The new rules of distribution in an omnichannel world

Reaching customers with the right product at the right time requires an effective distribution strategy, which becomes all the more important in an always-on, multichannel environment.

omnichannel

Distribution may not be the sexiest aspect of a marketer’s job, but it is certainly one of the most important and should be a key part of any brand strategy. It is arguably even more critical in today’s omnichannel world, where numerous direct and indirect, online and offline channel combinations are at play.

For Rachel Tan Carrasco, former brand manager for Dom Perignon, Ruinart and Krug at LVMH and a graduate of Marketing Week’s Mini MBA in Marketing course, despite working in perhaps one of the most luxurious and glamorous industries “it is still a volume plus value game” so distribution is vital.

“It was very important to know where to sell, how to strategically utilise the channels I was in, and how to ensure that what I was doing benefited the business, our partners and our customers,” she adds.

It is a lesson fellow graduate Craig Bridge, executive director at Australian multi-disciplinary agency, The Contenders, finds equally important.

“Distribution choices are a core element for any business and a foundation which marketers need to understand well beyond many other more shiny areas,” he says.

The Contenders works with a number of clients to explore the role that distribution plays, particularly when considering innovation or category disruption opportunities.

“Distribution for any brand must be strategically constructed, managed and adapted to meet the brand’s target audience in the right place at the right time and offer the right value,” says Bridge.

Not always a direct line

One of the key challenges is direct versus indirect selling, and as Professor Mark Ritson pointed out during the module, there are pros and cons to both.

The benefits of indirect channels include partners investing their capital in helping to sell your product, local market knowledge and partners’ core competence in retail, not to mention greater reach.

That challenge of maintaining a consistent experience, of mapping the customer over many different points of distribution, is the challenge we call omnichannel.

Mark Ritson

With direct distribution – as borne out by Ritson’s example of the innovative Dollar Shave Club, which sells directly to consumers online – benefits include speed-to-market, cost savings, the luxury of not having to deal with retailers and the ability to collect customer data.

As Gary Smith, course graduate and former marketing director at electronics company, ZAGG says: “Dollar Shave club versus Gillette was a great example of different approaches within the same category. Trying to be the new Gillette would clearly have been madness for Dollar Shave Club.”

READ MORE: Meet Harry’s, the shaving startup taking on Gillette

Examining direct versus indirect selling was an area that Tan Carrasco found particularly useful, reinforcing her own experience within the champagne industry. “It made me realise that the situations I was experiencing were real and normal.”

She recounts the tension between direct and indirect accounts due to differing prices, and the need to be creative with indirect accounts with value adds such as brand events and training. “Managing these situations could really be a pain and it’s really tough but completely unavoidable. Learning this during the Mini MBA gave me a lot more to think about and it also gave me insights on what to do.”

For Smith, one such insight was the need to get to know your distribution partners when you have a channel distribution network. “It’s key to make time to spend with and understand the channel. It’s time well spent.”

The reality of omni-channel

Omnichannel is another challenge facing today’s marketers. As Ritson says: “That challenge of maintaining a consistent experience, of mapping the customer over many different points of distribution, is the challenge we call omnichannel.”

It was something which clearly struck a chord. For Bridge, it drove home the message that omnichannel is no longer a question of “should we do it, but how do we do it?”. Tan Carrasco, meanwhile, directly applied the learnings in a sales and marketing meeting in her new role as senior brand manager for feminine and adult care at Kimberly-Clark.

“One pharmacy team got into a little spat with the ecommerce team because I had rolled out a new shop-in-shop and promotions as well as cleaning up our online partner stores by eliminating duplicate products. Yet the pharmacy team thought I was prioritising the ecommerce team, despite being a very small chunk of my business,” she says.

Tan Carrasco argued that while ecommerce may be a small part of the business it is a very high visibility space. “Anything that goes wrong online can go viral in an instance and vice versa.”

Taking a holistic view of the whole customer experience is key, a point supported by former Burberry CEO, Angela Ahrendts, one of the first marketers to challenge the traditional channel model.

Ritson quotes Ahrendts in the module. He says: “We’ve got 10,000 iPads out there in the stores. And we’ve built this clienteling app. So if you buy in Hong Kong or if you went and bought online or even if you are just window shopping and have stuff in your basket – we’ll know. Offline stores will be able to see all your behaviour online. We are blurring the physical and digital.”

Taking a bird’s eye view

As the retail landscape has continued to grow more complex, Smith says it is necessary to constantly challenge in order to get distribution right, something he cites as a key lesson from the module. “Asking questions and understanding where the distribution model fits in or doesn’t ensures [brands] aren’t spending time creating marketing office fiction or dooming their other good work to failure from the outset.”

In addition, the ability to step back from the tactical day-to-day delivery of campaigns and content gave Smith a new perspective, with the renewed emphasis on strategy hugely valuable.

The need to gain a strategic viewpoint also resonated with Tan Carrasco, who cited mapping channels as a key takeaway. “It’s really important to have a clear map or guide so you know where you are headed, constantly refining as you go and getting the most out of each channel or account.”

Chiefly, the module opened marketers’ eyes to the fact that distribution is not just a necessary part of the job, but a chance to reap great rewards.

“It has reinforced my view that distribution challenges and opportunities can quite often be overlooked as changes can be thought of as too much of a disruption for the business,” says Bridge. “But if you segment and target correctly, and know your competitors’ distribution strategies, there is a significant opportunity to increase channel volume, find significant margin loss and repair it, and even disrupt your category.”

  • Professor Mark Ritson will be teaching the next class on the Marketing Week Mini MBA in Marketing from September 2017. To find out how it could make you a more confident, more effective and more inspired marketer, and to book your place, click here.

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