Sales grew 45% and Profit doubled in three years for an FMCG firm operating in matured products market
Sales grew 45% & profit doubled in 3 years in a matured market with multipronged initiatives
With Indian economy opening up in early nineties, edible oils & fats industry underwent a metamorphosis. De-licensing attracted numerous new players, and the industry became highly fragmented with a large number of small & medium sized local & regional manufacturers. It transformed the sellers’ market to buyers’ market. Less than a decade later, at the turn of the millennium, the industry experienced another bigger shock. Duties on import of edible oils were brought down so low that imported oils could compete with locally manufactured oils. Conditions became favourable for big & multinational companies to enter India, set up large port based refineries and gain competitive edge through economies of scale. Big budget advertisements released in electronic media by these global firms made the customers brand conscious.
Unorganised sector, that had dominated the market so far, found it difficult to survive. Many small companies were wiped out, while medium sized companies ended up running a losing race. But a medium sized company, in North India, with long history of being an undisputed leader of the regional market, didn’t give up and successfully defended its turf for over 5 years – though found it tough to grow and sustain profits. For finding ways and means to not merely survive but also grow profitably, it decided to seek support from Actuate Business Consulting in 2006.
With detailed analysis of pros & cons of alternative actions, consultants convinced the management to adopt a multipronged approach for achieving profitable growth. Action programs covering the full spectrum of sales activities were well planned and executed meticulously in phased manner & sustained over next 3 years.
Key change initiatives included:
- Town & product wise competition analysis
- Assessment of each town’s market potential
- Rationalization of product basket offered
- Use of strategic, instead of cost-based, pricing
- Reinforcement of Dealers’ network & field force
- Setting targets & performance-linked incentives
- Enhancing IT capability
Company’s market share increased with improved reach and penetration; sales grew 10 – 15% every year and profit almost doubled in 3 years