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The components distribution business is filled with acronyms, euphemisms, and other means of expression that people outside the industry might find odd. I've even thought that a drinking game could easily be built around an acronym challenge: Deliver a new acronym in a timely manner, or cite the meaning of one. If you fail, you take a shot.
Maybe I'll find some willing participants at the Electronics Distribution Show. For now, I have a word in mind: “rationalization.” This word, when used in conjunction with “distributor,” forms a euphemism for the termination of an authorized relationship between supplier and distributor.
It certainly seems less offensive to speak of a company's “distributor rationalization program,” rather than “mass termination of distributors.” In addition to taking a blow to their ego and image, distributors often face a significant loss in revenue and profit when they are rationalized. They are left with orphaned inventory, and they are exposed to the potential for layoffs. Distributor rationalization certainly seems like a textbook example of a euphemism, right?
Wrong.
A distributor rationalization program need not be traumatic, involve excessive risk, or offend in any way (bruised egos aside). A properly managed distributor rationalization program, when done in collaboration with a master wholesale distributor, allows terminated distributors to retain some or all of their business, continue to sell invested inventory, and retain staff.
Authorized distributors need not be terminated. For instance, suppliers can engage the affected distributors as authorized master resellers, with full marketing rights and warranty pass-through. Even if the supplier is not interested in a master reseller program, the master wholesale distributor (as a neutral third party) can continue to serve terminated distributors for the benefit of end customers.
Rationalization is sometimes painful for suppliers, too. Since many distributor agreements allow for inventory return in the event that the agreement is terminated, suppliers are often hesitant about making tough decisions to bring balance when a channel is suffering from acquisition-induced bloat or neglect, or when a change in strategy is mandated.
Since it is neutral and can reach thousands of distributors in different geographic and end-user markets, a master wholesale distributor helps ease the pain felt by manufacturers considering channel rationalization. Assigning saleable inventory to a master wholesale distributor allows the supplier to recover value for much of the product.
Hi, Rich.
Thanks for the intriguing post! I have sometimes joked that suppliers are quick to terminate Reps, but not distributors, because Reps don't hold stock. I'm sure there is more than one instance where reclassification as a Master Reseller was done to mitigate the impact of inventory return. Still, in a well-designed program, a master distributor is in the best position to gain value from existing inventory as part of the agreement to serve Master Resellers.
Also, suppliers may appoint new distributors as Master Resellers, allowing the Master Resellers marketing privileges. The master distributor will handle service and logistics. A win-win-win-win situation for all parties (end user included)!
Rationalization is a way to admit you've messed up. Failing to manage that process properly could be an even bigger screw up
The movie stars Rich Krajewski appearing as Rich Krajewski!
@Bolaji would that constitute life imitating art, or art imitating life?
I can also see an advantage in terms of EOL product. Instead of a distributor selling off inventory after its has parted ways with a supplier, allowing that distributor to manage that inventory until it's gone can assist customers with long-lifecycle products. A win win for the distributor and its customers.
I perfectly agree that the brand personality helps the consumers to perceive the good features about a product or the product range offered by a company.
This reminded me of a product that our team developed some 20 years back which was something ahead of time . It was a TV with built in electronic diary , a small built in computer and capability for school children to program it .
When we approached the advertising company to create an ad campaign for the same they gave the personality of “Merlin” the great magician and truly our product had many a tricks that were hidden inside that simple outward looking TV.
That personality brand said everything about the product in one word what an hour long demonstration and a 10 page product brochure could not probably explain.
Its really important for any company to establish right marketing strategy that can explain how they can erase the pain of the customers. The persona are definitely a big success and animations are also very very impressive. What vodafone did in India with zoozoos, these cartoon gave an alternate name for the Vodafone brand itself.
Elctrx_lyf, you are true about Vodafone's story in India. The zoozoos and chasing dogs had created a good brand image for Vodafone in India, after acquiring Hutchinson Essar. There is no doubt that advertisement can create brand images, which will be always remembered.
Glad you're seeing the value in the concept. The personality can grow from an advertiising image, a top exec or even the spirit the employees project to their customers. As wih any well-thought-out marketing strategy, it should connect with customers' needs and values. In consumer brands the personality may be helpful. In the B2B tech sector the personality or tone may be knowledgeable or authoritative (educational) since change is constant and people are eager to keep up with what's next. What sorts of brand personalities in the B2B tech sector are you aware of? Can anyone name some they feel are effective?
I read your blog with great interest and it has energized me to try do something in my own company. Our product is at best a “me too” so we really need to get some personality. Thanks for the words of wisdom and inspiration.
Thank you! Remember that companies with rather “me too” products can still apply differentiation to their marketing. Many consumer product brands are continuously challenged with this. How would you like marketing toilet paper, window glass or crackers?
Paraphasing Lance Armstrong's book title, “Its not about the product.” Seek alternate ways of differentiating. These may include but are not limited to: how its made, where its made, how long its been made (tradition), special ingredients, who prefers the product, a unique attribute and your quality of service but only if the competition lets you have that option. Service isn't a sustainable differentiatior.
You may also be different in a range of places if you're meeting alternate competitors in various geos. Globalizaton has been overused and over-emphasized. As Jack Trout has taught, dramatize the difference. A strong brand personality can help accomplish that. Once a clear differentitor, that customers value, is discovered, you cannot overephasize your differnce. Please read my earlier blog posts on differentiation and strategy.
Ford, thanks for the response. I agreed that in consumer brands, such personalities can have more brand value and targeting a mass audience. But when it comes to B2B, would you think that any such personality can create a brand value. If that’s the case Steve job and Bill gates can create a brand image, so far not.
Flyingscot, for consumer brands, they normally use celebrities or popular figures from different fields for advertising the products and you can also look in to such aspects. But recently I had seen some of the companies had mad add films with their own employees. That’s a good option, if expenditure is a concern.
Ford, I have to admit it's more challenging for a B2B marketing firm. We're currently doing preliminary work for a tech startup that has both B2C and B2B audiences, and while the consumer “hook” came quickly and easily, the corporate vibe has been slower to develop. Off the top of my head, I can't name a high-personality B2B brand that doesn't also have a B2C audience.
Some responses seem to be going toward only considering the use of a celebrity personality (movie star, sports hero, commedian, etc.) for merely borrowed interest. Suggest that's generally a costly and often rather hazardous approach. It can work. However, if your brand spokesperson/celebrity does something dumb and trashes their public reputation, your marketing investment goes down the drain with them.
There are numerous other ways of creating brand personality and I'd offer its not just the perogative of B2C brands. I gave Zilog as an obvious example of a B2B marketer that has created a brand personna that brings lots of personality to the customer dialog.
B2B brands can help themselves especially by adopting some showmanship and personality because so many of their B2B peers or competiors are utterly lacking in personality. The contrast in the B2B realm can be more powerfully differentiating that in the consumer sector which is full of attempts at using personality to separate themselves from competitors.
I'm not going to attempt extensive B2B sector research to demonstrate how B2B brands are applying personality. I suggest people look around and notice how some brands communicate vs. others. In advertising, Hitachi Semiconcuctor, once a powerhouse in IC memories, had an award-winning, long-running campaign using original artwork of various animals like cheetahs, antelope and birds to connote specific product benefits. If a huge and frankly quite conservative chip company can do it, lots of smaller, more agile B2B brands certainly can. Also, differing brand personalities (and marketing messages) may be necessary in various geographies when facing differing competitors. Globalization is often highly over-stated.
Here's a more recent example of a B2B brand applying similar, animal-related, borrowed interest to their advertising to add some personality. http://www.alshultz.com/thework_matrix.htm Even better, here's the same company t using their management team members in costumes to get their differentiation across with great humor, personality and effectiveness …that their market segment couldn't ignore. This may be more than some companies can manage but it shows what's possible in a B2B situation.