1. How do FMCG companies measure their performance?
Nice work on the FMCG products! The backbone of every FMCG company is tracking its sales and market performance.
2. KPIs
Let's investigate which key performance indicators a category manager uses to do that! Two of the most common KPI's are market share and growth.
3. Measuring market share
The first KPI is market share. It is used to compare our sales versus the sales of our competitors. We can see what percentage of the total market belongs to who.
It is calculated by dividing the sales results of a brand or supplier, by the total sales results of the whole category. It is always expressed in a percentage and the total market share of all brands or suppliers always add up to 100%.
4. Measuring growth
Another important KPI is growth. It is used to see how much a brand or company is growing over time. You can calculate it by using the following formula. You take the sales results from the current period and divide it by the ones of the previous period and subtract one.
You can see in the example on the right how growth is calculated.
5. Measuring our KPI's over time
Both KPI's can be calculated over different time periods. Let's have a look at some common time periods: Year, Month, Year-To-Date and Moving Annual Total.
6. Yearly sales
The first time period we will discuss is year or full year figures. When calculating the yearly growth, where we will compare the sales results of a full year to those of the previous year.
7. Monthly sales
When taking Month as a time period, we will be looking at one single month. How much did we grow in June this year compared to June last year?
8. Year-to-Date sales
But a company often wants to track its performance in the course of a running year and wants to look at longer time periods. For this we can use Year-To-Date.
YTD is the period, starting from the beginning of the year, until the current month. YTD March, for example, includes the first three months of the year, while YTD June includes the first six months of the year.
When we calculate growth for YTD June, we will take this year's sales results from January to June and compare them to the results of the same time period from the year before.
9. Moving Annual Total Sales
The last time period we will discuss in this case study, is MAT, which stands for Moving Annual Total. Here we will always look at a period of 12 months.
To calculate the growth for MAT June, we will look at sales of the previous 12 months and compare them to the 12 months before that.
10. Unit vs. value sales
There are two ways to measure the growth and market share KPIs: using unit sales or value sales. Unit sales represent the number of products sold, such as for example 100 bananas. Value sales represent the total dollar amount, in this example $100.
11. The dataset
That’s enough examples, let's have a look at the dataset. In this exercise you will be a category manager working for HealthMax, a fictitious market leader in the shampoo business. The first dataset you will be using is external data and is coming from your biggest retailer, in this case a supermarket.
The supermarket is selling your brands, as well as the shampoos of your competition.
The dataset includes the sales of all the brands, with a split per region, subcategory, and supplier. The sales are available per month in unit and value sales, ranging from January 2018 to March 2023.
You will calculate the performance of HealthMax and compare it to your competitors in the shampoo industry.
12. Metadata sheet
If you want help to understand the different columns in the dataset, you can download the metadata sheet available.
13. Let's practice!
Now it’s your turn, enjoy analyzing!