Utilising third-party intermediaries
as innovative way to drive your
Brand in Emerging Markets
InnoCos Conference, Véronique STEPHAN
Rome, May 23rd, 2014
Why I am talking to you today
• Efficient go-to-market model is required to succeed in new markets
• Third Party Sales Intermediaries are often underestimated
• Sales Intermediaries can provide innovative solution
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The background
• In today’s economic context, generation of revenues is a priority
• Revenues to be created by geographical expansion
• Emerging markets identified as a great opportunity
• More risk averse culture to protect current profit
• Essential to strive for cost efficient and low risk market entry
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Key requirements for a successful launch
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What do we need to understand?
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What are the local commercial
policies?
What are the sales channel/
retailers?
What are the local
commercial policies?
What is the strategic
role of the channel/retailer?
Enablers of sales executional capabilities
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Adequate sales structure
Passionate and skilled sales force
Negotiation power with the trade
Relationship to the trade
internal
external
We need a Mr. “Right” organization for efficient go-to-market
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Muscle Mr. “Right”executional skills
Brain commercial knowledge
We need to make a decision: own or rent?
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Shall we rent the services of Mr. Right
organization at a third-party?
Shall we build our own Mr. Right organization?
In-house Outsourcing
Different solution to outsource the selling function
Involvement level + services
Cost $
Sub-distributor / Non exclusive
Exclusive distributor
Exclusive distributor with marketing budget
Full Market ManagementAccess outsourced
Trading Relationship
providing Access
Wholesaler
Agent model
Key benefits of outsourcing Mr. “Right” organization vs. full-fledged own organization
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Speed
Financial
Limited HR challenge
Focus on brand-building
Flexibility
Quality
Saving time and accelerating launch
.No need to establish legal entity.Limited recruitment.4 months to launch with a distributor
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Various compensation models
Conventional model
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Innovative modelRevenues based on
market share company profit
Mixed model
Flat fee for services
Mark-up/Margin
Financial benefits
.Lower cost.No upfront spending, “pay as you go concept”.Less financial risks.Easier to secure money collection
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Third-party need to be managed properly
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1. Market evaluation, distributor selection
2. Appointment. Legal, Training
3. Management. Goal setting, Motivation, On-going training
4. Termination
Changes in the retail environment impacting the profile of the distributor
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Yesterday
• Unstable economy• Fragmented trade• Few local KAs• Focus on
distribution, not display
• Technical distributor capabilities
Today
• Maturing free market economy
• Rapidly increasing trade concentration (top 10>50%)
• First international KAs
• Competition among retailers
• Focus on display and distribution
• KAM required from distributor
Tomorrow
• Growing economy• High trade
concentration (top 5>50%)
• More international KAs
• Free cross-border trade
• Focus on display, not distribution
• KAM skills as key success factor
5 key success factors to work with TPI
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Relationship based on partnership and trust
1.
• Understand the role of your brand for the distributor
2.
• Clarify roles and responsibilities
3.
• Share and align on brand potential and plan
4.• Strive for transparency
5.
• Educate your own organization on specificities of the go-to-market model
• Clarify roles and responsibilities
• Share and align on brand potential and plan
• Strive for transparency
• Educate your own organization on specificities of the go-to-market model
• Understand the role of your brand for the distributor
Misconceptions towards distributors
• They are an “intermediate step” until we reach critical mass
• They do not “own the business, they do not feel it”
• Their staff are not as competent or well trained as us
• Distributor margins are too high, these costs reduce our top line
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Conclusion
• Key to have a “Mr. Right” organization to ensure commercial execution
• Often more beneficial to outsource
• Innovative and tailor-made
• Specific distributor management approach
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GRAZIE