Low-involvement categories are best defined as “needed purchases” that rarely evoke passion. Unlike iPhones, buyers are not waiting overnight to buy soap, salt, staples, or paper. These products only get purchased when existing supplies run out, and a trip to the store (or online) is needed to replenish. If no one explains the value of branded products in a compelling manner, it’s easy to understand how buyers can migrate to private labels.
Compounding matters, resellers make money on either option – branded or private label. Their objective is increased traffic. If buyers perceive value is the same, they will typically purchase the less-expensive option.
This is the dynamic private labels hope for.
How do branded players in low-involvement categories combat this? The key is NOT to rely on traditional product benefit sales techniques and personal relationships to push, but showing resellers business opportunities they’re missing. Our proprietary process has been very effective in driving sales of higher-margin branded products. Key to success is data, segmentation, customized marketing, and measurement.
While there are many aspects to our market test program, the key is customer engagement &mdash on all sides!
Resellers know the value of increased sales activity whether that’s driving traffic to their website or store, or creating interest amongst their business customers. More shoppers mean more sales. Selling more high-margin products increases profits. Reseller confusion crops up when deciding which products to sell, at what price point, and what marketing programs to deploy that drive traffic to higher-margin SKUs.
Manufacturers need to look beyond their own product line(s) and be more reseller-centric. Not all products matter, especially today as traditional business models (and supporting supplies) have forever changed.
Understanding and analyzing data – from the reseller, manufacturer, categories, and from partners – is where value is created for both. When done well, it isolates opportunity gaps. In some cases, you reduce SKUs to sell more volume. In others, audience segmentation reveals buying patterns that can be leveraged.
This approach helped one of our manufacturers better understand what sells to whom (end-users) and why (which promotion works best) and increased total sales by 143% during the test period. Two-thirds of the incremental sales came from customers that previously were private label buyers! Once new buyers are in your system, strong loyalty programs can keep them forever. Best yet, the cost of this program was dwarfed by the value it provided and is now deployed throughout its geographical footprint.
This is where outside marketing partnerships can make all the difference. These experts can help resellers make data-driven decisions, and then execute multi-faceted campaigns that deliver results. Most manufacturers don’t have the capability or relationships to help resellers commit to such analysis.
Nothing sells itself especially in low-involvement categories like office products. Spit-balling promotions in a “one-size-fits-all” manner does not maximize ROI. Smart market analysis enables dramatically improved sales and profit margins. While this approach may not require Big Data Analytics or IBM’s Watson™, it does require sharing data and committing to do better.