Given current market turmoil, increasing customer concentration, with trade funding often exceeding 20% of supplier sales turnover, it is tempting for suppliers to remain in defensive mode. However, managed carefully, this high-risk environment can be a stimulus to growth and recovery…

Whilst harmonising the 4Ps can be a route to consumer satisfaction when above-the-line budgets are large enough to over-ride trade resistance, in these normal times a realistic focus upon the 4Cs (consumers, customers, communities and competitors), appropriately integrated with the Marketing Mix, may help in achieving corporate objectives..

With the consumer obviously benefiting from supplier woes in terms of permanently low prices, there will be little support available from politicians in reversing current market conditions via government intervention.

Moreover, with technology changing the nature of the buying-selling relationship, the consumer is more in control of the shopping process, less reliant upon suppliers and retailers for information, accustomed to multiple choice, and will seek to dictate the future and pace of their shopping experience. A real-world approach demands that here-and-now, suppliers need to place this sophisticated potential consumer within a realistic instore category context, with all its ‘distractions’, and keep in mind the fact that the only person who ‘lives, breathes, and sleeps’ the brand is the brand manager…

Accepting the fact that the retailer uses the brand to attract consumer-shoppers to the store and into the aisle, there to be confronted with an own-label alternative for 20% less, the realistic supplier has the option of either supplying own-label, or making the brand proposition so compelling in the aisle that the retailer relegates switch-selling to other categories.. Achieving this level of customer-integration requires that the supplier not only classify the customer as either Invest, Maintain or Divest but that appropriate strategies be applied in each case.

This means that a ‘high-invest’ customer has to be treated as a partner in opportunity and risk, using a shared strategy of equivalent timeframes, sufficient to allow real innovation a demonstrable payback period. Part of this investment by the supplier is in a sufficient level of multi-functional/multi-level resource to facilitate store-level assortment and execution, via supply chain integration, initially in superstores.

‘Maintain’ accounts still need careful handling, albeit using the standard service package, especially for risk-averse suppliers. The key strategy would be to ensure a fair share of available business, apply a level of service sufficient to avoid losing the account, and attempting to acquire money by reducing cost and saving, rather than making money via sales growth.

Allowing for the fact that the ‘consumer in a crowd’ requires separate handling, the analysis and meeting of communities’ needs is an important part of thriving in turbulent times.. Whilst consumers are affected by, and attempt to react to changes in the market place as individuals, when they act as groups they impact and begin to affect company performance. In other words, communities drive cultural and social change, their response to technological development determines its pace, and their sense of justice ultimately results in regulatory, legal and political developments that affect the company. In other words suppliers need to monitor, anticipate and meet community need for recognition, and factor a response it into trade strategies, before the system does it on their behalf…

Finally, in a 4C context, good competitors theoretically have the same 4Ps, target the same consumers, manage the same customers and respond to the same communities…wrong!

The big opportunity for good suppliers in current times lies in recognising that their combination of potential strengths and appeal to the consumer, customer and community can be unique. By realistically assessing consumer need and benchmarking competitors’ version of the 4P solution from a consumer perspective, the good supplier can tailor-make a unique response. By tailoring a total company offer, seeing their 4Ps vs the competition, from the point of view of their high-invest customer, their approach will be unique to that customer.

Finally, by anticipating and meeting community group needs before they become threats, good suppliers effectively eliminate competitors, by remaining competitive… just.

Optimising the 4Cs as a competitive advantage…

The 4C combination of consumers, customers, communities and competitors can represent a route to corporate growth when others are fighting for survival.

Essentially, real understanding of the brand’s consumer requires that the supplier forget the propaganda and step into the consumer’s shoes, explore the brand’s potential ability to satisfy consumption needs, more effectively than alternative brands and own-label. This means systematically auditing brand deliverables in terms of performance, price, presentation and place from the point of view of the consumer and their consumption needs, versus the competition. Next the supplier needs to make a similar assessment using the consumer’s shopping needs (choice, availability, price, convenience, opening hours, atmosphere, display and opportunities for impulse purchase) within a real-world store environment (‘fair-share’ co-existence with competitor brands and ‘over-faced’ own label, out-of-stocks, confused signage, varying shelf-lives, etc) again versus the competing brands and own label.

This realistic assessment of the combined consumption insights and shopping insights and the resultant synergies will enable the supplier to optimise brand positioning in the eyes of target consumer-shoppers, effectively tailoring to consumer need and attempting to be unique in the process.

Seeking and finding the target consumer-shopper in the traffic flow of the customer-base will help to qualify some customers as high-invest. Key measures include Potential, Partnership, Profit and Performance (for details see selection of a good trade partner)

Having chosen the high-invest trade partner, it is necessary to analyse brand/own-label balance on average and within the category, the generation-mix of own-label reached by the retailer (4 generations from generic, to me-too, to brand-substitute to brand-exceed), and factor this into the retailer’s ability to achieve and demonstrate compliance in the aisle.

The next step is to conduct a separate Buying Mix Analysis from the point of view of key functions within the retailer’s decision-making-process, compared with the competition. Depending upon the complexity of retailer-supplier relationship and scale of potential business, these functions could include buyer, logistics manager, supply-chain manager, stock-controller, marketing/merchandising manager, operations manager, finance manager and owners of the business. Each will have an individual perspective on brand and supplier, effectively comparing the offer and the supplier’s ability to meet their functional or job needs, versus available competition.

The skilled supplier then has to fuse their combined needs into an achievable blend or compromise that can be delivered profitably. This tailor-made approach, with its attendant costs, can obviously only be applied to the true high-invest customer. All others will have to be offered the standard package and serviced appropriately.

Having optimised consumer insight and shopper insight, within high-invest trade partners, it is crucial that the supplier manage the Threats posed by communities with unsatisfied needs. Essentially, these include regulatory/legal/political developments, unanticipated cultural/social and technological change, and perceived abuses arising from trade concentration/power/internationalisation. All have to be assessed in terms of their ability to present obstacles in implementing marketing and trade strategies. It is important for the supplier to judge their ‘manageability’ by labelling them as things which cannot be influenced but affect the supplier, things which supplier and customer can influence, things supplier and customer can do together, and things the supplier can do without the help of the customer.

Finally, real competitive edge can be achieved via the completion of a risk-analysis to help in identifying contingency plans in the event of things going wrong. This involves listing seven things that could go wrong and then assessing each in terms of impact upon the business (high, medium or low), and chance of occurrence (high, medium or low) and then agreeing contingency plans in the case of high impact and high chance of occurrence.

By the same token, the upside can be explored and the corporate appetite for change increased by analysing opportunities using the same process. This means identifying seven things that could ‘go right’ and labelling them high, medium or low in terms of impact and likelihood of occurrence.

All else is detail…..

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