Nostrahoytus AD2002 - Part 2

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=110 BGCOLOR="#666699" TEXT="#080000" bgproperties="fixed" background="04900840erlcjm.png"> <div> <B> <TABLE BORDER="0" CELLPADDING="1" CELLSPACING="1" WIDTH="600" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="LEFT" HSPACE="0" VSPACE="0" > <tR> <tD VALIGN=TOP HEIGHT= 103 ><NOBR><div> <A HREF="index.htm" TARGET="_top" TITLE="Hoytnet Home"><U><B><IMG SRC="063775a0.jpg" border=0 width="119" height="90" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></U></A></div> </NOBR></tD> <tD VALIGN=TOP><NOBR><div> <B>Hoyt & Company</B></div> <div> <A HREF="services.htm" TARGET="_top" TITLE="What We Do"><U>What We Do</U></A> | <A HREF="who.htm" TARGET="_top" TITLE="Who We Are"><U>Who We Are</U></A> | <A HREF="articles.htm" TARGET="_top" TITLE="How We Think"><U>How We Think</U></A> |<A HREF="contact.htm" TARGET="_top" TITLE="Contact Us"><U> Contact Us</U></A></div> </NOBR></tD> </tR> </TABLE></B></div> <bR> <div> </div> </td> </tr><tr> <td valign="top" width=165 BGCOLOR="#CCCCFF" TEXT="#080000" background="04311c00egdysm.png"> <div> <A HREF="articles69.htm" TARGET="_top" TITLE="Chris Hoyt Articles"><U><B>Back to:  Articles</B></U></A></div> <bR> <bR> <bR> </td> <td valign="top" height=370 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <I><B>www.reveries.com - 1/12/02</B></I></div> <div> <B>Nostrahoytus AD2002 - Part 2</B></div> <bR> <div> <I>by:  Christopher W. Hoyt</I></div> <bR> <div> A quick reprise of last week's Nostrahoytus 2002 predictions is that mega-retailers will lead the way with increasing demands on the supplier community in virtually every direction - pricing, terms, logistics and promotional support - while they strive to take increasing control of their own destiny by strengthening relationships with their best customers, differentiating on a basis other than price and expanding their private label offerings.  Mega-retailers will be scrutinizing the “partnership” with suppliers on a pure cost/benefit basis - if you don't measure up, look out for lingering mistletoe - you're about to get a kiss good-bye!   </div> <bR> <div> So what can smart marketers do for a productive and prosperous 2002?</div> <bR> <div> Obviously, we can't comment on your specific situation or state of preparedness to address these changes.  We can, however, provide certain thought guidelines that will start you on your way to the kind of thinking that will enable you to survive and thrive in this environment.  Specifically:</div> <bR> <div> The single most important lesson for everyone to grasp:  learning how to build and maintain brand equity with consumers while simultaneously building “partnership equity” with one's most important accounts.  Increasing profitable brand share and building brand equity must now be a dual-pronged effort:  increasing household penetration and purchase frequency is now only half the equation; the other half is demonstrating to your most important accounts how your brands will help them meet their financial and category marketing objectives.</div> <bR> <div> Learning how to work with and through your key retailers to leverage the relationships these folks have built with their best customers.  Key to this is understanding that time-pressured consumers are now more retailer-loyal than brand-loyal.  They will buy what their primary retailer carries at the time of their call and rarely, if ever, make a second stop for a brand they can't get at their primary store.  Being in distribution and on the shelf is <I>everything</I>.</div> <bR> <div> Know that “service excellence” is equally as important as brand excellence in how mega-retailers will evaluate your overall “cost/benefit” to them as a supplier.</div> <bR> <div> In this context, “service excellence” is defined as enabling your key retailers to sell it before they have to pay for it</div> <bR> <div> This will be particularly important for second and third-tier suppliers whose brands can be easily replaced by another supplier or private label.</div> <bR> <div> Be prepared to make the tough decisions about where to spend time and invest resources:</div> <bR> <div> Classify and reorganize your entire organization against your most important accounts - i.e., “vertical partnering”</div> <bR> <div> Learn to say “no” to unprofitable retailers or even entire trade classes - sacrifice marginal volume to increase profits big-time</div> <bR> <div> Be pro-active about limiting distribution of your brands to stores in which they sell well and de-list marginal performers in all other stores - the key to staying-in</div> <div> Limit your mega-account representation to only those people who have the authority to make on-the-spot decisions and speak for your company - third-party resources at this level in these types of accounts are out</div> <bR> <div> Evaluate your organization's preparedness to meet current marketplace demands as described in this article: </div> <div>  </div> <div> Get rid of the silos - brand marketing, manufacturing and distribution personnel must obviously take a much more active role in strategizing on an account-specific basis.</div> <div>   </div> <div> Silos insulate these people from the field and make them dependent on second-hand (and often biased) input</div> <bR> <div> Insist that brand group members get integrally involved in trade promotion spending decisions for mega-accounts (and your frustration level will drop significantly)</div> <bR> <div> Coordinate all activities across all categories</div> <bR> <div> Insure your promotion agency understands your top accounts' objectives and requirements and has direct continuing contact with the appropriate people in these accounts</div> <bR> <div> Make certain you are prepared to deliver consistent, flawless shelf and program execution at store level.</div> <bR> <div> CPG manufacturers who do these things will be the survivors.  While this isn't a complete list, we hope it stimulates your thinking and lays the groundwork for a productive and profitable 2002.</div> <bR> <div> Happy New Year!</div> </td> </tr></table></body>