The Indian retail market is predominantly unorganized as organized retail just accounts for close to 10% of country’s annual retail business. All the major industries like FMCG, Pharma, Building material, Plywood, Sanitaryware, Tyres etc. are primarily unorganized and require state or region level distributors to penetrate their products, given the way the markets are structured and operated. So be it new brands which plan to enter market or existent brands which plan to diversify into newer cities, a distribution network is essentially required.
In a world of intense competition and frequently changing consumer tastes & preference, a lot of stores experience declining sales. It is quite common that a brand has some stores reaping good sales year-on-year while others becoming stagnant or declining.
Lifetime customer value (LCV) is an idea that each customer should be analyzed in terms of current and future profitability to a brand. When a profit figure can be assigned to each customer, the marketing manager can then decide which customers to target.
The past profit that a customer has produced for the brand is the sum of the margins of all the products purchased over time less the cost of reaching that customer. This is feasible for firms which maintain their customer data like e-commerce firms and businesses selling products & services in an organized retail set-up. For other firms, there is dearth of customer data like businesses having unorganized selling channels (for eg. Kirana stores, pharmacies) and firms which have products which do not come with any warranty and hence no customer data is gathered for providing post-purchase service (for eg. Building material, paint & hardware etc.). For such businesses, a consumer panel can be built by considering a sample of consumers from all types of important markets. Frequently reaching out to this panel will generate awareness around consumer’s present consumption basket.
The need to better understand customer behavior and the interest of many managers to focus on those customers who can deliver long-term profits has changed how marketers view the world. Traditionally, marketers have been trained to acquire customers, either new ones who have not bought the product before or those who are currently competitors' customers. Today the tone of the conversation has changed from customer acquisition to retention.
My earlier article was about product strategies for brands which look to enter new markets. This article will deep-dive into product decisions which are required basis the lifecycle of a product – introduction, growth, maturity and finally decline. Such strategies increase the life span of each phase and maintain consistent excitement around the product. Product strategy can be divided into 3 components: Product-line analysis, Product-line length, and Line featuring & pruning.