There is a huge opportunity in manufacturers choosing to make their own brand
In the early 80s, Intel became the first manufacturer to introduce a microprocessor for computers. To this day, it remains a powerful brand. Every other computer that you buy has “Intel Inside.” Honestly, we can’t recall the name of any other chip manufacturer – is it Sun Microsystem? Possibly.
We did a quick Googling and found out that it’s not Sun; it’s Samsung (Samsung. Sales: $43.54 billion), then Taiwan Semiconductor (Sales: $29.32 billion), Qualcomm (Sales: $15.44 billion), but it’s still Intel that rules the market – Sales: $56.31 billion in 2017! Whoops! Intel is BIG.
As an OEM provider, it’s an incredible story. As a chip manufacturer, which is after all, only one component of the whole system, it must have been extremely hard for the Santa Clara-headquartered multinational, to stand out in the market. But it did eventually – and so well – guess how?
Through clever branding.
Nike Selling Direct to Consumer
Another multinational manufacturer, a shoemaker, Nikeannounced three years ago that its mighty serious about jacking up its says to cross $50 billion by 2020 through nothing more simple and straightforward than – you guessed right – direct-to-consumer marketing and growth through digital expansion.
The alchemy worked and Nike is poised to emerge as the world’s biggest athletic brand in the retail market.
Who Needs a Retailer in the Digital World?
Earlier there was always a retailer as conduit between a manufacturer and a consumer. In the digital era, who needs a retailer, when the manufacturer can straight penetrate a consumer’s home, and have his brand bought off the net at the push of a mouse!
These days, manufacturers have a hotline to their customers, and the middleman has got eliminated, at least from online portals, and this is true not just for the service brands, but especially true and is happening for the product brands, who are now considering it worth their while – and their investment – to set up their own supply chain for product distribution, with their own branded online, as well as offline stores.
A Top Direct to Consumer Brand
Apple, being Apple, started the trend in 2001, with a technology product that everybody, except Steve Jobs thought was a very non-sexy product. Not Jobs. He was clear his products were a cut-above the rest, and he marketed them as such, with full fanfare for a premium price, and to this day, Apple is considered an aspirational brand that not every Ramesh, Mahesh or Hitesh cannot easily afford.
Apple doesn’t need anyone else to market its products. It does it itself and does a bloody good job of that too!
When Manufacturers Turn Marketers
The straight outcome is that the product gets treated with a lot more love and respect, and gets its due in terms of display and push through an “experiential, direct-to-consumer sales model that many manufacturers – Samsung, Nespresso,and Dyson– have since tried to emulate, exploiting the freedom they gain to tell their stories in compelling, relevant ways,” observes Michael Barnett in a recent article for The Marketing Week.
Increasingly, manufacturers are choosing to become their own marketers and for good reason, they can now assume total control of the retail environment and sell their product in the manner they deem fit.
Owning theirown retail space lets them offer a full-bodied brand experience to the consumer, and helps them differentiate and define the USP of their product line, as no outside retailer can.
Wait. There are several other win-wins to direct selling too, such as:
“If a consumer chooses your product over a competitor’s on a retailer’s website, you might have won a sale—but you’ve lost the opportunity to build a relationship,”Alex Becker, global VP of Digital River tells Claire Hopwood of an online magazine Vision Critical.
Retailers deal with multiple brands. They neither have the time nor the inclination to pay individual, undivided attention to each brand, as a manufacturer does. That’s the reason for the huge sales difference for the same brand at a multiple (MBO) and a single-brand outlet (SBO).
When you are selling just your own product, you are not competing with anyone. You are also not spending a dime extra on cut-throat discounts and other below-the-belt marketing tactics that eventually only hurts your bottom line.
Gain Rare Insights
At your own store, you can delve deep with your customer. Explain him/her the win-win features of your product, and pick insights and data points on customer behavior through your direct interaction. No need to rely on third party analytics. Nike’s string of apps and websites must be generating a humongous amount of data for the manufacturer to consume from a heterogeneous group of over 100 million consumers, each month and tweak its product line, accordingly. It’s response to changing trends, is therefore fast and quick.
Personalization Is Possible
Netflix is a beautiful example of this. It sends you alerts as soon as a new movie in your preferred genre goes up on the net. It makes and sells its own “originals” and then distributes it with a touch of personalized message.
When there are no intermediaries, you cannot just offer a better price to your happy customer; you can also claim a bigger margin for yourself. Even if you have to lower your price points as a promotional gimmick, why not do it yourself, rather than let the retailer claim it as his offer?
“Direct selling gives the chance of cultivating loyalty with customers….. cutting out the middleman and thus lowering the cost of acquisition, and increasing their margin on any products they sell directly,” says Stephen Diorio, a guest contributor to Forbes.
Having said all this, selling direct-to-consumer doesn’t imply that you cannibalise this model opens up an additional, robust revenue stream for you. By all means continue to sell at all MBOs and SBOs that you are signed in with.
But when you have built sufficient brand recall, or even before it, set out to create your own brand. “Your brand is your business identity – the image you wish to portray to the world – and is one of your company’s most valuable assets,” says Debra Murphy in Masterful Marketing. Therefore, don’t leave your brand identity to chance or a maverick designer.
In short, own up to what you own.