What's the least glamorous 'P' of product marketing?

The least glamorous, and the most challenging 'P' of product marketing is Distribution! It still gets labelled as a “Leaky Bucket” in most business reviews…

Product distribution requires physical efforts and effective distribution is the only tactic which helps you win the moment of truth. The biggest dissonance a brand can face is non-availability within arm’s reach of its target group / consumer (TG / TC). Every other dissonance is secondary and / or subsequent to this dissonance.

This is also the same aspect that differentiates product marketing from service marketing – at its most basic level. The advent of technology has benefited service distribution the most. However, it has not yet fully solved the hardships of physical product distribution. Owing to this, we have seen multiple start-ups which have achieved Unicorn status, have largely been offering Services. There are very few in the product marketing start-up space and even fewer or zilch that have achieved Unicorn status. Of course, I am not labelling any of these start-ups as failures. In fact, many of them are successful and have a profitable business model (already!) – unlike their services counterparts who are busy inflating just three KPIs – valuations, GMVs and losses!

Specifically, in the Indian context, the dominant mix of general trade channel to most product categories has been an aspect that makes things extremely challenging (for organisations) on multiple fronts…

1. Upfront investments and expenses to establish pan-India footprint.

- This gets further complicated when organisations also aspire to establish omni-channel presence

2. Reasonably high and recurring fixed costs.

3. Manpower intensive.

4. Dependency on third party partnerships (CFAs, distributors, etc.) for last-mile execution.

5. Average square feet space available per retail outlet – this is too low, already over-flowing and expands at a snail’s pace. Thus, product / category / brand / line expansions and / or extensions are challenging to Launch → Establish → Sustain → Generate absolute and / or desired incremental top-line.

- Cannibalisation effect seeps in (not with consumer, but with shelf-space, retailer / distributor stocking, etc.), within no time of launch.

6. Low RPO – Revenue Per Outlet (drop-size) – Average top-line per retail delivery is very low for India (amongst comparable size of economies).

7. Lack of scan data (consumer off-take) from a dominant channel (general trade).

8. Market research data collection is complex and challenging and is based on a certain sample size.

a. This makes it prone to error owing to human interference, design bias and / or inadequate representation.

b. Sample sets are changed at a pre-defined frequency. Thus, macro change might take time to seep into the data.

c. However, this is one area where technology has also evolved – especially for capturing data, for quicker analysis, throwing up anomalies (faster than ever) and for overall decision making.

d. The time has come for this piece to be automated to the next level – that is, retail outlets, who are part of the sample, have simple technological solutions that capture data on a daily basis (rather than once a month visits from the data collector).

9. Revenue Management / Pack-Price Play (by sales channels) are not a fully evolved science. That is, they are not “way of life” for most organisations.

a. Largely, same set of SKU(s) are launched across all the channels.

b. Over a period of time, consumer off-take decides the dominant channel for that set of SKU(s).

c. However, recently, we are seeing increasing trend towards channel-specific launches.

i. This is happening more in the premium space where modern retail and e-comm channels act as rightful vent. The reason is that these channels provide ease of product placement (fewer number of customers for deal making, fewer locations for physical delivery) and quick data collation towards actual off-takes.

ii. This also solves the P&L pressures that many brands / marketers might be facing from their regular business (provided the planned volumes are achieved).

10. “Rural” – the buzzword that everyone wants to crack. However, this requires clear answers to a few pertinent questions…

a. Which set of current and future SKUs are relevant for rural markets?

b. What is the distribution set-up / design for catering to rural markets? Is it physical (direct) or through activating wholesale (indirect) or both?

c. How will the organisation maintain sanctity of pricing (across its entire offering for rural) so that there is no channel conflict?

d. What capability interventions are being planned for sales teams – internal team as well as external team?

e. Is the organisation going to have a dedicated rural sales vertical? If yes, what is the minimum horizon for which the organisation is committing the added costs for this structure?

f. What are the POS solutions designed for deployment in rural markets?

g. What BTL activations are designed specifically for the rural markets? In fact, what is the BTL calendar for the rural markets?

h. At each level in the organisation, what are the KPIs to be tracked and reviewed? How will the performance scorecard reflect the “Rural” delivery?

Unlike any media vehicle, distribution can’t be bought (especially, the one we expect to stick around for a while). It must be built – painstakingly, day in and day out – with perseverance, rigour, passionate reviews and dispassionate feedback / course correction. Any and every spend on the brand is futile, if distribution is not in place.

(The author is the director and country head (India & South East Asia), The Kraft Heinz Company)