By Steve Marzio

What in the world is a RLF Rating?

We now have over 40 articles here at  RetailLeverage.com detailing many examples on vendors utilizing retailers successfully to achieve their own ends.  Because the amount of retail leverage a particular company holds is a highly subjective matter of discussion, the experts at RetailLeverage.com are introducing a way to measure this “power” in terms of a 1-10 rating scale, which we call a Retail Leverage Factor, or “RLF” rating for short.

Is Your Retail Leverage Factor A Fear Factor?

A RLF-10 rating represents the highest amount of retail leverage possible that a particular vendor may possess vis-à-vis  the largest retailers.  In these rare cases, retailer make very little if any margin but must feature aggressively in order to steer the strong consumer foot traffic through their doors.  Conversely, a RLF-1 rating is indicative of a company with little to no leverage to conduct business at main-stream, big box retail.  You will not find these products at retail and they have no consumer pull whatsoever, barely making them exist at all but for perhaps some tax shelter benefits.

Some ratings may be obvious, others may surprise you.  This is because there are many factors being considered when generating a retailer’s RLF score.  Let’s take a look at some of these factors.

Here Are The 5 Components Of The Retail Leverage Factor:

1. Overall Size of Business of Vendor to Retailer: Obviously, when a company does hundreds of millions of annual dollars of business or more with a particular retailer, the vendor and retailer often feel the necessity to work collaboratively together to hold those significant dollars “in situ”.  However, sheer size of business is not enough to generate a perfect “10” score since sometimes large companies can fall asleep at the wheel and let new upstarts quickly become retailer darlings and get the premium features in ad and on the floor over the big guys.
2. Growth Categories of Participation with the Retailer: The higher the growth curve of the category, the more interested a retailer becomes in giving those vendors what they want.  Consumers are asking store associates for the product and are pulling this product through retail shelves and off retail endcaps without much selling effort on behalf of the retailer.  Consequently, retailers want to feature these categories aggressively so that they can establish themselves as a category destination.
3. Innovation Level of Company: Certain companies consistently bring new innovations to market helping participating retailers capture  new, incremental sales early and at the highest retail price points.  Beyond the direct revenue and margin benefits of showcasing new products, offering new innovations also helps solidify the image of said retailer as a destination for the uber-new, hot items.
4. Margin Dollars and Rate Given to Retailer: When growth, innovation or sheer vendor size is not in a particular manufacturer’s  favor, often margin dollars can compensate for this and work to garner attention and support by the retailer for rather obvious reasons.  Throwing money at a retailer in various forms can produce results in the short run if spent correctly.  Quality defects or dismal results however will usually trump margin dollars every time.
5. Consignment or Other Retailer-Incented Sell Through Incentives: Similar to #4 above, providing other go-to-market financial incentives such as consignment can effectively add to a retailer’s bottom line and go a long way to compensate for lack of substance in topics discussed in numbers 1-4 above.

Stay tuned to RetailLeveragec.om as we rate some of your favorite companies and assign them their first RLF score.

UNDERSTANDING THE SCALE RATINGS

As with any scale, the meaning of the rating is best interpreted when one understands the what the boundaries of the scale really mean.  Therefore, the retail leverage consultants have unanimously assigned Apple with a “RLF-10” rating. Retailers make very little selling Apple products vis-à-vis other manufacturers.  But the foot traffic and thus the opportunity for other market-basket filling items (i.e. high margin accessories) that featuring Apple can generate is quite considerable.  Retailers sit by the phone and just hope they will receive allocations commensurate with their forecasted demand on the latest Apple widget.  If Apple even has “sales persons” employed , they must be fully trained in the art of telling retailers “no” in hundreds of creative ways.  That is, Apple decides when and how high to turn the retailer faucet among its vast array of innovative products.

Since a “RLF-1” rating means a company is completely irrelevant to retail, it is not necessary to name an example.  By definition, it would be an oxymoron to even be able to do so.  We will not spend much if any time on companies with a score of RLF-1 since you most likely would not be able to find them at retail anyway.

Here are a few examples of our RLF scores for various manufacturers.

• HP: RLF-8
• Samsung: RLF-8
• Vizio: RLF-6
• Panasonic: RLF-6
• Brother: RLF-5

TAKEAWAYS:

We’re trying to quantify the intangibles that we’ve all recognized when it comes to competing with other brands.  We haven’t patented the algorithm yet but we think we’ve got a unique angle that can help provide reference within categories and among vendors at a retailer.  If you are interested in obtaining an RLF rating for your company, please reach out to us.

Twitter: @retailleverage

Email: retailleverage@gmail.com

By Steve Marzio

LOSE YOUR “DELUSIONS OF BRANDEUR” WHEN DEALING WITH RETAILERS (credit quote to Carol Spieckerman):

We get so wrapped up in the day-to-day business that is marketing and selling our wares to large, demanding, “the customer is always right” retailers, that we sometimes lose sight of some basic human nature principles which we could actually harness to gain some leverage in our negotiations with them.  Many marketers of even the large, well known brand names backed with multi-billion dollars of total corporate revenue and $100+ million dollar ad budgets, feel like the David in the David v. Goliath relationship when it comes to negotiating with one of these big national retailers.  This is because no matter what our brand scores may read from the market research studies or what our loyalty rates are, at the end of the day, the end consumer is not walking into our corporate offices to buy their syrup, computers or baby strollers, but rather into a retail outlet to spend their hard earned money.  Your consumer is ultimately the retailer’s consumer.  And every time they walk into our “partner’s” (and I lose that term loosely) well-lit, freshly painted, freshly mopped stores, they can choose to follow their brand loyalty OR they can easily get swayed to the competition OR opt to skip the purchase altogether.

READY, FIRE, AIM:

Put simply, what the end consumers see is simply the final decision of what that particular merchant decided to put out on that shelf, or on that endcap or in those checkout-lanes in that particular moment of time.  Sometimes that merchant is a newly appointed college graduate given a lot of responsibility and other times the day-to-day decision maker might be a seasoned buyer of 20+ years.  No matter who is choosing the placement, one thing is for sure.  Once those decisions are made and retailers move into execution mode of supply chain and store operations, gone are the powerpoint charts and the negotiating tables, hello POS!  Either your POS or someone else’s that is.   And once there is POS, future decisions to expand, contract or maintain will be the most powerful data a retailer will use to drive future decisions.

So the road to proving ourselves with POS actually starts in the meeting rooms trying to convince merchants that our product is indeed the best choice for that shelf, or that endcap or in those checkout lanes.  Most of our past 30+articles we have written and posted on here have focused on strategies and methods to increase your likelihood for expansion into big box retail.  This article is no different, but may be a little more controversial.  Some may consider this tactic….well….cheating.

BUYERS ARE PEOPLE TOO, GOSH DARN IT:

One of the most basic human nature principles is that there is absolutely no substitute for one’s personal experience.  Obviously, having lived through or being exposed to some event, condition or stimuli gives one a stronger conviction in their opinion on a particular matter vs. not getting exposed to that experience.  We tend to piece together many of our conclusions and opinions by piecing together tidbits of evidence that we have experienced or been exposed to in the marketplace….such as a marketing vehicle!

Here is something we often forget.  The buyer is human.  That’s right, no matter how old, how experienced or inexperienced, they have emotion and form opinions much like any other.  If he or she owns a particular product, they form an opinion about that product.  If he or she sees a TV commercial or a radio ad, he or she forms various opinions on those commercials (especially when it involves a product that they have some expertise in).  An opinion can be as positive as “Wow that was creative/funny/informative!” or could be negative in some way.  However, and perhaps more importantly than like vs. dislike of a particular marketing message, the buyer might simply takeaway the opinion that “Wow, that company is really out there marketing that product (i.e. creating consumer pull)”  Most merchants, even the inexperienced ones, know enough that even if a product or marketing campaign is not directed at their demographic in particular, marketing campaigns that are raising awareness and creating consumer pull from any demographic is, in general, a good thing for the retailer.

I would argue that some merchants even go so far as using exposure or lack of exposure to a particular marketing campaign to help them to justify a decision they made in the past.  When the buyer gets exposed to the marketing vehicles regularly in their personal life, this makes them feel that that they might be missing out on if they chose to not assort or promote that particular product.  “Am I missing out on an opportunity here?”  Or better yet, “is all this marketing going to drive customers to my competitor down the street that is listing that product?” (conversely if they see marketing and earlier chose to promote the product, this probably helps justify their decision)

WHY YOU SHOULD BUY BILLBOARDS IN BENTONVILLE (or the alliterative cousin, Mobile Marketing In Minneapolis):

If you have a marketing communications budget that is sizeable (i.e. over $100M), you probably don’t need to worry about this issue too much (since you most likely already have retailer support and plenty of coverage).  However, if you don’t have a lot to spend and you need retailer support, you may want to think about dialing up marketing activity in the headquarter city of the retailer you are trying to penetrate.  This may not help you in the short term if you are not on the shelves at all but could help you penetrate that retailer in the future.  So buy a billboard or two in Bentonville, try local radio in Minneapolis, beef up your TV media schedule in Chicago.  Ask your agency to come back with 10 cost-effective ways to blast a particular zip code to see what they come back with.  (By the way, even though you may feel vindictive, you may want to avoid tagging the targeted retailer’s competition in this “blast”.  Although one could argue sometimes dialing up the heat can get results!)

Dialing up your marketing efforts in retailer headquarter cities can be a relatively small investment to help bolster future success with that retailer and give you more chances to succeed in future discussions.  Imagine going back into “Round 2” discussions with a particular retailer, after having some POS success elsewhere AND having the buyer say “yeah I’ve seen your ads all the time! I had no idea you were going to do so much!”  Now that’s gaining some retail leverage!

By Steve Marzio




Looking for ways to carry some more weight into your negotiations with your retail “partner” when it comes to securing more, bigger, better circular ad space during the biggest weeks of the year?  Here’s a bit of advice…go Hi – Lo!

WHAT A GREAT DEAL!

We are all suckers for a deal.  Let’s look at the parties involved. For the consumer, the “win” is obvious.  How good do you feel when you buy your product that was only price reduced for that one week?  Good for you for rushing out and grabbing that seemingly short-lived offer on something that you had to buy anyway (you know like that second GPS unit for your golf cart).   For the retailer, “the deal” is deemed successful because the ad with the temporary, expiring deal generated a needed immediate lift to sluggish everyday sales.  For the sales rep, “the deal” helps her hit her quota for the quarter….so she too is happy.  Now for the marketer.  Herein lies the issue.  “The deal” is often an uncomfortable walk of shame that they had to price their beloved product so low…if even for just one week.  (Often this is when the sales reps phone rings whereby the ivory tower marketer says “Well of course it sold well, it’s easy to give it away!”)  However, it is the marketer’s fault to begin with, let’s explore.

5 HI-LO PRICING TACTICS TO TAKE TO HEART

As I wrote in an earlier article, “THE DREADED P” the price lever can often be an embarrassing one for any Top 20 educated MBA marketer.  However, the problem isn’t in figuring out what the “right” price should be on a product, the problem is that marketers don’t embrace enough retail realities when devising their pricing strategy.  In fact, too often, pricing strategy is often left to just pricing and no strategy.  In other words, discounting levels, frequency and timing of promotions are more of an afterthought, a bad afterthought when it comes to your product’s selling price.

Put simply, everyone loves “the deal.”  So utilize this consumer and retail psychology to your advantage.  Marketers, hear me now, “Embrace HI-LO!”.  I mean really embrace HI-LO from the beginning and you will sleep better at night, have better pro-formas and most importantly, retailers will love you (and so will your sales team if you care).  Let’s take a look at 5 examples on how to embrace HI-LO and to develop a successful pricing strategy in selling a $99 product:

1. Launch high with instant rebate (sleeves out of your vest): Instead of launching your $99 widget at $99, (which you know is the right price from your 2 focus groups when you ate too many M&Ms behind the tinted glass)….launch it at $129 and give a $30 instant launch rebate.  Do this especially when you are launching at a singular or smaller set of retailers to start.  Consumers do not have any reference point on your new product at launch.  Maybe some competitive products are similar, but with every new product, comes a new set of price tags and opportunity to create deals.  Even though you know the right price is probably $99, there is no time like at launch for you to reap some extra dough.  Who knows, maybe your excel sheets and those folks in the focus groups who wanted to spend an afternoon answering questions for $30 were wrong?  Maybe you end up selling more at $129 than you thought you could.  This is called “free money.” Go celebrate and buy your own M&Ms!
2. Price drop to original planned level (back to the future): When you make your eventual price move to $99 this could be your one chance at an ad WITHOUT a deal.  Enjoy it, try to bank some more “free money.” Saying “PRICE DROP” in an ad can often be as effective as saying save $30 off this week.  If you think you need more, read on to #3.
3. Price drop plus discount (price drop on steroids): If sales start out too sluggish and you need to make back some ground, do the famous DOUBLE DEAL.  Make the price move and put a discount on top of that. Ask for more circ ad space for this because if consumers like a deal (price drop), they will love the DOUBLE DEAL (price drop + discount).  Was $129, Now $99-$20=$79! This is a mirage of a $50 deal!  Add in a cover spot location then go get some popcorn and sit back and watch for some monster unit sales numbers come through on the EDI feed.  Remember, you were going to launch at $99 with a discount anyway so you are still no worse off under this scenario.  And now you have something loud to talk about in ad!
4. Vary Level of Instant Savings Based On Opportunity (keep your powder dry): Vary your savings offer for different times of the year or different circular ad treatments.  If the retailer will give you a cover spot, offer to take off $30 vs. just $10 for a small block on page 9.  Save your bigger discounts for when retailers are craving for extra special offers.  The problem many marketers make is they take off the maximum amount they are willing to live with, then 2 weeks later the retailer is soliciting offers for a huge Memorial Day ad with blockbuster deals.  You get locked out because you offer them the same offer as the week before and the week after.  You need to CREATE your own sense of good/better/best deal scenarios by varying your offer and the timing of which you offer them.
5. Never Ending Closeout (like the McRib, it keeps coming back): Finally, nothing screams a deal like a “CLOSEOUT.”  Here’s an idea towards the end of life…run 3 or 4 closeout ads!  Why limit it to just one?  On my drive to Florida every year, I pass 8 or 9 T-Shirt/Souvenir shops that have been running “GOING OUT OF BUSINESS” sales for the last 5 years!  Somehow these guys get it. (no offense to you going-out-of-business souvenir shop owners out there).

All of these tactics should be used to accomplish your various sales AND earnings goals for your product.  Even the EDLP king, Walmart, is open to creative ways to show their loyal, and massive consumer base a “deal.”  You just might have to disguise it more (hint #1: “ROLLBACK”, hint #2 “in/out special edition”.

KEY BENEFIT IS FLEXIBILITY:

Ours is a dynamic marketplace with many new variables getting thrown in daily.  Setting and tweaking HI-LO promotions are levers to keep the ever unbalanced supply and demand forces just that much closer to each other.  Short on supply due to welcomed overdemand, a manufacturing shortfall or late additional retailer coming on board?  Just ratchet HI-LO back.  Your boss just come storming into your office and demand more growth and lower invetories on your P&L?  Then crank it up!  EDLP is starting to sound a bit boring now isn’t it?

SUNDAY HOMEWORK:

So over coffee this Sunday, take a look at all those circulars, from green beans to LCD TVs to ergonomically designed pillows.  See if you can spot the smart marketers embracing this consumer psychology and harnessing it to their own ends.  The more you accept this principle, the more success you will have in your own financials and just as importantly, in your “leverage account” with the retailer.

FURTHER READING / SOURCES:

Rafi Mohammed’s Pricing Blog, “Pricing For Profit” (he provides lots of pricing strategies/ideas from a variety of industries)

By Steve Marzio

In Vince Young’s previous article on RetailLeverage.com, he astutely points out that one of the great ways for up-and-coming challenger brands to unleash pent –up demand at retailers is to start by choosing a path to market such as a specialty/boutique retailer.  Mr. Young goes on in a subsequent article on RetailLeverage.com to give an example of Rosetta Stone, who used retail kiosks in mall and airports as an early channel of distribution.

Neat Goes to the Airport!

Neat Receipts is another example of this strategy working as a way to get their product ‘out there’, in a highly controllable channel (your own!) to raise awareness and generate demand.  The Neat Company, headquartered in Philadelphia, sells a line of products which include a $500 scanner equipped with some super slick, easy-to-use organization software.  This proprietary interface (and thus unique user experience) essentially digitizes and organizes your personal finances essentially giving you a digital file cabinet. Information can be then charted, graphed, tracked, retrieved and analyzed very easily.  I would imagine that many folks who thrive on tracking every dollar that the household or small business spends would indeed be impressed with this product.

According to their website, Neat Receipts now has 16 kiosks in 10 large airports in the US and Canada.  Having walked passed them myself many times, I often wondered, who in the world would buy a $500 scanner while on their way to their gate in an airport?  Then as I thought about it some more, 4 good reasons came to mind why Neat might want to sell a $500 scanner in an airport.  These are also good reasons why other startups may want to consider a similar strategy.

4 REASONS WHY AN AIRPORT KIOSK CAN MAKE SENSE

1. You have a story to tell. Your product essentially requires a demo to close the sale…particularly when your product is relatively unknown. Plopping a $500 scanner down with a piece of POP on a crowded Office Depot shelf will sway no one.  Dust will collect and you’ll scratch your head wondering what went wrong with your killer product that was so unique.  Next thing you know, you are slashing prices (see my previous article “The Dreaded P” on RetailLeverage.com).  Demos on TV infomercials are effective.  Demos in retail aisles are effective (aka “Theater in the Aisle.”  Retailers and manufacturers spend a lot of time, money and effort to create a demo experience in the aisles (see the Bose displays in Target! Actually see the Bose displays everywhere!)  Kiosks, staffed with your owned trained personnel  present a simply awesome opportunity to show off your wares in the most controllable experience…your own!
2. You need to raise awareness. Instead of buying a TV or radio spot, then closing your eyes and crossing your fingers and praying to your marketing gods that someone heard your message…I mean really heard your message, airport kiosks put your brand and your product in clear view of all the passer-by traffic.  Instead of a channel of distribution, think of it as a MARCOM vehicle.  Think of the sales as the extra benefit, not the primary benefit.  If and when they stop by for the full demo, then great, you’re in the bonus round!  At the Atlanta Hartsfield Jackson Airport alone, nearly 90M passengers were recorded to have passed through in 2008.  This probably explains why the Neat Company has invested in 4 kiosks in that airport alone.
3. You have a relatively unique product that deserves a higher price point. Instead of being forced onto a shelf with other scanners priced at $99 and below, a kiosk allows you to stand on your own terms.  NeatDesk is a unique user experience and one that is vastly different than other “scanners” on the market as their demo will clearly show…when given the chance.  $500 looks way overpriced when sitting next to a $99 scanner.  Isolate yourself from other price points from products that may look a bit similar to yours.
4. The kiosk locations are where your target customers frequent. Neat really nailed this one.  I am willing to bet my dwindling 401k that no one ever bought a $500 scanner in an airport before Neat arrived however Neat’s target customer, the business, well-educated, financially conscious consumer who needs help organizing their thousands of receipts and business cards, can certainly be found en masse in the nation’s largest airports.  And as a bonus, they are often bored looking for something to do to pass the time between flights! Name recognition, demos and customer interaction are at your fingertips.

THE PAYOFF

According to CEO and founder Les Spero, “The product gained traction through direct sales, and then…climbed the retail ladder. It works because each retailer relies on the fact of your success at a previous retailer.” (Philadelphia Business Journal) Since you need to start somewhere, make your first retailer your own channel.  This gives you the best chance to succeed.  Today, Neat’s products are found on the shelves of the largest Office Superstore chains  – Staples, Office Depot and Office Max, many regional retailers and on the websites of such behemoths as Amazon.com.

As a long-term strategy as a sole source of distribution, the costs associated with airport kiosks between leasing and staffing alone probably do not make smart business sense.  But for a brand and product getting a name for itself, getting to demo its superior qualities and to not get pigeon-holed into being an over-priced scanner, I give kudos to Neat Receipts for finding a direct channel that enabled them to accomplish their objectives.  I have always implored marketers to OWN SOMETHING.  In this case, Neat Receipts did just that – they owned their own channel (a highly unlikely one for a scanner) and in doing so, turned what others may have viewed as a channel of distribution, into a powerful advertising and awareness vehicle to notch some pent-up demand.  Les Spero goes on to simply state in the Philadelphia Business Journal, “It’s all about the kiosks.”

By Steve Marzio

God love Business School and MBA programs, they serve a purpose.  You learned the four P’s role in the marketing mix. You went through simulations and competitive gaming.  The cases – ahh the cases.  No matter how realistic those learning exercises seemed, you never really got your hands dirty in ways that you will in real life situations. For a practical example, here’s a case study that may sound all too familiar to anyone in marketing or sales for a challenger brand …

Case of The Dreaded P (aka The Walk of Shame):

A year ago, you launched that whiz bang Product of yours after years spent existing in only powerpoint and excel files. Product development came through and launched that gizmo with only one product delay.  Your sales efforts landed some key shelf space (or “Pdistribution” as my business school professor liked to call it) in some national chains.  You reviewed, edited and executed some killer agency Promotions to support the launch of the product which helped give it a nice initial spike of sales in the marketplace.

And now it is a year later, sales have NOT continued to climb, you look at your ad budget and don’t see one and wonder what the next move is.  You know what the next move is, you just don’t want to go there.  In dreaded fashion, you crack that door open…..

You’re down to the last P.  The Dreaded P.  The P that makes you feel squeamish and dirty inside.  It’s excel’s version of the Walk of Shame.  You open a new file and begin the exercise.  What if I price my product lower?  How much lift should I assume?  Well, let’s try a sensitivity analysis here.  A 10% lift yields this much extra revenue and does this to my profit.  A 20% lift, a 30% lift and so on.  At what point does a price move (it’s hard to even type the words) make sense?  Can I really make it up in volume like my slick sales guy keeps telling me?  I think I know what he is paid on, better not listen to him.  Did the retailer really use the word “delist?”  I severely doubt that.  What will the VP marketing think of my when I even present this case?  I know, she’ll think I’m a complete marketing failure and she will wonder whether she should still support those recruiting efforts from my Top Tier B-School.    I’m spiraling now.  Get it together.  Simplify, simplify, what does this boil down to?

I need to make my numbers and see no other way.  Let’s try a 50% lift to see what that does….

Editor’s note:

The “Dreaded P” example above actually highlights the secret 6^th entry in the 5 sure-fire ways to get Retail Leverage. It is kept hidden behind glass with a “Break only in case of emergency” sign posted above.  The reality is though – if you aren’t using one of the 5 ways to get Retail Leverage, your only resort is #6 – Price.  Good luck selling that to your organization.  By the time you get to this point your hand is likely to be forced by your buyer.  Otherwise, de-listing is as close as the next reset.  In the rearview mirror some of those 5 Retail Leverage strategies don’t look quite as expensive anymore.

By Steve Marzio

One of the most overused terms in marketing conference rooms and on title slides of agency presentations is to have a “360 Marketing Plan.”  Wow that sounds good doesn’t it?  The thought that your target consumer might see your TV spot while drinking coffee and watching her morning talk show then hear your spot radio while schlepping the kids to daycare, soon passing a billboard showcasing a supersized image of your product as she enters the grocery store to see your product on the front endcap while standing on a colorful floor decal of your brand certainly makes for a powerful powerpoint presentation!

DON’T FALL FOR THE TRAP

The 360 Marketing Plan is a dangerous trap.  As marketers, we love the sizzle don’t we?  Be honest with yourself….its why you’re in marketing isn’t it?  You recall that business school course where you first learned about what a 360 marketing plan even was.  Surely this makes sense, my professor (who has a PHD!) taught it to me.  There are so many ways these days to reach your customer, why not dabble a little in all of them?  In this way, we are sure to reach our target…right?  Hereby lies the trap.  What looks great in powerpoint, using your budgets, doesn’t cause even the smallest ripple in the ocean of clutter that exists in the marketplace….especially when you are a challenger/up-and-coming brand.

The powerpoint presentation can look dreadfully similar on the number of marketing communication vehicles you can use whether you are on a $5M Marcom plan or a $50 Marcom plan.  The difference is in an excel chart on the last page that shows the budget numbers by line item.  This chart often gets lost in the sizzle of the 360 marketing plan (which were the first 30 slides of the presentation).

Put simply, unless you are the Geicos or Capital Ones of the world that have MARCOM budgets that dwarf the size of most companies’ total revenues and the GDP of some small countries, pick a…one…uno…a SINGLE communication vehicle that meets these criteria listed below to deliver maximum impact.

REQUIREMENTS FOR YOUR ONE COMMUNICATION VEHICLE STRATEGY:

1. Makes Sense Strategically - (long vs. short story to tell? Reach vs. Frequency goals? Close to a Retail Sale? Etc…)
2. Reaches Your Target Audience – (obvious you want to shout where your target customers can hear you)
3. Penetrates Enough to Be Heard – (your budget should be able to support a high level of reach/frequency over time)

TAKEAWAYS:

To quote a previous article of mine on RetailLeverage.com….OWN SOMETHING.  As much as $10M may seem like a lot on paper, but in the marketplace, this is hardly enough to support a 360 marketing effort.  Actually, let me rephrase.  You could certainly execute activities on a 360 marketing plan, but you will fail to break through the clutter in any one single vehicle.  Better to go narrow and deep to break through than to go broad and shallow.

Don’t be ineffective in reaching your target 5 times on the way to the grocery store.  Be effective in reaching her hundreds of times over several weeks/months during just one of her daily activities.  You will see consumers beginning to pull your product.  Save your 360 grandiose plans for a later time.

By Steve Marzio

You have, in all likelihood heard the expression “Jack of all trades….Master of none.”  You may have found personally that this is not an enviable position to be in when it comes to many areas of life such as in your career or your aspiration to be an NFL football star.  If you are a college football player who can throw the ball pretty well, run at average speed, tackle the opponents with average ability and catch the ball relatively well, you may be the 1st pick in your local YMCA league, but you probably will not find yourself signing a NFL contract anytime soon.  Conversely, if you can catch any ball thrown to you within a 10 yard radius or have 4.2-40 blinding speed, with little/no other football abilities, you may find yourself soon wondering who took that photo of you toasting champagne in the hot tub with 5 of your closest new friends celebrating your recently signed NFL deal.

“Jack of all trades…master of none” is also the worst position to be in as a challenger brand.   It is where retail leverage is maximized and your leverage as a small (in relation to a dominant market leader) challenger brand is minimized.  There are many ways to be a 5 share national brand, some of which are destined to be failures within the next 3 years and some who are destined to be a thriving, profitable brand and one on a growth track to be a serious threat to the dominant market share leader in the near future.

I have never been one for a long, round-about way to make a point, so here it is challenger brand marketers, if you don’t read this whole article, read the next two words….  OWN SOMETHING!

Your widget, knick-knack or bottled solution may in fact make sense for all consumers in the marketplace.  If you were selling your product door-to-door, you master marketers could have a pitch ready for any age, demographic or socio-economic class of the individual who answers each door.  That’s great, that’s wonderful, congratulations.  That does NOT mean you should take on the market leader(s) head on from day one.  Maybe someday, but all in due time.

To state the obvious, stronger brand positions, or leverage vis-à-vis the retailer, means having a strong degree of consumer PULL.  Retailers come to you and want your product, when customers come in droves to their well-lit, organized boxes asking for your product…by brand name.  Even if your national brand position is small, your consumer pull should be strong in some way shape or form.  OWN SOMETHING…or perhaps more correctly….OWN SOMEONE.

If you have a 5 share nationally, have all 5 of your share points some from females under 30, or from a particular tri-state area, or from consumers who make $1M+ annually, or from a minority demographic etc… Don’t lose sleep that your marketing budgets aren’t large enough for a superbowl ad to show how much better you are than the dominant brand, or that you can’t afford to give outrageous margins to make it easier to get on national chain shelves.  You should lose sleep thinking about how you can own one piece, even if it looks like a very small piece, of the overall marketplace.  Put another way, get a foothold and national growth will surely follow.

Own (60+ share) just one small segment of the population or of the market and you will have more leverage in retail negotations, even with the large national chains.  These chains are constantly looking on how to get incremental growth year on year, more consumer trips, unique first-time customers and innovative ways to increase the market basket size.  Challenger brands with a pinpoint strategy and a strong appeal with a particular group or in a particular geographic area, will represent an opportunity for retailers for which the dominant brands cannot offer.

I will follow up this article with some case examples but they are many across all kinds of categories.  Whether you are new athletic brand staring Nike and Reebok in the face (heard of Under Armour?) or a new breath mint that wants to be the next Tic Tac (heard of Altoids?) your long term success in becoming your own national powerhouse needs to start small but start with a consumer appeal that the big guys can’t match.  Do this and then start calling the shots with retail and not vice versa.

Note – this post is from special contributor Steve Marzio.