How a Strong Brand Improves Leverage in Channel Partner Negotiations

iStock_000012442006MediumIf an industrial tool distributor wishes to establish brand credibility and make significant sales, they will seek out relationships with premium brands such as Snap-on and BOSCH. If a sporting goods store wishes to attract hunting enthusiasts, they will need to carry premium brands such as Beretta, Hornady and Leupold. If a fine dining restaurant wishes to serve their guests premium coffee, they may strongly consider serving Starbucks.

Sellers throughout the distribution channel intuitively know which brands they need to offer if they wish to grow their business and increase profits. They will be much more flexible on terms with premium brands, and not so much with those lacking a powerful, relevant, competitive distinction. Nobody wants to inventory products that gather dust.

Premium brands do not need to jump through flaming hoops to convince distributors and retailers how and they would benefit from selling their products. Brands that have achieved such an elite status have earned the ability to set their own rules for terms and pricing. Leading brands often force retailers to agree to carry no competitive products. For example, a restaurant may have to choose between offering Pepsi Cola and Coca-Cola.

If you’ve ever wondered what the ROI would be of building a strong brand and reputation, this is it. If you still aren’t convinced, think about how GoPro, the world’s most versatile camera, has created a unique market, earning the privilege of erecting branded countertop and floor displays at big box retailers. They have quickly grown to be one of the world’s top selling brands.

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Premium brands are sought after because they are known for consistently delivering on their promise of meeting demanding end-user expectations, and have, thus, made their competition less relevant in one or more categories. 

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Of course, it’s nearly impossible to be a leading brand in every desired category. If we look at the auto industry, BMW, Mercedes and Audi are all high-performance luxury cars with somewhat similar price tags. Mercedes is better known for luxury, BMW is better known for performance, and Audi is better known for its quattro® all-wheel drive technology. Although all three are premium brands, each has competitive distinctions, and all have earned high scores in brand loyalty. And, those loyal customers are more than happy to pay a premium to drive such fine machinery.

So, the question is, where does your brand fit? Is yours one that is sought after in your industry? Is your brand one that is easy and profitable for reps to sell? If these are areas where your brand needs work, it may be the right time to measure the health, relevance and influence of your brand to understand exactly where you stand. If you’re interested in getting started, let’s talk.

scott@seroka.com