Danone: distribution and retail strategy review
- Danone's approach
- Becoming unavoidable for retailers
- Being closer to retailers, cooperating with them, advising them
- Danone's strategy: how is the group developing its relationship with the retailers?
- Strategy and upstream management
- Downstream and demand management
- The Trade-Marketing future
- Increase in turnover and profitability
- Increase in market shares
For decades, fast moving consumer goods (FMCG) manufacturers have focused most of their marketing efforts, expertise and funds on their end-targets who are the consumers. The successive laws addressing the relationship between retailers and manufacturers in France have encouraged the food retail industry to undergo a fundamental shift. The retail industry completely changed its strategic and operational skills due to aggressive expansion into new markets and countries.
It cannot be denied that the current environment is not helping the manufacturers; the increase in purchase of raw materials and energy prices along with the economic crisis has had an impact on companies.
Consequently, the balance of power in the new retailer-supplier relationship is leaning towards the trading side. In addition to being the primary way for brands to reach the consumers, the food retailers have created an extremely concentrated retail market after the invention of global retail powerhouses.
As a result, FMCG manufacturers have to be very adaptable because the economic situation is quite difficult.
Danone group is one of the biggest and most famous FMCG companies which has understood the need to reverse its approach in order to retain its commercial power and hence the reason why the group has set-up a Trade Marketing Strategy for several years now. Danone has always had a strong marketing oriented strategy by paying attention to the retailers as well.
[...] At an operational level, trade-marketing is complementary to the consumer marketing strategy as it allows the market to understand the shoppers' attitudes and habits in order to be close to the consumers' wishes and increase the retailers' and manufacturers' turnovers. The category managers can choose the best product mix structure, merchandising, promotion system and pricing for each store. They form the link between the brand manager and the key account manager. They are only responsible for their product category and have objectives relative to it. [...]
[...] order to retain its commercial power and hence the reason why the group has set-up a Trade Marketing Strategy for several years now. Danone has always had a strong marketing oriented strategy by paying attention to the retailers as well. I. Danone's approach 1. Becoming unavoidable for retailers In order to be as popular as possible for retailers, Danone's strategy was clear. The brand needs to be very strong and its image needs to be positive in order to answer the end-consumers' concerns The power of blockbusters Blockbusters are brands which consumers are looking for when they go to the supermarket and are not ready to switch to another brand. [...]
[...] The Commercial Development Direction task is two-fold: defining the products' commercialisation strategy and increasing the number of Stock Keeping Units (SKUs) in the retail stores as well as in the out-of-home segment. Thanks to its close connections with the key account and the category managers, the department better understands retailers' needs and has a concrete vision about market priorities. As a result, this team is the best place to develop tools in order to list products in the stores and sell them easily. [...]