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Group A-14Group A-14
Distribution Channels
ANTONIO’S BIG NIGHT IN ANTONIO’S BIG NIGHT IN TOKYOTOKYO
Presented byPresented by• Antonio Patron Boenheim Antonio Patron Boenheim • Thierry ZeddaThierry Zedda• Katsuya NakamuraKatsuya Nakamura• Renata Peregrino de BritoRenata Peregrino de Brito • Simi GambhirSimi Gambhir March 29, 2004March 29, 2004
Group A-14Group A-14
Second Day: “The Interview”
Where the @$%/ is that hotel?
At my cheap hotel room
At the Interview Trying to find my hotel
Group A-14Group A-14
Front Desk
Second Day: Night out
Flowers Alcohol
Food & Coffee
Smokes & CondomsForgotten or unavailable Items
You can find everything
“around the Corner”
Group A-14Group A-14
Marketing Context
• Example of nonstore selling (direct selling, direct marketing, buying service)
• CONVENIENT!
• 24 hours, 7 days a week
• Low service cost
• Can serve a captive audience
What is AUTOMATIC VENDING?
Group A-14Group A-14
Manufacturer
0-level 2-level 1-level
Consumer Consumer Consumer
Retailer Retailer
Wholesaler
Manufacturer Manufacturer
Marketing Channels
Group A-14Group A-14
Sales and Breakdown by Vending Machine (2002)
Financial Data
# of Vending Machine in JP 5.6m
Persons per Machine 23
GNP$71b: Philippines
$66b: Chile
$57b: Czech$56b: Pakistan$54b: Peru$51b: New Zealand
$66.7b
Salesfrom
VendingMachines
inJapan
Sales
6.8%
24.0%
28.2%
40.0%
•Beverage•Alcoholicbeverage
Other
Tickets, etc
Cigarette
1.5%: Foods
(Source: Japan Vending Machine Association)
(Source: International Financial Statistics Yearbook 2002)
$22.6b
$13.8b
$1.5b
France Germany U.S. Japan
Group A-14Group A-14
41% 20% 25% 14%Beverage Market
in Japan
52% 15% 23% 10%Coca-Cola Grp
20% 35% 30% 15%Ito-en
88% 11%
1%
Dydo
VendingMachine
ConvenienceShop Supermarket Other
(Source: Weekly Diamond Japan)
Preferred Channels
(Sales share% by channel)
Preferred Channels by Selected Brands
Group A-14Group A-14
Preferred Channels
A Brand that Uses Vending as a PRIMARY Channel
FABO is a local Japanese producer of canned coffee
Group A-14Group A-14
60
14.4
27.6
60
12
6
24
18
Product Cost
•Marketing•Logistics•Other
Location Fee
Profit
18Retailer’s
Margin
Discountby Retailer
Product Cost
•Marketing•Logistics•Lease or Depreciation•Other
Vending machine Channel Supermarket Channel
Retail Price (Yen)
(Source:Japan Vending Machine Association)
Financial Data
Profit
120(Yen) 108
(Yen)
120(Yen)
Vending vs. Supermarket Channels
Group A-14Group A-14
Net
(500)
154 154 154 154 154 154144135125117110
0 1 2 3 4 5
•Vending Machine•Setting Cost
Cash-out Flow
Cash-in Flow
NPV:
785
(K Yen)
(Year)
Discounted Payback: 2.5yearsIRR: 34.3%
(Source: Weekly Diamond Japan)
Financial Data
..
• Annual Revenue per Machine in Average: 1.1million Yen ($10,000)• Durable years: 5 years• No terminal value• Discount rate: 7%
A Good Investment!
Group A-14Group A-14
• Geographic• Economic• Socio-cultural• Technology
Are these factors applicable to other countries?
Critical Factors for Success
Why does this work?
Group A-14Group A-14
19.3 29.7 35.7
106.3
333.6
462.9
Brazil UnitedStates ofAmerica
Colombia France Japan Netherlands
Geographic Constraints
Population Density (per km2)
+ only 30% of land can be utilized
Source: Food and Agricultural Organization of The UN
High cost of landHigh cost of land
Low stock kept at the home
Low stock kept at the home
Frequent buyingFrequent buying
Convenient channelsConvenient channels
V.M. utilize small spaces efficiently & profitably
V.M. utilize small spaces efficiently & profitably
What impact does this have?
Group A-14Group A-14
Economics
2.6 2.91.6
2.23.4 2.8
1.62.00.7 0.5
1.7 1.91.9 2.0 2.0 2.2 2.53.5
1.70.7
-0.3 -0.7 -0.7 -0.9
15.8
6.9
3.2
4.9
7.0 6.8
8.4
14.7
18.7
10.9
8.07.1
2.32.32.8
2.11.61.21.81.7
2.8 4.5
2.2
-0.3
0.1-0.10.7
6.3
9.2
18.5
20.2
23.8
21.0
(5)
0
5
10
15
20
25
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
2075.9
66.0
(%)
Cha
nges
in C
onsu
mer
Pric
es
Brazil
Netherlands
Columbia
U.S.
France
Japan
~~
~~
(Source: IMF International Financial Statistics)
High inflation rates can lead to:
• High stocking
• Continuous price changes
• Currency change
Group A-14Group A-14
Socio-cultural
12.3
7.06
4.93
4.6
2.05
1.58
1.41
1.41
0.02
0.01
0.04
Spain
Chile
Costa Rica
South Africa
Mexico
United Kingdom
Venezuela
United States
Japan
India
Thailand
Crime: Robberies per Capita (2000)
Source:http://www.nationmaster.com/cat/cri
Low vandalism and respect for public property leads to….
• Machines not confined to private spaces
• Further potential for expansion
Group A-14Group A-14
Technology
Helping sustain Japan’s vending culture
PRODUCT REPLENISHMENT REQUIRED
Wireless communication between machine and owner• Monitor sales activity• Inventory control and refill scheduling
Group A-14Group A-14
SMART PAYMENTMobile phones and smartcards increase convenience and purchase of expensive items
Technology
SMART MACHINES• ID checking for underage consumption• News and weather information• Up next? Digital kiosks (ATM, Internet)
Group A-14Group A-14
JOB – don’t give up but start thinking of a title for your research project HEALTH – stop eating at Maria’s Cantina LOVE – you won’t get lucky if you take a girl to a vending machine
Fortune
YOU DIDN’T GET LUCKY IN JAPAN!