutely seems like a sensible methodology. How about we continue. Assess the Case Using the Framework 1 of 6 10/2/09 6:57 PM BCG †Join BCG †Interview Prep †Practice Cases †Distribution†¦ http://www. bcg. com/join_bcg/interview_prep/practice_cases/dis†¦ First, I might want to show signs of improvement feeling of where Big M Mart remains according to our customer's other conveyance chan nels by looking at the customer's business information and edges, by wholesaler. The promoting office doesn't have edges by channel, yet tracks deals and volume for its main five distributors.What does this suggest about Big M Mart as a dispersion outlet? It looks as though the top merchants have been developing progressively significant, yet especially Big M Mart, which is becoming quicker than all the others. This is especially obvious when we take a gander at volume, where Big M Mart's development is a lot higher than that of the other four channels. What's more, how might you decipher what these information says about edges? While the customer's deals through other dispersion channels are becoming quicker than volume, Big M Mart volume and deals development are the equivalent, so the normal cost paid by Big M Mart has remained constant.That infers that business development at Big M Mart could have negative ramifications for our customer's edges. Next, I might want to take a gand er at how our customer is getting along corresponding to the opposition inside Big M Mart. Have they been picking up or losing piece of the overall industry? In what manner may you locate that out? I would attempt to meet Big M Mart's buying staff, since they would likely track those information for their own motivations. For what reason would they need to converse with you? By what means may you approach such a meeting? I would move toward the buying staff and recommend that our customer and Big M Mart work ogether to recognize best practices to lessen expenses and increment deals of sugar grains at Big M Mart. Suppose ideally you could get a breakdown of Big M Mart deals for the four biggest contenders (see pieces of the overall industry underneath). 2 of 6 10/2/09 6:57 PM BCG †Join BCG †Interview Prep †Practice Cases †Distribution†¦ http://www. bcg. com/join_bcg/interview_prep/practice_cases/dis†¦ What would we be able to gather about our customer's rivals inside this channel? Who would it be advisable for them to be stressed over? It would seem that our customer is losing piece of the overall industry, as is Tasty Breakfast, while Cereal Co. nd Private Label are picking up share. Private Label, be that as it may, seems to be developing from an extremely little base. I might want to investigate why our customer is losing piece of the pie to Cereal Co. at Big M Marts. Are their costs better than those of our customer? After a time of value wars six to seven years prior that brought down industry edges, the oat organizations have abstained from value rivalry inside a similar channel. On the off chance that costs are not driving the distinction, I would take a gander at different factors, for example, brand determination, level of rack space, item position, and in-store promotions.Visits to Big M Marts demonstrate that each name-brand organization holds 30 percent of the rack space, while private mark has 10 percent. Oat Co. brand s, be that as it may, will in general be set lower on the rack than your customer's items. All things considered, I presume that kids are a huge objective market for the sugar oat makers. The lower rack arrangement could be particularly imperative to youngsters who are taking a gander at the various sorts of grains. Are there some other advancements? Some Cereal Co. brands have deals advancement labels, and the group noticed that store flyers promote specials on Cereal Co. rands for Big M Mart client cardholders. In this way, regardless of whether all the organizations are keeping up item costs, perhaps Cereal Co. is deliberately limiting costs to pick up piece of the pie. It appears as though there is proof of participation between Cereal Co. also, Big M Mart. Do we know anything about their relationship? During prior conversations with Big M Mart, you found that your customer's rivals have 50 salesmen committed to the Big M Mart account. Your customer has seven. Oat Co. seems, by all accounts, to be committing more assets to its relationship with Big M Mart than our customer is.This may clarify its better item arrangement and advancement programs. 3 of 6 10/2/09 6:57 PM BCG †Join BCG †Interview Prep †Practice Cases †Distribution†¦ http://www. bcg. com/join_bcg/interview_prep/practice_cases/dis†¦ I think I have a decent feeling of dispersion and rivalry. I might now want to take a gander at the clients and comprehend why they select the items they do. One theory I have is that moving brand loyalties are harming our customer's piece of the pie at Big M Mart. That is fascinating. What might persuade acquisition of sugar cereals?There are bunches of components, for example, the games in the containers, the cost of the oat itself, how it tastes. To all the more likely comprehend shopper conduct, we may direct statistical surveying, perhaps through center gatherings, client perception, and value affectability considers. BCG groups reg ularly do such research. How about we expect your group leads some investigation. Your exploration infers that most purchasers will in general fall into two classifications. Around 60 percent of purchasers go directly to one oat and snatch it. We can consider this gathering the â€Å"brand-loyal† shoppers.Another 40 percent of customers take a gander at all the grains and afterward select one that intrigues them. How about we consider this gathering the â€Å"impulse† purchasers. For the brand-faithful customer, the need would be item accessibility, while item position would be significant for purchasers who like to look around. Inside these gatherings, are purchasers value touchy with the end goal that one brand can draw customers faithful to another brand? By and large, your examination shows that shoppers are not value delicate and are amazingly faithful to their favored brand.But when the favored grain is inaccessible, the brand-steadfast clients will buy limited o ats roughly 35 percent of the time. All things considered, from that data, apparently cost is certainly not a significant driver of buys except if the favored grain is unavailable. In these stock-out circumstances, you stated, brand-faithful clients will buy limited oats 35 percent of the time. What happens when the client doesn't buy a limited grain? In roughly 25 percent of cases, the client leaves without buying any grain at all.In the staying 40 percent of cases, the brand-steadfast client will act like a spur of the moment customer and select another brand. Intriguing. It appears as though item accessibility could be a significant driver of all out oat volume for Big M Mart. Obviously, we would need to realize how regularly stock-outs happen that cause shoppers to leave without buying oat happen. Since I have a truly decent comprehension of client inspiration, I'd currently prefer to pose a couple of inquiries about the customer's flexibly chain. I would need to converse with o ur customer's appropriation work force to comprehend the circulation procedure and to decide how regularly stock-outs occur.Can you depict how our customer's grain is disseminated at Big M Mart? Grains are dispersed from the processing plant to the merchant's stockroom twice month to month. The retailer at that point stocks the racks itself. Do we have any information about when the individual stores are unavailable? No, we don't, since our customer just conveys to the stockrooms and has no immediate access to in-store stock data. Since we distinguished item accessibility as a