Basic Market Research in FMCG Marketing

By: admin 11 Sep 2016

In broad terms marketing can be divided into two key challenges:

The first – and most widely appreciated – is to ensure that consumers or end users want a firm’s product. This generally termed pull marketing.

The second challenge is less broadly recognised, but often just as important. Push marketing ensures that consumers are given the opportunity to buy.

Marketers have developed numerous metrics by which to judge the effectiveness of the distribution system that helps create opportunities to buy. The most fundamental of those are measures of brand availability.

Availability metrics are used to quantify the number of outlets reached by a brand, the fraction of the relevant market served by those outlets, and the percentage of total sales volume in all categories held by the outlets that carry the brand. There are three popular measures of distribution coverage:

  1. Numeric Distribution. This measure is based on the number of outlets that carry a brand (that is, outlets that list at least one of the brand’s stock keeping unit, or SKUs). It is defined as the percentage of stores that stock a given brand or SKU, within the universe of stores in the relevant market. The main use of numeric distribution is to understand how many physical locations stock a product or brand. This has implications for delivery systems and for the cost of servicing these outlets.
  2. All Commodity Volume (ACV). AVC is a weighted measure of brand availability, or distribution, based on total store sales. AVC can be expressed in a money value of percentage. The principal benefit of the AVC, by comparison with numeric distribution, is that it provides a superior measure of customer traffic in the stores that stock a brand. The weakness of AVC is that it does not provide direct information about how well each store merchandises and competes in the relevant product categories.
  3. Product Category Volume (PCV), also known as weighted distribution. PVC is a refinement of ACV. It examines the share of the relevant product category sold by the stores in which a given brand has gained distribution. It helps marketer understand whether a given product is gaining distribution in outlets where consumers look for its category, as opposed to simply high-traffic stores.