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Manufacturer Presence & Third Party Selling

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Brand Marketing & Channel Support.

Brand Marketing and Channel Support for retailers and manufacturers. Strategic issues of selling direct via digital or only through either or both digital or offline wholesale/retail channel.

Presentation excerpt from Udemy course "Digital Product Management" http://udemy.com/digital-product-management

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Manufacturer Presence & Third Party Selling

  1. 1. Manufacturer Presence & Third Party Selling BRAND MARKETING & CHANNEL SUPPORT From the Udemy.com online course: Digital Product Management
  2. 2. So You’re the Brand  So you’re the Brand. And maybe the the actual Manufacturer as well. From the consumer perspective, it mostly doesn’t matter who’s doing the actual build of products or online stores. (With the possible exception of drop shippers with affiliate partners.)  Are you going to sell direct? You’ve probably thought about it. But for whatever reason, you’ve decided “No.” At least not for now.
  3. 3. Omnichannel Consistency  Unless YOU yourself are present in digital across devices types and information types, you don’t have the beginnings of control for your messaging. And “94% of consumers do research online before visiting a store.” - The Consumer Trends Report – 2017 Edition, Kibo Software.  Even though 90%+ sales are still offline, research often begins online. You need an O2O, (online to offline funnel.)
  4. 4. What are Consumers Doing at Retail?  Seeking Information. (ROBO – Research Online Buy Offline.) “64% of U.S. purchases are researched online.”–bazaarvoice. The ROBO economy: How reading reviews impacts offline sales  Comparing Prices. “Three quarters (76%) of consumers regularly price- check against competitors, up from 66% in 2015.” - The Consumer Trends Report – 2017 Edition, Kibo Software.
  5. 5. What are Consumers Doing at Retail? (cont’d)  Checking Customer Reviews. 82% of consumers are influenced to complete their purchase thanks to product reviews. - The Consumer Trends Report – 2017 Edition, Kibo Software.  Looking for Coupons/Rebates/Offers.
  6. 6. Providing Channel Support  You have to get deep into digital to support your channels. Brand and Product level assets and meta data. Imagery, videos, product specs, etc. Customer Loyalty/Personalization history. Retailer may implement “endless aisle” inventory and need drop shipping support.
  7. 7. Providing Channel Support  Two Words: Dealer Locator. Two more words: Online and Offline locators. Besides getting users to your product, you might learn where you have too small a footprint in a local market. You could possibly do ad deals with retailers within your dealer locator!
  8. 8. Providing Customer Support  Pre-purchase Info. With so many seeking info online pre-purchase, are you providing enough easily accessible info for both customers and your channel partners?  Post purchase support. Especially if selling through channels, how can you maintain loyalty, retention and better lifetime value without a direct channel to customers?
  9. 9. To Sell Direct or Not Let’s re-visit this strategically critical question.
  10. 10. Selling Direct Strategic Issues  Considering selling direct means addressing any channel conflicts, building out eCommerce and logistics capabilities, and more.  Leaving all the nuts & bolts aside… does selling direct fit with your brand’s perception and consumer needs?
  11. 11. Who’s Doing it?  Direct sales.  Links to other online retailers.  Sophisticated direct links & inventory.  Great Pay Per Click (PPC) Headline.
  12. 12. Who’s Doing it?  Direct sales.  Dealer locator.  Emphasis on direct and offline sales, not other online channels.
  13. 13. Who’s Not? This top brand gets away with it. For now. Thanks to years of quality and a top notch reputation, they maintain the rare ability to succeed selling only via their offline dealer network. This is rare. And probably not sustainable. Chanel actually does sell online and through some retailers, but only started doing so recently. Their reasons for resisting likely included creation of scarcity/exclusivity. This is an example of where they – apparently – found this was not going to serve them well going forward. Popular power tool manufacturer with extensive dealer network.
  14. 14. Why Not?  Reasons to stay offline could include… Emotional aspect of exclusivity (luxury brands). Desire to maintain highest quality at retail service level. (equipment manufacturers, e.g. Stihl.) Complex products requring skilled installation/support.  It is, however, likely that over time all will be dragged online, (kicking and screaming if necessary), because their customers will simply demand it.
  15. 15. Meeting Digital Half Way  Some brands, (especially luxury goods), have a singular digital presence of their own where they will sell online.  They may have a select few other digital stores where they will distribute product.  However, they will not maintain the same distribution channel as they might for offline store chains. And they certainly work hard to stay off mass market sites.
  16. 16. Deeper Into Channel Value  As a Brand, what do you provide to your retail channel?  Does your name recognition and value help drive store traffic?  Do you provide them with high margin products?  Does the retailer actually compete with you with store brand or OEM manufactured product?  And What is it You need from your retail channels?  Are they trained well enough in your product?  Do they care to get trained?  Can they service your product well enough?  Do they care to do so?  Are you an important brand to them? Or just another offer to make their shelves look selective? (Maybe just a low price options)
  17. 17. Quick Look at Specialty vs. FMCG  Specialty goods with strong brands, (from bicycles to electronics), may compete on differentiation as best they can.  Fast Moving Consumer Goods, (soap, shampoo, razors, etc.), often depend more on more intangible aspects of brand loyalty. And yes, even FMCG may be forced to do more direct online to compete with what’s coming.
  18. 18. FMCG Radical Change Examples For decades, P&G’s Gillette and Schick-Wilkinson Sword enjoyed a business model that became a cliché known as the razors and blades model. Their multi-billion dollar market was a cash cow. Printer ink, glucose strips, and other products are similar models. And yet, In 2012, Dollar Shave Club (DSC) launched. And Harry’s in 2013. And there’s others. Collectively they’ve added millions of customers in a few short years. Is Gillette higher quality? Maybe. Is it higher enough quality to justify what is still a significantly higher price point for most plans? Maybe not. Gillette’s response is a direct club of their own. As for DSC? Unilver bought them for $1 billion cash in 2016. (Original DSC investments were a bit over $160M.)
  19. 19. Gillette and Schick Have No Choice. Do You?  Gillette and Schick had no choice but to figure out how to respond strategically and they’re arguably still back on their heels.  Perhaps the Shave Club entrants just thought they’d disrupt the industry. They might not have actually said, “Let’s kick their #$$@%$ teeth in.”  (But that’s what they’ve been doing.)  To a lot of Consumer Packaged Goods (CPG), the whole ’digital thing’ is a line item on Brand Manager’s spreadsheet.  Maybe time to start re-thinking that at a more strategic level.
  20. 20. Re-Visiting Why Should You Sell Direct?  You can get closer to your customers.  You Deserve Share of Voice in Market.  Do you know who’s providing channel value?  Sometimes retail provides most value and builds brand.  Sometimes brand is the draw to retail.  Brand Recognition and Control.  Leverage and some price pressure with retailers. (careful!)  You should be able to make solid margin.  Though possibly not if you have complicated logistics or specialty issues in your channel.
  21. 21. Re-Visiting Why Should You Sell Direct?  Your customers may want you to.  They want high quality. (Assumption is you’ll provide it.)  They don’t trust other channels that may be knock offs.  They want to evaluate your full line. You, of all outlets, should have all sizes, colors that are possible vs. others, (especially offline retailers), may only carry most common combinations. (Though there may be exceptions to this if you have large retailer agreements where you are selling custom goods only available through that channel.)  You should have all accessories and spare parts. (Ideally even for discontinued items if possible.)
  22. 22. Why Should You Sell Direct? (cont’d)  You can offer your full catalog. This might include consumables, (such as razor blades or bags), replacement parts or cross-sell accessories that might not be available at retail; even at your online channel partners.  Big Box and Online Killing Some Channels. Big Box stores and Amazon are killing a lot of smaller, sometimes specialty retailers. This may leave you without even the possibility of local presence in some markets.
  23. 23. Why Should You Sell Direct? (cont’d)  Business Intelligence Seeing how people shop on your own site can tell you a lot about consumer preferences, what images and information they seem to like, and how they respond to differing offers.  International. You might be able to go international, (or at least test some new markets), at a fraction of the cost of setting up a full logistics and marketing channel.
  24. 24. Why Shouldn’t You Sell Direct?  Retailers, (and your own sales team), may get unhappy with you.  Degree of unhappiness might depend on category.  A little unhappy? They gripe.  A lot unhappy? Drop your brand completely. Drop promo spend on your brand. Better placement for competitors. You’ll have to assess and manage any potential channel conflict.
  25. 25. Why Shouldn’t You Sell Direct? (cont’d)  You’ll now need eCommerce solutions, logistics solutions, direct customer support, etc. However, at this point the ecosystem has a wide variety of support for such needs and activities.  Your product is just generally too complicated. Technical gear, (such as avionics, production machinery and similar.)
  26. 26. Selling Indirectly Online  Even if you choose not to sell online, you will probably be needing to let Authorized Resellers do so. At this point, very few businesses have zero online footprint. Excepting some categories. E.g., consumers may buy bread and milk via grocery delivery, but manufacturer direct sales via digital for these items seems just silly. (For now anyway. We’ll see.)  If you’re still Offline Only, you’re fundamental problem is that some consumers may want your brand, but don’t even have a retailer nearby.
  27. 27. Channel Influence Challenges  Even though “only” about 10% of retail sales are online, some form of digital touchpoint is often involved in the customer journey.  Again…“94% of consumers do research online before visiting a store.” - The Consumer Trends Report – 2017 Edition, Kibo Software.  Whether you’re going to sell direct or not, you’ll need more than simple brochureware online to satisfy your customers.
  28. 28. Example - DeWalt Company Story Service Info Dealer Locator Where to Buy
  29. 29. Example - Aspen Complex, high price point product Support area Dealer Locator
  30. 30. Final Thoughts  If you don’t already have an at least rudimentary online presence, you are likely behind the curve and falling further behind every day.  Even if your industry is of a small, specialty nature, chances are your stakeholders are increasingly operating online in various capacities.  If you’re not already facing direct competitive pressure, you likely will be. And even if not direct, there are likely substitutes to your offering that potential partners will find instead.  As the bar keeps rising for “table stakes” digital elements of a business, (both informational and operational), it’s increasingly critical to build capabilities.
  31. 31. Thanks! From the Udemy.com online course: Digital Product Management

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