Year after year, millions of brand-provided funds such as co-op dollars and market development funds go unused, misused or, worse, underused. This is puzzling considering that available co-op and market development funds and channel advertising dollars often exceed what a brand spends on national advertising.
Today, marketers spend $85 billion annually to stimulate consumer activity at the retail level, using television, radio, print, point-of-purchase displays, direct mail and co-branded marketing in all media.
A blend of strategy and tactics. Perhaps the misused and underused status of these dollars stems from the lack of full understanding of channel marketing as a strategic program. It is the joint promotional effort of two or more parties in the selling chain – any kind of co-marketing between the brand and the brand’s reseller and distribution network. It also includes marketing messages from a brand to its reseller community, updating product information and promotions – an essential component that can motivate and reward sales performance and dominate mind share. Thus, a well-rounded marketing program becomes an effective tool to create the synergy that allows marketer and seller to maximize impact and profitability.
Almost equally misunderstood is channel marketing’s potential to take advantage of the multitude of opportunities that today’s consumer has to interact with marketers and make a purchase. In a multimedia marketing environment, hard-won brand loyalty can quickly erode. Yet, brand equity remains king, and the brands that will continue to be the most successful are those that dominate at retail through an effective channel program.
If you build it, will they come? Yes, when a channel marketing program maximizes the investment of co-op and market development funds and takes an uncompromising and serious approach to ensure success at the retail level, consumers will come.
Channel marketing, as practiced by those few advertising agencies that are specialists in this area, recognizes that the channel partners – retailer, reseller, distributor or e-tailer – are also a brand. There is a delicate balance between what is right for both marketer and distribution network. Channel programs such as co-op radio, direct mail, television or print must include branding, product messages and, most importantly, consumer-driven solutions.
Channel marketing and brand stewardship. A brand is the intangible sum of a product’s attributes – its name, packaging and price, its history, reputation and the way it is marketed. A brand is also defined by consumers’ impressions of those who use it, as well as their experiences. Occasionally, retailers develop and place their own product advertising, which may do more harm to the brand than good. Maintaining brand equity is an important responsibility. Sometimes overzealous retailers forget this.
For example, Hewlett-Packard’s Printer and Scanner Division was spending large amounts of money in co-op and market-development funds for marketing and advertising that emphasized the channels instead of the brand. A complete channel marketing program designed for HP recommended that the division exercise more control over its channel expenditures through a brand-focused strategy that would drive store traffic and make HP the brand of choice.
Making its agency responsible for the development and placement of co-branded print and direct mail advertising for product-specific promotions paid off for HP. Measurably effective national advertising has helped drive retail sales. Local marketing ties specific retailers closer to HP. The company has achieved greater compliance with its channel advertising policies, and key accounts are now more receptive to co-marketing programs.
Channel marketing agencies also can help the marketer regulate the timing of dollar expenditures and maintain positive, virtually absolute control over spending. Co-op and market-development funds are never relegated to a backroom accounting or audit function.
Today, the size of co-op and MDF budgets makes it imperative for brands to develop proactive strategies for effective use of these funds and the media where they are used. For products sold through an external distribution network, a common sense yet innovative channel marketing program with one or more advertising mediums present can be more creative, more targeted and more consistent with brand image, contain more product solution messages and, in the long run, be most cost-efficient through accountability.