Should Resellers Control Your Marketing?
Wholesalers, manufacturers, and importers that cannot or do not have the resources to create their own distribution channels rely on resellers to connect with end customers. Although the Internet offers an alternative route to market, it does not solve logistical problems, credit control, and expertise in Internet marketing, regardless of what e-commerce and hosting services may claim. This article is too long to cover this topic.
Although resellers can offer significant financial benefits, the margins for most resellers will be around 30% to 40%. The bigger problem is losing control over virtually all aspects of your brands, including pricing, market positioning, and customer perceptions.
Here are some examples
A name-brand importer described his business as a wholesaler. His major brand was sold to consumers through a well-known chain with specialist shops for many years. This resulted in a high level of success. Our advice included the creation of a new website that clearly identified the brand’s features and benefits, as well as the retail prices for each primary product. This was done to help build brand awareness and set expectations. The author refused to give up direct control of marketing, even though we warned that the reseller could try to import and distribute the brand. You will be surprised to learn that this is what happened.
Our advice to build a strong brand identity for his product range, which would provide similar benefits at lower prices and one that could distribute through different resellers or directly to end-users via the Internet, was also rejected by the same importer. We have said many times before that “if there’s a competitor, let him be you.”
One of the most prominent rural product manufacturers distributed many goods through resellers. The latter sold his products through the same outlets as the competitor. Our advice was accepted by the company to enhance its brand identity using combination advertising, trade promotion, and, especially, point-of-sale merchandising.
A significant discovery was that several products’ packaging was not adequate, which caused considerable inconvenience. The competitor did a much better job.
We recommended that end-users make product selection and identification easier. The reseller received custom-made display units that included product selection guides and were installed in their showrooms at no additional cost.
We were approved to run a mystery shopper campaign for a large camera brand. It was clear that although the resellers were skilled in selling the products, they did not recommend them to their customers. It is evident that brand considerations were outweighed by retail profit margins, trade promotions, and other incentives.
Beyond the facts
Management will have their own opinions and likely some pretty fixed ideas about how to proceed. There will often be resistance from some quarters to any changes. It is difficult for consultants to convince management that their internal navel-gazing may not be sufficient to identify potential important issues or solutions, mainly if they are radical.
There are unlikely to be two identical scenarios. Even though the solutions recommended for each case may differ, the process of evaluating is very similar. ASPAC Consulting, the author’s company, uses proven methods that often include these stages:
If any customer research/studies were ever done, review them.
Sales analysis is more than just accounting. It also includes the search for patterns in buyer behavior over the past year. This can provide a strong indicator of adverse actions taken by resellers and also any emerging trends.
Talks with clients from all levels of the organization, not just management. It shouldn’t surprise that staff in the warehouse, order department, and loading dock might have a good understanding of how customers feel about the company and its products and services. We guarantee that the individual who provided the information will not be held responsible for any adverse consequences.
Discussion with selected resellers. Again, at different levels. This includes front-line staff and management. These discussions will cover similar topics. In confidence, the interviewees will share information they wouldn’t tell a company representative.
Prepare “strategic Options” Summarising results and presenting alternative solutions and possible outcomes that may affect all parties in the distribution chain.
Scope of work proposed, if applicable.
Change is something you should consider
The above will make it clear that you need to have a fresh, objective view of the entire marketing process. Many companies don’t welcome consultants, and that is fair. The best consultants can offer new insight and solutions that address the needs of both the company and its customers.
One more thing to consider when selecting a consultant: Often, it will be the mindset and goals of the board or management regarding the selection criteria. A company with a significant size may prefer to only use the best professional firms. This is not always a good decision. An experienced consultant in a broad range of categories may be better than an MBA who is engaged at great expense and may not have the street-wise experience or the techniques to get the truth out of stakeholders.
ASPAC Consulting has a lot of experience in recommending and evaluating solutions for many different reseller categories.