Key accounts, key solution?

If you didn’t know until now, the era of big retailers is just beginning. But you already knew this because you are advised readers. We assist at the fulminant development of chains and at a growth o buyers. We assist at a battle between retailers and their politics to maintain low prices and producers who want profit and are obliged to keep prices low in order to be present in key accounts.

Very well, I say, as a week end buyer who has to chose between lots of options and is happy to find the mustard a little cheaper. Or the diapers for the little one. Or bread. Or anything.

Nevertheless, what does result from the giants’ fight? Pressure on prices will determine the orientation on cost efficiency. Cost efficiency will be achieved, mainly, through reducing quality, through ingredients, through reduction of producing time, and in the best case scenario through reducing the time” road to market”. The marketing budgets will grow in order to maintain the brand at shelf( also due to the competition) and to determine retailers to buy them. Usually the listing is done taking into consideration a few factors: price, product, volume, delivery frequency and brand. The vicious circle closes at consumer who will pay less on poorer quality, but a lot of packaging, marketing and advertising. The producers already depend on retailers to make sale volumes, some of them making 40 % of the profit share in this way.

The dependence creates privileged relations but also pressures, especially on prices. The question is how big will the impact of dropping the quality on brands? Brand are the sensation that transcends the inner qualities of the product, but does not exclude them.

There are consumers who give up certain fruit jam because they have noticed that the percentage of fruit has dropped. I have give up a certain cigarette brand after many after many years of smoking it, because of the lower tobacco quality, the packaging quality and changed flavor.

I have tried to buy cheaper diapers( they’re all the same, aren’t they?) for babies, but I came back to the expensive ones because my wife made the difference and I preferred to pay the price. You will say that in Romania we do not have an aware consumer and the price matters a lot.

You will say that people still have money to spend-make a counting, only in Cluj it is estimated that people spend 100 Ron daily on everyday products, which means 500.000 inhabitants x 100 RON. Agreed, but this attitude is changing even if the 2L PET economy beer volumes keep growing.

I think there are still solutions because I notice that some of the producers chose the non-compromise way. A big chicken meat producer gave up, without negotiating, to deliver products to a big retailer the moment the last asked him to drop the prices. After one month, the deliveries continued at the retailer’s request because the brand was famous and the producer had the possibility to deliver almost any quantity.

Alti producatori pot alege calea ponderarii vanzarilor prin canalele clasice cu retailerii pentru a nu depinde de acestia, cunoscandu-le apetitul pentru volume mari si preturi mici. Toata problematica trebuie examinata strategic (si) prin prisma brandului.

Other producers may chose the share way for sales through classic channels with retailers in order not to depend on them, being aware of their appetite for big volumes and low prices. The whole problem must be strategically examined through the means of brand.

The producers are interested in selling and profit, regenerated in long time, these being facilitated of everything that is not tangible, which is brand. And the price, as we all very well know, is not the reflection of costs, but for those who do not have a solid strategy.

This is why strategy, construction and brand management also depend on distribution channels in order to get to the target public. The behavior and desire examination, combined with the field realities, and also with trends are essential for a coherent and valid strategy.

A question may be asked: can a brand be built based exclusively or mostly on the “ key accounts” presence? I incline to say no because the experience of the consumer with the brand becomes limited.