In MYPRODUCT56 I detailed one of the most important and complex professional challenges throughout my career.
My involvement in the commercial support provided in 2013-2015 to Rhone Vet, a company responsible for distributing and selling Merial’s veterinary products in Hungary, was materialized actively and directly on multiple areas and functions: management, operational, commercial, sales, marketing, communication, human resources, budgets , policies, organization chart, professionalization sales team.
Analysing the competitive environment for Hungary’s anti-parasitic market, I immediately noticed that the Frontline Combo shelf price was about 40-75% higher than its main competitor Avantix (Bayer).
As the price, promotional offers were almost decisive arguments in the pet owners buying decisions and Frontline Combo brand was in an eroding phase, I realized that this price gap represent a major handicap that will eclipse on medium term all commercial efforts and investments made by the company in its flagship brand.
In order to understand the complexity of this problem, we must keep in mind that the final shelf price is composed by producer price + importer mark-up + sub-distributor mark-up + retailer mark-up (cabinet, veterinary pharmacy, pet shop) + VAT.
In this matrix, Rhone Vet as an importer could only act on its mark-up, but taking into account the price gap mentioned above (40-75%), any action assumed by Rhone Vet alone would have brought no significant impact.
I have explained this problem in the following way. Suppose you want to buy a car. You are thinking to BMW or Mercedes. Strong brands, well made cars, the same class, almost similar features, close driving experiences. One of them costs 50,000 euros and the other 75,000 euros. What will be your choice? Except brand lovers, it is very likely the natural option to be the 50,000 euro one.
Consequently, for the first time I introduced into the marketing plan a complex matrix of actions that directly targeted the reduction of the price gap, among the developed initiatives being:
– offers and promotional mechanisms for pet owners (TV, online campaign with 25% discount for Frontline Combo purchase)
-partnerships, special projects with sub-distributors and retailers (cross selling)
-professionalization of the sales team (presentations and specialized discussions on prices, discounts, using the Formula Price-Discount tool, an innovative model created by me in xls, easy to use and generating in few seconds comparisons between promotional offers – see MYPRODUCT52)
-conferences to veterinarians, beside the technical medical topic included for the first time a “commercial” presentation sustained by me in which I deepened the issues regarding the level of acquisitions (value, units), profit, number of clients and number of days you get a certain profit, break even rate, etc.
Beyond these initiatives, I consistently debated in front of Merial the major implications of the price barrier for a representative anti-parasitic range from our portfolio, which finally resulted in an important support accorded by producer to Rhone Vet.
From confidentiality reasons, I will not detail the actions and the size of this support. I can only tell you that from the “incubator of ideas” sparked the initiative to future pass from the sale of the mono-pipette to the sale of the product in 3-pipette packaging too, with direct influence in the final price per treatment.
After years of declines, Frontline Combo sales registered an upward trend, marked by quantitative annual increases of up to 20%, which confirmed the strategic approach for lowering the price gap.
Try to define clearly, concise barriers and critical factors that can have a significant contribution to the success of your operations.
Do not think how difficult, inappropriate or unlikely is the solution to solve a situation that greatly affects your business.
Strategically address these dimensions and adapt your tactical plan to these realities.
And act now because tomorrow may be too late.
Notification: MYPRODUCT reflects my real professional experience and expertise as well as my subjectivity. I do have a profound respect for all the companies I collaborated to and for all the people I worked with. It is not my intention to approach any sensitive, confidential or offending information related to companies, projects or people. If you the reader deduct or recognise companies, projects or people in my examples, I kindly ask you to respect MYPRODUCT and my professional and ethic approach and to not share any detail, information, situation, name, company.