Scheme calculation in Fast Moving Consumer Goods (FMCG) typically involves the evaluation and determination of various financial aspects related to promotional schemes offered to customers or channel partners. The calculation process may vary depending on the specific scheme structure and objectives set by the FMCG company. Here are some key elements that are commonly considered in scheme calculations:
Scheme Type and Objectives: FMCG companies design different types of schemes based on their goals, such as increasing sales volume, launching new products, promoting specific brands, or incentivizing channel partners. The scheme type and its specific objectives will influence the calculation methodology.
Scheme Terms and Conditions: The terms and conditions of the scheme are essential for calculating its financial impact. These may include criteria like minimum purchase quantities, target sales volumes, promotional periods, pricing discounts, free goods, or cash incentives.
Sales Data Analysis: FMCG companies rely on sales data analysis to assess the impact of schemes. They analyze historical sales patterns, market trends, and demand forecasts to estimate the potential response to the scheme. This analysis helps determine the expected sales uplift and revenue impact.
Scheme Costs: FMCG companies consider all costs associated with the scheme, including discounts offered, cost of free goods, additional marketing expenses, and operational costs. These costs are evaluated against the projected sales increase to assess the financial viability and profitability of the scheme.
Channel Partner Incentives: If the scheme involves channel partners such as distributors, wholesalers, or retailers, the calculation also includes the determination of the incentives to be provided to them. These incentives could be in the form of trade discounts, volume-based rebates, or other promotional allowances.
Return on Investment (ROI): FMCG companies assess the scheme's ROI by comparing the expected incremental revenue generated from the scheme against the associated costs. This analysis helps determine if the scheme will yield a positive return and contribute to the company's overall profitability.
Scheme Monitoring and Evaluation: Once the scheme is implemented, FMCG companies closely monitor its performance. They track sales data, measure actual results against projected targets, and evaluate the scheme's effectiveness in achieving its objectives. This information is valuable for future scheme planning and adjustments.
It's important to note that the specific calculation methods and factors involved in scheme calculation may vary among FMCG companies based on their internal processes, business strategies, and market dynamics.