Today’s successful fast moving consumer goods (FMCG) brands don’t just deliver their products to the retail outlets and wait for potentials shoppers to buy their products
By Bjorn Kruizenga. The author is the General Manager of Business Development – South East Asia, DKSH Smollan Field Marketing
The economic climate has considerable impact on the global retail sector, which represents around one third of the gross world product. To capitalise on current opportunities and temper risks in a volatile economic climate, it is critical for retailers and brand owners to expand their businesses in and to promising, future markets. Avoiding the pitfalls of shifting retail markets, however, requires a strategic mindset about expansion. Each market has unique challenges and unique opportunities.
Malaysia decidedly is a promising land for the consumer goods sector. With a forecasted GDP growth of over 4% in 2017, the country is still among the fastest-growing economies in the region. The country is also one of the most attractive markets worldwide in retail development, according to consulting firm ATKearney.
These attractive market conditions awake the interest of new market participants. Aside from the established Western brands, many Asian companies are expanding to new markets such as Malaysia, leading to increased competition. Domestic consumer goods companies are getting more competitive in their offerings, too.
Launching new products is one way to increase market share. This however requires significant R&D and marketing investments and space on supermarkets’ shelves is very limited. Of the newly introduced products in South East Asia, just 10% remain available on the shelf of retailers beyond their first year, highlighting the significant risk involved in investing to take a new product to market.
Beyond expanding to more outlets and introducing new products, field marketing can help grow Malaysian FMCG companies. The discipline is a relatively new and broad activity within marketing. Its main benefit is to drive growth for international manufacturers by increasing product availability and visibility in the retail space.
In addition to merchandising, field marketing also includes product demonstrations and consulting, promotions, event management and design of promotional material such as product displays, promotion booths and uniforms for promoters.
Field marketing aims to actively convert shoppers into buyers for FMCG companies. These value-adding services have increasingly become important over the years as they increase the demand for products directly at the point of purchase, thus enabling attractive growth opportunities for consumer goods manufacturers in a competitive environment.
Increasing on-shelf availability is one of the main targets of field marketing. At any given time, approximately one out of every twelve products globally are out of stock. Research shows that when a shopper’s favourite product is not available, 9% don’t buy any product and leaves the shop empty-handed and 37% buys a different brand.
Many shoppers never switch back to the original brand. Every 2% of extra on-shelf availability leads to a 1% increase in extra sales. In an Asian market that is more competitive, improving availability is a key to success.
Studies for Southeast Asia show that actively managed field marketing activities can increase overall on-shelf-availability considerably by up to 10%. These additional percentage points can be decisive for the commercial success, especially in the highly competitive FMCG sector in Malaysia.
This story was first featured in the Business Today magazine (May 2017 issue)