The Success Behind Cargills Food City

Cargills has the largest retail chain in Sri Lanka comprising over 266 outlets including, Cargills Food City supermarkets and Cargills Express convenience stores. Cargills Food City, was rated the 4th Most Valuable Brand in Sri Lanka according to the survey initiated by Brand Finance in 2009. Cargills Quality Foods, a fully owned subsidiary of Cargills (Ceylon) PLC, is the holding company of several food manufacturing companies, a marketing and distribution company and a food servicing company holding the KFC franchise.

Without any doubt,  Cargills can be considered as the leading retail chain in Sri Lanka. One of the secrets behind their success is the effective marketing evaluation, using marketing metrics.

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Marketers are facing increased pressure to provide clear, quantifiable evidence to senior management as to how their marketing expenditures help the firm to achieve its goals & financial objectives. Moreover, a whole host of internal changes within the organization & external changes in the marketing environment may coincide with the marketing expenditures, making it hard to isolate the effects of any particular marketing activity. Then only marketing metrics come to play in marketing evaluation.

What are Marketing Metrics ?

Marketing metrics is the set of measures that helps them quantify, compare & interpret their marketing performance. (Keller & Kotler 2012)

Marketing metrics include defining objectives, measuring the degree of completion and providing the feedback on processes subject to change. In general, metrics are considered as a standard of measurement and they are used as a corresponding benchmark. (Frantisek & Iveta 2015)

The marketing metrics (as a tool how to find effectiveness) could reach the highest level of priority in the whole business environment because of creating a competitive advantage. The reason may include dissatisfaction with the traditional way of measuring marketing activities, associated with accounting, corporate cost-trends, or rapid IT development. Nowadays, there are a number of different methods that may be used as marketing indicators. These methods help to track business performance through data collection from individual marketing activities, such as marketing campaigns, marketing channels or customer responsiveness.

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What are Marketing Dashboards ?

Firms are also employing organizational processes & systems to make sure they maximize the value of all these different metrics. Management can assemble a summary set of relevant internal & external measures in a marketing dashboard for synthesis & interpretation. (Keller & Kotler 2012)

Marketing dashboards are like the instrument panel in a car or plane, visually displaying real-time indicators  to ensure proper functioning. They are only as good as the information on which they are based, but sophisticated visualization tools are helping in bringing data alive to improve understanding & analysis.

As input to the marketing dashboards, companies should include two key market-based score cards that reflect performance & provide possible early warning signals.

  • A customer – performance scorecard – records how well the company is doing year after year.
  • A stakeholder – performance scorecard – tracks the satisfaction of various constituencies who have a critical interest in & impact on the company’s performance : employees, suppliers, banks, distributors, retailers & stakeholders.

Financial Metrics

Cargills is a very innovative company & they are implementing new marketing strategies & promotions in order to attract new customers & to retain their current customers. Financial metrics play a huge role in evaluating the success of each & every marketing strategy & promotion. Therefore, Cargills has immensely relied upon the financial metrics such as profit contribution, profit margin & Return on Investment (ROI)  during the past years.

The Retail business, previously challenged by inconsistency in fiscal policy that dampened the overall consumer environment, made a strong turnaround in the latter part of the financial year. Accordingly the sector registered a turnover growth of 13.2% over last year to reach Rs 55.9 Billion as at March 31st 2016. EBIT ( Earnings Before Interest & Taxes) achieved a growth of 80% at Rs 1.7 Billion reflecting the strong measures taken to enhance productivity and efficiency in the overall retail operation. The leadership of the business is driving stringent standards on front-end and back-end deliverables covering price, service, quality and availability which continue to move the operation in the right direction. The segment profit after tax was Rs 770.6 Million compared to Rs 46 Mn in 2014/15.

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Behavioural Metrics

The behavioural metrics contribute Cargills to evaluate its sales, market share & market penetration. Also they provide accurate details regarding which brands are more popular & how frequent the customers purchase those brands & certain types of products. 

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The Cargills loyalty card not only provides discounts & special benefits to the customers, but also provides details of the 100% loyal customers, the frequency the customers purchase products from Cargills & the most popular brands or products purchased by the customers.

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The Cargills offers a lot of seasonal discounts & promotions to their customers & the behavioural metrics become very useful in evaluating the success of those. The Defection rate of Cargills holds a very low percentage & they humbly accept any complaints, comments or recommendations from their customers.

Customer Profile Metrics

Before issuing loyalty cards, Cargills asks their customers to a fill a small form which includes the name of the customer, gender, age, home address, occupation, e-mail ID, contact numbers & the nearest Cargills super markets. This helps Cargills to identify and reach all the different buyers in a brand’s category & to be competitive in the local market.

Marketing Activity Metrics

Cargills efficiently evaluates their marketing activities to be aware whether they are successful or not. Marketing activity metrics are essential for Cargills to keep track of its marketing investment.

References

  • Iacobucci, D 2014, Marketing Management MM4
  • Keller, Kotler 2012, Marketing Management, p 114-118
  • Frantisek, M, Iveta, S 2015, ‘Marketing Effectiveness : Metrics for Effective Strategic Marketing’, Engineering Economics, Vol.26, Issue 2, p 211-219
  • Cargills Annual Report 2015/2016
  • Currim, I, Mintz, O 2013, ‘What Drives Managerial Use of Marketing & Financial Metrics & Does Metric Use Affect Performance of Marketing – Mix Activites?’, Journal of Marketing, Vol.77 Issue 2, p 17-40
  • Wyne, G, A 2008, ‘Do Financial Metrics Stifle Marketing Creativity?’, Marketing Management, Vol.17 Issue 6, p 6-7
  • Byron, S, Svetlana, B 2013, ‘Marketing Matrix’, Marketing : Theory, Evidence, Practice
  • ‘Managing the Marketing Metrics Portfolio’ 2011, Marketing Management, Vol. 20 Issue 3, p 16-21
  • Bianca 2015, ‘Considerations upon marketing metrics’, Economic Sciences, Vol.8 Issue 2, p 125-130
  • Pauwels, K 2015, ‘Truly Accountable Marketing : The Right Metrics for the Right Results’, Marketing Intelligence Review, Vol.7 Issue 1, p 8-15

 

 

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