#136 Perfetti Van Melle’s Top Salesman in India
Meet Nayar. Nayar (name changed) is the proud owner of a retail store. His store has no loyalty cards and no shopping carts, no cash registers and no employees. Nayar has a lot of customers, though. His store is located under a stairwell in a house at a busy intersection in Calcutta, India. Nothing special for an emerging market with large segments of the population in lower income strata, one might think. Nayar, however, has also been one of the highest grossing sellers of candy for the global confectionary giant Perfetti Van Melle in India. While largely unknown as a corporate brand, Perfetti Van Melle is the third largest candy company globally, and it owns brands such as Mentos, Frisk, Smints, Airheads, or Chupa Chups. Nayar is also a prime example of how doing business globally, especially in emerging markets, isn’t always glamorous and how it requires serious adaptation of distribution strategies. The reality of the supply chain in emerging markets is very different from that in mature markets. Especially in India, where national retail or distribution simply doesn’t exist. 95% of India’s retail is “unorganized”, and Perfetti Van Melle therefore had to maintain its own salesforce of between 4,000 and 6,000 employees and contractors that served approximately 500,000 retail outlets nationwide. Besides, most consumers in India don’t buy their candy in bulk in supermarkets. Some buy just one or two pieces because they can’t afford larger quantities; others buy just one or two because they just happen to fancy that one piece of candy while they are on their way to or from work. And that’s why Nayar sells his candy out of big jars that he keeps under the stairwell. Well done, Perfetti Van Melle! Well done, Nayar!
February 12, 2018 @ 12:50 am
I found this particular blog about Perfetti Van Melle’s top salesman in India being a small retail owner who sells from under the stairwell of a house at a busy intersection. When I think about some being a top salesman I envision a big office, a fancy car, cool clothes and an expense account. I do not picture someone who resembles an indigent worker under a stairwell. But, as we have learned throughout this course it is not always how we perceive our market and marketing strategy in another country should be and it may not always be as “glamourous”, as you stated in your blog, as we assume. This article really represents how an organization has adapted itself to the nature of the haphazard marketing of the Indian culture.
In this case Perfetti Van Melle is utilizing an Indirect Exporting entry mode into India. They are interfacing with their Indian customers through salesmen such as Nayar; even though he is not a member of their salesforce in their home market, he understands the wants and needs of the people living in his area of India and has found a way to adapt the product to make the product successful. I would never have thought it could work but it is pure genius.
February 16, 2018 @ 9:50 pm
I wholly agree that this is a great example of distribution strategy adaptation but my worry here is that, as the Indian market matures, is this strategy really sustainable? Managing a sales force of 4000-6000 employees and contractors will require more and more resources as the country continues to develop and consumer preferences, and economic conditions, begin to evolve. What is the exit strategy? Does Perfetti Van Melle, and Nayar, have a long term plan in place to adapt to a new India in the coming years?
As a country develops, as we have seen in China over the years, consumer preferences tend to shift toward services more than just goods. Premium products begin to gain popularity as consumers begin to earn higher wages. Will a customer still prefer to buy a single piece of candy from Nayar if he can afford not to or if he no longer walks past the shop under the stairs because he works at a new job?
I’m certainly not saying they shouldnt strike while the iron is hot or that they shouldnt take advantage of consumer trends in the market today, but some effort should go in to planning for tomorrow as well.
March 12, 2018 @ 10:07 pm
What a great example of adapting strategies to a target market, in my opinion. Keeping fancy stores, suit salesmen and huge packaging sizes just for the sake of maintaining a corporate brand reputation? Obviously, that is not Perfetti Van Melle’s way of doing business – And they are successful with their approach.
As we know, there are only three strategy decision options when entering a new market:
– Standardization
– Adaptation
– Staying away from the market
Many companies seem to be afraid of taking a final decision whether to enter a market and if they enter a market, which strategy to follow. Oftentimes, this is caused by a lack of information, knowledge and experience, leading to the company not being able to make informed decisions – one of the main sources of failure in international business.
Perfetti Van Melle obviously did their homework and decided to go for an impressive adaptation strategy. They acquired knowledge about local conditions and consumer preferences and decided to actively involve the people who know best: Locals. Taking into consideration political, economic, societal and technical aspects, they adapted their strategy in all parts of their Marketing mix:
– Product: Sold by piece instead of in bulk
– Price: Lower price due to smaller packaging unit
– Place: Under a stairwell at a busy intersection instead of in a fancy shop
– Promotion: Word-of-mouth instead of traditional communication channels
Quite an impressive and courageous step for a global player in confectionary like Perfetti Van Melle that shows what a structured approach to market entry can do for a company. Finally, it was crowned with success.
April 15, 2018 @ 3:59 pm
When I think about my trips to India then this is the common situation that I faced. Indian are masters in distributing, just think about the dabbawalas, a lunchbox delivery and return system, bringing hot lunches from homes or restaurants to people at work by bicycles and railway trains. And best of it, they are always in time (I talked with local Indians and they told me about that. Due to my opinion, I would say that as good as always on time, however, I did not prove the opposite). This case shows how important it is to consider very well the distribution strategy if you enter a foreign country.
In emerging market with many people with low incomes, the selling unit is pivotal. Their buying habits and possibilities are totally different to what we are used to in Europe, and local micro distributions as well as the word of mouth plays an essential role . Entering such markets requires to adapt one’s distribution strategies and get access to a well-tied network depending on the supplied area. Mostly you see unorganized retailing, e.g., the so-called kirana stores in India. According to Sarkari (2017), such kind of shops, also called neighborhood mom-and-pop stores are responsible for at least three-fourth of overall sales and the fastest growing channel for Fast Moving Consumer Goods (FMCG) in the country. I noticed that people are very creative, they try and do a lot to earn money and improve their lives, so, if the offered margin helps them to get ahead then you can get into business with them.
No matter, if I went to Chennai, Delhi, Mumbai, Jaipur, or Goa. People run micro-stores (installed or mobile) to earn money. The value and beliefs are different to what we have in Europe. In the case of Nayar, the top salesman in India of Perfetti Van Melle, a global confectionery giant who owns brands such as Mentos, Frisk, Smints, Airheads, etc., for this company, it is an indirect exporting entry mode into the country. Moreover, it is more than just how to distribute, it depends also on what cast or religion someone belongs and how he grew up, and how is embedded in social and community life. This is crucial to know as you should obey specific habits.
Calcutta as the seventh biggest city in India and its more than 14 million inhabitants in the greater area of the city is a vital and busy place. Common for Indians is to interact highly with others also in the meaning of doing business. For instance, if one person is known to be able to provide a specific number of selling units of something, then the persons who are close can do business by reselling it.
An important learning is that we should not focus on what we have in mind if we want to enter different markets but observe and talk to locals how things are done.
References
Sarkar, J. (2017, October 13). Kirana stores fastest growth channel for FMCG: Study – Times of India. Retrieved from https://timesofindia.indiatimes.com/business/india-business/kirana-stores-fastest-growth-channel-for-fmcg-study/articleshow/61061302.cms
July 16, 2018 @ 7:03 am
Being born and raised in India it is not hard for me to agree to the fact that: Business and Distribution Channels in India are pretty unorganized. Companies whether big giants like Apple Nestle and Perfetti Van Melle needs to adapt to local culture and plan selling accordingly. Unlike China and United States people (consumers) in India wish to buy products in small denominations. Most of Indian population is middle and working class who cannot afford large expenses, even they buy and plan groceries according to weeks and not months. It is also advisable to go to local distributors, sales people and small store owners like Nayar when selling in India as major section of consumers buy from them. Organizations that are running global needs to understand that every country’s market, selling strategy and consumer demands will be different so they need to be prepared for it. Adaption to local market and consumer needs is the key to success when running business overseas.
Nayar does not have a big lavish store, is not qualified with and MBA degree and does not know much about the company whom he buys these candies. What he knows is how to sell and attract consumers sitting in his small place which is not actually a store. He understands the needs and demands of his consumers and plans his sales accordingly benefitting himself and the company. Perfetti Van Melle did a clever work by planning its distribution with sales man like Nayar especially in India. But what is the matter of concern now is, as time passes standard of living improves and people shift their demands and buying pattern changes. This is tough when you are running business all over the world and you need to adapt according to each country and their local style of buying. But not to forget those companies who master this art can never lose in the international market just like Perfetti Van Melle.
September 30, 2018 @ 1:56 am
Entry mode choice is part of a systematic internationalization process that a global corporate business selects the best method in entering a different country. A business needs to choose the best method of expanding its business and when they explore the possibility of going into a different country they need to make a few changes to be able to adapt to the environment of that country. Each country and every culture have a different perspective and ways of doing things and corporations needs to understand and adapt in their marketing and distribution of selling their products in that country. For example, if a country has a high level of poverty, consumers will not be willing to walk into a glamorous store due to higher prices or massive warehouses due to bulk amounts which also results in higher prices. In addition, households in countries with lower incomes often do not have refrigerators or air conditioners to provide a cool place for storage or may have animals or insects in the houses that will spoil products. Because of this, most are more willing to buy in small quantities to be able to consume products right away. Many corporations, such Walmart in Germany, Target in Canada, and Fosters Beer in Vietnam, are examples of failures because they did not culturally adapt to the population’s culture, needs and style of living. In the end, they were forced to exit the market resulting in big financial losses. Keeping your consumers happy should always be a business’ main focus and they need to research and even experience it when considering an expansion to a foreign country. Perfetti Van Melle is doing exactly that and has proven it with its top salesman in India.
March 17, 2019 @ 9:12 am
Nayar’s story reminded me about my travels to India and the incredible things that are possible in this colorful country! However, from my point of view India is a country of contradictions and the retail business is one of its examples. Many systems in India are still heavily dependent on people rather than automation despite the high level of technical development in the country. Through this, the systems – such as the dabbawala – show a very high degree of flexibility and customer-orientation, but they live on very low labor costs. Perfetti van Melle understood that this reality is an opportunity when entering the Indian market and built up a delivery system using an Indian salesforce of several thousand employees to serve street shops all over the country. Ultimately this gave Perfetti van Melle access to millions of customers, and it is bringing happiness to children of all parts of Indian society (and 150 other countries in the world!) Its candy is adapted to local tastes and one of their main products, the Chupa Chups lollipop, is available in more than 100 flavors, including a tongue tickling sweet and sour taste in raw mango! An incredible effort! I agree, well done Perfetti van Melle!
June 29, 2020 @ 10:55 pm
This has been an eye opener, and a scenario that one might expect more from a Roald Dahl story as opposed from a real-life top seller in an international market. Any marketing or business graduate might anxiously be clutching their desk right about now, shivering at the mere thought of how seemingly unstrategic or not by the playbook Nayar is operating his business. “But what about optimising the 4 P’s? And what about Porter???” Even I, sitting here in a western culture, studying the principles of marketing and sales management through the lens of a western society, started making a mental list of things that I would immediately start doing, were I in Nayar’s shoes. But this is also the exact moment that we should take a step back and yet again be reminded that we simply can’t understand all the subtle dynamics, the inside scoop of what works and what doesn’t work, and the patterns of behaviour from the people inhabiting different markets, without truly observing and experiencing them for ourselves. There are so many unwritten rules and social norms that different cultures adhere to as a group, and we as one business trying to operate in a foreign culture will 100% always need to adapt to them vs. the other way around. At the end of the day, it’s the people (and their mentality, that has often been shaped over many generations and countless other socio- political factors) that define a culture and also those same people that in return make up the market. And as marketers we need to cater to the market, not try and force things the other way around.
As they say: You can’t control the waves, but you can learn how to surf.
June 28, 2021 @ 10:35 am
Adapting to a country’s culture done right! In my opinion, Perfetti Van Melle did a great job in selecting Nayar as one of India’s retailers to sell their candy. Even though I’ve never been to India myself I am confident to say that selling candy underneath a staircase at a busy intersection is the best way to distribute in this country. No fancy stores needed to satisfy Indians. Also, selling single pieces of candy, like one lollipop, from those large candy jars means less packaging waste and economically advantageous distribution. I would say that this type of distribution will only work in developing or emerging countries though, because in western industrial countries people prefer going into a physical store, taking a shopping card, probably buying with card and everything being neat and tidy.
But this kind of retailing in India is just brilliant – perfect definition for market adaption!