Wipro consumer Care: Merchandising for success

Q. What does VM seek to achieve? What are the hallmarks of a good VM program? Is there also a
cost to not having a good VM program? Develop an exhaustive set of evaluation parameters?

A. Visual Merchandising plays a crucial role not only to boost sales but also to drive sell-outs in
other outlets through improved brand imagery. The key objective is to engage and inspire
shoppers & encouraging them to buy more and buy right away. The hallmarks of a good VM
program are:

1. Mapping territories, right stores within the territories

2. Managing POP material inventory and on field execution
3. Collection of data and real time tracking of merchandiser activity
4. Hiring adequate manpower to carry out on field execution and other management
activities

There is a cost involved in not having a good VM program. These can be explained on the basis
of following evaluation parameters

1. Competition: If a company doesn’t have a good VM program then the competitor’s

products would have better visibility and hence more chances of being picked up by
customers
2. Impulse purchases: 70% of the in-store purchases are unplanned, so most of the shoppers
are swayed by the in-store displays and visuals
3. Relationship with retailers: Good personal relationship with retailers can help push the
product over that of competitors
4. Explaining new products: People won’t buy a product if they don’t understand how it
works. VM could help explain the new products to shoppers

Q. How is VM related to channel management? Outline the benefits to the channels and the
manufacturer as also the costs of VM?

A. VM is related to channel management in a way that the participants of the channel play an
important role i.e. the distributors, retailers are involved in making the VM process possible.
Distributors and retailers

Q. What are the pros and cons of operating the VM model through distributors and manpower
models? Calculate some of the key parameters that will help in comparing these models?

A. Distributor Model

Pros: The investment required in the model is less compared to other models. The investment is
further reduced if the distributor makes a good deal of business by sharing the expenses
Cons: No initiative taken by the distributor to monitor the activities as there would be no direct
benefit to them. Sales being the primary function of distributor they would not concentrate
much on the promotional activities. In case of attrition, its difficult to find replacements. The
sales team would have an arduous task of territory allocation and preparing journey plans for
every merchandiser. The distributor may not maintain the outlet coverage efficiency as
promised.

Manpower Model

Pros: The manpower required for VM is done by hiring merchandisers through talent-provider
agencies. Greater control over operations by hiring a field supervisor/team leader to monitor
field-force activity and send daily report to the Area sales manager. The agencies are specialized
in sourcing pool of candidates as per specific requirements on a demand basis. Also, the agency
could guarantee quick replacement in case of attrition or request by company.

Cons: This model has substantially high expenditure. The scope of the agency is limited to staffing
and payroll management and no ownership of the program w.r.t operational management. All
other operational work like territory division, store mapping, journey planning is out of the scope
of the agencies.

Q. Compare the proposals of the two outsourced agencies. Calculate some of the key parameters
that will help in comparing these agencies?

A. The proposals of the two agencies can be compared on the basis of following parameters:

1. Monthly fixed cost to the company per store:

Costs MarginDize VisuaLeverage

Merchandiser cost 8,19,000- (63*13,000) 7,37,000/-(67*11,000)

Team Leader cost 1,08,000/- (6*18,000) 90,000/- (6*15,000)

DEO cost 50,000/- (5*10,000) 80,000/- (8*10,000)

OE cost 75,000/- (3*25,000) 1,15,000/- (5*23,000)

NMO cost 18,000/- 19,000/-

Program Manager cost 50,000/- 52,000/-

Other average monthly

4,00,000/- 5,00,000/-
expense

Real time reporting cost 7,900/- (79*100) 3,00,000/- (20*15,000)

Cost 15,27,900/- 18,93,000/-

 Agency Fee 12.5% of 15,27,900/- 15% of 18,93,000/-

Total Cost 17,18,888/- 21,76,950/-

2. Real time data capturing capability: MarginDize had the capability to offer real time data
capturing capability. It had expertise to leverage technology.

3. Relevant industry experience: VisuaLeverage is a better-known name in FMCG industry and

had VM programs for leading FMCG firms in the past, whereas MarginDize had run only a short
duration program for a multinational company.

4. Reporting Mechanisms: MarginDize offered a low-cost reporting model as the app developed
was compatible with low-end android phones, commonly held by merchandisers. VisuaLeverage
offered mobile -based reporting where the app was compatible with only medium and high-end
android phones and hence the client had to bear the additional cost of these phones.

Q. Develop an action plan for Ankur based on the information provided?

A. Based on the parameters evaluated in the above question,

Q. Consider a scenario where the increase in sale per outlet is not able to justify the increase in
costs/outlet when the model moves from distributor to agency. Should the agency model be
discarded in such a situation?

A. The agency model should not be discarded when the costs/outlet exceed the sales/outlet as
significant amount of investments are made in the agency model. If the sales/outlet are not
justified identifying the issues and modifications in the VM plan could help to overcome the
investments in agency model.