Tag Archives: trade marketing

Multi Channel Marketing – Distribution Expansion or Cannibalisation

25 Aug

Bricks and Mortar Retail

My young nephew Dhruv came home very agitated the other night. He is planner and brand manager in charge of the store experience of a leading lifestyle brand. They were running a promo and he had spent many hours planning for the activation – he is a geek, so has devised simple but interesting models for inventory optimization, repricing etc.

Problem – in classical copybook style, he had planned that all “unique”, limited stock, special merchandise would be sold at their own retail showrooms during their heavily advertised promo. Makes sense, right? This is where you plan your retail experience, where you keep your best trained storefront people, where you spend megabucks on displays and merchandising.

What happened — yes, you all know it! 2 days before the activation was to hit the market, he figured that the dealer network had already booked all of it, and before he could say “activate….”, that inventory had all vanished!

Gives rise to classical undercutting!

This is a common problem in all dealer network sales systems, specially in India. Long ago, when I was leading area sales for Mattel toys in one of the toughest markets in the North of India, we kinda had the same problem. There was a dominant “wholesale” market in the center of town, and one fat cat distributor who supplied to those guys. Because the wholesalers bought in bulk, they got higher slab discounts – infact, all the the distributor kept for himself was a small margin. The rest of the city got supplied by other distributors, and since the retailers were smaller, they got no/ lesser trade discounts. Prime ground for channel conflict. Many retailers, who anyway visited the wholesale market for purchases of other/ less well distributed products would then get our merchandise cheaper at the wholesalers, leaving their distributors high and dry. This ugliness climaxed one fine day, when we had invited all distributors over for a meet and greet, and many of them almost came to blows!

Barbie Wall of Pink

(We did resolve this – and fairly innovatively too! But it took great guts and a strong belief in the power of our brand’s consumer pull to implement the strategy! We essentially cut down the slab discount mandates to retailers – and made the distributors accountable and penalizable for any contraventions! Would this have meant a reduction in revenues? Yes, a temporary dip – but our theory was that given the fact that we were selling a branded product in a largely unbranded products’ market, anyway, our retailers stocked our products only as the “hook”. Also, kind of following a not-price-led-but-brand-led version of the bait and switch tactic, they always attempted to switch the customer to a non branded – higher margin product that relied on trade push and therefore incentivized trade heavily to execute! Which meant, that all sales that we were seeing of our products were actually happening DESPITE the retailers, and not BECAUSE of them! That was the strength of our brand! Hence, crossing our fingers, we took the HUGE trade discount rationalisation step, which almost made history in trade sales!)

Coming back to channel conflict – my husband was ranting about this recently in another context. Attempting to invest some of our money in some bonds (or whatever), he asked the relationship manager of the bank what percentage interest we would get. (remember, we are so called ‘HNI’ so we merit a relationship manager who, btw, calls me everyday to give annoying snippets like – NIFTY has crashed/ the blasted ruppe is at 65 blah blah…). Imagine his disgust when the RM quoted him a rate that was – hold your breath – LOWER than that quoted on the bank’s website!!!!! (That poor RM i think didn’t get sleep that night since he was probably nursing a wounded ear – post the blasting that Manoj gave him!)

This online sales or “own store” sales vs dealer/ brick and mortar sales is a true conundrum.

Kind of rubs off on marketing as well maybe. The biggest thing that brands and companies nowadays are trying to achieve, is Multi Channel Marketing. ( we saw many RFPs on precisely this task last year). This is particularly relevant in the digital world – so, your offline presence needs to be synched to each of your digital avatars – your website/ blog/ forum presences/ social networking pages or channels. Since this is still fairly new, most brands are at the entry level of figuring this out – which largely means making sure that the visual identity in each channel is more or less similar (not as easy as it sounds – since most of these channels evolved at different times, and were probably executed by different departments within the company).

But, the true test of, and resolution to this is when you can remember the main reason behind having different channels – just greater/ higher reach. You know your customer now doesn’t have the will, or the need to – try too hard to get what she wants. So, you have to go where your customer is! This is true of the offline/ bricks and mortar space and of course online. And of course, different segments on your customers will go to different places – that is after all, the raison d-etre of distribution! So, you expand/ diversify/ have multiple avatars. Then the real way to avoid conflict is – differentiate your offering! Have merchandise as well as communication specific to each channel/ that suits the channel’s peculiarities and also that segment of your consumer that visits that channel. So, LinkedIn needs to have a more professional orientation, while Facebook can be/ is gimmicky/ polls and freebies…Dhruv’s own store needed the one off/ special merchandise because consumers come there expecting the widest range, NOT the most common!

The dichotomy though – how do you standardize visual identities/ simplify SKU hierarchies/ rationalize pricing while at the same time customizing offerings for every channel??? The answer – you do a bit of both! Have visual identities that cue the same stuff, but adapt to the channel – but DO differentiate the offerings for different channels – respect your channel – there is a reason why it is different – recognize that difference! Only then will your channel give you love back!

conflict resolution

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Sales Promotion vs. Trade Marketing; Paying vs. Incentivizing; and the Power of Relationship in Sales

25 Mar

dealer display

As I entered my grocery shop yesterday, I saw what used to be bread and butter (pun intended) for me a couple decade ago – but a sight I hadn’t seen in a while. It was a “merchandiser”/ “sales rep” clicking away at a very nice end cap shelf display – the brand in question was Kelloggs. Clearly this was either a display contest – designed to have participating retailers give up some of their precious shelf space up to a brand in a bid to enhance impulse purchase – the payoff being, like a lottery, the possibility that they win a prize and therefore money and more importantly prestige; or was “bought shelf space”, more the norm, but a fair drag on the brands’ trade marketing/ sales promo expenses.

But that’s not the story – the story was the action of the retailer personnel immediately after the merchandiser type finished clicking – they immediately got down to restoring the end cap to its usual position – this time with some nuts/ dry fruits (depending on where you are reading this ☺ – english is a funny language isn’t it? or maybe american is… )

So, either the Nuts guy had payed more money, but the retailer wanted to participate in the contest; or the retailer was scamming both companies – greedy pig (but hey, he’s not running a business for charity ☺ ); or the nuts guy had payed more money, and the sales rep/ merchandiser had prevailed upon the retailer to “just put up the display so I can show my bosses” (remember, depending on the company’s scheme – he either gets money or prestige too!) . All scenarios are likely, but for a low margin branded product that relies more on the “pull” created by advertising/ branding than the “push” created by the retailer actively promoting its brand, it is probably the last one that is applicable.

Reminded me of my years in trade sales years ago – with Leo Mattel – a joint venture company that sold toys – more a “semi durable” category. So while there was an “impulse” element to purchase sometimes, it was also equally pre meditated sales (say for gifts); and certainly purchase occasions were not too frequent/ replacement cycles were large. I used to tour the Delhi market with a young “sales rep” on my scooter – this guy was BIG – 6 feetish, heavy – and hence my arms and shoulders always ached whenever I took him around. He was also, and I hate to sound prejudiced, but its true, blessed with one of the ugliest faces I’ve ever had the fortune to see. But every retailer that he took me to – had ONLY nice things to say about young Chakrapani – “Ma’am, please do not remove this guy from our sales beat” – basically the guy was SO good at customer service, and the retailers – an admittedly tough breed in new Delhi – found him so endearing in his mannerisms, that as one guy told me – Ma’am, I have to only look at Chakrapani’s face, and I can NOT say no to him ☺. So, Chakrapani would have done what my Kellogg’s sales rep in M.K Ahmed was doing – but he would have prevailed upon the retailer to keep the display on for longer. Sorely on the basis of his relationship!

Having said that, in an impulse purchase item, its not really a bad thing to have a front display for even a few minutes – atleast for those few minutes, the brand has grabbed eye balls! Its like when a regional sales manager in the then Gillette told the then CEO as he complimented the sales team on an excellent field visit, “but you do know that these have all been window dressed for your arrival, right?” Pradeep gave a hearty guffaw and said – yes of course, but for the 2 – 3 days that this window dressing is up, more people will tend to buy our products than they would have otherwise! And true enough, even in the less than half hour that I saw action on the Kellogg’s display, 3 ladies were fingering the K for Kelloggs boxes, and I saw atleast 2 sales being made right in front of me at the checkout!

So, yes, the relationship is very important in sales, the money tradeoff while important will not ensure action necessarily – after all, the next brand may come in and offer more money! A sales guy needs to be building those relationships at all points. This is true whether you are selling Kelloggs and Razors, or Engineering services and tech products –

As Vrinda, one of our sales people in EmPower told me, the true test of my rolodex is if when I leave this company and go to another, I can call every name here and ask them to try my new product/ services, and they will say yes! (the equivalent in the FMCG world is Balbir, a rambunctious sales guy telling me – you are truly a powerful sales manager if every retailer on your field trip greets you with cashews ☺ – nuts anyone?

For a POV on the “other side” of the coin – the dealer salesman, read this old article of mine here