How do product acquisitions impact Broker Models in the FMCG industry?


By: Beroe Inc. --

29 September, 2014

How do product acquisitions impact Broker Models in the FMCG industry?

Broker services involves three major service lines: Headquarter sales, retail merchandising and data collection Since headquarter sales involves generating buy-in, maintaining the relationship and gaining approval for product penetration at the headquarter level of retail chain, the effectiveness is pivoted on the relationship that the agency has at the headquarter level, benefits of consolidation are limited However a broker agency that has a larger/more valuable portfolio of a client's products might consider the client favorably and may push the products more aggressively at probably a lower commission rate (typical pricing model is commission on sales).

The downside to consolidation is that the client may not be able to leverage a very healthy relationship that the incumbent (for a particular product/category) currently possesses with some of the retail networks Retail merchandising and data collection involves store level activities taken care of by an agency to ensure that all approved products at a store are available 24/7; products get favorable and approved shelf presence and coverage including in-store promotional material like displays and data gathering about sales performance vis--vis the product category.

This part of the service offering is more amenable to consolidation as it does away with any duplication/redundancy of efforts that might happen if two or more teams are accomplishing the same services for a client's integrated portfolio. High level of savings on cost per store (typical pricing model is hour based billing for personnel) is possible just by avoiding this duplication.


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