Brands and retailers, they are the two ingredients of providing the customers with necessary products. Now it is not obvious that a retailer must sell a product of a particular brand and also a brand does not always need to be using only one retailer to give it the interface to connect with the customers. But it is obvious that a relationship beyond the common one will be able to deliver a strong result for both the parties. How is it possible? Let us get a brief view on this interesting topic.
Now, what is a brand? According to Google, it might be said that it is a type of product, which is manufactured under a particular name by a particular company. Now, why is this so important in the case of product management? Let’s face it, we have all a fascination for a branded commodity. One might find other good options in the same price range but the names of the brands such as Fast-track, Levy, Pantaloons or Puma, are so attractive we would just have a go for it. An item can only be introduced in the national as well as global market successfully if it is branded.
So what is the definition of the retailer then? Well, the main idea is to sell products to the customers, without any third party being involved. This means if I or my company, buys a chunk of goods from you, and sells it with a fair share of profit, I am a retailer. As one can see, that retailer can both be an individual or a group. The most profound name in this sector will probably be Wall-Mart, who has a large chain of shops worldwide.
Let us discuss now, what are the benefits of merging a manufacturing company with a retailer. Consumer Packaged Goods (CPG), as they have named it and retailers are having same goals in a nutshell. They both share the same goals – increased sells, cost effective budget, maximum growth and most importantly, a happy customer pool. Hence, there are plenty of opportunities to excel in the market if both parties tied up together.
A nice example would clear things up. The mighty production Unilever had made a pact with Migros, one of the largest retailers of Turkey. Through a thorough research, the company gets to understand that their conditioner was of no use to the customer as they tagged it as an expensive and unnecessary item. What Unilever did was they arranged a particular shelf to present a shampoo and a conditioner together. The idea of making the item a necessity worked brilliantly as at the end of the year, there were almost a growth of 25% and 36% for Migros and Unilever respectively.
So it works and really on a large scale. But the making of one successful bonding between a brand and a retailer is not always smooth. The first and most important factor is trust. If a brand cannot have faith in the retailer with their products completely or retailer does feel not getting the proper share, the stand won’t be long. They must try to create an atmosphere for them to establish a strong connection with databases and transparent transition from both sides so that the collaborative structure can be strengthened.
Another important factor is to realize the respective parts. That is the CPG and the retailers; both should analyze themselves and their expectations from this upcoming contract thoroughly. Inability to understand their own potential and target might be the cause to distort the harmony. This might even lead to a situation of conflicting interest those results in the collaboration to fail.
An important result of this collaborative structure is the manufacturer companies can get an exact review of their products by their own persons. The R&D department has been used in this regard for some time. According to that report they can decide which projects they should consider on producing more and whose budget should be cut off. It also gives an opportunity to meet the customers directly which will certainly help to provide with a sense of direction.
Collaboration between Both the companies needs to understand that it is a matter of utter importance. Two of them should have gone through thorough research before the deal. The CEOs should take a good look into this matter and might also assign new subordinates to manage things promptly.
So, how is India doing in this context? Literally speaking, there is good news and bad news. The good news is that some tie-ups are happening in notable markets; such as the recent deal between Motorola and Flipkart about selling their product exclusively in the market which was kicked off at the launch of Moto-G. This idea is getting popular also.
The bad news is that a recent survey shows that though 90% manufacturers were involved in the collaboration, only 18% of them got out with a profitable income. This is disappointing because this modern trend has helped in the growth of Asia, Europe, and the USA notably. The stagnancy of this market from 2010 could be well resolved by this emerging concept too.