Most manufacturers have been accustomed to selling through a number of retail partners. As retailers continue to consolidate, both online and offline, manufacturers are seeing the power dynamic changing and that is forcing a change in marketing strategy. Going forward, manufacturers will be exploring unique and exclusive relationships with their retail partners.
Manufacturers have already noticed that retailers have more power in many industries. This is happening at the same time that consumers are opting to pay for private-label rather than brand-name products. In addition, consumers are wielding more influence. In the Best Retail Brands 2012 report by Interbrand, analysts note that “Now that consumers decide how, when and where to interact, the only location for retail is where the customers are.”
As a result of these marketplace changes, manufacturers are now spending over 60% of their ad budgets on “trade marketing, in-store promotions and cooperative advertising.” This shift is being made at the expense of direct-to-consumer marketing campaigns. Researchers at MIT’s Sloan School note that manufacturers can use another strategy, that of co-branding products with specific retailers. They can use their expertise to assist retail partners in delivering unique and geographically relevant products to consumers.
A good example of this strategy is the new partnership between Steele Fitness, a group of health clubs in Minnesota, and Under Armour. The health clubs will sell only products that have been designed specifically for them by Under Armour. Through this co-branded model, the stores will sell unique products that will connect with consumers who visit the health clubs.
A good marketing campaign will be important to the success of this experiment. As these unique partnerships evolve, manufacturers should enjoy a more profitable distribution of their products and smaller retailers will have a chance to compete with bigger companies who are seeking to dominate the landscape.[Sources: Lee, Thomas. Steele Fitness and Under Armour. Startribune.com. 30 Apr. 2013. Web. 21 May 2013; Diwar, Niraj and Stornelli, Jason. Rebuilding the Relationship. Sloanreview.mit.edu. 18 Dec. 2012. Web. 21 May 2013; Best Retail Brands. Interbrand.com. 2012. Web. 21 May 2013]