Formation of multi-channel sales strategy for the pet nutrition business unit within the international FMCG company operating in the Russian Federation
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STATEMENT OF A SUBSTANTIVE CHARACTER OF THE COURSE PAPER 2
KEY ACRONYMS AND GLOSSARY OF KEY TERMS 4
INTRODUCTION 6
CHAPTER 1. ANALYSIS OF COMPANY MARKET POSITION 9
Company A overview 9
Pet nutrition segmentation 12
Sales channels description 16
CHAPTER 2. EXTERNAL FORCES INFLUENCE ON SALES CHANNELS 24
Analysis of macro factors influence 24
Analysis of industry factors 26
Sales channels assessment 30
CHAPTER 3. MULTI-CHANNEL SALES STRATEGY CREATION 33
Channel-portfolio allocation matrix 33
Strategy financial justification 37
CONCLUSION. 41
APPENDIX 41
Interview plan 47
LIST OF REFERENCES 48
KEY ACRONYMS AND GLOSSARY OF KEY TERMS 4
INTRODUCTION 6
CHAPTER 1. ANALYSIS OF COMPANY MARKET POSITION 9
Company A overview 9
Pet nutrition segmentation 12
Sales channels description 16
CHAPTER 2. EXTERNAL FORCES INFLUENCE ON SALES CHANNELS 24
Analysis of macro factors influence 24
Analysis of industry factors 26
Sales channels assessment 30
CHAPTER 3. MULTI-CHANNEL SALES STRATEGY CREATION 33
Channel-portfolio allocation matrix 33
Strategy financial justification 37
CONCLUSION. 41
APPENDIX 41
Interview plan 47
LIST OF REFERENCES 48
The consulting project focuses on Company A, which was selected for further analysis as the research object. To ensure confidentiality, all company-specific indicators have undergone modifications with coefficients. Additionally, any unique company attributes, revealing sensitive information were intentionally omitted, while industry financial and statistical indicators remained primeval, accurately reflecting the real market situation.
Company A is a multinational corporation (MNC) with operations spanning various regions worldwide and diverse sectors within the fast-moving consumer goods (FMCG) industry. One of its specialized departments focuses on the pet nutrition sector, which is experiencing rapid global growth. According to a report by Yahoo Finance (n.d.), the pet nutrition industry has shown a Compound Annual Growth Rate (CAGR) of 6.7% from 2022 to 2027.
The growth of the pet nutrition industry in Russia is closely tied to the rapid increase in the country's pet population. According to internal company statistics, the number of pets in Russia in 2023 reached 74.8 million, comprising 49.2 million cats and 25.5 million dogs. Russia ranks as the third-largest country in terms of cat ownership and fourth-largest in terms of dog ownership. Out of a population of 121 million people aged older 14 in Russia, 68 million are pet parents, indicating that 56% of households in the country have either cats, dogs, or both.
To meet the increasing demand for industrial pet nutrition1 in Russia, Company A continues to operate within specific limitations caused by imposed sanctions, that, in turn, affect its ability to construct new manufacturing plants and engage in active marketing promotions. These limitations are imposed on the Russian branch due to the company's international status. Addressing these managerial challenges could be facilitated by easing these limitations.
Presently, Company A faces a shortage of manufacturing capacity, which hinders its ability to maintain a competitive market position and remain viable. This challenge has become more acute with the entry of local producers and private labels into the market. Specifically, the company has encountered difficulties in producing wet pet food products2 - a product category crucial for maintaining shelf space and consumer retention.
In conclusion, it is crucial for Company A to meticulously plan and forecast sales channels that could yield higher profits, safeguarding its gained market share and sustaining market efficiency (Moorman C., 2017). The managerial problem lies in appropriate and effective product allocation in accordance to each of the sales channels to ensure company’s market position with its limited resources. The consultation project will address the strategic decision-making process concerning sales channels that offer the greatest attractiveness and potential for Company A to maintain its market position in conditions of limited resources.
Project goal
To formulate multi-channel sales strategy by product segments and technology within sale channels to protect and manage company A current market position.
Project objectives
1. To explore company A current market position through the lens of its sales channels;
2. To determine level of influence of macro-trends, industry factors on each of the sales channels;
3. To determine the most attractive sales channels for company A from the perspective of resource allocation;
4. To provide financial justifications for the chosen multi-channel strategy.
Project object
The pet nutrition business unit within the international FMCG company A operating in the Russian Federation.
Project subject
Sales channels of the pet nutrition business unit within the international FMCG company A operating in the Russian Federation.
...
Company A is a multinational corporation (MNC) with operations spanning various regions worldwide and diverse sectors within the fast-moving consumer goods (FMCG) industry. One of its specialized departments focuses on the pet nutrition sector, which is experiencing rapid global growth. According to a report by Yahoo Finance (n.d.), the pet nutrition industry has shown a Compound Annual Growth Rate (CAGR) of 6.7% from 2022 to 2027.
The growth of the pet nutrition industry in Russia is closely tied to the rapid increase in the country's pet population. According to internal company statistics, the number of pets in Russia in 2023 reached 74.8 million, comprising 49.2 million cats and 25.5 million dogs. Russia ranks as the third-largest country in terms of cat ownership and fourth-largest in terms of dog ownership. Out of a population of 121 million people aged older 14 in Russia, 68 million are pet parents, indicating that 56% of households in the country have either cats, dogs, or both.
To meet the increasing demand for industrial pet nutrition1 in Russia, Company A continues to operate within specific limitations caused by imposed sanctions, that, in turn, affect its ability to construct new manufacturing plants and engage in active marketing promotions. These limitations are imposed on the Russian branch due to the company's international status. Addressing these managerial challenges could be facilitated by easing these limitations.
Presently, Company A faces a shortage of manufacturing capacity, which hinders its ability to maintain a competitive market position and remain viable. This challenge has become more acute with the entry of local producers and private labels into the market. Specifically, the company has encountered difficulties in producing wet pet food products2 - a product category crucial for maintaining shelf space and consumer retention.
In conclusion, it is crucial for Company A to meticulously plan and forecast sales channels that could yield higher profits, safeguarding its gained market share and sustaining market efficiency (Moorman C., 2017). The managerial problem lies in appropriate and effective product allocation in accordance to each of the sales channels to ensure company’s market position with its limited resources. The consultation project will address the strategic decision-making process concerning sales channels that offer the greatest attractiveness and potential for Company A to maintain its market position in conditions of limited resources.
Project goal
To formulate multi-channel sales strategy by product segments and technology within sale channels to protect and manage company A current market position.
Project objectives
1. To explore company A current market position through the lens of its sales channels;
2. To determine level of influence of macro-trends, industry factors on each of the sales channels;
3. To determine the most attractive sales channels for company A from the perspective of resource allocation;
4. To provide financial justifications for the chosen multi-channel strategy.
Project object
The pet nutrition business unit within the international FMCG company A operating in the Russian Federation.
Project subject
Sales channels of the pet nutrition business unit within the international FMCG company A operating in the Russian Federation.
...
Company A is a multinational corporation with operations spread all over the globe. Company A competes in the FMCG market through its sweets and pet nutrition products in the Russian Federation. However, introducing scrutiny on the MNCs that have not ceased the Russian market has influenced Company A operations. The introduced sanctions enabled Company A to construct new manufacturing facilities that are crucial in conditions of the pet nutrition market's double-digit growth. This managerial issue centers on maintaining market share despite the inability to meet demand across all of the sales channels, hence, highlighting the need to prioritize the most critical channels to strengthen market position and retain the loyalty of the parties involved. The international status of company A is the root of the problem and can be easily managed without its presence. However, in conditions of limited recourses, the tight focus must be on sales channels that potentially will yield higher profits to safeguard gained market share.
The solution to the managerial problem involved developing a comprehensive multichannel sales strategy, beginning with an analysis of the current situation in each sales channel and followed by a thorough examination of the external environment using PESTEL and EFE matrix. These analyses provided a broader understanding of the macro-environment in which Company A operates.
The analysis of macroeconomic factors along with industry factor analysis was conducted and compared with each sales channel. By actively responding to these factors, Company A can reduce risks and benefit from opportunities. The macro-level analysis was conducted on the base of PESTEL while industry factors were revealed via the External Factors Assessment Matrix (EFE) which allowed to receive a deeper understanding of market dynamics, opportunities and threats. This analysis of the external environment allowed us to evaluate the long-term perspectives of each of the sales channels, and have given a broader understanding of the macro-and-industry level environment and where company A operates.
The development of the Channel-Portfolio Allocation Matrix, adapted from the BCG matrix structure has provided a framework for resource allocation across the sales channels. After the results of the analysis of the current performance and the growth potential, the development of a Channel-portfolio allocation matrix was possible to construct to provide a strategic roadmap for allocating resources across sales channels. The division of channels into "Seed", "Growth Engines", "Harvest" and "Fuel for Growth" allows Company A to prioritize investments and products offered based on the growth potential and current performance of the sales channels. This approach ensures strategic consistency and optimizes the use of resources to ensure long-term profitability and represents the multi-channel strategy.
The financial rationale for the multi-channel sales strategy highlights its impact on the result. By assessing growth rates, analyzing return on sales (ROS), and conducting scenario analysis, Company A can assess the financial implications of its strategic decisions and ensure compliance with business objectives. This data-driven approach allows one to make informed decisions and increases the likelihood of success in the market.
In conclusion, the strategic planning process described in this thesis provides Company A with a reliable basis for working in the complex pet nutrition market in the Russian Federation. Despite the difficulties associated with company's international status that followed plan construction restrictions, the multi-channel sales strategy allows Company A to maintain market share and profitability. Through a detailed analysis of the current situation in sales channels and the external environment, Company A can effectively prioritize its resources, benefit from growth opportunities and reduce risks, ensuring sustainable market leadership and competitive advantages.
The solution to the managerial problem involved developing a comprehensive multichannel sales strategy, beginning with an analysis of the current situation in each sales channel and followed by a thorough examination of the external environment using PESTEL and EFE matrix. These analyses provided a broader understanding of the macro-environment in which Company A operates.
The analysis of macroeconomic factors along with industry factor analysis was conducted and compared with each sales channel. By actively responding to these factors, Company A can reduce risks and benefit from opportunities. The macro-level analysis was conducted on the base of PESTEL while industry factors were revealed via the External Factors Assessment Matrix (EFE) which allowed to receive a deeper understanding of market dynamics, opportunities and threats. This analysis of the external environment allowed us to evaluate the long-term perspectives of each of the sales channels, and have given a broader understanding of the macro-and-industry level environment and where company A operates.
The development of the Channel-Portfolio Allocation Matrix, adapted from the BCG matrix structure has provided a framework for resource allocation across the sales channels. After the results of the analysis of the current performance and the growth potential, the development of a Channel-portfolio allocation matrix was possible to construct to provide a strategic roadmap for allocating resources across sales channels. The division of channels into "Seed", "Growth Engines", "Harvest" and "Fuel for Growth" allows Company A to prioritize investments and products offered based on the growth potential and current performance of the sales channels. This approach ensures strategic consistency and optimizes the use of resources to ensure long-term profitability and represents the multi-channel strategy.
The financial rationale for the multi-channel sales strategy highlights its impact on the result. By assessing growth rates, analyzing return on sales (ROS), and conducting scenario analysis, Company A can assess the financial implications of its strategic decisions and ensure compliance with business objectives. This data-driven approach allows one to make informed decisions and increases the likelihood of success in the market.
In conclusion, the strategic planning process described in this thesis provides Company A with a reliable basis for working in the complex pet nutrition market in the Russian Federation. Despite the difficulties associated with company's international status that followed plan construction restrictions, the multi-channel sales strategy allows Company A to maintain market share and profitability. Through a detailed analysis of the current situation in sales channels and the external environment, Company A can effectively prioritize its resources, benefit from growth opportunities and reduce risks, ensuring sustainable market leadership and competitive advantages.
