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 oat division of Foods Inc. , a U. S. - based wholesaler and producer of bundled nourishments. As indicated by the division president, Foods Inc. ‘s conventional quality has been with supermarkets, which despite everything represent most of its $1. billion in sugar oat deals. In any case, Big M Mart, a rebate chain, has been developing at a sound pace of very nearly 15 percent for every 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 appropriation technique. Set up Understanding of the Case First, let me ensu re I comprehend the issue. Our customer represents considerable authority in sugar oats generally circulated through markets. Deals to Big M Mart, a rebate chain, have been developing at 15 percent for every year, and the chain has as of late become the biggest merchant of the customer's item nationwide.We are here to help assess the conveyance methodology considering Big M Mart's development. That is right. Would you be able to disclose to me how markets vary from rebate stores? Sure. Markets by and large represent considerable authority in food, just as selling some family merchandise and over-the-counter pharmaceuticals. Markdown stores, then again, offer food nearby a wide assortment of product, including attire, home hardware, and housewares. Does Big M Mart showcase its food items uniquely in contrast to do markets? Rebate 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 notes t o myself? If you don't mind feel free. Set Up the Framework Before making proposals, I figure we would need to assess whether deals development at Big M Mart is fortunate or unfortunate for Foods, Inc. To do that, I would initially take a gander at how its sugar oat execution at Big M Mart contrasts and that in other appropriation channels. Second, I would take a gander at its presentation at Big M Mart according to contenders' exhibition. Next, I would figure out what drives client buys. At last, I would need to comprehend the flexibly chain.That absolutely seems like a sensible methodology. We should 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 comparable to our customer's other dispersion channels by analyzing the cus tomer's business information and edges, by merchant. The showcasing office doesn't have edges by channel, however tracks deals and volume for its main five distributors.What does this suggest about Big M Mart as a dissemination 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 evident 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 gander at how our custom er is getting along according 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 most likely track those information for their own motivations. For what reason would they need to converse with you? In what capacity may you approach such a meeting? I would move toward the buying faculty and propose that our customer and Big M Mart work ogether to recognize best practices to diminish 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 deduce about our customer's rivals inside this channel? Who would it be advisable for them to be stressed over? It would appear that our customer is losing piece of the pie, as is Tasty Breakfast, while Cereal Co. nd Private Label are picking up share. Private Label, nonetheless, appears to be developing from a little base. I might want to investigate why our customer is losing piece of the overall industry 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 ceased from value rivalry inside a similar channel. In the event that costs are not driving the distinction, I would take a gander at different factors, for example, brand choice, 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. Grain Co. brands, 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 grain makers. The lower rack situation could be particularly essential to kids who are taking a gander at the various kinds 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. Along these lines, regardless of whether all the organizations are keeping up item costs, possibly Cereal Co. is deliberately limiting costs to pick up piece of the overall industry. It appears as though there is proof of participation between Cereal Co. what's more, 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 devoted to the Big M Mart account. Your customer has seven. Oat Co. has all the earmarks of being de voting more assets to its relationship with Big M Mart than our customer is.This may clarify its better item position 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 conveyance 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 rouse acquisition of sugar cereals?There are heaps of elements, for example, the games in the cases, the cost of the grain itself, how it tastes. To all the more likely comprehend shopper conduct, we may direct statistical surveying, potentially through center gatherings, client perception, and value affectability examines. BCG groups frequently do such research. How abou t we accept your group leads some investigation. Your exploration presumes that most purchasers will in general fall into two classifications. Roughly 60 percent of purchasers go directly to one grain and get 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 arrangement would be significant for buyers who like to look around. Inside these gatherings, are customers value touchy with the end goal that one brand can draw customers faithful to another brand? As a rule, your exploration demonstrates that shoppers are not value touchy and are incredibly faithful to their favored brand.But when the favored oat is inaccessible, the brand-steadfast clients will buy limited oats roughly 35 percent of the ti me. Indeed, from that data, apparently cost is certifiably 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 oat? In around 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. Fascinating. It appears as though item accessibility could be a significant driver of complete oat volume for Big M Mart. Obviously, we would need to realize how regularly stock-outs happen that cause shoppers to leave without buying grain happen. Since I have a quite 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 our customer's conveyance staff to comprehend the dispersion procedure and to decide how regularly stock-outs occur.Can you depict how our customer's oat is appropriated at Big M Mart? Oats are dispersed from the production line 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