Protecting Product Values is the Key to Maximizing Profitability and Market share
Updated: Apr 29
Every action taken by a Brand or business on distribution decisions has ramifications in the marketplace. There are benefits and risks with the opening and closing of every account, as well as every product access decision to those accounts or outlets.
Brands must ask themselves,
Where do we currently and historically capture consumers mind share?
Do our products generate enough demand that our customers will seek them out no matter where they are sold?
Do our consumers have an allegiance to specific retailers or distribution outlets, that is stronger than their allegiance to our brand?
If we pull back from certain outlets, will our consumers follow us?
Is there competition to fill the void of our departure?
If so, how strong is that competition?
Does the same distribution allegiance exist for every category or market segment that we compete?
The way that some of these decisions pencil out on paper can look better than they are. If a Brand can translate all of their demand to a DTC model, they will benefit from significantly higher margins. However, recapturing all of that demand is a big if. Of all the products in the brand catalog, how many consumers seek out versus how many are shopped as part of a larger purchase that your brand can not fulfill?
We calculate Brand Equity by the number of units that can be sold at the highest sales price across all channels to determine a Brand Equity value. While the retail landscape is changing, some consumers will shop from every outlet that drives a unique consumer experience and has long-term potential.
The keys to success are monitoring and managing your distribution channel in the changing retail landscape. Protecting your product values through the entirety of its’ lifecycle is vital, especially if it will be succeeded by an updated product carrying a similar name or feeding off the marketing of its’ predecessor.
There is a solution for every situation