Balancing the retailer - manufacturer dynamic

As global retail chains increase their presence in the Asian markets, analysts question whether the battle for power between brand manufacturers and large retailers will also be fought here.

If pressure from retailers and their private labels continues on brand manufacturers, what are potential moves for manufacturers to alter a possible gloomy outlook of retailer dominance?

Create your own distribution network

If the mass channel becomes difficult to compete in, leverage your dependence away from that channel. Go in-house and target your customers directly. Using the franchise model is a relatively easy way for a quick expansion. McDonald’s uses this method to quickly expand its presence in new markets.

Engage in e-retail

Explore this as a serious option. Online retail has grown at a tremendous rate and there are no signs that this trend will change over the next years. Amazon, for example, has known an enormous success and has recently set up plans to start a free weekly home delivery service.

Provide your customers with a shopping experience

Don’t forget that shoppers see shopping as an important leisure activity. Focus on providing your clients with the best attraction in your category section in the supermarket or in your shop in the shopping complex. Apple experiences a lot of success in this way: shoppers can test and try Apple products, attend workshops and ask for advice from Apple ‘Geniuses’ about all kinds of products. Make your products stand out from the rest by experimenting with creative packaging, creating your own shelves, sample tastings and introducing innovative products. In this way, you essentially force the retailer to stock your products.

Be innovative

Many large brand manufacturers have spent decades creating an emotional brand value. Nowadays, as shoppers are more than ever aware of the huge amount of options they have, focus should shift towards creating innovative products and marketing them accordingly. Knowing how your shoppers shop and offering them a quality product will generate repeated sales. This focus readjustment to products can potentially prove to be effective against private label competition.

Cooperate with retailers

Work together and search for win-win situations.  Retailers and manufacturers are in it together to sell products. Retailers need brands in their shelves to create their own brand image. Look for symmetries between your brand and the retailers’ brand and establish safe long-term contracts to secure that collaboration.

Take these 5 guidelines into consideration and question yourself what they practically mean for your brand. We need to remember that the emergence of mass retailers is an effective channel for brand exposure and reaching your end customer, especially in the Asian markets where infrastructure is still developing.

Stephen Elop of Nokia is no ‘Jerry Maguire’ as Nokia’s share value drops

In a recent internal missive to senior executives of Nokia, that was ‘leaked’ to the wider public, the new Chief Executive, compared Nokia to that of a ‘burning platform’ fuelled further by its own adequacies:

‘We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.” 

We all appreciate frankness and plain-speaking and it’s good to ‘lay your cards’ on the table, but conveniently for Mr.Elop as he has only recently joined Nokia from Microsoft he is able to lay the blame for Nokia’s failings on his predecessors and incumbents. Now is this the right way to motivate and encourage a business that has been at the forefront of mobile technology for many years and still holds a deep affinity with the wider general public as the mobile phone of choice? Well several arguments laid down by Lucy Kellaway of the FT actually suggest yes honesty is the best policy in this case, though ‘bravest’ leaders admit to not only the burning platform, but being the ones who started it. (Talk like a loser and you might win - FT)

With the new strategic battle lines being outlined by Nokia it will be interesting to see how Mr Elop sees the way forward. A merger may be the only viable route to catch-up in a market that never slows down and could this see Nokia becoming another Google tool in their quest for world domination?

The deal... Feb 11^th

In a move that has effectively taken over $7 billion dollars off the market value of Nokia in two days and threatens over 6000 Finnish jobs, a deal with Microsoft has been struck to make the Windows Phone 7 its primary mobile-phone platform, replacing its home-grown Symbian. Analysts and industry professionals are debating the wisdom of moving to a platform that is significantly behind its rivals, however there is also the flip side, which is what alternative did Nokia really have?

Now it will be Elop’s rhetoric that he hopes will galvanise Nokia behind the Microsoft deal to ensure long term stability, with the short-term gains very much taking a back seat. There will be many Symbian developers within the Nokia ranks who will also need to be quelled and cajouled down the Microsoft route as Elop drives his vision of the business forward.

Nokia is definitely one to watch this year with Elop in full voice, even if its competitors don’t think so... with Motorola describing the alliance as almost ‘a non-event’. Microsoft tie-up

Read the internal memo in full:

Nokia's burning platform

Do companies have a duty to undertake corporate social responsibilities (CSR) initiatives?

Guest Blogger Andrew Storey - Director of Institutional Relationships & Reporting for The Clinton Health Access Initiative (CHAI) writes...

It’s a question that seems to be increasingly debated in the media and an article in a recent edition of The Economist adds an interesting angle to the debate. ‘Milton Friedman goes on tour’ (January 29^th 2011-  Milton goes on tour ) examines a recent report which asked members of the ‘informed public’ (define that as you will because the report certainly seems to, but generally the top quarter wage earners in their particular age groups and countries) what they think of Milton Friedman’s famous assertion that ‘the social responsibility of business is to increase its profits’.

The result of the report suggests that advocates of CSR still have a lot of convincing to do across much of Asia. In Singapore more than 60% of respondents agreed with Mr Friedman, with even greater numbers agreeing in South Korea, Japan, India and the UAE (apparently less than 1 in 5 of the ‘informed public’ in the Emirates would be inclined to disagree with that statement). This is in contrast to attitudes in the West where those in agreement with Mr Friedman seem to be in the minority (although only just in the USA).

Few can suggest that there is anything wrong for a company to seek profits, it’s their raison d’être after all. A well worn statement is that ‘The primary goal of any business is to increase shareholder value,’ but is this really to the exclusion of all other considerations? Need the concept of a business increasing profits and also being socially responsible be mutually incompatible or can a strong CSR program successfully marry these dual aims?

Hewlett-Packard (HP) is a good example of such an organization with a highly successful CSR policy. In November 2010 HP announced an alliance with the Clinton Health Access Initiative (CHAI) that will provide structural and systemic improvements in testing and treating more than 120,000 infants exposed to HIV/ AIDS in Kenya each year. With support from CHAI and the Kenya Ministry of Public Health & Sanitation, HP is investing more than US$1million worth of technology that will capture, manage and return HIV test results in just one to two days after results are ready – a significant improvement from the previous system, which took two to three months. The turnaround time for test results is especially critical, as infants diagnosed with HIV must begin anti-retroviral treatment as quickly as possible to ensure survival. Without immediate treatment, half of HIV-positive infants are unlikely to survive past age two.

In this case HP are partnering with a government and a nongovernmental organization to provide technology and expertise that is not only aligned perfectly with their core skills and abilities, but also is highly targeted and it is no exaggeration to suggest that their support will contribute to saving thousands of children’s’ lives each year. It will be interesting to watch other organizations follow the lead of HP and others as they build on their core skill to successfully find the way to be both highly profitable and have a strong CSR program. Perhaps this and other examples will help convince future survey respondents that businesses need not forget CSR in order to make money.

About the Author.

Andrew Storey is the Director of Institutional Relationships & Reporting for The Clinton Health Access Initiative (CHAI).  CHAI is a global health organization committed to strengthening integrated health systems in the developing world and expanding access to care and treatment for HIV/AIDS, malaria and tuberculosis. CHAI’s solution-oriented approach focuses on improving market dynamics for medicines and diagnostics; lowering prices for treatment; accelerating access to life-saving technologies; and helping governments build the capacity required for high-quality care and treatment programs. Additional information about CHAI is available at http://www.clintonfoundation.org