When should Manufacturers best exercise each strategy?
The easy answer is “both strategies, all the time”, and most manufacturers will say that they do this religiously. However, if you peel back the onion one will find that certain times are more favorable for choosing one or the other as a primary 80/20 strategy and putting appropriate resources behind it.
There really are only a few tactical applications that fit each of these strategies. Gaining new customers is sometimes the most costly way to expand business. The manufacturer must allocate sizeable dollars and resources to “potentially” achieve success. Manufacturers can gain new customers if they:
On the other hand, organic growth can be achieved via several options:
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Promote and sell more current product to existing customers
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Develop new menu items/usage with operators
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Expand categories and/or SKUS with current customers
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Expand location usage of “Non-Complying” multi-unit operators
In today’s economically depressed economy, it is advisable for manufacturers to err to the side of spending more resources on organic growth. Not only advisable . . . but because of cutback of people and promotional dollars, manufacturers simply don’t have the assets to employ for “potential” gain. The really progressive manufacturers are using some combination of tactics to achieve most of the bullets under the “organic growth” area. However, now is the perfect time to “take the low-hanging fruit” and the lowest common denominator may very well be to the last bolded bullet point above - GO AFTER “NON-COMPLYING” MULTI-UNIT LOCATIONS. After all, the purchasing director for the operator approved your product . . . supposedly, he or she provided you with units/purchase expectations in relation to your special pricing. So, basically, you deserve to identify that each unit is buying your product! And OH, by the way, this is probably the least-costly means to growing ones business.
Herein lays the problems! Because of the manner in which operators submit data for rebate funding is generally not presented at a “unit level” format so one can identify the non-complying units. Unless the manufacturer has a standard application or an outside company that is collecting, reconciling and settling their multi-unit claims for them, it is highly unlikely that they have the means to identify non-compliance with any regularity. It is time to put “teeth” in your contracts with multi-unit operators . . . and for some manufacturers this simply means attempting to get operators to comply with the “teeth” that are already in their contracts.
Answers Systems’ ContractPro® solution is the only “Total Trade Promotion System” that provides manufacturers with a standard application allows contract creation and communication, then provides total data acquisition, reconciliation and settlement of ALL manufacturer claims with their distributors and operators; then presents the data that enhances “visibility” into contract activity. The added bonus is that our system will help you to identify and sell more products to your already approved customers. So, if you are one of those manufacturers that may be stumbling with your internal contract management system and you are unsure of your chain account compliance and need some help in identifying and filling the gaps . . . take some time to find out how industry leaders are approaching this subject. Contact us today!
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