How to navigate the FMCG wordings

April 27, 2020

Some basic FMCG sales terminologies for the freshers who are planning to start their careers in sales:

FMCG: Fast Moving Consumer Goods, goods that move faster from a retail outlet

Primary Sales: These are sales from the company to the distributor e.g. the amount of product that a distributor purchases from the company. Normally Area Manager’s and Regional Manager’s targets are set on Primary Sales.

Secondary Sales: These are sales from the distributor to the retailer. Usually, TM/TSM’s targets are always based on secondary sales.

Offtakes (Tertiary Sales): These are sales from the retailer to the customer. While offtakes are not tracked by the company, trends of offtakes are tracked by some market research agency like Nielsen.

Beat: This is the route that a salesman (DSR/SO/SR) follows on a particular day. For example, beat on Saturday is Location X, and beat on Sunday is Location Y. If the salesman visits each beat on every alternative day, all the retailers/stores/outlets in his sales territory will be covered in two days. Thus, he will visit the same outlet of his beat thrice per week.

Numeric Distribution: The number (or percentage) of outlets where company’s product is present (outlets that have at least one SKU of a product) e.g. at how many outlets a company’s product are available is measured by numeric distribution.

Weighted Distribution: The percentage of the total sales volume that comes from the served outlet.
Let’s clear this by an example: you have 10 outlets in a beat, now out of these 10 outlets if your product is present in 4 outlets then numeric distribution is 40%. If that 4 outlets contributes 75% of your total sales, in that case weighted distribution would be 75%. Numeric distribution gives you an idea of the reach of distribution whilst weighted gives you an idea of the quality of distribution.

Stock Keeping Unit (SKU): This refers to a specific product from a range of product of a company. For example, 100 gram Dettol original soap is an SKU of Dettol soap of Reckitt Benckiser (Reckitt Benckiser has other SKUs of dettol soap like 50 gram Dettol soap, 200 gram Dettol soap, etc.).

DSR Distributor’s Sales Representatives: employed by distributors but managed by TM/TSM; DSRs are the salesmen who are responsible to make sales of company’s products (SKUs) to retailers.

Wholesalers: An outlet of a beat is considered as wholesaler if that outlet contributes more than 50% sales of that particular beat (this assumption may differ for different companies).

Modern Trade: Super shops who mainly sell to premium customers e.g. Agora, Swanpa etc. (Modern Trade is managed by the dedicated sales channel)

Trade Schemes or Trade Promotions (Widely Known as TP): These are schemes that are given out in the market to boost sales from time to time. Trade Schemes are designed for the trade i.e. Retailers/Wholesalers and the Distributors.
Trade Promos are of two types:

  • Quantity Purchase Schemes (QPS): To inspire the retailers to buy more, sometimes a company offers QPS. These typically look like this: Purchase of 144 pieces at a time and get 8% discount. These are discounts offered on purchasing a particular quantity of products.
  • Value Purchase Schemes (VPS): These are the same as QPS, the only difference is that these are offered on value purchased instead of quantity. These would look like this: Purchase of Tk 10,000.00 at a time and get 8% discount. These are discounts offered on purchasing products of a predefined value.

Trade schemes are further divided into two types depending on who they are offered to:

  • Primary Schemes: These are those that are deducted while the invoicing is done to the distributor from the company’s end. This may be done to give the distributor an additional margin.
  • Secondary Schemes: These are those which the distributor is supposed to first extend to the market as per company declared trade scheme and then claims it back to the company.

ROI (Return of Investment): This is calculated on monthly/quarterly/yearly basis to understand distributor’s profitability. ROI calculation is very important as it is a tool to negotiate with your distributor to manage/deploy required investments.

The equation is simple: ROI= Return/Investment, Return = (Earnings – Expenses).

FOC: Free of Cost (Goods offered as free). Sometimes company offers FOC goods to retailers as a part of special promotion.

Display: This refers to Shelf of an outlet that a company pays for (can also be a floor standing unit (FSU) in Modern Trade). Company usually hires shelf space of an outlet on monthly rental basis to display its products.

Strike Rate of Productivity: It is the % of all successful sales calls out of total calls made by a DSR. This is generally measured on a daily basis.

Other Popular Terms:
EC: Effective Coverage, PC: Productive Call, LPC: Lines Per Call, LPD: Lines Per Day, LPM: Lines Per Month, LPI: Lines Per Invoice, KPI: Key Performance Indicator, TBTL: Time Bound Trade Load, DLTL: Display Linked Trade Load, NPLP: New Product Launch Process, CP: Consumer Promotion, CO: Consumer Offer, L&D: Leakage & Damage, DD: Direct Distributor, SD: Super Distributor, OSDP: Out Stationed Distribution Point, JC: Journey Cycle, TMR: Town Market Report, Discounts: Primary Discounts, Secondary Discounts, Cash Discounts