In this article, we will talk about how brand and distribution (two sides of the same coin) play an important part in the success of any company.
Warning: Packed with in-depth analysis, this article is a valuable resource crafted specifically for marketing professionals.
If you happen to meet a sales head of an exciting FMCG company, you will be surprised to find that they wear two hats, one while addressing the sales force and another while talking to the brand team.
When he/she talks to the sales force, the narrative goes that distribution is everything and brand strength doesn’t matter in achieving success.
In Scenario 2 when he/she talks to the brand team, the narrative goes that brand recognition & awareness are everything and true success can only be achieved by creating a strong brand.
The sales head is right (quite paradoxical it sounds) in both cases, and we will exonerate our dear sales head by exploring the nuances of Brand Vs. Distribution in this article.
Below are the topics we will discuss in this article: (You can directly click to get there)
What is the meaning of Brand strength?
Before jumping into brand strength, let us first define “Brand”.
A brand is a Name, Symbol or other markers (tagline, color, slogan, etc.) that businesses use to distinguish their product from competitors and foster public identity. Brands sometimes act as trust, sometimes act as an emotion, sometimes act as a convenience & few rare times it act as pride.
Brand strength shows how strong the equity of a brand is in customers’ eyes. Strong brands have a high level of loyalty and emotional connection with the consumers. Their consumers are their brand ambassadors.
Let us list down the 5 levels of Brand Strength
(examples used are personal & your preference may differ from mine):
1. Awareness – It means your target customers don’t know your brand. - E.g. Good: MRP tyres - Bad: Coca-Cola’s energy drink named Charged. Customers’ top-of-the-mind awareness isn’t enough
2. Image – It means your target customers may know your brand but don’t like it much. They aren’t excited about it. - E.g. Good: Voltas AC
- Bad: Indigo, you know it, you use it but just don’t like it.
3. Quality – It means your customer doesn’t perceive your product’s quality as high. It may be true that your quality is top-notch, but your customers aren’t convinced. - E.g. Good: Taj Hotels; Bad: Maruti Suzuki’s cars or Oppo’s phone. - In today’s digital world, customers always check reviews to ensure their quality.
4. Association – It means customers know about you and buy you because they know that you have good quality, but they don’t connect on an emotional level. - E.g. Good: Amul; Bad: Yippee noodles or Lenovo’s Laptop)
- If your customers tag you on Instagram or discuss with his/her colleagues about the experience of your products, it’s called brand association.
5. Loyalty – It means your customers know you, buy you, like your quality & like you. Switching to another brand may feel like a betrayal to them & in most circumstances they avoid brand hopping.
- Ask any Apple Fanboy how much they love their iPhone & their iPad.
- Loyal customers not only buy your products but encourage their friends & family to get one.
What is the meaning of a strong distribution infrastructure? What are the types of distribution?
Distribution = Place in 4P. It is simply the availability of your products for customers to buy. Distribution is not just having your product available. Strong distribution means a higher number of places your customers can get your product, with perfect conditions of the product & with maximum convenience while buying the product.
A higher number of places means more physical outlets near your consumers, more e-commerce listings & fast delivery to your target customers. Delivery remains a crucial variable be it an online platform like Amazon or a hyperlocal channel like Blinkit or a mom-and-pop store.
Perfect conditions include hygiene of the product (e.g. ice cream kept in a broken refrigerator or dust on a Body Soap), expiration of the product or anything related to the usability of the product.
Convenience includes ease of payment facilities such as EMI facilities (e.g. mostly valid for expensive things), includes availability of service staff (e.g. while buying an AC, you need the installation or an in-house tailor to alter ready-made clothes in a store.) or less wait time. This is an ever-evolving variable & only most customer-centric companies spend time & money on this.
You may have noticed that while moving from No. 1 to No. 3, the involvement of the brand increases.
While you may not need a lot of brand/marketing intervention when the task is to be present at more places, but when we move to keep perfect condition, it involves how your field team communicates the brand’s hygiene value to a place of selling (Shop).
When we reach the 3rd parameter which takes care of conveniences of different types, here a lot depends on how the overall image of the brand reflects.
Distribution is mainly of below 3 types (this list is not exhaustive as there are many niche kinds of distribution specific to certain industries):
A. General Trade (Mom and pops stores; mostly unorganized)
B. Modern Trade (Walmart, Dmart, Malls; mostly organized.
Large retail formats & Malls segregated in major cities contribute to MT. MT contributes 2-3% of total commerce. MT requires huge investments & high footfall to be profitable.
MT provides a unique experience to consumers. It is emotionally enriching to shop at a beautiful mall. Examples of MT are Pantaloons, Mark & Spencers, Zudio, Dmart, JioMart, Walmart, Metro, Vmart, etc.
C. Online Digital space. It is primarily of two types. E-commerce like Amazon and Hyperlocal (or Quickcommerce) like Blinkit. Major difference between the two is regarding the speed of delivery & warehouse density. E-commerce is mostly affordable compared to Quickcommerce.
Now as we have refreshed our basics on Brand & Distribution.
Let us understand the nuances which will lead to a holistic understanding of the problem.
What are the different types of products based on the level of consumer involvement?
The imaginary distance between the product & user’s heart categorizes the product in two. Products which are close to your heart are personal products & products which are far away is called general products.
Example of Personal Product: These products are mainly strong brand association products like Perfume, toothpaste, grooming products, clothes, Pizza, car, phone, etc. It depends on a person’s psyche & circumstances. E.g. for a germophobe the brand of soap matters but for a hobo it may not.
Example of General Product: These products are mostly commodities or products not noticed in everyday life. The general product can be sub-categorized in two:
Low to moderate impact general products: Products such as gasoline, mineral water, cold drinks, grains, lentils, fans, etc. When I say low-moderate impact, I mean it won’t ruin your life if you drink a Pepsi instead of Coke.
High-impact general products: Products such as health insurance, cement used to build your house, Bank, Hospital, etc. These products have devastating consequences if chosen poorly.
How does consumer differ in their attitude towards a product?
Let’s meet two friends, the First is Picky Peter & the second is Casual Karen.
Picky Peter is someone who really gets huge involvement in every product he uses. He is a brand loyalist who is stubborn when he can’t find his brand. He can drive 500 miles for his favourite coffee beans. Imagine an uncle who won’t pick Mother Dairy’s butter when he can’t find Amul. He will go to another store & buy it from there.
Casual Karen does care about the quality of products, but she isn’t too adamant about replacing a brand with another brand if she finds it convenient. Imagine a regular Colgate user picking a Pepsodent just because it’s on a nearby aisle. Casual Karen isn’t bothered with the brand as long as there is an equally decent substitute.
In the real world, sometimes, Picky Peter becomes Casual Karen in the below scenarios:
Inflation
Financial instability
Casual Karens usually don’t become Picky Peter in most scenarios. For a new brand with moderate awareness, abundance of casual Karen improves sales. But for an established brand, Picky Peter is a dream.
Again there is a context of culture and values which differ geographically and socially, hence it is important for a brand to understand the nuances of the market they are operating in.
Defining the bottleneck: Is it a poor Brand recall or a poor distribution? What’s really stopping the growth?
A bottleneck is defined as the main cause of the decline in movement. It is when a highway changes into a narrow road and all the traffic jams. It is when you buy a Ferrari but do not find a road big/smooth enough to test its speed. It is when you have 2 cars but only 1 parking spot (sorry :-p) .
A bottleneck is the first & key hindrance while upgrading any process.
In sales & marketing, you need to assess what is stopping your brand’s growth. Is it because your brand is not popular enough that despite having high availability at retail, the offtake (sale) is slow?
Or is your availability low that despite having high demand your sales are not picking up?
You can visualize the bottleneck in the above image. It is important for a marketer to clearly understand these bottlenecks. Without it, you may invest your resources where it’s not needed.
Gunjan Brand/Distribution (GBD) Framework Idea to put everything in one frame.
Let us put all the above pieces together & see the bigger picture.
We have seen there are 5 Main stages of a Brand’s Strength, we have seen 3 different distribution types & 3 types of subjective nuance in distribution, we have seen 2 types of products and, finally, we have seen 2 types of customers. We can fairly assume that we have seen a good number of things. It’s time to mash them together.
Let us put Brand Effort on Y-Axis & Distribution Effort on X-Axis. Here as you move vertically, the brand effort will increase & as you move horizontally, the distribution effort will increase.
Let us take an example of a popular Indian electronic brand Boat. Now, let’s plot their presence across the above along with mention of relevant information discussed above.
Various approaches of growth using Brand Vs. Distribution. Micro Case Studies.
A. Improving sales via optimizing distribution
It is the classic case of most companies which have ventured into GT, MT and Digital.
Being present doesn’t mean being effective. E.g. A brand has ventured into 30+ major cities but due to supply chain constraints, it is not able to provide availability in 20/30 cities. Or a brand is popular in western state of Gujarat and Maharastra but not popular in Northern states such as Punjab and Haryana.
Another example is of a brand listed on e-commerce platforms, but other sellers are making most of the sales because of lower pricing & better SEO.
Optimizing distribution means to improve the efficiency of distribution be it any space. Being present doesn’t mean being effective.
B. Online as a channel for new product launch
This strategy is usually adopted by young brands which don’t have a traditional distribution in GT while the MT channel is asking for painfully high discounts & rentals.
In such cases brands agree to a timebound exclusive tie-up with an e-commerce partner. E-com partners help them optimise the demand as well as streamline promotions.
After building credibility online, many brands expand to MT and GT. Xiaomi is famous successful example of the same.
C. Rural first approach where competition is low compared to urban.
Although the disposable income of rural is lower than urban, this approach provides you with the opportunity to launch an affordable variant of a product focussed on the rural market.
There are cases where a product availability gap is found in rural. This insight provides a gold opportunity for a challenger brand to capture the market before the market leader.
D. “Rural” as the next growth engine because urban distribution & sales have reached a plateau.
Marginal improvement will be higher in rural.
The saturation of the urban market also forces companies to pivot toward rural India.
E. Brand equity improvement via controlled placement.
This case happens in luxury or premium products where a company want to place their product at high-end outlets where footfall comprises affluent customers.
Making the product available everywhere devalues the exclusivity of the product, hence this approach is used.
F. Distribution as a branding.
Product visible at the outlet contributes to cheap BTL advertisement.
If you achieve a sizable placement of the product and convert it into decent visibility, your customers & influencers will take notice of the product.
Here the product gets advertised by virtue of its availability. Many big companies do soft launches in this manner to assess how the consumers and influencers are affected by its presence.
Let me know in the comments what you think about Brand Vs. Distribution?
Author: Gunjan Solanki
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