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IF View - Issue No. 12

COMMITMENT
VERSUS
CAMPAIGN

Issue No 12

Marketing Channel Strategy Consultants
USA - EUROPE - AUSTRALIA - BRAZIL - HONG KONG
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What is Marketing Commitment?

The difference between being committed and being involved is true to the whimsical analogy between bacon and eggs. The pig is committed, the chicken, having merely laid another egg, is involved. In the same manner commitment differs from campaigns.

Commitment, unlike campaigns, requires long term objectives. It also requires comprehensive long-term strategies, devised and monitored with the aid of research and backed by appropriate capital investment – that is financial commitment.

No major innovation and/or irreversible change has ever been achieved without the resolute implementation of those prerequisites.

How to Improve Resellers’ Performance Through Commitment

Let’s assume a company has in place the basics all resellers (dealers, distributors, etc) expect of suppliers: financial returns, product quality, competitive price, reliable delivery and a sound reputation.

What else can a company offer its resellers to persuade them to give that extra bit, and to improve their technical selling and assistance capabilities? How does it compete successfully for resellers’ time and effort, or indeed gain an edge over comparable competitors’ products carried by them?

The answer to that question, first and foremost, is commitment to long term strategic programs that are of real and demonstrable value to resellers.

Only sustainable commitment provides resellers with superior value from the resale of its products, or from support programs and incentive relative to those offered by other companies, can bring about the desired dependency and/or reliance upon which resellers’ improved marketing efforts are predicated.

The Four-Step Approach

The process of gaining such an advantage with resellers, or channel positioning, involves four strategic steps:

Step One: establish expectations

Step Two: identify channel positions

Step Three: build partnership advantage

Step Four: promote the established channel position

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The following elaborates on these steps:

1.  The company must ensure that resellers are clearly aware of its expectations in the way of performance, as well ad desired levels of market penetration.  This requires strategically structured, ongoing communication, preferably face-to-face. 

2.  The company must identify the most advantageous channel position to build.  Such a position must be consistent with the company's capabilities, as well as objectives and strategy.  But most importantly, it must clearly distinguish the company from its competitors, among resellers as well as the final customer.  

3.  This is all about constructing a strategic package of offerings to secure a partnership advantage with resellers.  Such packages fall into three categories, namely:

  1. The company must ensure that resellers are clearly aware of its expectations in the way of performance, as well as desired levels of market penetration. This requires strategically structured, ongoing communication, preferably face-to-face.
  2. The company must identify the most advantageous channel position to build. Such a position must be consistent with the company’s capabilities, as well as objectives and strategy. But most importantly, it must clearly distinguish the company from its competitors, among resellers as well as the final customer.
  3. This is all about constructing a strategic package of offerings to secure a partnership advantage with resellers. Such packages fall into three categories, namely:
  1. The five basic prerequisites mentioned earlier which relate basically to the company’s marketplace position and the resulting financial returns to the reseller in respect of the functional discount provided, volume sales and inventory turnover, and a premium for performing additional services.
  2. Capability building programs. This area is pivotal to companies’ commitment, as well as offering the greatest scope for initiative and innovation. Programs designed to build desired reseller capabilities do not only improve skills (which ideally are not directly transferable to the lines of other suppliers), but also build reseller goodwill.

Key programs may involve:

  • Promotional support, including co-operative advertising, merchandising assistance and joint sales calls
  • Responsiveness systems to identify, anticipate and resolve resellers needs and problems
  • Training courses, including product applications, selling, technical problem solving
  • Technical assistance through hiring field technical assistance or implementing a computer-networked expert systems, and
  • Market research to provide sales leads and identify cross-selling opportunities.
  1. Incentive programs. Because they are tactical in nature, resellers sales force incentive programs should be selected after the other two components have been determined. Alone, such programs rarely have long-term benefits, but used to support and reinforce long-term strategies they can help generate enthusiasm and improve performance.

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The Reseller Support Spiral

 

However, all such incentives should be pre-tested and closely monitored throughout operation. In any case, they are least likely to create a significant partnership advantage.

4.  This calls for a range of promotional initiatives to communicate to resellers the    company’s channel position. This can involve anything, ranging from advertising or gaining media coverage in trade journals to sales presentations.

Conclusion

The proposed four-step strategic approach strives to achieve a long-term channel position based on commitment to building an effective and sustainable partnership with resellers.

Such a partnership advantage can be expected to result in an improved marketplace presence – and bring home the bacon – because it promotes consistency between reseller programs and overall company strategy; provide programs that satisfy reseller requirements as well as surpass competitive offerings; and creates a long term reputation among resellers based on the company’s distinctive competency, as well as its commitment.

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