Know-How Exchange : Branding

For most of the companies I have been working with recently, floor models are sold between supplier and wholesalers, but generally at a lower price than wholesale. Some new companies trying to break in have gone much further (one retailer I work for gets some product on consignment from smaller manufacturers).

On the branding, that is up to you and your customer. I wouldn't automatically consider a private label version bad, but would look at the costs (added costs of producing a new version with different packaging, potential risk to the current brand, etc.) versus the benefit (the added sales). Given what you said about this becoming a medical device, the risk of offering it elsewhere could be pretty high.

Hey WMMA,

if your client gives them 250 free samples without any financial commitment then you better consider looking for some clients who you're going to earn a commission fee from when the deals done. This just doesn't sound fair and definitely goes against Covey's win, win, win principals.

NO I WIN YOU LOSE SCENARIO'S...
If your clients customer isn't into creating win, wins that benefit everyone involved their headed for a quick departure from success. My advice no go.

THERE ARE NO FREE LUNCHES...ESPECIALLY FOR CUSTOMERS..>
Even as a customer advocate I don't expect for corporations to allow the customer to take advantage of them. In this case it appears the customer is truly trying to take advantage of the company. Again tell your client NO WAY. Is there anything else I can do for you?

Your Servant, Deremiah, *CPE (Customer Passion Evangelist)

Sounds like a very aggressive distributor trying to take advantage of a manufacturer who may have a good product on hand and distributor recognizes the potential of the product. A distributor is welcome to give suggestions, but have the nerve to remove the packaging—WHAT’S NEXT. Even if your client is willing to invest 250 samples as way to break into the market, what is stopping that distributor from asking for 250 more to gain more exposure? After all, the distributor will gain also if the samples help move that product and to earn, you have to invest. Once you give in to him, he will always ask for more. It seems that distributor recognizes the potential for the product and is willing to tap into his network. Does the manufacturer have the product in the market or do they have any agreements to put that product into market? Your client’s decision obviously depends on how strong he is. If he doesn’t have product in the market and no agreements in sight, then obviously he can be little more flexible. I personally feel that 250 free samples may be less of an issue even if that is not very fair if the distributor gets you into few places and sales start to flow. But if you give in once to somebody who is so demanding, it may be difficult to say no next time or it will strain the relationship. What can be offered is the following option if the manufacturer sees the potential of moving his product and is willing to invest one time.

Manufacturer sells 250 samples at his cost or close to his cost one time only with the understanding that if the distributor sells a predetermined number in a certain period of time, he gets credit what he paid for initial 250 samples.

The name that pops in my head is CDW.I would suggest to the manufacturer to approach CDW and there might be few others. I am slow, but how about Dell Direct and obviously retail can follow.

As far as branding is concerned, that belongs to manufacturer and manufacturer only. If that distributor wants to be part of that and own that, he can ask the manufacturer if the company is up for sale and then once he buys it, he can do what he likes.

Hi Randall,
Free samples are becoming more rare these days, especially in the amounts you’re talking about for unproven distributors. Proctor and Gamble does not give free products or promo items to its major distributors, nor does J&J. They even pay for marketing collateral. I worked for a company that made $600 nails. We made all distributors pay for samples, despite heavy protest. Keeps everyone accountable.

The only time I would consider free samples to a distributor, in small amounts and not 250, would be if the distributor is a proven market leader, or established in a high barrier market. If so, then I’d consider some free or samples priced at cost just to leverage their penetration ability.

This is especially true if your client has little experience in penetrating a certain lucrative but difficult market such as government, medical, education, law. Incumbant vendors have too much advantage here, so leveraging them may well be worth it. The free/at cost samples will pay for themselves in no time from the market leader's short sales cycle and high volume.

The branding/private label issue is answered with the same criteria. Is the new distributor's partnership valuable enough?

It comes down to the quality of the distributor as a sales prospect. If he/she has something your client needs/can’t do then consider samples at below wholesale or at cost, depending on how much value they can bring to your client's distributorship portfolio.

If you do decide to provide 'at cost' samples, be sure to make them pay for marketing collateral support such as brochures, POP ads and stands, etc.