There are many different names for distributors’ promotional programs, but the concepts are all similar. Natural products consultant Bob Burke identifies the six basic programs for natural and specialty distributors and explains how they work. Assess your finances and sales to determine which program best suits your needs. – Bob Burke
Natural and specialty distributors have different names for their programs, but the following list will help define the general concepts:
1. Catalog/Price Book: This is the main catalog that the retailer uses for ordering products. The product name, unit size, distributor code, wholesale and Suggested Retail Pricing (SRP) are included in these listings. Catalogs are usually updated quarterly and are a good advertising vehicle for introducing your products to the retailer community.
2. Newsletter/Monthly Specials Bulletin: This is a listing of new products and monthly specials. Insertion of product selling information during the same month that a product is on sale is a great way for your product to get retailer exposure and gives an incentive to purchase the product.
You should be in contact with the advertising department eight weeks before the promotion begins to request that the ad appears adjacent to the product description and/or promotional announcement.
3. Consumer Flyer/Flier/Circular: Distributors will solicit high volume, well-distributed products for participation in these monthly programs. Mass-market retailers produce weekly listings of what is on sale in their stores during a particular week. These are delivered to the consumer through inserts into the local newspaper, and are available in-store.
The distributor solicits participation from the vendor community, sets the deals, price points and designs the layout of the circular. Space is left at the top for the individual store logo to be printed during the production process. To the average consumer, it looks as if the store is doing its own store-dedicated circular (just as their mass market competitors do).
These programs can help force distribution into the stores, as the retailers feel compelled to carry what is listed in the “flyer” for the month. They generally sell far more product (three to four times) than standard promotions listed in the newsletters or monthly special bulletins previously mentioned, but the programs tend to be more expensive (higher promotional discounts, plus ad fee). You need to determine if your expected sell-through justifies this program. Most distributors are willing to negotiate the cost of these flyers based upon frequency of participation and other advertising commitments.
4. Case-Stack programs: A program available to manufacturers of shelf-stable products, these deals are listed in distributor catalogs and monthly newsletter or specials bulletins. As the name implies, retailers can get increasing discounts by purchasing larger quantities of product. These deals can be customized to last one month to one year.
For the right product, these can be highly effective promotional vehicles, but the program should be monitored closely to make sure that it is resulting in incremental sales (through increased consumer promotion or reduced price points) and not just going into the retailers’ pocket. If sales do not increase proportionately, the program should be reevaluated.
5. Shipper Programs: Manufacturers of shelf-stable products may choose this program to ensure that their products get in-store visibility. Manufacturers usually build a display that serves to ship and merchandise their products. These “shippers” are an excellent vehicle for securing prime retail space, good price points and consumer awareness. The “shippers” can be shipped through distributors, or the display itself can be shipped to the store and the product ordered through the distributor.
Take great caution when cutting your distributor out of the loop by shipping product direct to their accounts. It can severely impede the progress of growing your distributor relationships.
This article is an excerpt from the Natural Products Field Manual, Sixth Edition, a guidebook and resource compendium for entrepreneurs in the natural products and specialty foods markets. Authors Bob Burke and Rick McKelvey describe it as “the book we wish we had when we were starting out.” The Field Manual is a no-brainer for anyone bringing natural, organic or specialty products to market. For more information, click here.