2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
Munich/Berlin, November 2010
Results of the study conducted by Markenverband and Roland Berger Strategy Consultants
1
2
Participants and structure
9
Background of the study
3
Page
3
Selected results
13
2
Participants and structure
9
3 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
The smaller playing field for branded products and the driving-force
retail trends will influence the future of selling
What does this
"SMALLER PLAYING FIELD"
EUR -20 bn
PLAYING FIELD FOR
BRANDED PRODUCTS
1
What does this
mean for the
future of
Sales
?
"DRIVING-FORCE RETAIL TRENDS"
EUR -20 bn
Undifferentiated brands are losing ground
Manufacturer
brands
25%
Manufacturer
brands
60%
15%
TODAY
FUTURE 2015
1
5 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptxPrivate
labels
Other food
retailers
20%
80%
Discounters
75%
Source:BBE; BTE; Roland Berger
Private
labels
Other food
retailers
40%
60%
Discounters
85%
EUR -20 bn
PLAYING FIELD FOR
BRANDED PRODUCTS
10 major retail trends are driving this development
Efficient
price-oriented formats are
on the rise
2
Bargaining power is
increasing
1
From bargaining to
bargaining "plus"
Less is more
6
7
2
Retailers want to
become brands
2
3
increasing
4
Retailers are learning to
understand shoppers
better and better
Professionalization
and growth of private
labels
5
Managers are moving
from manufacturers to
retailers
7
8
Selective backward
integration
New services and
business models
9
The resulting challenges for Sales …
Management
organization
> Is there a "real" organizational structure?
> Is a constant willingness to adapt needed?
> Is the customer a management issue?
Key account
> What is ideal international customer support?
> How can one best deal with discounters?
7 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
Key account
management
> How can one best deal with discounters?
> What new forms of cooperation are needed in addition to
terms and conditions?
Field organization
> Does the field organization justify its existence
(POS impact vs. costs)?
> What is the best organizational model?
> How important is it to further develop skills?
Trade Marketing
> How far advanced is the development (in terms of tasks)/
upgrading of the function?
> Which structural foundation is being pushed?
… especially with a view to marketing
"When Sales and Marketing work
well together, companies see
substantial improvement on
important performance metrics:
Philip Kotler
important performance metrics:
sales cycles are shorter, market
entry costs go down, and the cost
of sales is lower"
Philip Kotler
Ending the War between Sales and Marketing,
9 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
The issue is highly relevant, so many top players took part in the
study
COMPANIES (extract)
PARTICIPANTS
CEO
10%
46 top FMCG managers in Germany
Other (e.g. Business
Development)
17%
Head of Key Account
Management
5%
Head of Sales/
Sales director
40%
Marketing/Sales
director
28%
It encompassed a wide range of company sizes and categories
Characteristics of participating companies
BACKUP
SALES [EUR m]
CATEGORY COVERAGE
500-1,000
13%
>1,000
11%
Beverages
18%
11 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverband
SALES GROWTH [%]
<100
28%
500-1,000
48%
100-500
13%
>10%
13%
0-5%
15%
5-10%
63%
<0%
9%
Oral/personal
hygiene
11%
Frozen foods/
ice-cream
8%
Confectionery/
baked goods
17%
9%
37%
Fresh meat/
sausage
Other
The cogent structure of the study led to high response levels
> COMPREHENSIVE
55 detailed questions,
interviews integrated
> SIMPLE
Modular, can be filled out
both on and offline
> SIMPLE
both on and offline
> FORWARD
LOOKING
Integration of trends,
challenges, etc.
13 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
Summary of the main results
Management
organization
>
Real structure?
>
Constant willingness to adapt?
>
The customer a management issue?
>
Matrix organization!
>
Never stagnation in the organization
>
Clearly a management issue
>
International customer support?
>
Great dissatisfaction, the future is in
CHALLENGES
RESULTS
>
Further development (of
tasks)/"upgrading"?
>
Structural foundation?
Trade Marketing
Key account
management
>
International customer support?
>
Dealing with private labels and
discounters?
>
New forms of cooperation vs. histories?
>
Great dissatisfaction, the future is in
"International Lead KAMs"
>
Ever more focus on discounters
>
Fix the basics
Field
organization
>
Justified existence (POS impact vs.
costs)?
>
Organization model?
>
Future skills?
>
Many field organizations lack the critical
size
>
New cooperation concepts are needed
>
Traditional visit concepts and KPIs
>
Develop skills!
>
Almost no further development
>
Great potential not yet being exploited
>
Further development toward integrated
General conclusion: Individualized solutions are needed – Ideas
have to be embedded in the category context
What does that
mean for
15 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
mean for
MY
company
and the future of
OUR
Sales unit
?
Source:Roland Berger; Markenverband
>
FROM
historically grown
structures, characterized by
>
TO
solutions, adjusted to the
individualized and effective
>
Slow processes
>
Little understanding of the
retailer
>
Little knowledge of shoppers
>
Historically grown
organizational structures
>
…
>
Brand positioning
>
Category drivers
>
Customer and retail structure
>
Corporate culture
Organizational changes must lead to a better understanding of the
customer
Management
organization
1. Matrix organization is replacing
functional organization
2. Organizational development never stops.
17 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
2. Organizational development never stops.
Constant adjustment is needed if growth
is to be achieved
3. The cost component of Sales varies
greatly
4. Sales is being recognized as a CEO
management issue
5. Manufacturers still have too little
understanding of retailers
Matrix organization is replacing functional organization
1
Management organization – Structure of Sales [%]
> The choice of
organizational structure is
independent of how the
TODAY
Functional
organization
FUTURE
70
35
independent of how the
FMCG categories are
covered
> In particular smaller
companies
(< EUR 100 m in sales)
today have
function-based organizational
forms
organization
Divisional organization
Matrix-organization
International
customer-business
teams
Other
4
0
13
13
7
14
33
11
Organizational development never stops – Constant adjustment is
necessary for growth
Management organization – Organizational changes [%]
2
FREQUENCY
MAIN REASONS
Fundamental,
major change
35
18
59
2
Drive growth
59
17
17
7
19 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverband
Reduce costs
Speed up realization
Sales excellence at POS
Sales excellence at the
customer
Internal excellence of
Sales
Category excellence
major change
Fine tuning
No change
Every year Every 1-2 years Every 2-3 years >3 years
35
27
18
4
2
39
4 4
59
4
17
46
39
33
44
39
35
17
26
23
28
34
7
9
9
4
7
2
20
24
35
26
30
46
The cost component varies greatly, due to varying category coverage
and market penetration
14
>10%
SALES COSTS
3
> The share of sales costs
Management organization – Cost component [% of sales]
16
11
21
27
11
5-7.5%
7.5-10%
No
response
<3%
3-5%
> The share of sales costs
varies greatly across all
company sizes. No
surprise because of
respondents' varying
category coverage
> Sales costs account for
more than 5% of total
sales revenue at half the
companies
Sales is being recognized as a management issue –
CEO is "CCO"
4
Management organization – Customer orientation (industry viewpoint)
Orientation of the company
toward customer needs
Role allocation/clear separation
of tasks
ROLE OF THE CEO …
21 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
… Feels responsible as
the "Chief Customer
Officer" (75%)
… Delegates tasks/
customer
responsibility to the
Sales Manager (25%)
Clear mirroring of
customer structure/
allocation of
contacts
Clear definition of
roles, which are
then also realized
accordingly
Clear definition of
the roles, but these
are not lived out
accordingly
91%
87%
Less clearly
defined
13%
9%
Manufacturers do not understand retailers well enough yet – Good
cooperation at operational level, less knowledge of their strategies
5
Management organization – Customer orientation (retail viewpoint) [positive net value]
1)
EVALUATION OF FMCG MANUFACTURERS
STAFF ORGANIZATION
-1
Understands our specific
6
16
Business relationships
Overall evaluation
CATEGORY DEVELOPMENT
25
-1
5
11
Understands our specific
strategies/goals and reacts to them
Visits are productive
Makes objective category
recommendations
Offers category development plans that
help us achieve our growth/revenue
goals
18
18
7
47
16
11
6
Customer service
Logistics/Supply chain
Trade marketing
Consumer marketing
Category development
Staff organization
Business relationships
Great need for improvement in KAM
1. KAM is highly relevant for sales
2. Satisfaction with international customer
support is very low
Key account
management
23 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
support is very low
3. "International Lead KAM" is today seen as
the solution for the future, with clear
responsibilities as the main challenge
4. More focus on supporting discounters
5. Fixing the "basics" is still a challenge.
Companies try to overcome their past
instead of being future- and
shopper-oriented
The high sales revenue relevance of KAM is driven by retail
consolidation
1
National key account management – Structure
NATIONAL
REGIONAL
Structure [%]
87
Existence of regional KAM [%]
70
Independent KAM
YES
13
87
Coverage [% of sales]
10
10
9
28
43
30
70
Organizational foundation [%]
Regional KAM is part of a
national KAM team
Regional KAM reports to the
head of the field organization
Other/no response
40
7
53
Interdivisional KAM
Independent KAM
90-100%
70-90%
50-70%
<50%
No response
YES
NO
Great dissatisfaction with international customer support – Very few
have found the best model
2
International key account management – Structure [%]
Support of international
business
Satisfaction with the organizational foundation of the
international KAM activities
59
25 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx41
52
7
Not satisfied
Satisfied
Highly
satisfied
59
41
YES
NO
"International Lead KAM" is seen as the future solution – Clear
responsibilities are the main challenge
3
International key account management [%] – Organizational structure
One KAM for both the national
23
15
> International Lead KAMs will
TODAY
FUTURE
Support of international key accounts
One KAM for both the national
and the international business
One KAM for international
business
One "internat. Lead KAM" in
charge of a team of nat. KAMs for
the international business
18
17
19
23
23
7
15
15
48
15
International KAM team
Other
> International Lead KAMs will
increasingly take over the
management of international
customers
> A purely international
perspective from one single
KAM is becoming less
relevant
> Responsibilities have to be
clearly defined between
countries, divisions and
customers
TODAY
FUTURE
Discounter support is more in focus – Specific management of the
customers and the format
National key account management – Responsibility for discount [%]
Support of discounters (multiple resp. possible)
4
27 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
> Specific management of
discounters
> Discount support either by
single KAMs or format
KAMs depending on the
size of the discount
customer
One KAM for each
discount customer
One KAM for the
discount format
One KAM for each retail
group, across all formats
7
13
44
48
4
22
48
37
Other
Basics are a big problem – One key challenge is learning to
understand the customer better (1/2)
National key account management – Challenges [%]
5
Responsibility/competence
Customer and shopper orientation
More empowerment of
KAMs
33
45
22
0
Improved understanding of
the customer and clearer
22
4
74
0
KAMs
Ensuring category
competence in
cross-category teams
More responsibility for
managing the agreed
activities from beginning to
end
45
38
41
22
28
22
4
37
0
30
33
0
the customer and clearer
mirroring
Clarifying the own role with
customers
Building up internal skills for
the customer
Focus off conditions and on
shopper orientation
50
59
23
37
15
8
4
67
2
26
0
13
0
Basics are a big problem – The focus is still on overcoming the past,
rather than on shopper-oriented cooperation (2/2)
National key account management – Challenges [%]
5
System of conditions
Incentives/Internal efficiency
Reducing the growth of the
share of terms and
70
26
0
More incentives/
performance orientation
33
41
26
0
29 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverband
share of terms and
conditions in sales
Optimizing the terms and
conditions system through
customers
26
20
8
4
70
2
70
Essential Important Less important No response
performance orientation
and cost transparency
Standardizing processes,
tools and KPIs
More support of KAMs by IT,
stricter control
54
65
20
15
4
22
20
0
More impact can be achieved at the POS
1. Many field organizations lack the critical
size
2. There is more confidence in external
Field
organization
2. There is more confidence in external
service providers than in intercompany
cooperation
3. Traditional criteria determine the visit
concept
4. Little formulation of variable incentives
5. The focus is on developing skills
Many field organizations lack the critical size
1
Field organization – Structure
Own field organization within the unit
Travel time per
sales rep
[minutes]
Yes
80%
31 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverband
No. of sales reps
[#]
Greater efficiency!
0-80
80-120
>120
No response
11%
16%
3%
70%
Size of the field organization [# sales reps]
Yes
No
20%
External service providers are trusted more than intercompany
cooperations
2
Intercompany cooperation
Alternative organizational models for the field organization
[Share of companies without their own sales reps]
14%
86%
0%
Other
Outsourced to an
external service provider
Intercompany cooperation
of field organizations
Traditional factors dominate the visit concept
3
Field organization – Management [%]
Relevant criteria for defining the visit
concept
KPIs for managing the field organization
(multiple responses possible)
61
Assertion of
service
Format type
39
26
13
22
33 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx36
36
39
43
55
57
Speed of
implementation
Adherence to
the planogram
Shelf share
Out-of-stock/
availability of
space
Distribution
Number of
customer visits
service
Source:Roland Berger; Markenverband
Format type
Revenue
potential
Category driver
Levels of
freedom at the
outlet
Support of the
outlet
26
26
37
33
30
13
28
17
39
22
22
20
20
22
15
39
2
50
9
30
Essential Important Less important No response
Often inadequate variable incentivation for sales reps – There is
upward potential here
4
Field organization – Management
Share of variable remuneration for sales reps
9%
0%
0%
0%
9%
38%
44%
60-100%
40-60%
20-40%
10-20%
0-10%
> Little incentivizing of sales
reps through variable
remuneration
> Little use of KPIs that have a
major influence on the impact
at the POS
The focus is on developing skills
Field organization – Challenges [%]
Responsibility/competence
Efficiency/benefit
Management/incentives
5
Further develop the
sales reps' skills
Increased need to
justify the use of
sales reps
Improved
management of the
28
22
50
0
30
30
15 24
26
37
15 22
35 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverbandsales reps' skills
justify the use of
sales reps
management of the
activities at the POS
Separation into
“simple" and
“complex" skills
Focus on raising
efficiency
Better support
through IT systems
More incentive
through less/
more simple KPIs
22
22
24
24
50
0
33
41
15
17
22
22
20
30
30
41
13 24
22
26
Further potential can be realized in Trade Marketing
1. Hardly any development beyond classical
category management and Trade
Marketing
Trade Marketing
Marketing
2. The great potential of this function is
seen but not yet anchored in the role
3. Commercial planning and shopper
Hardly any development beyond classical Category Management
and Trade Marketing
All grouped in one
1
Trade Marketing – Structure [%]
STRUCTURE OF THE DEPARTMENT
Tasks within the org. unit under
consideration
(multiple responses possible)
Category
67
TODAY
FUTURE
37 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx
All grouped in one
function
3
15
32
50
8
10
23
59
Divided up between two
functions
Divided up between more
than two functions
Other
Category
Management
9
2
28
35
50
67
67
Trade Marketing
Shopper insights
Channel management
Integrated commercial
planning
Other
None
65%
75%
Great potential is seen in the function, but it is not yet anchored in
the role
Trade Marketing – Role
CUSTOMER
CATEGORY
Developing category know-how and category
trends
Designing and evaluating retail-related
2
35%
50%
53%
63%
65%
PLANNING
TOOLS
CHANNEL
SHOPPER/
CONSUMER
CUSTOMER
Designing and evaluating retail-related
customer analyses
Developing and evaluating insights and
anchoring the knowledge of consumers/
shoppers
Developing channel-specific know-how and
deriving retail strategies/tactics from it
Developing tools, guidelines, manuals, etc.
Integrated planning of channel, shopper,
category and customer objectives
Commercial planning and shopper insights are key challenges
Trade Marketing – Challenges [%]
3
Role of the function
Responsibility/competence
Systems/personnel
Clear role definition
as link between
division, country,
Putting together the
commercial plan
50
31
8
Improved use of
tools/
11
46
28
15
11
50
22 11
17
39 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverbandas link between
division, country,
customer and brand
commercial plan
tools/
IT systems
Anchoring and
introducing the
function
High level of
planning precision
Developing shopper
insights
Reducing the no. of
promotions (fewer,
bigger, better)
Establishing
overarching
career paths
31
29
28
41
28
17
15
11
8
50
11
11
28
50
30
46
37
28
30 13
20
15
11
Essential Important Less important No response
50
37
22
22
11
13
17
28
Don't hesitate to contact us if you have any questions
Contacts
PATRICK MANNSPERGER
ANDREAS GAYK
Roland Berger Strategy Consultants
Partner
Markenverband
Head of Sales Policy/Retail
E-mail:
E-mail:
41 2010-11-17_Markenverband-RB_Vertriebsstudie_Ergebnisse_E.pptx Source:Roland Berger; Markenverband