SMCG financial model - modeling of consumer goods sold as a service
Originally published: 26/08/2019 12:47
Publication number: ELQ-99350-1
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SMCG financial model - modeling of consumer goods sold as a service

Financial model for a SMCG business in Excel that shows how to model this business as a business service

Description
In the Excel file you will find a model of a Slow Moving Consumer Goods (SMCG) company. By SMCG firm we mean firms like: smartphone producers, domestic appliance producer, fashion players (to some extent), car manufacturers, furniture producers etc. There are 2 ways in which you can model consumer good businesses. In the first one you model the consumer goods as a sale of a product (traditional approach where you get one-off payment for the product). In the second approach you can model the consumer goods business as a service business (the customer pays annual subscription for the right of using the product). Here we will use the second approach and model the SMCG business (in this case smartphone producer) as a service model. We will try to decide whether the switch from selling products to selling services makes sense.

We first model the smartphone producer business as if it was a business selling product. Later we try to see how the profit and loss statement would differ if they switch from selling the phones as a product to selling the smartphones as a service (subscription).
The model you can use for due diligence, checking whether the switch from one business model (product based to service model) makes sense or not. You can adjust the model by changing the parameters that are in blue. SMCG business models as all consumer goods related businesses are very demanding in terms of sales and marketing and not the easiest when it comes to supply chain.

Consulting projects especially when it comes to Slow Moving Consumer Goods (SMCG) are pretty difficult in terms of analyses. This sort of model will help you make more rational decisions.

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  • WalidD(last updated: 06/04/2020 14:44)
  • Kunal Relan(last updated: 21/11/2019 15:28)

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