One Blog |August 30, 2010 | POS Tracking Software
The Delivery Tier vs. The Marketing at-Retail Tier
If you are an alcohol-beverage distributor, you may, as a result of reading this post, ask yourself: “What are we doing to manage, control and measure our marketing at-retail initiatives?” Especially since it is now widely accepted that 70% of buying decisions are made at the point of sale.
The Supplier View
Beverage suppliers often see distributors as their delivery channel. They historically viewed distributors — the middle tier — as bringing very little value in selling and promoting the brands they distribute. Although this perception has changed somewhat over the past few years, distributors are still not widely viewed as an extension of the bottler, brewery, vintner or distiller. Because of this misperception, suppliers believe it is imperative that they know and understand the “delivery tier” of the business. Suppliers want to ensure their products are not simply delivered, but are effectively marketed and sold in order to grow market share and build brands. In some respects, this means the distributors may feel that the suppliers look down on them.
The Distributor View
Alcohol-beverage distributors, on the other hand, often see their beverage suppliers as being out of touch with their local market’s specific needs. Some distributors see their suppliers almost as adversaries who attempt to squeeze higher margins from distributors while simultaneously expecting distributors to pay the costs of expensive retail promotional campaigns, which negatively affect the distributor’s bottom line. Some distributors believe suppliers know little about selling to the local market, thus causing conflict.
Both May Be Right
There is some truth to both points of view. Suppliers are somewhat justified in seeing distributors as the delivery mechanism — but, suppliers need to recognize and understand the promotional and selling efforts provided by the distributors. The distributors also have a point. Suppliers are looking for any and every way to preserve and grow margins and market share, even if it is on the backs of the distributors. Most suppliers do have extensive marketing allowance and bill-back programs to support and fund the distributor’s marketing at-retail initiatives. Suppliers typically provide brand guidelines and graphics for point of sale temporary signs, permanent signs and menus. Often, product sample expense recovery allowances are offered to offset the distributor’s costs.
The Marketing At-Retail Tier
Where Products are Placed, Priced and Promoted
The distributor of course, is the delivery tier. But increasingly, as the cost and effectiveness of national media campaigns have come under scrutiny, distributors have become the "marketing at-retail tier" (where the sales are made). It is, perhaps, the virtual lack of standardized marketing activity reporting that has made marketing at-retail management, control and measurement — accountability — an administrative issue for both suppliers and distributors.
Fortunately, there are solutions available to facilitate the deployment of marketing at-retail campaigns and provide standardized tools to record and report both what materials were deployed at the point-of-sale and the corresponding sales results. To our knowledge, only OnTrak Software offers solutions available to address these marketing at-retail challenges.