21 - How to sell to retailers

Question 1

What is the primary misconception suppliers have when dealing with retailers?

Answer 1

Suppliers often forget that retailers are not the customer, but a channel to reach the customer.

Question 2

What creates economic value in the relationship between suppliers and retailers?

Answer 2

A commercial relationship that benefits both supplier and retailer.

Question 3

What happens when suppliers engage in a ‘zero-sum’ game with retailers?

Answer 3

They risk losing market access or profitability.

Question 4

What framework should suppliers revisit when working with retailers?

Answer 4

The key elements of a channel value proposition, focusing on growth, profit, and productivity.

Question 5

What is critical for suppliers when selling to retailers?

Answer 5

Understanding the major trends and forces shaping the retail sector.

Question 6

True or False: Retailers are currently facing unprecedented challenges.

Answer 6

True.

Question 7

What are some of the challenges retailers face?

Answer 7

• Shifts in consumer expectations
• Changes in spending patterns
• Evolving retail offers.

Question 8

What has prompted retailers to consider international expansion?

Answer 8

The need for sustained growth as domestic markets become static.

Question 9

What are some arguments for retailers to expand internationally?

Answer 9

• Shareholder pressure for growth
• Available resources
• Replicable business models
• Global outlook
• Enabling technology.

Question 10

What does globalization mean for suppliers?

Answer 10

Suppliers need to be proactive and share local market expertise to assist retailers.

Question 11

What has changed about the consumer experience in retail?

Answer 11

Consumers have greater access to information and demand customized offerings.

Question 12

What do consumers expect from retailers in today’s market?

Answer 12

An enhanced customer experience beyond just product selection.

Question 13

What role does customer relationship management (CRM) play in retail?

Answer 13

It helps retailers track interactions and tailor offers to consumers.

Question 14

What is the ‘modal consumer’ concept?

Answer 14

Consumers behave differently depending on their context, such as being a worker or a bargain hunter.

Question 15

What do changes in consumer experience necessitate for suppliers?

Answer 15

Collaboration with retailers to deliver complete product-service solutions.

Question 16

What is a key focus for retailer-supplier collaboration?

Answer 16

Pooling consumer and market information.

Question 17

What is becoming increasingly complex for suppliers in their branding strategy?

Answer 17

Navigating the proliferation of brands and ensuring front-of-mind awareness.

Question 18

What are the evolving product offerings moving towards?

Answer 18

From pure products to lifestyle solutions and interrelated services.

Question 19

What do successful retailers leverage to create new services and products?

Answer 19

Knowledge of multiple distribution channels and strong partnerships.

Question 20

How are new competitors affecting traditional retailers?

Answer 20

They are offering interrelated products and services and can also be potential partners.

Question 21

What must suppliers do to adapt to the shift from products to services?

Answer 21

Stay close to consumers and retailers throughout the product life cycle.

Question 22

What is a key task for suppliers when working with retailers?

Answer 22

Ensuring consistent delivery of message, products, and services.

Question 23

How must suppliers approach partnership management in the evolving retail landscape?

Answer 23

By raising the profile of partnership management activities.

Question 24

What is a key task for suppliers throughout the product life cycle?

Answer 24

Matching and complementing new retailer skill sets

This involves ensuring that suppliers and retailers work together effectively to adapt to changing market demands.

Question 25

What is the evolving retail offer trend?

Answer 25

Retailers are moving from products to offers of interrelated products and services ## Footnote This includes grocery chains offering financial services and DIY stores expanding into home furnishing services.

Question 26

What do out-of-town retail malls and shopping centres aim to enhance?

Answer 26

The total consumer shopping experience ## Footnote Despite this, convenience/local outlets still cater to immediate consumer demands.

Question 27

How are retailers tracking technology products?

Answer 27

By monitoring the life cycle of technology products and adjusting offers based on consumer acceptance ## Footnote This helps in aligning sales efforts with the market's readiness for new technologies.

Question 28

What happens as products commoditize over time?

Answer 28

They move along the evolutionary chain from specialists to mass merchandisers, eventually being sold through discounters ## Footnote An example includes high-technology products available in discount retailers like Costco.

Question 29

What is a key success factor for suppliers in retail partnerships?

Answer 29

Identifying ideal business partners and conducting mutual assessments of strategic fit ## Footnote This ensures that both suppliers and retailers align in their goals and capabilities.

Question 30

What are the two fundamentally different approaches to fulfilling consumer needs?

Answer 30

1. Fill demand 2. Create demand ## Footnote These approaches dictate the nature of retailer-supplier relationships.

Question 31

What characterizes a transaction-driven retailer-supplier relationship?

Answer 31

Focus on trading terms, discounts, margins, and supply chain issues ## Footnote This relationship type is typical for filling demand.

Question 32

What is a collaborative retailer-supplier relationship focused on?

Answer 32

Offering highly customized packages of products and services ## Footnote This type of relationship aims to create demand through partnership.

Question 33

What is essential for managing retail relationships at a tactical level?

Answer 33

Supporting the retailer’s core trading needs with strong brands and attractive products ## Footnote This includes ensuring a balanced mix of high-volume and high-margin lines.

Question 34

What should suppliers be prepared to negotiate with retailers?

Answer 34

Product lines, margins, store positioning, and marketing support ## Footnote These negotiations are crucial for establishing favorable terms.

Question 35

What is a critical aspect of engaging with category buyers?

Answer 35

Understanding their objectives, constraints, and performance targets ## Footnote This knowledge allows suppliers to tailor their proposals effectively.

Question 36

What happens if a supplier oversells their product to a retailer?

Answer 36

It can lead to stock stuck on shelves and damage to credibility ## Footnote Buyers are quick to spot overselling, and it can harm future relationships.

Question 37

What must suppliers do to maintain a strategic relationship with retailers?

Answer 37

Continuously demonstrate value and align with the retailer’s business objectives ## Footnote This requires ongoing communication and adaptability.

Question 38

What are the four types of retail offers characterized in the framework?

Answer 38

1. Transaction-driven 2. Targeted 3. Collaborative 4. Strategic ## Footnote These types reflect different approaches to meeting consumer needs.

Question 39

What does the fill demand/create demand spectrum illustrate?

Answer 39

The range of approaches retailers and suppliers can take to fulfill consumer needs ## Footnote It highlights the shift from basic transactional relationships to strategic partnerships.

Question 40

What is essential for suppliers aiming for a strategic partnership?

Answer 40

Audit their capabilities and assess readiness to meet strategic partner criteria ## Footnote This involves understanding both their strengths and potential barriers.

Question 41

What happens if products do not justify their place on the shelves?

Answer 41

Retailers will not entertain an approach from the brand again ## Footnote This can lead to lost selling days and diminished brand reputation.

Question 42

What is the vertical axis used for in the product competitiveness framework?

Answer 42

It compares the product to its direct competition in terms of consumer perception of advantages.

Question 43

What types of products are found at the top of the vertical axis?

Answer 43

Products that are so superior they have no discernable competition, like Viagra or the original Apple iPod.

Question 44

What are parity products?

Answer 44

Products for which consumers cannot perceive any advantage or disadvantage over other products.

Question 45

What strategy is recommended for unmatched superior products?

Answer 45

Use PR only to promote the product.

Question 46

What is the recommended marketing approach as products move down the vertical axis?

Answer 46

Shift from 'pull' marketing to 'push' marketing.

Question 47

What is the focus when products are perceived as inferior?

Answer 47

Focus on trade marketing and performance allowances.

Question 48

What are performance allowances?

Answer 48

Payments made to retailers for performing certain functions, like premium shelf positioning.

Question 49

What does 'open-to-buy' refer to?

Answer 49

The dollar amount of merchandise that a buyer can order for a particular period.

Question 50

How does open-to-buy help retailers?

Answer 50

It allows retailers to react to fast-selling items and quickly restock shelves.

Question 51

What is critical for managing open-to-buy?

Answer 51

Controlling inventory levels to avoid stock-outs and excess inventory.

Question 52

What does the 'closing stock' depend on?

Answer 52

It is calculated by adding opening stock, on order, and open to receive, then subtracting forecast sales.

Question 53

What is the difference between flat cover and forward cover in open-to-buy systems?

Answer 53

Flat cover uses a fixed number of periods for stock requirement, while forward cover sums the forecast sales of the next periods.

Question 54

What is the role of a wholesaler in the supply chain?

Answer 54

Wholesalers own the buy/sell relationship with retailers and manage bulk deliveries.

Question 55

What does the supplier do in a pure direct model?

Answer 55

The supplier delivers directly to the retailer and manages their own buy/sell relationship.

Question 56

What are the advantages of using a service provider?

Answer 56

Service providers can break bulk, finish products, and deliver to store level, allowing suppliers to focus on strategy.

Question 57

Why is it important for suppliers to analyze their distribution model?

Answer 57

To understand the full costs of selling through and servicing retailers and project business growth.

Question 58

What is the key to building strategic partnerships with retailers?

Answer 58

Creating value for consumers and making a strong commercial proposition to buyers.

Question 59

What challenges do retailers face in their business model?

Answer 59

They must work with suppliers to bring customers into the store and maintain good margins.

Question 60

What role does consumer marketing play in retail?

Answer 60

It helps to establish brand awareness and influence consumer choices in-store.

Question 61

Fill in the blank: Open-to-buy funds are critical for managing _______.

Answer 61

inventory levels.

Question 62

True or False: Retailers typically share their open-to-buy calculations with suppliers.

Answer 62

False.

Question 63

What is a key factor for suppliers to achieve top-level status in the retail channel?

Answer 63

Making a strong commercial proposition to buyers ## Footnote This involves aligning with the needs and goals of category buyers.

Question 64

What should suppliers assess regarding their products?

Answer 64

The role their products can play in a category buyer’s portfolio ## Footnote This includes understanding how their products fit within the buyer's overall strategy.

Question 65

What is essential for suppliers to sell in their economic strengths?

Answer 65

Willingness to pay for consumer or trade marketing that is appropriate ## Footnote Tailoring marketing efforts to the specific needs of the market is crucial.

Question 66

Why is retail considered an expensive channel to go to market?

Answer 66

Due to the costs associated with marketing and distribution ## Footnote Despite the costs, retail offers significant sales volumes and growth potential.

Question 67

What benefits can retail channel deliver to a brand?

Answer 67

Sales volumes and growth acceleration that can transform a brand’s position ## Footnote Successful retail strategies can lead to greater market presence.

Question 68

What should suppliers research to enhance their retail strategy?

Answer 68

The channel well and identify opportunities of best fit with retail accounts ## Footnote Understanding the target consumer is key to effective market access.

Question 69

What is a crucial aspect of delivering a proposition to buyers?

Answer 69

Timing that hits the buyer’s objectives ## Footnote Aligning the timing of proposals with buyer needs can improve acceptance.

Question 70

What are the key challenges retailers face?

Answer 70

* Getting customers to the store * Getting them to shop the store * Getting customers to return ## Footnote Addressing these challenges can enhance supplier-retailer relationships.