1Tan Chong Yew, Steven
1 Consumer Marketing
1(chongyew.tan@gmail.com / steven_tan@oum.edu.my)
Abstract
Fast-Moving-Consumer-Good Market (FMCG), as the words articulate, fast moving, fast pace & restless. The growing consumer demand influenced by the international & domestic media, fuelled by the increase market entry to compete over the same piece of pie; the market competition is intensified! Companies need to out beat the market, so as to become the No.1 Company, would need to fine tune their operation & strategize to enhance company competitiveness. Company should begin to sharpen their competitiveness by looking into the 3 dimensional models or lose-out eventually…
Keywords: FMCG Market, Competitiveness, Management with Dimensional fine-tuning
1. THE 3 DIMENSIONAL THAT BRING FORTH COMPETITVENESS FOR FMCG COMPANY
Imagine you wake up in the morning, squeeze one-cm of Colgate toothpaste on your Oral-B toothbrush & start brushing your teeth; continue with Gillette Foamy & Gillette Shaver; imagine again, thousands & millions of man are doing the same things every morning. That probably tells you consumers market is huge, and lucrative – only if you succeed in penetrating the consumer market!
1 “According to Marketing Intelligence Service in Naples New York which tracks new product launches in the United States via a service called Productscan®, shows that in the US alone, packaged goods companies launched 33,678 new food, beverage, health, beauty & household, while pet products in 2003, are about 6 percent more than the 31,785 introduced the previous year. And, most of the 30,000 new products packaged goods companies launched last year did not succeed due to tremendous competition for shelf space.”
The market competition is so intensified that companies have to be competitive to stay in the marketplace. Notwithstanding, many FMCG companies are still one of the uncompetitive. They are still struggling to discover model that is possible used to enhance company competitiveness.
The 3 dimensional models perhaps help to simplify the understanding, and synergy company management towards becoming the best company. The 3 dimensional models also manifest the fact that companies need neither advance management model nor professional help to build competitiveness, as it can be done internally by reforming the existing resources.
2. PRODUCT IS THE KEY, NOT BRANDING ALONE!
Consumer behavior is evolving remarkably due to the influence of International & Domestic Media Advertisements. Consumers are more advance in their needs, and eventually only best quality products can satisfy consumer’s needs – Clearly, it is not about branding anymore as consumers are growing smarter. Companies, who solely focus on brand investment while ignoring the ‘quality’ aspect, will eventually find it strenuous to retain their brand position.
Good quality products also allows brand to command the market with high awareness, trials rate & repeat rate. It also makes viral marketing possible when consumer uses it, likes it, and prefers to have it again and again, and start to spread good words of the products. Eventually, it enlarges the consumers based, and suffuses the market.
The growing consumers based helps to secure a long term financial return for company. Company enjoys higher revenue stream, and able to reinvest to build the human capital & for better product improvement. Hence, it is axiomatic that a company can not grow without a good product to compete effectively in the market. Company has to ensure that product carries its value to consumers, and product quality must live-up and over consumers’ expectation. Constantly improvement on product quality has become vital to success in the consumer market.
3. HUMAN RESOURCE IS A FUNCTION THAT GIVES EMPLOYEES REASONS TO STAY; IT BRING FORTH HUMAN COMPETENCY
FMCG Company is often cognized with high turn-over due to it fast moving nature. Perhaps, the challenge to retain employees is HRM first priority, understanding that company with high turnover rate increases recruiting costs, leading to low morale &low productivity.
Some companies may find it hard to believe, and invariably reluctant to attend to the high turn over rate. Believe it or not, Company can only sustain periodically if without good people to handle quality product. Companies should also understand that product & People work hand in hand, parallel in action. It is unrealistic to push sales force to sell ineffective products. It is nether possible to have a lousy sales force to sell fantastic product; both must be equally capable.
Human Resource Function is often refers to the employees benefit; but it also means company culture, policy, and motivation – more reasons to stay! Human resource must look at every angle of the company to devise the proper system, and ensure it gives employees reasons to stay. Having more reasons to stay will bring-down the turn over rate significantly.
Constant training is also crucial. Company who are sales oriented tend to ignore employees training. Gradually, employees become ignorant, and weak at soft skills. Company HR Function should build effective training for employees; it should consist of in-house training & On the Job (OTJ) training. For example, P & G offers management trainees program that consist of 3 years career plan towards brand manager position; they also offers effective on the job training guided by a mentor who is usually Brand Manager.
Training alone does not prolong the momentum, but motivation does. HR needs to devise a good motivation system in the company to keep momentum on-going. HR needs to ask ‘Do I have a good motivation system to create the momentum?’ Kimberly Clark offers competitive remuneration with 13 months salary plus performance bonus, complemented with allowances, overseas training & exposure; it becomes a promising carrots for employees to work harder towards company mission. In short, the emolument is higher when employees are highly motivated
Knowing the nature of the industry, HR should be able to provide the flexibility to react swiftly to any kind of changes. Empowerment thus plays an important role for sales team; sales team is the vanguards, who spend 90% of their time out of company seeking order. They understand the trade market situation more than anyone else working under office environment. If they are empowered to make certain decision, it will greatly sharpen the company competitiveness.
4. GOOD SYSTEM ALLOWS YOU TO OVERTAKE COMPETITORS
System could refer to distribution system, administration software, SAP and many more. Effective & Efficient system enhances company operation; similarly, Tedious & sluggish system is a stumbling block to company. Company need to ensure that all systems are in prim & proper situation to avoid system-halt. Meanwhile, System integration is as important to ensure proper & clear-cut communication flows. The system must be accessible to all parties to be able to receive constant & accurate update of the stock movement situation to have punctual ordering. Effective Store Management is another ‘efficiency’ contribution. A good Store management system bring minimum Out-Of-Stock rate; and delivery achieve punctuality rate of over 95%.
The Target management system is also crucial to measure degree of individual sales achievement; the system will match sales target and actual sales achieve on daily basis & conclude on weekly basis to communicate the remaining gap between achievement & target.
Promotional Management System (PMS) deciphers marketing budget & spending flows; it tells you if you are over-spent. Retailer are often involves in temporary price-cut or temporary price promotion to drive basket of spending. It defeats the purpose of promotion when it is done often. Hence PMS is important to monitor overall promotional spending.
5. SPEED WITH DIFFERENTIATION
Speedy than competitors is crucial to outperform competitors in FMCG market. Knowing that ‘Fast-Moving’, as the word articulates, ‘you need speed in every areas of your operation to overtake competitors in fast lane!’ However, speed without differentiation will put company in significant disadvantage situation; hence, it is important to emphasize on the value of ‘speedy with differentiation’.
Dr. Philip A. Himmelfarb, founder of Philip Adam & Associates, a Milwaukee-based consulting firm specializing in the evaluation, fine-tuning and strategic planning of new-product development‘, in his article, “being first to market isn’t Enough”, admits that in today's highly competitive marketplace, speed, quality, profit margin, manufacturability, meeting customer needs and charging a fair price are essential ingredients for survival and growth. Of these, speed, in the form of shorter and shorter development cycles, has been singled out by modern managers as being especially important, often with disappointing results due to the ignorant of differentiation’.
Inevitably, Speedy with differentiation are the pillar of the whole cycle. A decade ago, large companies win small companies over their strong financial background; under current business environment, large companies are not ordained to win anymore! It is the ‘speedy with differentiation’ companies that rules. Speedy company can market their differentiated products faster than large company, and steal share by giving consumers the first good quality products; plant the brand, design the consumer rules & speedily penetrate consumer life with the best product - and win!
The society is evolving, bringing changes to consumer behaviors, and the business world as a whole. It is now truly depend how company react to the changes in the environments as how good you respond to changes in consumer behavior determine how successful you are; Similarly, How fast can your system react to the order determine your in-store share; and, How motivate is your people to move forward faster than anyone else in the market determines company target achievement.
6. REFERENCES
1. Allen, A (1997), Learning From Measuring Why Employees Leave:
Managing Voluntary Turnover [Online] Available: http://www. Culpepper.com
2. Biz-Architect, (2003), The Class in Mass – New packaged goods in 2003 [Online] Available: http://www.biz-architect.com/notable_consumer_product_innovations.htm
3. Himmelfarb. P.A (1982), Being First to Market isn’t Enough [Online] Available: http://www.qualitydigest.com/feb/product.html
**********END************
Steven Tan Chong Yew
B.A (Hon) Bus. Admin (Marketing Mgt), Anglia Polytechnic University,
MBA (International Business),
NOTE: The views expressed herein are solely writer’s personal opinion. Readers may email writers at chongyew.tan@gmail.com
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