Distribution: The Inconvenient Truth for Brands

marketing thingy blog image - distribution

I was having a conversation recently with a woman who is SERIOUS about fashion. She dresses impeccably, and cares pretty deeply about the name on the tag inside every skirt, blouse and shoe she wears. I posed a question: “what if you could get (insert uber brand here, like Christian Louboutin, for instance) at a discount retail outlet like Costco? Would you do it?”

She shot back: “NO WAY.”

Now, pardon the “focus group of one” here, but this seemed to shed some light on an interesting sub-topic of marketing, which seems especially important considering it also impacts one of the four cornerstones of our entire industry.

As our conversation went on, it turned out that even a significant savings of 10-15% wouldn’t be enough to convince her to go to a discount retailer for the toppermost brands she so covets. She also believed that most people (men AND women) who are serious about fashion would agree.

As it turns out, “where” may be as equally important as “what” when it comes to the experience of brands, and not just fashion brands. Distribution strategies (also known as “Place” in marketing 101) help consumer brands reach customers, typically creating a factor of convenience or an experience of excellence, depending on the brand and the target audience. But this paradox seems to touch so many aspects of marketing, such as price, product, place, brand ethos and even consumer perceptions. Let’s examine.

The Price Question
Many brands are sold at retail outlets and also online through many e-tailers, which may include the brand’s own website. (This is true in almost every category: fashion, appliances, electronics, home goods, food and beverage, health and beauty, etc.) In some cases, price shopping is a driving factor. In other cases, it’s not. Some brands don’t discount because they built their brand to own the high price position, or (with a case like Apple) the prices are simply non-negotiable. (You can’t get a “cheaper” iPod anywhere – the prices are fixed.) So unless the price is steeply discounted for a brand at one outlet over another, the consumer will likely choose to shop at a distribution point (online or offline) that is either a.) convenient or b.) preferred.
So, regarding price, the distribution strategy matters.

Brand and Perception
For a high-end brand (like Louboutin,) there is a perception that it can’t possibly be sold at places other than the most selective boutiques. That’s part of the brand’s equity. But for mass market brands, and even discount brands, the locations still have to match up with the brand personality. The distribution center, then, becomes a very important aspect of building the brand. (You won’t hear THAT much from your agency!) It’s just as weird to find Louboutin in Costco as it is to find Wrangler or Lee jeans at Nordstrom. It’s just a disconnect that can impact the brand, and for that matter, the brand perception of the retailer, too!

Note: In other cases, the brand and the distribution center are inextricably linked to cement the brand and its perception. Think Old Navy.
So, regarding brand perception, the distribution strategy matters.

The Consumer Experience
Finally, in some cases, the consumer experience gets folded into the overall brand offering. If you’re a high end fashion brand, you want to manage the entire experience of how the consumer goes about acquiring their next piece of your clothing: the way the store looks, the way the salesperson greets and works with the consumer, the fitting room experience, the checkout and most certainly the bag or packaging she’ll walk out of the store with. (Note, this is different than product packaging, which is a discipline unto itself.)
So, as it turns out, where DOES matter to consumers, across almost all points of concern.

It’s time for more marketers and agencies to get with this inconvenient truth, and start building brands to include the distribution ecosystem as a key brand building block and cornerstone of brand maturity.

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2 thoughts on “Distribution: The Inconvenient Truth for Brands

  1. David Adelman April 25, 2012 / 2:19 pm

    A limited, slightly out of reach of the common folk distribution strategy is key for luxury brands. If Louboutin signed a deal to design a line of products for Walmart it would destroy the brand entirely. I think Burberry went from somewhat lux to mass and now there is no real high end equity for them anymore.

    As we discussed, having a portfolio management strategy like the Gap is key; Old Navy for price conscious, Gap for moderate price, Banana Republic for slightly higher end and different styling. Their newest outlet is a higher end Athletic store, Athleta.

    • Nader Ashway April 25, 2012 / 4:16 pm

      Excellent points, David. I see many fashion brands (even in the high end) trying to branch out into mass market distribution, and the early returns are exactly as you described: a dent in the brand equity.

      Smart marketers would launch a challenger/flanker brand and NEVER make an association with their high-end brand. Behind the curtain, the enterprise would realize greater operational efficiency (one manufacturing plant churning out two lines reduces overall costs across all SKUs,) and improved distribution (more options across both brands=more leverage.) In front of the curtain the high-end brand maintains its position (even if that means exclusivity) while the newer lower-end (or price conscious) brand begins to fight for position.

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