STP OF MAGGI

Segmentation –Basis of lifestyle and eating habits

Focus mainly on age and appetite of urban families.
Targeting – Kids,youth, working women ,health conscious people
Postioning – Positioned with slogan Easy to cook
2 min noodles –taste bhi health bhi

According to a recent article, this retail giant stocks products made in more than 70
countries and at any given time, operates more than 11,000 stores in 27 countries
around the world, and manages an average of $32 billion in inventory.

With these kinds of numbers, having an effective and efficient supply chain
management strategy and system is imperative. The entire organisation is committed
to a business model of driving costs out of supply chains to enable consumers to save
money and live better.

Over the past ten years, Walmart has become the world’s largest and arguably most
powerful retailer with the highest sales per square foot, inventory turnover, and
operating profit of any discount retailer. In its transition from regional retailer to
global powerhouse, the organisation has become synonymous with the concept of
successful supply chain management.

“I don’t believe there is a university in the world that doesn’t talk about Walmart and
the supply chain,” said James Crowell, director of the Supply Chain Management
Research Center at the Walton College of Business. “They are just so well respected
because they do it so well.”

Walmart began with the goal to provide customers with the goods they wanted
whenever and wherever they wanted them. The company then focused on developing
cost structures that allowed it to offer low everyday pricing. Walmart then
concentrated on developing a more highly structured and advanced supply chain
management strategy to exploit and enhance this competitive advantage and assume
market leadership position.

Inventory Management 101

What exactly is inventory management, and why is it so important to your business?

While many definitions exist, the core concept revolves around keeping track of your
stock on hand – and utilizing this intelligence to optimize your inventory to best
satisfy market and customer demand, without exposing your company to unnecessary
costs and risks.

Fewer Links In The Supply Chain

Even in its early years, Walmart’s supply chain management contributed to its
success. Founder Sam Walton, who owned several Ben Franklin franchise stores
before opening the first Walmart in Rogers, Ark in 1962, selectively purchased bulk
merchandise and transported it directly to his stores.
Walmart’s supply chain innovation began with the company removing a few of the
chain’s links. In the 1980s, Walmart began working directly with manufacturers to cut
costs and more efficiently manage the supply chain.
Under a Walmart’s supply chain initiative called Vendor Managed Inventory (VMI),
manufacturers became responsible for managing their products in Walmart’s
warehouses. As a result, Walmart was able to expect close to 100% order fulfilment
on merchandise.
In 1989, Wal-Mart was named Retailer of the Decade, with distribution costs
estimated at a mere 1.7% of its cost of sales – far superior to competitors like Kmart
(3.5%) and Sears (5%).
The company’s supply chain has only become more effective since then.
Strategic Vendor Partnerships
Walmart embarked on strategic sourcing to find products at the best price from
suppliers who are in a position to ensure they can meet demand. The company then
establishes strategic partnerships with most of their vendors, offering them the
potential for long-term and high volume purchases in exchange for the lowest
possible prices.

Furthermore, Walmart streamlined supply chain management by constructing

communication and relationship networks with suppliers to improve material flow
with lower inventories. The network of global suppliers, warehouses, and retail stores
has been described as behaving almost like a single firm.
“Wal-Mart’s whole thing was collaboration,” Crowell said. “That’s a big part of what
made them so successful.”
Cross Docking As Inventory Tactic
Cross docking is a logistics practice that is the centrepiece of Walmart’s strategy to
replenish inventory efficiently. It means the direct transfer of products from inbound
or outbound truck trailers without extra storage, by unloading items from an incoming
semi-trailer truck or railroad car and loading these materials directly into outbound
trucks, trailers, or rail cars (and vice versa), with no storage in between.
Suppliers have been delivering products to Walmart’s distribution centres where the
product is cross docked and then delivered to Walmart stores. Cross docking keeps
inventory and transportation costs down, reduces transportation time, and eliminates
inefficiencies.
Walmart’s truck fleet of non-unionized drivers continuously deliver goods to
distribution centres (located an average 130 miles from the store), where they are
stored, repackaged and distributed without sitting in inventory. Goods will cross from
one loading dock to another, usually in 24 hours or less, and company trucks that
would otherwise return empty “back haul” unsold merchandise.
Using cross docking, products are routed from suppliers to Walmart’s warehouses,
where they are then shipped to stores without sitting for long periods of time in
inventory. This strategy reduced Walmart’s costs significantly and they passed those
savings on to their customers with highly competitive pricing.
Technology
In its relentless pursuit of low consumer prices, Walmart embraced technology to
become an innovator in the way stores track inventory and restock their shelves, thus
allowing them to cut costs.
Technology plays a key role in Walmart’s supply chain, serving as the foundation of
their supply chain. Walmart has the largest information technology infrastructure of
any private company in the world. Its state-of-the-art technology and network design
allow Walmart to accurately forecast demand, track and predict inventory levels,
create highly efficient transportation routes, and manage customer relationships and
service response logistics.
For example, Walmart implemented the first company wide use of Universal Product
Code bar codes, in which store level information was immediately collected and
analysed, and the company then devised Retail Link, a mammoth Bentonville
database. Through a global satellite system, Retail Link is connected to analysts who
forecast supplier demands to the supplier network, which displays real-time sales data
from cash registers and to Walmart’s distribution centers.
Suppliers and manufacturers within the supply chain synchronize their demand
projections under a collaborative planning, forecasting and replenishment scheme,
and every link in the chain is connected through technology that includes a central
database, store-level point-of-sale systems, and a satellite network.
What made Walmart so innovative was that it has been sharing all these information
with all their partners and back in the days, a lot of companies weren’t doing that. In
fact, they were using third parties where they had to pay for that information.
Walmart’s approach means frequent, informal cooperation among stores, distribution
centers and suppliers and less centralized control. Furthermore, the company’s supply
chain, by tracking customer purchases and demand, allows consumers to effectively
pull merchandise to stores rather than having the company push goods onto shelves.
In recent years, Wal-Mart has used radio frequency identification tags (RFID), which
use numerical codes that can be scanned from a distance to track pallets of
merchandise moving along the supply chain. As inventory must be handled by both
Wal-Mart and its suppliers, Wal-Mart has encouraged its suppliers to use RFID
technology as well.
Even more recently, the company has begun using smart tags, read by a handheld
scanner, that allow employees to quickly learn which items need to be replaced so that
shelves are consistently stocked and inventory is closely watched.
According to researchers at the University of Arkansas, there was a 16% reduction in
out-of-stocks since Wal-Mart introduced RFID technology into its supply chain. The
researchers also pointed out that the products using an electronic product code were
replenished three times as fast as items that only used bar code technology.
In addition, Wal-Mart also networked its suppliers through computers. It entered into
collaboration with P&G for maintaining the inventory in its stores and built an
automated re-ordering system, which linked all computers between P&G factory
through a satellite communication system. P&G then delivered the item either to Wal-
Mart distribution centre or directly to the concerned stores.
Walmart’s supply chain management strategy has provided the company with several
sustainable competitive advantages, including lower product costs, reduced inventory
carrying costs, improved in-store variety and selection, and highly competitive pricing
for the consumer. This strategy has helped Walmart become a dominant force in a
competitive global market. As technology evolves, Walmart continues to focus on
innovative processes and systems to improve its supply chain and achieve greater
efficiency.
A close look at Walmart’s supply chain and inventory operations definitely provides
valuable learning points that businesses can take and apply to their own operations.
Even Army Col. Vernon L. Beatty, who commanded the Defense Distribution Depot
in Kuwait, spent a year with Wal-Mart as part of the military’s Training With Industry
program.
“Supply chain management is moving the right items to the right customer at the right
time by the most efficient means,” Beatty said in article about his experience. “No
one does that better than Walmart.”

RURAL MAREKTING (CK PRAHLAD)

More scope
Serving more customers in bottom line
More customers more profit
 The concept of Rural Marketing in India, the economy has always played an
influential role in the lives of people.
 In India, leaving out a few metropolitan cities, all the districts and industrial
townships are connected with rural markets.
 The rural market in India is not a separate entity in itself and it is highly
influenced by the sociological and behavioral factors operating in the country.
 The rural population in India accounts for around 627 million, which is
exactly 74.3 percent of the total population.
IKEA STP
IKEA offers well-designed, functional and affordable, high-quality home furnishing,
produced with care for people and the environment. There are several companies with
different owners, working under the IKEA Brand, all sharing the same vision: to
create a better everyday life for the many people. There are a total of 412 IKEA stores
in 49 markets. IKEA home furnishing is beautiful, functional and affordable. Every
product we create is our way of making your home a better, more comforatble place.
We offer solutions for everyday life from furniture to furnishings, all under one roof.
IKEA (/aɪˈkiːə/, Swedish: [ɪ²keːa]) is a Swedish-founded Dutch-
based multinational group, that designs and sells ready-to-assemble furniture, kitchen
appliances and home accessories.
Segmentation:
Based on Geographies:
It divides customers based on the regions like US, Europe, Latin America, Asia etc.
Sizes of homes, choices of people differ across the countries. Tailored content for
each market is necessary.
Based on Income:
People from different income groups have varied choices and their propensity to buy
and how regularly they would buy also changes accordingly.
Based on Culture:
People with different cultures have distinct spending habits. Even the choices of
products as well as materials change with this.
Based on Lifestyle:
Urban, semi-urban and rural lifestyles are significantly different. Sizes of their homes
and furnishing styles differ as well. Also, material and color choices vary accordingly.
Targeting:
The main target of IKEA is “Generation Y” or urban young aspirational people. The
people who would love to decorate their homes with stylish yet affordable furniture.
This generation would not use same furniture for decades. As soon as they reach to
different income level or as per trend they would junk the old furniture and look for
new. They provide these people with stylish, unique and comparatively cheaper
options. Parents having kids between age group 0-3, 3-9 and 9-12 are targeted with
different options. They are targeting larger middle class market with affordable and
good quality products. US customers want big beds and closets whereas Chinese
apartments are small so they need smaller sizes. So, designs were changed
accordingly.
In emerging countries urban people are targeted by IKEA. Also in China, people were
not so keen about assembling own furniture. People in India may not like it as well.
So, they would be targeting people young and urban population with their products.
Positioning:
In U.S. and European countries Ikea positioned itself as a brand which sales furniture
at prices so low that more number of people can afford it. A brand providing good
quality and stylish products at low prices is the image in minds of people. Ikea prices
were higher than discounters like Aldi but lower than West Elm and Bed, Bath &
Beyond. This price helped them to position themselves as a brand for wide middle
class.
But in emerging countries like China this positioning confused buyers in the
beginning, as local manufacturers were manufacturing products at lower prices, also
they could copy the design at cheaper costs. So, in such countries it positioned itself
as an aspirational brand providing western styles. Though, it kept the prices low
thereby sticking to its mission. The same strategy would be followed in India.
The IKEA concept is based on their market positioning statement “Your partner in
better living. We do our part, you do yours. Together we save money”.

Current macro-economic conditions in India have created conducive environment for

foreign investors. 100% FDI is also allowed in processed food category and
government has allowed Ikea to open Cafés in its stores as well. Also, local sourcing
norms have been eased. With the ease of FDI laws, current condition is much
favourable for Ikea to enter Indian market.

Customer is king-Mcdonald

Once a pioneer in the fast food industry, McDonald’s Corp. (MCD) has gone stale.
Consumers slowly stopped eating at the restaurant after the documentary “Super Size
Me” was released in 2004. In the second quarter of 2015, McDonald’s saw its sales
and earnings per share (EPS) fall again. This year, management has also shared its
plans to close more restaurants, leading to a shrinking number of McDonald’s for the
first time in 40 years.

In May 2015, McDonald’s new CEO Steve Easterbrook introduced a plan to turn the
company around and increase profitability for shareholders. This plan focuses on
restructuring and increasing the number of franchised restaurants along with greater
listening to the demands of consumers. But what does a McDonald’s consumer want?

Simplified Menu

Eating at McDonald’s is an exercise in patience. The menus flip over at a high speed,
making the barrage of options for even the simplest of meals overwhelming. By
getting back to its roots – hamburgers, cheeseburgers and French fries – the
McDonald’s brand can strengthen itself. Consumers will no longer spend minutes
reading about the seven types of breakfast wraps that McDonald’s now serves,
although for a limited time only, and at twice the cost of the hamburger the consumer
wanted originally. Quick and simple ordering means happy customers, and happy
customers will always come back for more. (For more, see Top Five Fast Food Value
Menu Deals.)

Fast Food

McDonald’s failed experiment with pizza in the 1990s should have taught the
company that consumers don’t visit fast food restaurants to sit around and wait for
food. Franchisees complained about the expensive pizza ovens and long cooking time,
but it took until 2000 for McDonald’s to close its pizza chapter.

Today, franchisees are complaining about the McWraps. The tricky menu item take a
longer-than-expected amount of time to prepare and lead to frustrated, impatient
consumers. Regardless of whether the franchisees want to listen to the consumers or
do away with McWraps, franchisees only have a limited amount of power to change
the menu.

By listening to their franchisees and, by extension, their consumers, McDonald’s can

restore its image as a restaurant to get fast and cheap food—one of the main reasons
that customers eat at McDonald’s to begin with.

Tasty Burgers

Fast food doesn’t have to be tasteless. McDonald’s once made the tastiest hamburgers
in America, but today the best hamburger award goes to fast casual restaurants like
Shake Shack Inc. (SHAK) and Five Guys. McDonald’s, in a bizarre move, abandoned
its core brand of being fast and cheap and attempted to copy the upscale hamburger
places to woo back consumers. (For more, see The Story Behind Shake Shack's
Success.)

Instead of focusing time, energy and money into luring back consumers with fancy
new products, McDonald’s should focus on improving the quality of its core products.
Locally-sourced ingredients, organic food, and a high standard of quality are what
consumers want from McDonald’s. Having fewer products that taste great will return
McDonald’s to its heyday of selling quick and yummy food at good prices. (For more,
see Why Organic Food Is So Expensive.)

Customer Service

Consumers are shocked at the lack of effort that goes into providing a nice experience
inside McDonald’s. The best and easiest solution for improving the time spent in a
McDonald’s is self-service kiosks. These popular machines allow fast and precise
ordering, secure payment options and free up the workers to perform other tasks and
improve customer service.
Lower Prices

McDonald’s raison d’être is to serve cheap food quickly, and consumers who are
willing to spend more than $5 on a hamburger will go to a fast casual hamburger
restaurant instead. With its fancy Angus burgers and wraps, McDonald’s is failing its
investors and the consumers who frequent the establishment for inexpensive calories.
(For more, see Fast Food vs. Fast Casual.)

By simplifying the menu and implementing self-serve ordering, McDonald’s can

lower its prices. Smaller, uncomplicated menus not only translate into lower staffing
costs, they also don’t force franchisees to purchase expensive specialized equipment
or keep as much inventory on hand in order to sell a wide variety of menu items.

The Bottom Line

McDonald’s is listening to the wrong people. Instead of heeding what its existing
customers say and following the advice of their franchisees, executives are looking to
chase consumers who have already ditched the restaurant. Fast casual restaurants are
not McDonald’s competition. McDonald’s will never be a place where people go to
eat artisan breads and exotic meat hamburgers stuffed with imported cheese; it’s a
place to buy cheap, decent-tasting hamburgers that are ready within minutes of
entering the building.

As long as McDonald’s continues to compete against the wrong companies, it opens

the doors for its real competition – The Wendy’s Co. (WEN) and Restaurant Brands
International Inc. (QSR) subsidiary Burger King – to take over the fast food market.
SOCIAL V/S SOCIETAL MKTG