Hi there, welcome back to the Business of Marketing. Today we will be talking about a few very important measures around sales. From the time the product leaves your factory to the time the consumers actually buy your products, there are a lot of different stages in between. And there is a lot of good things or bad things that can happen in any of these stages. That is why it is extremely important to be able to track these different stages and to be able to measure how the product movement is happening across these stages and how the sales is happening across these stages. That is what we are going to cover in today's video. I will be talking about the different stages. What kind of data is required to be measured at these different stages and how can you take the best advantage and what are the things that you can find out from this kind of data. But before I proceed, let me quickly introduce myself. My name is Rahul, I run the Business of Marketing. On this channel I simplify the real world practical concepts around marketing. I have over 15 years of experience in these industries. I have worked with a lot of brands and through this channel I am trying to give back whatever I have learned over these years. Even though this is a new channel, I promise to publish a lot of interesting content around marketing. And if you haven't already subscribed, I think you should subscribe now. Also if you have any thoughts or comments on what else you would like to see on this channel, please drop them in the comment section below. So let's dive straight into today's video. As you know, from the time the product leaves a factory to the time consumers actually buy it, there are a lot of different stages. But if you were to simplify the whole process, there would be broadly four stages which are involved in the process. What are those four stages? First the product moves from the manufacturer to the distributor. The distributor then sells it to a lot of different retailers. And finally, as consumers, we go to these retailers and we buy the product from them. Measuring the amount of product which leaves the manufacturer and reaches the distributor, that measure is known as cell in. After that, when the product leaves the distributor and reaches the retailer, that measure is known as cell through. And lastly, when the product leaves the retailer and is bought by the consumer, that measure is known as cell out. So these are the three key measures which are involved in the different stages between the product moving from the manufacturer to the distributor to the retailer and finally into the hands of the consumers. So we've seen what cell in data is, what cell through data is and what cell out data is. The next important measure which is calculated is something known as cell through rate. So what exactly is cell through rate? The cell through rate is a measure to understand the rate at which a product, a range of products or a brand has sold. It is usually a monthly measure that can give an indication of the speed at which something cells or moves out. It can be seen from the perspective of a distributor or a retailer. To put it in very very simple terms, you are trying to understand how quickly is the product coming in versus how quickly is the product moving out. So where does the product come in? It comes into the distributor from the manufacturer and it comes into the retailer from the distributor. And it finally moves out into the hands of the consumer. We need to try and understand how quickly the product is moving out when compared to the speed at which it is coming in and that measure is known as cell through rate. The calculation of cell through rate is extremely simple by dividing the cells for the month by the stock at the beginning of the month and multiplying that by 100 you get to cell through rate. To simplify this even further, let me use the help of an example. A retailer bought 100 units of toothpaste at the beginning of the month. During the month he was able to sell 30 units out of those 100 units. Therefore the way you calculate the cell through rate is 30 divided by 100 into 100 which is 30 percent. That is his cell through rate. There is another important measure which is very similar to the cell through rate and that is called the inventory turnover rate. What is the inventory turnover rate? The inventory turnover rate is a measure to understand the rate at which a product, a range or a brand has sold. Unlike cell through which is a monthly measure, inventory turnover rate is usually an annual measure to understand the speed at which something cells are moves out. Similar to cell through, it can be seen from the perspective of a distributor or a retailer. So when you take the cells for the year and divide it by the stock at the beginning of the year, multiply that by 100 you get the inventory turnover rate. To make all of these concepts crystal clear and so that you never forget them again in your life, I have put all of these measures into one single chart. Take a look. On this chart you can see that the product is moving from the manufacturer to the distributor. That measure is known as cell in. When it moves from the distributor to the retailer, the measure is known as cell through. And finally when it moves from the retailer to the consumer, the measure is known as cell out. In between you can calculate the cell through rate from the data which is based on the manufacturer and the distributor's data and you can calculate the cell through rate on the basis of the distributor and the retailers data. If you remember this one chart, you will never be confused about any of these terms ever again. Finally, let me just quickly touch upon why are all these measures extremely important? These measures provide us a reality check on how well something is selling after it leaves the manufacturer. At the same time, they help us to identify problem areas which could be around the product, around the way the pricing has been determined or the absence of promotion or not the right kind of promotions that might be existing in the market. Once we are able to identify the problem areas, we can build better solutions to address those issues around pricing, around promos. We can take the help of advertising to address some of the issues. We can also plan and manage the production cycle way better if we have access to this data. When we know how fast things are selling in the market, the manufacturing process can be planned according to it. And lastly, the warehouses in the distributor's place as well as the shell space which is owned by the retailers are extremely important. They are almost as real estate to an individual and therefore it's extremely crucial for the brand to have access to these measures to be able to track them properly and to be able to take the necessary actions so that this valuable property is not being wasted. That's all from me in today's video. Thank you for watching and if you liked what you saw and if it helped you in any way to understand these concepts a little better, please hit the like button and if you haven't already done so, please subscribe to my channel. I promise to share a lot more content around marketing and related industries in future. In my next couple of videos, I will be touching upon the subject of distribution. Unlike sales which is usually known to be the most important measure because it directly impacts the bottom line, distribution is the second most important measure for a marketer because it directly impacts the sales for a particular brand. So therefore do check out that video once it comes out and thank you once again for watching today's video. See you soon.