his is the second episode of my fortnightly blog on Exchange4media.com. You can see the original article by clicking here.
Welcome back to the Marketing Unplugged blog. Last fortnight we spoke about innovation in pricing that leads to strong brands being built. Today lets talk about innovation in distribution.
The video below is from South Korea. It is self explanatory, but if you don’t have the time to watch the video, here is a brief synopsis of it.
Tesco is the UK’s largest super market chain, but was struggling in South Korea against a local competitor. It simply did not have the same number of stores as the local champion and so was in a distant second place. Then somebody came up with the idea of virtual stores. Not online, but in places where consumers collect anyway – like subway stations. The brand decided to take show windows in the station and pasted pictures of the shelves in an actual store showing the products exactly as they are stocked.
The only difference was that each product had a QR code (what’s that? Some geeky squiggle which can be read by the camera of a mobile phone if you have the right software on it. The squiggle can be made to contain whatever information you want – in this case the name of the product, price, quantity etc). When customers scanned the QR code with their smartphones, it got added to their virtual cart. When they had finished shopping, they would make the payment and the products would get delivered home.
Brilliant, isn’t it? Really convenient for the shopper since it makes use of their idle time while waiting for the train to arrive. And also, because it is delivered home. Brilliant for the brand since it is now using media space to actually sell. How much better can advertising get?
Creating a new channel isn’t always about using the digital medium. There are many other ‘non traditional’ options open to a brand too. Take the case of air conditioners. Do you remember the time when ACs were only sold through specialist AC consultants? These were typically small businesses who didn’t actually have a showroom, but operated from small offices or workshops. They would come to your home to sell and service your machines. Carrier, Voltas and other brands were sold in this way and these brands dominated the category.
Then along came LG and moved air conditioners into the consumer electronics stores. This is the channel where they are strong and the old leaders weren’t. They were followed by Samsung, Videocon, Onida and others. Today the dominant channel for AC sales is the consumer durable stores and the players with the highest market shares are LG and Samsung.
One of the classic success stories of distribution innovation is a pantyhose brand called L’eggs from Hanes. The brand name, L’eggs, was a pun since these leggings were sold in egg shaped plastic containers. The innovation was that these were not sold just through the lingerie stores or women’s section of department stores, but were placed on racks close to the check out counters in supermarkets. It served as a reminder as well as making it easy to pick up. Later L’eggs was sold through food, drug and mass retail stores thus becoming the leader in its category by miles.
This change in the distribution strategy had turned a considered purchase into an impulse purchase.
Too often the focus of distribution is only on coverage. Distribution of one brand gets compared to that of the leader. “We are at 70% of the leader’s coverage” seems to be a cause of celebration. Shouldn’t we be looking to find channels where the leader is not present? So that we can be the leader there. And then build on that momentum.
As always, I would love to hear your comments on the above as well as examples of other great distribution innovations. You can leave a comment below or write to me at suman@MarketingUnplugged.in.