Client Challenge
The Canadian unit of a western multinational introduced seven SKUs (from a list of over 550) via an India distributor. Sales were tepid and Amritt was asked to diagnose the problem and recommend a short term and medium term plan.
Amritt-Client Process
Amritt analysis showed that the client had priced the products correctly for the India market and had obtained the right type of in-store placement and promotion, appropriate for the product category; no print, radio or television advertising was planned or needed at the market size for this category. The client suspected that the problem might be the distributor and his capabilities and wanted Amritt to evaluate and recommend other channel partners.
Our analysis showed that while the distributor was not perfect, the real problem was the product itself. Focus group testing in three different cities confirmed that one particular feature of the products while seen as attractive in North America was a complete turn-off for almost 85% of likely buyers. Anecdotal evidence from retailers also confirmed that a very narrow demographic slice were repeat buyers.
We recommended modifying all seven SKUs to remove one feature, which reduced the unit cost of the product by about 6 percent. While focus group studies showed willingness for consumers to pay a slightly higher price for the improved product, Amritt recommended that the client maintain prices and simply pocket the extra margin.
Impact
After an extended and spirited discussion, the client agreed to make the product changes and it took about seven months from the time of our recommendations to introduce the modified products into the channel in India. Sales went up by over 220%. Anecdotal evidences suggested that most of this improvement was from a wider segment of repeat buyers. A larger company (who was already a candidate for being the second reseller partner) acquired the current distributor. The larger entity had a national footprint and sales increased by a further 84% in the following year, without the burden of finding a new relationship.
