Channel marketing: not same old game

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.Strategy also...

The following column, which appears each issue, looks at new and emerging trends in direct marketing. Alternating columnists are Barbara Canning Brown, a leading figure in the Canadian direct marketing industry, and David Foley, a specialist in database marketing programs.

Strategy also invites other news items or column submissions for this section. Enquiries should be directed to Mark Smyka, editor, (416) 408-2300.

It seems everybody wants to get their hands on end-consumers these days.

Once upon a time, the marketing ‘food chain’ was quite simple. Products were designed and manufactured. Sometimes, the manufacturer acted as the distributor/wholesaler.

Distribution

More often, the products were then sold to distributors or wholesalers, who, then, in turn, sold them to retailers/resellers/ dealers.

Subsequently, aided and abetted by zillions of mass advertising dollars spent all along the chain, the end-consumer was told this product was the hottest thing since the hoola-hoop and they should buy it or else all kinds of horrible things would happen.

Things such as body odor, rejection by friends, limp hair, whites that weren’t bright, colors that weren’t colorful, unhappy children, dissatisfied husbands/wives, etc.

In simplistic terms, the manufacturer was the largest predator in the chain. Manufacturers decided what products to make and then forced them upon the retailer who, in turn, ‘gobbled up’ the consuming public.

Worm has turned

But, something has changed. It doesn’t work that way anymore. The worm has turned. The protozoan becomes the predator.

What changed? It seems that the day Malcolm Forbes died, along with him died comfy margins, consumer acceptance of poor service and effective retail selling.

Today, the end-consumer is in charge. Customer service people used to be told (and probably still are) that the customer is always right. Any fool knows that is not always the case.

In charge

What is true today is that the customer is in charge.

As well, consumers can no longer be lumped together in an amorphous mass market. Rather, marketers must learn to deal with a mass of markets each made up of one, or a few, individuals – the market of one.

What that looks like is that customers now are telling retailers what they want to buy.

Retailers, if they are tuned in to their customers, tell the manufacturer/supplier what they want to sell and, in general, manufacturers are scrambling to catch up.

The result is a proliferation of efforts to get at end-consumers to make them buy directly, efforts to improve margins by eliminating stages of the chain, efforts to keep customers loyal, or, at least, keep them buying.

Number of ways

So, how can you, as a manufacturer, distributor or retailer get into the game? There are a number of ways. And, it does not necessarily mean jumping right into direct-to-end-consumer selling programs:

1. Manufacturers going direct

Prominent activity in this area is in the pharmaceutical sector.

No longer content to rely on doctors to recommend and prescribe its products, drug company Glaxo launched an 1-800 information line for migraine sufferers to call and request helpful information, and Imitrex, Glaxo’s migraine medication, is mentioned.

Computer hardware manufacturers will never forget Dell.

Dell Computers is the original example of a manufacturer choosing to open the direct-to-end-consumer channel first, followed by exploration of traditional distribution channels as the expansion strategy.

Little success

Success stories are still few and far between because manufacturers are afraid to upset their delicate relationships with retailers.

2. Retailers going direct

In Canada, retailers sometimes believe they are going direct to consumers simply by putting names and addresses on advertising material that was once delivered by newspapers, magazines and television.

Too often, the objective of these communications is still solely to drive customers into the retail store.

The fear of cannibalizing retail sales overrides any desire to service (and sell) customers wherever they might choose to shop – and that includes picking up the phone and taking delivery at home.

u.s. companies such as The Nature Company are exporting their retail/mail order models to Canada. Unfortunately, our own retailers will be forced to learn hard lessons from them.

3. New partnerships between manufacturers and retailers

Last year, a u.s. national tv campaign featured a spokesperson for the car, Infiniti. In a spot, the spokesperson opens up the Yellow Pages to find the local dealer and shows the ad for the dealer in the local viewing area.

Benjamin Moore

In Canada, Benjamin Moore sells to independent paint dealers and supports them with flyer promotion programs localized as to dealer and product selection. The next step would be to personalize programs direct to end-customers in the dealer’s trading area.

4. Rewarding the customer

Here, in Canada, we do have an example of successful synergy between retailers, end-customer rewards and direct marketing techniques.

Air Miles

The Air Miles Reward Program teams national retail sponsors with the database-driven rewards program and thousands of end-consumers eager to earn free travel.

How to get started? Start listening. To your manufacturers. To your distributors. To your retailers. But, first and foremost, to your end-customers. They know what they want. And they’re telling you. Listen up.

Barbara Canning Brown, a 20-year veteran of the direct marketing industry, is a direct marketing consultant specializing in catalogues.