Expect more from brand leaders
Reinvesting in new products and technologies is a requirement
By Fred Pond -- Industrial Distribution, 8/1/1999
IN TODAY'S DISTRIBUTION CHANNEL, A LEADING BRAND must be more than simply the brand with the highest sales. Distributors should expect their major, "power brands" to provide leadership in a variety of areas which produce benefits for the distributor and its customers.Being a leader means breaking new ground. Perhaps the best form of leadership is in new product development. Leading manufacturers in every product category carried on a distributor's shelves -- from plumbing and power tools through power transmission and fluid power components -- should be constantly providing the distributor genuinely new products and introducing innovative technologies. While it can vary greatly based upon the industry, an investment of three to four percent in pure research and development above and beyond engineering expenses is typical.
Distributors should expect that these new products are much more than just additional SKUs. These should be products that can be used by the distributor to increase sales to existing customers as well as open new markets. Brand leaders should aim for a total of 30 to 35 percent of sales from truly innovative products that add value to the end user. Products that add value make the lives of distributors' customers better, easier and more productive.
Distributors should also expect a premium level of training on these new products and technologies. Brand leaders should provide intensive training for distributor sales staffs, not only concerning product attributes, but also regarding how to sell and exploit unique market opportunities, increase sales, and improve customer satisfaction. Product training needs to be accessible, either held during regular intervals at corporate headquarters, or taken on the road to distributors, or even better, by joint calls on key prospects.
By offering training certification, the training process becomes a formalized one that ensures distributors are fully trained and ready to meet the challenges of the marketplace. Finally, with the move towards Internet training, brand leaders can create another venue for distributors to easily obtain training for their sales force and customers.
New products are not the only example of this re-investment the distributor should expect. Re-investments in marketing support, such as advertising and catalogs, benefit both the manufacturer and the distributor by helping sell the product. Again, it can vary largely by industry, but brand leaders should be investing approximately three to five percent of their total sales to market development efforts.
Distributors should also expect strong, consistent efforts by power brands to reach, educate, influence and pull the end user to the distributor. Using the recognition and strength of a brand name, manufacturers have the ability to reach far into a market through a variety of promotional techniques and excite potential end users. Internet marketing, tradeshow participation and sales blitzes are several ways to create this end user excitement.
For leading brands, this re-investment in new products and technologies is really much more than an expectation; it's a requirement. It's required, because the very basis of American business is competition. Leaders only remain leaders if they are effective. And, there is a lot of competition to be the leader.
Even this competition among suppliers can only benefit the distributor and the end user. When every one is trying to be the best, only the best gets to market.
Fred Pond is a senior vice president at Ridge Tool Co.
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