By Herman Kwik, Ph.D.

When I work with entrepreneurs or inventors who are excited about their new products and eager to get busy “marketing,” I often have to urge caution – for two reasons:

Because when they say “marketing” they really mean “selling,” and that’s a different operation altogether. Because entrepreneurs don’t always consider the sequence of events necessary for “marketing” to be properly deployed.

In launching a new product—as opposed to offering a service—there is one strategic element that is rarely given its proper due: deciding on the channel strategy.

Failure to carefully plan a channel strategy is perhaps the No. 1 mistake entrepreneurs make in their rush-to-market approach. Unfortunately, the consequences of such an oversight are significant.

For example, industry statistics indicate that 50 to 80 percent of new products fail within five years. Granted, not all failures are the result of poor channel planning. But the lack of channel planning severely reduces a new product’s already slim chance to succeed in the marketplace.

So how do I develop my channel strategy?

First, let’s define the term. Simply put, channel strategy is a set of decisions that identifies the path a product must take from producer to end user. There are three channels that must be considered: sales channel, product channel and service channel. Although some channel intermediaries may serve one or more of these three different channel roles, it is essential to refine your new product’s marketing strategy through each of these three lenses.

1. The sales channel. These are intermediaries involved in selling your product through each channel layer and ultimately to the end user. The key question is this: Who needs to sell to whom for your product to be sold to your end user?
2. The product channel. The product channel focuses on the series of intermediaries who physically handle the product on its path from its producer to the end user.
3. The service channel. The service channel refers to the entities who provide necessary services to support your product launch, as it moves through the sales channel and after purchase by the end user. The service channel is an important consideration for products that are complex in terms of installation or customer assistance.

The four key points to consider when building your channel strategy:

1. Internal capabilities. Be honest and identify where you might need help. Do you have the resources to service end users directly? Do you have the ability to service all the retailers who should be carrying your product? And what about your sales staff? Is it large enough to call on distributors who handle regional markets?
2. Margins and fees. Every intermediary extracts a fee or reduces your profit margin. How will these costs impact your pricing to wholesalers? To direct-to-retail buyers? To end consumers? What about the fees your channel partners charge each other? How will those affect the end user’s price? And finally, how will your channel partners handle discounts, coupons or rebates?
3. Market connections. Identify which channel partners have the necessary relationships to help place your product. Is your selection of channel partners consistent with your brand identity and positioning? Do the best-connected distributors also carry your competitors’ products? If you use multiple distributors in overlapping markets can you manage conflicts over territories?
4. Alternative channels. Develop alternate channels to ensure continued sales growth. If key distributors or retailers refuse to carry your product, do you have other creative but still strategic ways of reaching your targeted end users?

So where do I start?

Having said all that, there is one additional factor that complicates even the best of plans: The Power-Trust balance between the producers and channel partners.

Here’s what I mean. Let’s say that you plan to use a certain wholesaler to sell your product into key retail outlets. Naturally, wholesalers and retailers prefer to handle products with a proven level of demand. In fact, they may refuse to carry new products with insufficient demand, although that’s a rare occurrence, since consumers like new things. But ultimately, producers are in a weak bargaining position. They can only trust that their product will be marketed properly, while the channel players maintain the power to dictate the terms of the relationship.

As demand increases, however, power shifts upstream to the producer, and reliance on trust shifts downstream to the retailer. Once a product reaches a high level of demand, the producer gains the power to dictate how the product is marketed by its channel players. The downstream channel players have to trust that the producer will deal with them equitably.

Take Nike’s dispute with Foot Locker stores in 2003 as an example. There is no doubt that there is high demand for Nike products in general, and for Air Jordan brand shoes in particular. But that didn’t keep Foot Locker from mistakenly thinking that it still had the power to dictate the terms of the relationship. They were sorely mistaken when Nike decided to withhold inventory from them, putting a dent in their revenues and strengthening their competitors in the process.

Nike is clearly the power holder in that channel, but it takes years for most producer—especially for new ventures—to reach that point.

How then does a new product build demand in order to acquire this coveted power position? By utilizing effective consumer marketing communications (advertising and direct mail) and promotions (discounts and special events) to generate increased demand to pull products through the channels.

Remember: Demand is the driver that changes the Power-Trust balance.

Herman Kwik, Ph.D. is Marketing Integrator + Principal at Outsource Marketing in Bellevue, Washington. His experience includes work in international trade and supply chain management.

Subscribe to this feed.

Want to know what Responsible Marketing is about but don’t have the time to read our white paper on the topic?

Well, here’s “The 7 Keys to Responsible Marketing in 2 Minutes,” featuring the characters you’ve grown to love (or hate) in our Responsible Marketing web shorts.

View on YouTube

There ya go—with a video that short, now everyone has time to learn about Responsible Marketing. Share away.

Subscribe to this feed.

For Blog Action Day, I started crafting a post regarding the UN Climate Summit in Copenhagen in December, but then I realized, hey, this blog is supposed to be about Responsible Marketing!

Here’s an interesting Google Earth tour on the topic. Right after I’ll get to my real post.

View on YouTube

Okay, so I’ve decided it’s time for me to get something off my chest.

You see, I’ve been called a tree-hugger. A green-weenie. And most recently, an “eco-lib.”

Whatever. Sticks and stones and all that.

I doubt I’ll convince anyone reading this blog that thinks climate change global warming is just a liberal hoax that they’re wrong on the topic.

So I won’t try to convince you otherwise.

I promise.

But I do have a few questions for you:

1. Are you sick and tired of hearing about global warming, climate change and melting ice caps?
2. Do all the magazine covers, television shows and news programs on the topic drive you nuts?
3. Are you ready to unfriend everyone on Facebook that are constantly asking you to sign yet another petition or the world will end tomorrow?

If you aren’t buying the “eco-hype” I can see why you’d be fed up.

So don’t believe the hype.

But do you believe that wherever there’s hype, there’s a buck to be made on it? There’s a sucker born every minute, right?

Then invest in green technology.

Buy the products that save energy and money—there are plenty of them.

And since consumers overwhelmingly prefer buying from environmentally responsible companies, be an opportunist and take the steps to make yours one too.

If you aren’t going to do it for your mother, do it for yourself.

And make a buck while all the rest of us suckers worry about something that will never happen.

Subscribe to this feed.

By Martin Pierce

Ah, ah, I almost forgot…I’m also going to need you to go ahead and come in on Sunday, too. Mmmmmkay? Thaaaaaanks!

We here at Outsource Marketing like to think that our office culture doesn’t resemble that of our good friend Bill Lumbergh’s Initech. But we do relate.

Don’t know who Bill Lumbergh is? Never heard of Initech?

Then you haven’t seen Mike Judge’s 1999 cult masterpiece “Office Space.” You don’t know what you’re missing. Here’s the trailer:

View on YouTube

A couple months back we took time out of our busy schedules to have a little fun and watch Office Space as a team. Somehow the movie is even funnier watched in a group.

But a movie packed full of classic, memorable quotes delivered with comic brilliance inspires imitators. Lot’s of them. Over and over and over again.

Yes, “We’re going to have to have you go ahead and come in on Saturday” is a brilliant line in the hands of Gary Cole but not in the hands of amateurs.

Thus was the inspiration for our latest Responsible Marketing movie.

View on YouTube

What’s the message?

There is none . . . unless you haven’t got the memo about putting the new cover sheets on the TPS reports.

Subscribe to this feed.

It ain’t so easy being green. Unless, of course, you buy a clean diesel from Audi.

That’s the message of this Audi A3 “Do Your Part” advert:

View on YouTube

I get the idea: Show you can be environmentally responsible without having to put yourself out. You can have it all.

Here’s one point of view from @motorad666 on Twitter:

If ads are supposed to make you want to buy stuff, the Audi A3 Clean Diesel ads are working on me, and I should know better. Good work, VBP.

And the counterpoint from @markapennington:

bike riding: green. bus riding: green. buying an audi: not green. http://bit.ly/hD8TN Is this “green-jacking”?

Some might call this greenwashing because it implies driving a diesel is as good or better than riding the bus or a bike to work.

But this ad’s greatest offense is that it mocks its target audience. Was the Members Only jacket and tie for the guy on the Segway really necessary?

So what do you think? Is Audi’s “Do Your Part” ad is Responsible Marketing or not?

Comment below to weigh in.

Subscribe to this feed.

In 2006, we decided we needed get serious about greening Outsource Marketing after years of agreement about having an environmentally responsible workplace but no real plan to make it happen.

Since then, we’ve been recognized for our efforts and have even won a few workplace recycling awards.

The two secrets to our success:

1. Everyone at Outsource is required to sign our Green Pact. The Pact is our personal vow to abide by a list of rules we developed as a team regarding paper use, bottled water, use of cleaning supplies and such.
2. While several people were passionate about the idea, one person, dubbed our “Green Czar,” was given the responsibility and authority to lead the charge.

Some team members were perfect for the role: They motivated us to do what was necessary and made us feel good about the work we were doing.

Others? Well, let’s just say some people can drive you to drink.

So, what are some of the best practices you’ve seen in workplace recycling programs?

Comment below to share.

Subscribe to this feed.

In advertising, it’s the gospel truth: Sex sells.

You’ve heard it a million times. So many times it’s gotta be true, right?

Hell, even the Devil himself says it’s true in our second of seven Responsible Marketing web shorts, here:

View on YouTube in HD

Why not believe it? You just heard it from the Devil himself.

Well, because it’s all a lie.

Sex sells sex.
Sex gets attention.
And sex creates controversy.

But it seldom converts attention to action.
And most people don’t recall the brand the ad was for.

Men respond better than women to sexy ads, as expected. But in Buyology, author Martin Lindstrom shared this interesting tidbit: One study found that even for men, recall for sexually explicit ads was less than 10%, but recall was nearly twice that for the non-sexually charged ads.

Steve Hall of Adrants puts it perfectly when talking about sex in advertising call it:

. . . a lame cop-out used by marketers who lack imagination to create more compelling work that will sustain itself beyond the initial titillation.

I couldn’t agree more, but what do you think?

Subscribe to this feed.

You know the ads on the right hand column of your Facebook feeds page?

Here’s a view I’ve received a lot lately:

Yeah. I know. You’ve seen these ads enough already.

Not sure why I’d receive ‘em…I’m not a gamer and there’s nothing in my profile that would lead you to believe I’d be interested in this.  In fact, I really don’t like seeing a gun or a crime scene every time I log on to Facebook.

So I’ve nuked these ads whenever I’ve seen them, using Facebook’s advertising feedback feature:

Now that’s what advertisers and users are looking for: Users can receive tailored ads, and advertisers can build a feedback loop for their creative.

Well, at least in concept.

You see, I decided to delete all the “Mafia Wars” ads that popped up, and they simply kept appearing—sometimes two to three of them at once. It didn’t seem to matter which reason I gave, they still littered my screen.

Look, I like a good mob movie as much as the next guy—but what if I really found these offensive? I’d be pissed.

This practice isn’t just anti-user, it’s anti-advertiser.

Somebody has said every way they can that they don’t want to see your ad—but Facebook is still serving them up?

Sure, the feedback widget says “Over time, this information helps us deliver more relevant ads to our users” but if you are given the option to remove an ad because it’s offensive, misleading or anything else on the list, shouldn’t your wishes be granted there and then? Are there any advertisers out there that really want to offend people over and over?

I started deleting the “Mafia Wars” ads weeks ago. And while they don’t pop up nearly as much, I’m still receiving them.

It’s nice Facebook is asking for feedback, especially since it appears they are using the information provided to improve the user experience…somewhat.

But they aren’t asking people to passively answer a poll regarding the color of their wallpaper. They are asking people if they find an ad offensive or misleading. If the user says “yes, this offends me,” the ad needs to disappear from their user experience—forever.

What do you think?

Subscribe to this feed.

He’s a muscle-bound, rough and tough lover of all things manly. She’s a petite girly girl that loves a nice glass of Chianti and long walks on the beach under the moonlight.

Learn how they meet, and what happens if you don’t recycle.

View on YouTube in HD

We dare you to litter in our parking lot. We double-dog-dare you.

ABOUT THE VIDEOS

This is the first of at least seven Responsible Marketing web shorts from Outsource Marketing. I say “at least” because we had so much fun doing these, we’ve already begun concept development on the next round.

As we launched our new responsible brand, we decided to crush any notions that Responsible Marketing might be boring—even prudish. Even the casual reader of this blog knows better.

While there are seven videos in this series, don’t expect them to focus solely on the Seven Keys to Responsible Marketing. Our goal wasn’t to preach responsibility.

Rather, it was to have some fun with the conflict every organization faces—that battle between commerce and conscience. Between doing the right thing or doing the other thing.

To accomplish this, we’ve put two characters you’ll know well into our everyday working environment to see how they’ll fare.  Eventually we’ll cover all “Seven Keys,” but it will be subtle and not in this round.

THE RESPONSIBLE MARKETING YOUTUBE CHANNEL

The videos will be be posted weekly here on the blog and on most video sharing platforms. We’ve given special treatment to our Responsible Marketing YouTube Channel where I’ve favorited over 300 marketing videos over the last few years. Subscribe if you dig quality and/or controversial marketing vids.

While you’re there, take as moment to rate and comment on Recycling: A Love Story.

Thanks for watching, and whatever you do remember to “respect Mother Nature!”

Subscribe to this feed.

We’ve been evangelizing Responsible Marketing for some time now, so infusing the idea into our new brand wasn’t just necessary—it was the responsible thing to do.

Here’s our deck from our Re-Brand event last Wednesday night.

Here’s our new logo and tagline:

A screenshot from our new Outsource Marketing website:

To see a little more of our new brand, here’s the deck from our event. View full screen for best results:

We know our goals for the new brand and what we’re trying to communicate. But of course, our intentions matter not.

The real question is, what do you think?

Subscribe to this feed.