MG6407 International Sales and Negotiations Report (M.Sc.Strategic Marketing and Practice) PDF

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MG6407 : International Sales and Negotiations Question : Pick any company. It can be your own company, an employer, or any company that is in the public eye. •Understand their corporate goals and marketing strategy from their publicly available information. There is no necessity to have inside information or interview staff. I’d prefer if you made assumptions based on publicly available information. •Create a realistic sales plan for the financial year 2020. The elements of the plan will be considered realistic if you can provide proper justification. •Create a Big Idea to define the sales challenge for the year. A written report of 3,500 words detailing your sales plan with justifications for every element, deliverable before class starts on November 15th. Use tables of figures to define your plans and text descriptions for justification.

Answer : Sales Plan 2020 for Grofers

Grofers is an Indian based e-commerce website and app that’s focused on food and groceries. Grofers offers almost everything for daily needs in the food and grocery space. It was launched in 2013 and has been growing in terms of size and revenue ever since. Market Share Analysis Grofers is into the Online Retail Distribution Sector. It has three major competitors who are Retail Distributors of groceries as well. They are : •

Big Basket - launched in 2011

•

Nature’s Basket - launched in 2005

•

PepperTap – launched in 2014

Nature’s Basket being the oldest of all, still doesn’t hold a huge market share in this sector. The reason behind it could be the lack of awareness about the internet, zero smartphones and no culture of online shopping back in 2005 in India. Today Big Basket has the largest market share , that is of 45%, followed by Grofers at 30%. Nature’s Basket and PepperTap have a market share of 20% and 5% respectively. Being one of the newest entrants in this sector, Grofers has done a great job by achieving the second highest market share.

Market Share

Big Basket

Grofers

Nature's Basket

PepperTap

Sales growth of Grofers from Financial Year 2014 To Financial Year 2019 – Started off the business in the year 2013 with an investment of just 2 million, Grofers gained a revenue of 13 million in the very first financial year with a 4% profit rate. Since then the revenue and the profit margin of Grofers has been rising at a decent pace. In 2019, Grofers earned a revenue of 34 million, 14% of which was the profit, that Grofers will now be investing in the financial year 2020 to improve sales and for the growth of the company.

Year

Revenue

Profit

2014

13 million

4% = 520,000

2015

18 million

7.5% = 1,350,000

38%

2016

19 million

8% = 1,520,000

5%

2017

24 million

12% = 2,880,000

26%

2018

30 million

12.5% = 3,750,000

20%

2019

34 million

14% = 4,760,000

13%

Presence of Grofers in India currently :

Growth

Grofers at present has its presence in 16 cities across India out of which are the biggest metropolitan cities : •

Delhi NCR

•

Bengaluru

•

Mumbai

•

Chennai

•

Kolkata

•

Hyderabad

•

Jaipur

•

Lucknow

•

Ahmedabad

•

Kochi

•

Bhubaneshwar

•

Indore

•

Bhopal

•

Kanpur

•

Madurai

•

Ranchi

Grofers sales are the highest in the capital, that is New Delhi, followed by Jaipur and Hyderabad. In other cities Grofers sales performance so far has been more or less the same.

S.W.O.T :

Strengths : Product Range: It offers a huge variety of products and many exotic products, which can include exotic fruits and vegetables or dairy products which is not easily available in every local store around localities which gives them an edge in catering to customers who like buying such stuff. Discounts: It offers huge discounts on various products. This makes them a lucrative option for customers to buy. Convenience: It offers an escape from the hassle of standing in the queues of malls or going all the way to the retail stores. They give the products right at the door step and offer multiple payment options. Target Group: They have selected their target customers very carefully and have established a footing in the metropolitan and some tier-I cities.

Low Fixed Cost business model: Most of the items that they offer are perishable hence they depend on the retail stores they are coordinating with for the products. This means they have no inventory cost and makes their business model more profitable.

Weaknesses : Delivery Time: It delivers the groceries the next day. Many retailers have started the facility of home delivery to nearby societies and customers in just few minutes to hours. So customers prefer this instead of waiting for 24 hours. Minimum order quantity/price compulsion: Grofers doesn’t always provide free home delivery. It sets a minimum order value for customers to get rid of the delivery costs which is at times frustrating for the consumers. Be at home: Even though there is an option to choose the delivery time, many times consumers get disappointed because the delivery doesn’t take place on time and they have to stay at home waiting for their delivery. Order Cancellations: As grofers doesn’t have an inventory of its own, many times it has to cancel the orders made by the customers because of unavailability of the product with the merchant.

Opportunities : Market: Indian retail market is valued at more than approx. $550 million and grocery alone covers 60% of this share. Hence it’s a huge market with many players to accommodate and customers to cater. Grocery Growth: India is the 6th largest grocery market in the world. E-commerce grocery market is growing with a year on year growth rate of 19%. Expansion: Many cities are still not covered by these startups and Grofers can target them and gain the first movers advantage. They can expand smaller cities and increase their market. Cross selling and Value Packaging – Cross selling is a major advantage for Grofers as it can sell multiple products by product bundling.

Threats : Competition: It has small presence in terms of cities covered hence, it is getting a huge competition from other companies and startups like Big Basket , PepperTap, Nature’s Basket, Zop Now, Aaram Shop, Mera Grocer, etc. Bigger Players: Bigger players like Amazon, Flipkart and Google have also entered this industry which has created a challenge for Grofers to compete with them Smaller Players: Many Local grocery stores in India have started the home delivery service to nearby customers which could make Grofers lose a lot of its target consumers in certain areas. Customer Retention: It is very difficult to retain customers. They would tend to move with the service provider that offers the most discounts.

4 P’s : PRODUCT

•

PRICE

It has all the daily needs products

•

listed on its website •

Customers delivery

can schedule

merchants and earns through the customise as

per

their

transaction that takes place between

their

customer and the merchant.

convenience. •

Grofers provides a platform to

It’s product offerings are different from one city to another based on the type of consumer group and

•

It charges a commission from the merchant for listing their product on its online page.

availability of particular area.

products

in

that

•

It also charges merchants for putting up their advertisement on Grofer’s webpage.

•

It offers periodic sales discount on certain range of products .

PLACE

• • •

Grofers has its operations in 16 cities

PROMOTION

•

Grofers

uses

advertisements

on

across India.

television and the web like youtube

The company has both an website and

and other social media to promote its

app.

brand and services.

When consumers place order through the app, it then places the order with its tie-up merchant and the grofers delivery boy then delivers the products to the customers

•

The ad campaigns are targeted towards working couple who find it hard to make balance between their personal and professional lives.

•

Grofers also uses print media during festive seasons to display their offers and discounts.

Target for Financial Year 2020 As Grofers has been growing ever since its establishment, this year it plans to leap ahead of its competitor company Big Basket, which is holding the largest market share in the Indian retail distribution market. The target set for FY 2020 is : 1) Revenue : 50 Million

Margin / Profit : 2 times of 2019’s profit = 28% = 14 Million Growth : 47%

2) Another goal of Grofers this year is to establish their market and brand name in the following four cities : •

Chandigarh

•

Ludhiana

•

Patna

•

Agra

These are the cities with comparatively big populations and also as per previous sales records, it was found that Grofers has been more successful in Northern part of the country, so Grofers hopes to be successful in these four locations.

3) The next goal of Grofers is to introduce 100 offline Grofers stores to the metropolitan cities. Grofers will do this by converting local kirana stores (general stores) to Grofers stores by collaborating with the merchants and also introducing the Grofers packaging to the grocery items.

In order to achieve this Grofers will create a strategic sales plan that will focus on key areas which will give the company the maximum results. Target Splits : Grofers will have to split its target into 3 aspects , that are : •

By Customer

•

By Geography

•

By Product

By Seasonality

•

Customer As

Geographical

Grofers

caters

Product

Seasonality

In FY 2020 Grofers Grofers has planned Being

both Customers and

will divide its targets

to

Businesses, its both

Geographically

packaging

into B2B & B2C

as well.

sales. Therefore

Grofers

include

in

India,

its Grofers will also set to monthly targets. The

products that will be targets of sales for

It’ll invest more into

sold in the Grofers the festive seasons :

the 6 metropolitan

stores,

which

•

Diwali

will have to achieve

cities and focus on nothing

local

•

Holi

its target by meeting

expansion into 4 new stores converted into

•

Christmas

the goals of both

cities.

Grofers stores.

•

New Year

these customers , that

It’ll also strategically research the demographics and geographics of the consumers and design the sales plan accordingly

The product Grofers

•

Independence

are : 1)Local retail stores 2) Consumers

but

are

Day

would sell to the merchants will be to provide them with their platform to sell their products and the

product

Grofers

that would

provide

to

the

consumers will be the groceries, etc

•

Republic Day Will be set high, and also more offers and discounts will be provided to increase the sales during these times as consumers and tend to shop for more.

Sales Team : For FY 2020, Grofers has created a team of 16 efficient sales persons. The sales peoples’ roles will be divided in the following manner throughout the country :

City

No. Persons

of

Sales

Delhi

2

Mumbai

2

Bengaluru

2

Chennai

2

Kolkata

2

Hyderabad

2

12 out of the 16 sales persons will focus to improve sales and brand placement in the metropolitans, as these are the cities with maximum population and not just that, people in these areas come under the working class category who depend on services like these that Grofers provide. One out of the two sales persons in these cities will focus on “Retaining the customers and increasing the sales”. The other sales person’s responsibility will be to collaborate with Local Grocery stores and sell them the idea of converting into a Grofers store. The remaining 16 sales persons will be divided in the following manner : New Cities No. of Sales Persons Ludhiana

1

Chandigarh

1

Agra

1

Patna

1

As Grofers has no presence in these cities, the role of the sales persons here will be to collaborate with more and more merchants in all parts of the city so that Grofers can successfully establish itself in the online retail market and have products to sell to its customers. Cost of Sales (Budget) As Grofers has planned to grow by 47% in Financial Year 2020, which is almost double of what it earned last year, it has to have a strong budget. Hence, the company has decided to invest all the profit of last year, that was 14% = $ 4,760,000 back into the business.

The salary of each sales person has been set as Rs. 720,000 per annum Total salary of 16 sales persons = 16 x 720,000 = Rs. 11,520,000 = $ 160,647 As the targets set for each one of them is huge and involves the same effort, the following Bonus plan has been introduced as well : % of Target Met Bonus/Commission to Sales Person for the year 0 – 50 %

0

50 %

Rs. 120,000

60% - 70%

Rs. 180,000

70% 90%

Rs. 360,000

100%

Rs. 600,000

This Bonus plan has been designed as per our budget of $ 4,760,000. Even if all 16 sales persons achieve 100%+ target goal, the total bonus payment for the year would be : Rs. 600,000 x 16 = Rs. 9,600,000 = $ 133,984 Remaining budget = $4,760,000 – (salaries + bonuses) = $ 4,465,369 $ 4,465,369 – This amount will be used for the other plans and the Big Idea.

Grofers is a company that’s both into B2B and B2C sales. It collaborates with Local Retail stores to become their merchants for providing products to the customers. And it also sells the products directly through its online app to customers. Grofers earns its revenue from the transaction that indirectly takes place between the Retail Store and the Customer. Currently Grofers has exactly 350 Retail Merchants in the 16 cities that is is already in. From each transaction that takes place on the Grofers app between the Merchant and the Customer, Grofers gets a commission. Grofers takes a fixed commission of 45% from the Retailers/Merchants for listing their products on Grofers and for selling their products through them as well.

For example : If a retailer earned Rs.1,500,000 in a year through its sales via Grofers. 45% of Rs.1,500,000 is Grofers commission = Rs. 675,000 = $ 9,419 If the sales of every retailer via Grofers is Rs. 1,500,000 per annum, this would be Grofers earning : ($ 9,419 X 350 retailers ) X 16 cities = $ 52,746,400 $ 52,746,400 is also the target we have aimed for FY 2020 i.e. 50 M revenue. Therefore to improve its sales on both the B2B and B2C aspect Grofers needs to follow certain strategies. Strategies for B2B sales 2020 : Under this Grofers sales persons sell the online Grofers platform to retailers, where they can then publish their products, ads and sell through that portal. In 2020, as Grofers is aiming to expand to new four cities of Chandigarh, Ludhiana, Patna and Agra, more Merchants will partner with Grofers. More the stores, more the revenue, so in this case, Grofers can reduce the commission to 30% from 45%. This commission pricing strategy will attract more retailers to join the Grofers chain and partner with them as the other three competitor companies charge a commission of more than 40% from Retailers. Grofers is also planning to convert minimum 20 local retail stores to Grofers stores and introducing Grofers packaging to the products there. The sales persons can do so by targeting retail stores that are in areas where there’s a concentration of older generation customers, who are into store to store traditional buying and don’t prefer offline shopping. For example in Delhi, through market research and demographic research of sales of Grofers, it was found that in these particular areas, people don’t prefer online shopping : •

Chandni Chowk

•

Mehrauli

•

Rohini

•

Lakshmi Nagar

•

Rajauri Garden

•

Kirti Nagar

•

Tilak Nagar

•

Shahadra

So, Grofers can partner with the local stores in these areas and convert them into Grofers stores by providing the Grofers title and Grofers packaging to the products that they provide. This strategy will attract both the retailers and the customers as the retailers will attract more customers because the offers, discounts and products in the store will be exactly similar to that provided on the online Grofers app. Also, Grofers packaging will add a value of trustworthiness as it’s a well known brand all over the country and customers will find these products more genuine compared to the other local brand names. Therefore the goal of the sales person in each of the 6 metropolitan city is to segment the market according to the nature of customers in each locality and then target Retail Stores to convert them into a Grofers stores. Grofers will be charging a commission of 35% from the Retailers of offline Grofers stores. The budget alloted for the packaging and renovation and transition of Local stores to Grofers Stores is : $ 1,500,000 M

B2C Sales Plan Under this Grofers has to cross the market share % of Big Basket and have the maximum Market share. Grofers is already into TV advertising and print advertising. As it’ll step foot into 4 new cities, it’ll have to market and advertise its brand name more. To attract customers in those cities in the beginning, Grofers will have to provide bigger discounts and subsidies to the consumers. This will not only benefit the consumers, but also the retailers as the sales will increase. In the areas where Grofers is converting Local stores to Grofers stores, it can launch itself by introductory promotional discount offers and product ...