How does Dr Pepper grow its market share at twice the rate of competitive companies? The answer is by pulling as well as pushing.
"A manufacturer that only thinks about pushing product into the marketplace is shortsighted and ultimately doomed," says John Farrell, senior director of channelfor Carlson Marketing Group. "Companies have to be concerned about helping the dealer to move product all the way through the pipeline."
That's how it works at Dr Pepper, where the technical term for the company's multilevel incentive approach is "channel marketing," referring to the channels of distribution through which a company delivers its goods or services: the direct sales channel (the sales reps); the indirect channel (independent third-party companies such as dealers, distributors, brokers, and others) who distribute the product; and ultimately, the consumer.
"It is usually the dealers, not the manufacturer, who are the primary interface to the marketplace--and the company's eyes and ears to the market--yet they're often overlooked in traditional sales incentives," says Farrell. "They not only deliver the product and service to the customer, but also the brand promise."
The Push/Pull Approach An important key to creating successful channel marketing programs involves identifying and rewarding both the "push" and the "pull" components within the sales distribution channel, says Farrell. The push refers to the "sell": You reward the company salesperson for selling. The pull refers to the "buy": You reward the dealer and the consumer for buying.
Dr Pepper's incentive programs cover all of the push/pull touch points in its sales distribution channels: bottlers, retailers and foodservice distributors, and consumers. The company holds about 60 regional incentive or special event programs; four national travel incentive programs, and up to 10 sporting or entertainment event incentives yearly. "Our goal is to grow consistent with the carbonated soft drink category, and to make the Dr Pepper brand a priority in the minds of bottlers, retailers, and consumers," says Tamara Quilty, manager of corporate incentives for Dr Pepper/Seven Up Inc. in Plano, Texas.
"This means an enhanced awareness of the product's features and benefits as well as an awareness of the program itself," says Farrell. He predicts a potential increase in "mindshare" of more than 50 percent from push/pull channel marketing programs, a figure he's ascertained from pre- and post-program analysis.
A Relationship Builder Building relationships is also an important part of channel marketing incentive programs. For Dr Pepper, it's critical, says Quilty. For example, in its "Top Performer" program for bottlers, operated by Carlson Marketing, "Our senior-level bottlers bond with each other and with the company executives because of the trip they take together. The program helps us to differentiate ourselves from our competitors and maintain the prestige of our products. Every year we see an increase in volume, sales, and loyalty," Quilty says.
Dr Pepper's sporting and entertainment events, which bring together a mix of push/pull players, are also relationship builders. A typical program might be a corporate-sponsored trip to the Super Bowl or Rose Bowl for bottlers, distributors, and consumer contest winners. "Our sporting and entertainment events become a way for all of the sales distribution channels to build relationships with each other," comments Quilty. "There's definitely a synergistic effect."
Making It Work Tips for developing a successful channel marketing program, from Carlson Marketing Group's John Farrell:
* Define--Pinpoint your push/pull objective.
* Communicate--Promote the program frequently.
* Educate--Design an effective training program. Distributors often carry products from competitive companies, so it is crucial to capture their mindshare. Make sure that all the third parties in an indirect channel are well versed in the benefits of your company's products and services.
* Measure--Track every individual's performance and evaluate the return on investment.
* Reward and Recognize--Develop incentive programs that provide tangible symbols of accomplishment, including group and individual travel programs, merchandise, and recognition items.