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.
