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The Frontlines: Where brand innovation lives or dies Jim Huebner

I ran across a really interesting article a while back from the Marketing Science Institute's website. It was titled:

Innovation Success: The Overlooked Role of the Retailer

The article was written by four university marketing professors, and it started out this way...

"Despite the billions of dollars spent on new product development and related marketing activities by national-brand manufacturers, it is the retailer who is the gatekeeper to consumers. Not only do they selectively grant access to their shelf space, their shopper-marketing activities in terms of price, promotions, and assortment composition together with their retail context are key drivers for an innovation's subsequent performance at their outlets."

While the focus of the article was on consumer packaged goods (CPG) manufacturers and their retailers, it certainly applies to durable goods manufacturers as well. The researchers found that the retailer actually plays a major role in the success or failure of any product innovations the manufacturer introduces to the market.

The reason Huebner Integrated Marketing decided to focus on building brands and marketing programs for manufacturers years ago was precisely because of this phenomenon. We found that the corporate marketing department can make the best laid marketing and brand-building plans in the world, but if they don't have the buy-in or an answer to "what's in it for me?" for the local dealer...it may all be for naught.

HERE'S A GOOD EXAMPLE...

Years ago, one of our clients introduced a new standard feature that revolutionized the customer experience with their product. But had they added the feature and not had the dealers jumping for joy over it, it may have only seen mediocre success. Instead, with marketing materials behind it, sales training around it, and an international sales event featuring it, it contributed to a banner year for that client...and they couldn't have done it without the dealers.

But, as the article points out, it's not just ANY dealers that will help provide success for the manufacturer.

The researchers found that the STRENGTH of that local retailer's brand is also a critical piece of the puzzle. The stronger the "RBBE" (retail banner's brand equity), the more success they experience and the higher margin they can command. If a retailer/dealer in a local market has a weak reputation or "brand", the article states that promotions and more competitive pricing are necessary. Probably not the preference for most manufacturers.

So what's the formula to seeing product innovation succeed at the consumer level? It's pretty darn simple...

  • 1) Strong corporate brand.
  • 2) Above average marketing support from corporate at the local level.
  • 3) Strong reputation of the retailer/dealer in their local market.

Now...start innovating!