CategoriesSales
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Retailers objection to sales

Retail Shop Poornesh

Recently, we decided to be active on social media and updated Facebook cover photo. A subscriber from Mangaluru commented saying your product is not available anywhere here. Fact is it is available at many outlets at Mangaluru. But he has a valid point, that it is not available at many shops where he has tried out. I replied saying that we are working hard to place the products at as many shops as possible. How is it such a hard work to place the products? Because of objections by retailers. Retailers have limited shelf space, inventory budget and no intention to promote any product. So, they will only sell those brands that are fast moving. Here are the common ways in which they object to our salesman when he tries to sell.

  • No response – This is common when you are not interested in what the salesman is offering
  • No consumer demand – retailers will take the pain to stock a brand only that has consumer demand
  • Price is high – He needs to earn a decent margin and yet compete with other retailers
  • Low margin or MRP – He wants MRP to be printed higher so that he can offer a significant discount to consumer and yet earn decent margin
  • Credit – Retailers are habituated to purchasing on credit from local distributors and will object to anyone with cash and carry terms
  • Oil is yellow/not pure – His imagination of pure coconut oil is one that is extracted from Ghani/Chekku and is clear white, anything different is considered not pure
  • New brand – He is not interested in selling new brands because he is not sure about consistent supply and he has to work hard to promote It to consumers
  • Dictating terms – He is already getting the product from another source. Here he would like to exploit a new supplier by dictating terms like discount and credit

These are some of the common objections which may be presented in different ways. It is up to the salesman to answer these objections skilfully to earn a sale. In the coming posts, we will answer these objections.

CategoriesGreenery
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Water conservation measures taken at Cocoguru

April 22nd is celebrated every year as Earth Day, to me personally it is special as it is also my birthday. I resolved last year to contribute my bit in preserving the planet for next generation. I focused on 2 aspects, one water conservation and two planting trees to increase green cover. In this post I will discuss the measures taken over last one year to conserve water.

Water Usage

At Cocoguru factory at Kallarpe, Puttur, we use about 1.5 lakh litres of water per month. We were lucky to get good water through borewell and have been using it as the only source of water for all our requirements. Water is used for steam generation (35%), Hot Oil cooling (25%), watering plants (10%) and remaining 30% towards canteen, washing, toilets for 30 employees. We made an effort to carefully collect the usage data to find ways of managing water.

Water Conservation Tactics
We thought of conserving water in 3 directions.
1. Minimise water usage. Awareness was created among people to minimise wastage.
2. Use waste water effectively. Use used water where fresh water would have been used instead.
3. Source water from a easily recyclable source than bore-well. Rainwater, stream water and open-well are the sources worked on for supplying water. Use bore well only if water from all other sources are not available.

Waste Water
Water from steam condensation and drinking water use are the source of waste water. Many tree saplings and vegetable yielding plants were planted in available land. Waste water is distributed to irrigate those plants. It not only saves water but also avoids draining of waste water to stream causing water pollution.

Water Sources
Rain Water – It rains continuously for 4 months from June to September. Then, rain water is collected from building roof and is directed to use.
Stream Water – Water runs off the earth surface in a stream adjacent to our plot till the end of December. Building a check-dam across it in November extends the availability of stream water by another month. So, stream water is available for 4 months from October to January. Water does flow in full force during rainy season but it is not needed.
Open Well – A well is dug for about 15 feet depth near the stream, it collects shallow groundwater and are easily rechargeable. Water is available even in summer for 2 months i.e. February and March. The check-dam retained water recharges the open-well and all other aquifers nearby making the ground water-rich.
Bore Well – That leaves bore-well water required for only 2 peak summer months of April and May. To keep the bore-well in useful running condition, it is also used round the year in small quantities for canteen drinking water.

Expenses – 80,000 for open well, 40,000 for rainwater collection and usage system, 30,000 for check-dam, 15,000 for waste water irrigation system. Total of 1.65 lakhs. With these steps, the bore-well water usage is reduced to 1/6th of last year.

CategoriesPricing
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Yet another price increase

Price premium of coconut oil packs have been increased to about 10% as compared to other mass brands in the market and at par with a premium brand.

We have a sales officer Mr. Nandakishora who has strong opinions about pricing and in favour of traders.
While discussing he said, “We have reached the final stage of our pricing evolution, haven’t we?”.
I countered saying, “No, there is still a long way to go!”.
He was worried, “With great difficulty we have increased the price premium to this stage and you still want to increase it further?”
I swayed his concerns, “From now it is not going to be about increasing price but about fine tuning it as per our marketing strategy. Because after so long we have a control over our pricing”

How did we reach here?
November 2014 – 1 Rupee Premium – Association was formed and prices were fixed by them. We used to supply to shops directly with our own vehicles.
January 2015 – 2 Rupees Premium – Then we changed from van sales to distribution system. Distributor was given at association wholesale rate which was 3 rupees discount to retailer rate. With 2 rupees premium, we gave distributor 5 rupees margin.
July 2015 – 3 Rupees Premium – This was because the association decided to reduce the wholesale discount by 1 rupee to just 2 rupees. We retained distributor margin by increasing retailer price.
November 2015 – 5 Rupees Premium – , Association was tending to keep the price low to discourage price rules violation.

It was not very smooth for every price increase we lost a couple of distributors, a few wholesalers and many retailers. Even those who continued buying from us raised serious questions. I used to get very nervous before taking decisions. But bold decisions had to be taken, that is what has made me an entrepreneur in the first place. By now everyone got adjusted and were expecting further price moves by us. We were left with only loyal customers, retailers kept our brand only to give to those who asked for Cocoguru. Still this customer base was substantial to help us survive. We gained in confidence as these are the customers who we have rightfully earned.

April 2016 – 6 Rupees Premium –. To supply to distributors we introduced as super stockist and his margin of 1 Rupee was added to price.

By now association stopped fixing the price as the members had already stopped strictly following the prices. Fearing price fall due to competition we still had to increase our price premium to survive. Price fluctuations weekly were another big problem to tackle as it caused disturbance to members in our trade channel. This meant we cannot reduce prices immediately, we have to give 1 week notice to distributors before reducing price. A couple of times, we didn’t reduce price even after 1 week and hence the premium increased from 6 to 7 to 8 to 9, back to 7 or 8 and then to 10. While our competitors change prices weekly we don’t change our price unless there is a major change in raw material cost.

This has enabled the distributors to purchase confidently without worrying about price fall after their purchase. We have successfully differentiated ourselves from competition and I can peacefully enjoy my Sunday without worrying about their price. Now, we have gained great control over our price, we will fine tune it further.

CategoriesCoconut Oil
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Coconut oil helps you lose weight. But how?

Coconut oil helps to reduce weight

Normally, consuming oil should make one fat and gain weight, but how is it that using coconut oil helps weight loss? It is true, not a joke. Let us understand how.

Anomaly
Coconut oil is an anomaly among edible oils and nature’s gift to mankind. In science and nature, we know a famous anomaly that is of water. Ice floats in water. Normally, cooling a liquid should bring the molecules closer and make it heavier/denser. But water when cooled beyond 4 C starts expanding and becomes lighter and Ice at below 0 C floats in very water. This anomaly of water has enabled life to sustain under water even in colder regions in winter months. Similarly coconut oil gives you the benefits of oil required by human body and yet doesn’t give the side effects of weight gain.

Oil or Fat?
Lipids can be classified into oils and fats. Coconut Oil though an oil shows several qualities of a fat.

Physical Specifications

Physical ParameterOur Values
Specific Gravity0.915
Refractive Index1.445
ColourTransparent Light Golden Yellow
OdourPleasant roasted coconut

Generalizations don’t hold
Having considered coconut oil as an anomaly, the following generalizations based on transitive logic are not true

  • Saturated fats are bad, Coconut Oil is saturated. Hence coconut oil is bad.
  • Cholesterol clogs arteries and bad for heart. Coconut Oil has cholesterol. Hence coconut oil is bad.
  • Oil intake should be avoided for better health. Hence coconut oil should not be used.

Rather the reverse of it is true for coconut oil.

Digestion
Digestion is essentially about breaking down complex hydro-carbons like carbohydrates, lipids and proteins into basic carbon dioxide and water using oxygen and release energy. Simpler hydrocarbons are easier to digest than complex ones.

Digestion of glucose

Medium Chain Fatty Acids
Majority of coconut oil is easily digestible medium chain fatty acid. Other oils consists of long chain fatty acids and require special enzymes for digestion, they give more strain to pancreas, liver and entire digestive system and they get stored as body fat.
Coconut oil had 50% lauric acid of carbon chain length 12. To compare with alternative edible oils. Olive oil considered healthy is majority oleic acid of length 18. Sunflower oil, a mass consumed oil is majority linoleic acid of length 18.
Practically compare your feelings after eating oil fried food with coconut oil vs sunflower oil to feel the difference. Stomach feels bloated and heavy with sunflower oil but light with coconut oil.

Reasons for weight loss

  • Improved metabolism. So, with lesser quantity of food the desired energy is generated in body
  • Instant energy. Craving for food reduces when energy is supplied
  • Not stored as fat. Fully digested into useful energy and not stored as fat.

For many who live outside the tropical regions, don’t get coconuts, import coconut oil and use it for their health. But those in tropical region where coconuts are available don’t value what they have. Kannada saying “Hittala gida maddalla” literally translates to “The plant growing in the backyard is not medicine”.

Source
Dr. Mercola – http://articles.mercola.com/sites/articles/archive/2010/10/22/coconut-oil-and-saturated-fats-can-make-you-healthy.aspx

CategoriesPricing
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Another Price Increase

Starting today, we will increase our wholesale price premium per litre by another 2 Rs from existing 3 Rs to make it 5 Rs. I owe an explanation to various stake holders like company sales force, distributors, wholesalers, retailers and consumers about the move.

A friend casually asked while talking about each other, is Cocoguru the ‘Apple’ of Coconut Oil? That was 2 years after we started the business and struggling to stay afloat with various operational issues and struggling to find feet in the market. Couldn’t tell a lie and say ‘yes’, shy to say ‘no’ either. Couldn’t give any proper answer, but started imagining how an ‘Apple’ of coconut oil will be. With cut-throat competition and price sensitivity in the market didn’t think it was possible.

Coastal Karnataka market has majorly 2 types of coconut oil suppliers, small millers and re-packers. Small millers have a couple of rotary machines, do job work service and cater to small local area. Re-packers bring coconut oil in tankers, pack in small consumer packs and distribute at competitive prices to all wholesalers and retailers. Each one tries to undercut their price compared to others. There also exists a few age old mills (between 50 to 100 years old) that sell their brand to a small niche market at a premium price. They have no fixed costs like bank loan interests and repayments and salary to professionals. They don’t even have a hunger for growth as they will be battling with succession plans.

In a market like that, for a new comer like us, with large fixed costs, loan repayment pressures, with foot barely set in the market, increasing price is the hardest decision to make. There is a huge risk that traders will alienate us, but consumer demand is what we can cling on. It is a path less travelled, but we are here to make a difference.

Higher price automatically leads to more profits is far from truth here. If short term profit is the motive, reducing price should build volume and compensating lower price by slightly reducing quantity, lowering quality, adulteration and tax evasion gives far better margins. Brands that provide full value of coconut oil to consumers have around 20% premium to mass brands. So, our 2 rs price increase now is just a means to end.

Till now one rupee was increased every 6 months, so as per plan the next increase was due in January. But we are doing it now because of the adverse circumstance we find ourselves now. Despite association being formed in coastal Karnataka, millers are resorting to short-cut routes to earn a sale by undercutting their rates below the agreed base price. Countering to that the price deciders in association have resorted to deep price cutting.

Complaints of manufacturers selling oil at below association base rates prevail. We would like to warn that prices will be dropped further and will be dropped deeply if this trend continues and will be kept lower until all undercutting stops.

Undercutting will never stop, we don’t have deep pockets to survive, we don’t want to compromise on our quality and value to alienate our consumers.

We have been trying to deliver more value to our consumers and will continue to keep the promise which I would like to highlight a few here

    • Sweet taste, aroma – This means purchase of good quality copra whose FFA is less than 0.5%. Such copra costs about 5% higher than ordinary copra with FFA of about 1%.
    • Long life – Once the raw material quality is ensured. Each stage of manufacturing process must be strictly controlled to deliver right product to have long shelf life of 6 months to 12 months
    • Availability – Regular availability of stocks, irrespective of season, market price and demand fluctuations. Also availability in wider geographical region, rural/urban areas, wholesalers/petty shops. This requires maintaining adequate stocks and effective supply chain management and distribution network.
    • Branded – A brand has the responsibility to stand for something and exceed customer satisfaction relentlessly. It should be well known and liked. Demand should be driven by consumers instead of being pushed by traders.
    • Food Safety – Coconut Oil is recognized as a food product and is given the respect it thoroughly deserves. It means maintenance of purity, necessary hygiene and safety standards.

Copra prices change daily and multiple times within a day, but association coconut oil prices are changed weekly. That itself is too short a cycle for a smooth trade along the channel from manufacturer to consumer. That is how commodities are traded not how branded consumer products are distributed. We intend to raise the price sufficiently high so that price comparison stops and when we have full control over our price we like to change prices at a much lesser frequency like monthly or quarterly.

To summarise, the intention of increasing price is not to increase profit but to increase customer value. Thanks everyone for your kind cooperation.