I worked with a brand manager who was handling the ace brand " Chakra gold". He is a smart, witty person and has very good business sense. I used to enjoy the way he analyses the market and the way he builds the brand by apllying the right branding tools. Once in a brainstorming session we faced a deadlock. The mission was to achieve the target for the month and we were discussing on the modus operandi for the same. But we were not able to convince the brand manager for a regular promotion that we do every year to achieve our volume target. The reason was aparent. He is a person who looks at the long run(Brand Image, Equity etc....). I swear i didn't understand his perpective then and was even of the impression that He is such a jerk. He doesn't believe the sales team, that is why he is not spending on these things. But that day was an eye opener for me on how to develop a brand with a long term focus at the same time not compromising the short term objective of achieving the targets.......
We used to operate a trade scheme in the Re.1 tea pack every year. The sale used to shoot up by 50% after that. Our monthly volume normally is around 80 tons. So during scheme period it will hit 120 tons. But the outlay for the scheme is Rs. 5 per kg which is 6 lakhs for the month. The brand manager was totally against this scheme as it will only advance sale as traders will stock up and reduce the purchase in the prospective month. He suggested a different strategy to gain in the long term and also in the short run. He proposed increasing the grammage from 4gms to 4.5 gms. This means an increase in the volume automatically by 12.5 %(.5/4=12.5%). And there will be a gain of 10tons every month as its a pemanent increase. So cumulative increase in volume is 120tons and Profit is arond 30 lakhs. But at the same time there is also a increased cost due to additional grammage. Cost shoots up by 12.5 Rs/kg and therefore every month he needs to foot a bill of Rs. 10 lakhs(80000*12.5) and annually 1.2 crores. Net to net he spends 90 lakhs for an increase of 120tons(which is like 75Rs/kg). It seems huge and illogical know. But his logic for this was when you increase the grammage of the paisa pack what happens is that customer who buys it gets more cuppage and percieves a higher value. The increased CPV will help in re-buy and also may result in upselling to higher size packs where profit is more. Also new cutomers try this as it is value for money and due to word of mouth.........
What a subtlet perspective it was..... I totally enjoyed this........
Its quite interesting. But it is a very important decision to take. Though his perspective sounds logical, i m not sure how do you take such a decision when you dont have a proof or you may not forecast what the increase in sales would be if we implement the idea
ReplyDeleteThis idea was implemented and has actually resulted in an increase in the base not only in the LUP(Least Unit Pack) but also in the 25gms and 50gm packs which are the up gradation from the Re.1 pack.........
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