Strategic Brand Management

Strategic Brand Management Related links

The New Rules Of Brand Management/We Have Entered The B To B To C Phase

List of Topics

We have entered the B to B to C phase

The first edition of Philip Kotler’s seminal book Marketing Management in 1971 dwelt on the revolution of B to C: the marketing share of the end client. Thirty years later, new realities have arrived and this notion must be amended. In many sectors, we have passed from B to C (business to consumer) marketing to B to B to C. We need to integrate the whole chain into the discussion, and ask ourselves what added value we bring to it.

The brand that does not have the luxury of independent distribution of its own must first of all consider the manner in which it will help the distributor/retailer to reach its own objectives. It is the distributor that must be convinced first of all. What is the use of a ‘major brand’ if it does not appear on the shelf, like all the other brands that have disappeared, not because clients no longer like them, but because they are no longer strategic for the distributors or retailers?

In a rolling market, for low-cost products such as toilet paper, or paper for other uses, an examination of a supermarket shelf might lead us to ask where the ‘major brands’ (Lotus, Kleenex, Charmin, Trèfle) have gone. They have all been replaced by Carrefour, Tesco, Sainsbury and other distributor brands There remains only one manufacturer brand, Okay, positioned on its price/quality ratio. The Portuguese brand Renova, however, managed to retain this market. This SME first conquered its domestic market, then Spain, and now European mass distribution. Its entry into mass distribution was based on a double diagnosis of the distribution:

This shelf does not earn money: it is necessary to give it value through innovation. This shelf is typically threatened by hard discounters. Renova therefore did not arrive as a product but as a new partner for each distributor/retailer, primed with a double offer.

At the top of the range it offered hydrated paper and soft paper, and at the bottom of the range, the ability to maximise offers (12 for 8, 24 for 18). This promotional range was presented pre-packaged on wheeled stands.

Everyone has heard of the phenomenal success of Yellow Tail, the Australian wine, in the United States. Nobody doubts that it is a good product, suited to the market, at a good price. Still, this was a wholly unexpected success. The Australian maker, Casela, however, had had two good ideas, typical of a good B to B to C understanding of the market.

First, it gave shares to the US distributor, which motivated it to promote the product everywhere in the US specialised distribution sector, and second, it fixed the price at a level that allowed it to pay these same distributors even more than the competition.

The indisputable fact that brands that no longer have their own distribution circuits are in fact engaged in B to B to C marketing is not given enough recognition. It is time that the distributor ceased to be considered as a ‘distributor’. This word stems from the vocabulary of logistics, like stockist, dispatcher or wholesaler. A distributor is above all a retailer with its own differentiation strategy, and therefore its own brands. It is necessary to envisage it as a partner, and to start from its key problems, which are the same as those of the brand: the differentiation of its name, creating loyalty to its name, and profitability. It is concerned with the profitability of its own company, not of Danone or l’Oréal.

There is no point, therefore, in multiplying the studies on brand awareness or brand equity at the final client level if the brand is no longer referenced in the supermarket. Bic suffered the same misadventure in Europe in tobacconists and service stations: they have no need for Bic lighters, and prefer Chinese lighters that are more fun, cheaper to buy and sold at the same price. The ‘strength’ of Bic in the European market was in fact an illusion:

for lack of other competitors, Bic was the only one to be found. For the past five years, however, Chinese competition has arisen, with a differentiated offer that has seduced retailers, so they no longer sell only Bic lighters. Bic, enjoying its position of near monopoly, preferred to make profits rather than strengthen its brand among end clients (by telling them for example how a Bic lighter was better, and much safer), and the end customers saw no reason to complain when Bic lighters disappeared from the shelves.