NEW COMMUNICATION CHANNEL FOR FMCG SECTORS

New Communication Channel for FMCG Sectors

Table of Contents

Chapter 14

Introduction4

Chapter 28

Literature Review8

The adoption of mobile channels solutions in supply chains9

Chapter 313

Methodology13

Study design issues13

Study methodology and limitations14

Chapter 416

Study findings16

Chapter 520

Discussion20

A case from the FMCG sector20

Practical context: the FMCG sector20

Princes soft drinks21

Study summary24

Technical issues24

Customer/commercial issues25

Supplier issues25

Chapter 630

Conclusions and Recommendations30

References33

Appendix37

Abstract

This paper sets out to discuss the development of an e-business strategy by a UK soft drinks company. It is based within the Fast Moving Consumer Goods (FMCG) sector (also known as Consumer Packaged Goods), which is characterized by powerful retailers, tier-1 suppliers of industrial end-products and ingredient/raw material producers further upstream. The paper aims to examine the tensions created at tier-1 level relating to the adoption of e-business solutions for B2B activities.

New Communication Channel for FMCG Sectors

Chapter 1

Introduction

FMCG Mobile marketing rapidly became the largest mobile phone operator in China. In 2001, its asset was more than $32.74 billion and it had 100 million subscribers. Until 2002, these figures have grown to over $38.8 billion and more than 138 million subscribers. However, the continued good performance of FMCG marketing is threatened by a number of factors.

These threats come from a number of places, the most important of these being the fierce competition with the three other state-owned companies. However, this competition will be increased in 2007 when the WTO Basic Telecommunications Agreement comes into effect, allowing foreign companies access to FMCG market (Yang, 2003, p3). This pressure is reflected in the fact that the Mobile Phone Revenue per User has dropped 50% in the past three years (Yang, 2003, p3) to a figure of RMB100 Yuan (Reuters, 2004, p1).

All of these mean that FMCG marketing strategies through mobile channels, especially its advertising strategies, will become the most important element of its sustained and successful growth. The

Email was one of the first applications to run on the internet and involves the direct transmission of text messages between 2 users. Using email provides the simplest form of mobile channel marketing. It replaces paper, fax and telephone communication between members of a supply system (Beynon-Davies, 2004). It is quick and uncomplicated, but lacks the sophistication provided by EDI and internet-mediated mobile channel marketing solutions.

Developed to facilitate business transactions between trading partners, EDI technology provides organisations with the means to develop mobile channel marketing capabilities and thereby to eliminate the delays and errors generally associated with traditional procurement systems. It provides a (limited) collection of standard message formats that businesses may use to exchange data including, for example, orders, delivery notes and invoices (Beynon-Davies, 2004). It has been in existence for over 20 years and has been championed mostly by large manufacturing and retail companies who use it to link suppliers into their business processes. On the inbound supply-side of an organisation's operations, improved record accuracy, lower data entry costs, reduced inventory holdings and improved inventory turn ratios are cited as benefits; whilst on the outbound demand-side improved responsiveness to orders and enquiries and increased business opportunities are cited (Davis and O'Sullivan, ...