Manufacturer Marketing Support, Does it Exist?

The manufacturers do not have as much money as they used to! Really?

So many responses to that statement come to my mind. Unfortunately, in today’s politically correct atmosphere I am not at liberty to use most of them, so I will just shorten it to a one-word response “Bull”!

For the last 30 years or so, wherever I have worked the funding has increased every year, year after year, with very little exception. And by very little I mean one or two years when we were in economic freefall, and Covid was not one of them.

What drives Manufacturers to want to spend money with the distributor?

1. Your performance with them outperforms the market they are experiencing. If they are up 5% organic growth in your market and 7% nationally, it helps a great deal if you come in at even greater growth. Can that be done with multiple manufacturers each year? Absolutely. How? With adequate planning and a well-executed strategy.  I have not seen many manufacturers in my career pull back funds from a distributor if in fact the distributor is outperforming the market.
2. You have a strong relationship at all levels with the manufacturer. If you oversee the marketing effort you need to know who your manufacturer counterpart is at the national level as well as key personnel at the local level. If there are things like region structures in between you need to know that too. More importantly you need to keep these people in the loop. You must be willing to tell your own successes to the manufacturers so that they know you are out there working on their behalf. Sharing those successes with the local Rep, God bless them, is not enough. Also, if the local folks or anybody else in the manufacturers team is doing a good job, send an email to their boss and their bosses’ boss and let them know. That does not mean you have to be their buddy.  They need to have an understanding that you have a great program, they are doing their part, and you appreciate it, New technology is finally beginning to force us to do better with this, but it has been lagging, and I have been as guilty as anybody.
3. Speaking of relationships, do not forget your own teams. I said teams in the plural sense for a reason. Obviously, sales must be on board with your efforts and by on board I mean actively involved in the planning process and having a high level of enthusiasm, and Participation in the execution, that reflects their belief that what you are doing will work. But sales are not your only team members, do not forget the financial people your supply chain management team, and logistics. Get their opinions and buy in and modify your approach so that you achieve that goal. Make sure you are talking to the field / ground level folks in your organization, not just the senior management.
4. There is only one measurement for success in marketing and that’s increased profitability. That must be for both the distributor and the manufacturer. This does not necessarily mean you have to charge more.  It does mean you have to sell more. My thought, depending on the promotion type and the depth of the program, is somewhere between two and three times projected organic growth, but at the very least, outpace organic growth metrics.

Funding Groups

My experience has been that the funding, and not just cash, breaks into approximately three groups.

1. The things the manufacturer wants to do either because they think it is a great idea at the field level or because their mother ship is telling them it is a great idea, and they are under pressure to get their distributors to participate. Look at those as an investment in your relationship with both the manufacturer and the customer. Why do I say the customer? If the manufacturer has a national or regional promotion going on there is a good chance that they are promoting it directly to the end user as well as working through the distributor. You do not want your customer to think you are out of the loop. I will put in a sidebar here that manufacturers that come through the door with national or regional promotions that they are offering to every distributor in town, and it started three days ago, have historically had a hard time getting my cooperation. At the end of the day, you must do what is in the best interest of your customer and your company.
2. The second group of funding is what you want to do. First, with very rare exception please do not be guilty of what I just complained about coming from the manufacturers, they need time to react as well, and by react, I mean plan and then communicate with their people.
3. That leaves the third group which is in my opinion discretionary largely driven by what the distributor “needs” to do. You know, the things that we say “promote our brand” or get done to appease others. This is “a three-beer conversation” which I will to address in depth, along with more detail, in the future.

While I’ve noticed that manufacturer “co-op” programs, defined as a % of last year’s sales allocated to potentially fund this year’s marketing efforts, have become more restrictive as well as less manufacturer’s are offering, with a plan this should not be a deterrent to a distributor. The three funding groups above are the critical considerations. If they are considered, funding, in some form, can be found. The question is “Is there a desire to get to “yes, we want to market together to achieve “x”?

Also, for another time, I would hope to elaborate on the following closing thoughts.

• I want to be on record as opposed a la cart invoicing for marketing activities. Billing for an entire program is my preference.
• This statement that might seem a little abrupt. I have told the manufacturers for years that whatever company I was working for at the time, my department is not their marketing department. We can give you, and we should, a detailed menu of options that you can participate with us during a year. You must be your own driving force, cheerleader, and advocate. Or, best case, we can be collaborative, but don’t ask me to do “something” but you have no idea.

Ten years ago Channel Marketing Group conducted research within the electrical industry on co-op marketing and MDF. We shared on ElectricalTrends distributor and manufacturer input and have been interviewed on the manufacturer marketing support of distributors. We’ll be updating this research in the coming month, so be on the look-out for the survey. Respondents will receive a free copy of the results (and feel free to email us (add the note “Marketing Funds Survey” to ensure you receive the survey.)

We have experience in helping distributors develop ways to optimize the marketing support that they receive from manufacturers as well as experience in helping manufacturers effectively optimize the utilization of their channel marketing / cooperative marketing / trade marketing / MDF (in other words, whatever you want to call them) programs. And yes, not everything should be funded!

And now for an unsolicited commercial. This organization I work with, Channel Marketing Group, is one of the best that I have ever seen. I have known David Gordon for years, and I personally endorse his qualifications.  They are strong in developing the analytics to give you the information to make sound decisions. As for me, I believe that most electrical distributors fall very short of the financial participation from the manufacturers that is available to them. We can possibly help with that subject as well. Call David or any one of the Channel Marketing Group team. This year is almost 25% over and I am not getting any younger. Kcain5622@gmail.com or 240.682.3660.