Crafting Marketing Strategies: Wholesale Channels
Crafting Marketing Strategies: Wholesale Channels

Crafting Marketing Strategies: Wholesale Channels

Lead Author(s): Sam Holloway, Mark Meckler

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We start with consumer behavior and redefine wholesale marketing strategy for firms operating in a digital age.

Instructor's Notes: Strategic Marketing In Wholesale Channels

SYNOPSIS OF MODULE

Most strategic management textbooks ignore consumer behavior in favor of firm-level strategies and corporate strategies – we think this is a huge mistake!  Your capstone students will be so glad that you integrate marketing strategy into your business policy and strategy focused course. Hopefully, they get some of this material in another course, but here we teach them to integrate marketing strategy into the fuller business and corporate strategy.

Why would most textbooks ignore the important role of consumers in developing strategy? We feel it is because most of those textbooks are on their 10th edition and were originally written before social media infiltrated our society. Now, perhaps more than any other time in history, firms have to carefully observe both trends and details about consumers, learn fast, and quickly adjust firm behaviors and strategies.

In a highly regulated industry like craft beer, the challenges are even more acute. First, most beer is sold through wholesale channels – so your primary customer is not the consumer! That’s right, the primary customer for a growing craft brewery is a wholesaler. We remind students that wholesale sales is common across many industries, including footwear and apparel (Nike, adidas, Under Armour, etc.), semiconductors (Intel), and a myriad of other industries. What makes the craft beer industry so interesting is that beer is a perishable good – not a durable good like sneakers or golf shirts. Further, craft beer is usually not pasteurized, so it is much more fragile a product than traditional beers that are pasteurized. This makes for a wonderfully challenging situation of marketing a fresh and fragile product via wholesale channels to promiscuous consumers. Our first four content pieces in Module 8 describe the wholesale landscape and how to communicate with distant consumers:

​Now that you understand the wholesale channel, how can you design strategies to communicate with consumers, even though they aren’t your primary customers? We offer two podcasts that cut right to the heart of communication in wholesale channels:

White Paper: What Does it Mean to Listen to Your Customers?

Video: Rediscovering Market Segmentation

White Paper & Video: Craft Beer Consumers Seek Enchantment

Now that you understand the wholesale channel, how can you design strategies to communicate with consumers, even though they aren’t your primary customers? We offer two podcasts that cut right to the heart of communication in wholesale channels:

Podcast: Why Research Design Matters

Podcast: Marketing in a 4-tiered system with CraftNation.com

Last, how can you get a distant consumer to pull down your product from a very crowded grocery store aisle? This is especially hard when consumers have so many choices of technically equal products – just try counting the number of IPA beers in your favorite grocery store! The real secret is to get past the consumer’s rational brain and get to the core of their decision-making processes, which lie in their limbic and reptilian brains. Don’t worry; we’ve got you covered with two videos. First, learn how biology inspires action with Simon Sinek’s “How Great Leaders Inspire Action.” Last, you will explore the reptilian brain and its power over buyer behavior as Dr. Mark Meckler adapts the research of Clotaire Rapaille in our video, Understanding Culture Codes and Beer.

TEACHING/LEARNING OBJECTIVES

1. Understand the difference between thinking you know your customers and actually meeting with, carefully observing and listening to an adequate sample of each of your difference customer groups.

2. Learn what information you need from customers in order to properly adjust the business strategy and the value proposition.

3. Understand that emotional stand-alone benefits -- how a product or service makes the user feel are as valuable or even more valuable that the physical benefits. 

4. Learn the general idea of enchantment, and how it plays out in the beer industry. Be able to give examples of enchantment playing out in some other industries medicine, entertainment, etcetera).

5. Learn to not get market segmentation wrong. Know that market segmentation begins with and is dominated by the factors that drive the actual purchase decision at the purchase point. Other factors are secondary.

6. Learn what data is needed to gain market intelligence. Learn to design questions carefully around the variables you want to understand. Reinforce proper sampling. Get a realisitic understanding of the difficulty of doing this well, and the costs of getting it wrong.

7. form a link.

8. Know who the primary customers of business are versus the end users of their products and services. Discern between marketing to end users, and marketing to customers who are often wholesalers or other businesses downstream in the value chain between the focal business and the end user. 

9. Learn some strategies for marketing to wholesalers, and others down the distribution chain.

10. Understand the power of communicating “Why,” and the value associated with the beliefs of a business. Learn to reorder leadership and other communications strategically, by getting things in the right order.

11. Learn what culture codes are. Know some culture codes for the beer and brew pub industry. Understand how they should influence the value proposition. Understand the tactic of using culture codes in marketing communication.

First lesson. White Paper: What Does It Mean to Listen to Your Customers?

Second lesson. White Paper: Craft Beer Consumers Seek Enchantment: Does Your Business Facilitate This?

Third lesson. Video: Rediscovering Market Segmentation

Fourth lesson. Podcast: Why Research Design Matters

Fifth lesson. Podcast: Marketing in Wholesale Channels

Sixth lesson. Video: Simon Sinek Ted Talk - "How Great Leaders Inspire Action

Seventh lesson. Video: Understanding Culture Codes and Beer Industry Culture Codes Revealed

DISCUSSION QUESTIONS

Discussion Questions are embedded in the lessons in the book. Going over discussion questions during class meetings can be a great way to dig into the content. We typically begin each class by breaking students into small groups and having them discuss with each other how they responded to a discussion question for about 3-5 minutes, and then have each group report their thoughts. We do this for each of the lessons assigned.

Instructors can see whether students have participated in the discussion board in the lesson on the Top Hat Platform. You may grade responses or not for assessment. We recommend quickly grading responses with an A, B, C, D, F A for unusual and outstanding, B for a decent entry, C for a kind of poor entry but barely ok, D for any entry, and F if they did not do it. Taking 15 minutes to do this for at least one of the assigned discussion questions before class will help you get a pulse of where students minds are at.

For discussion questions to not take too much grading time, adjust the balance so that only one or two of the discussion questions is graded for quality of answer. That means, set most discussion questions to 1 for “participation” and 0 for “correctness.”

Part 1

Lesson 1

1. How can large companies like Nestle or Kellogg, Dupont or Nike listen to their customers? Who are their customers?

2. Can you think of a way for the listening/hearing part of the marketing function be distributed to every employee? What would have to also happen for this to be a significant help versus being kind of a waste of time and effort?

3. Activity: What would you say? If department heads had these different views about marketing priorities described above, and your were the leader, what could/would you say? Think about this for a few minutes, then write a short statement, no more than four well-thought out sentences, that you can also demonstrate in class (or at the next training meeting).

4. Should everyone contribute value for the customer? One of the questions above asks: "Do all employees see their jobs as adding value to the customer?" Do you think this is a good practice, or is it over-the-top in terms of customer orientation? If you are thinking something like "it depends" then what does it depend upon?

Lesson 2: 

5. In the example above, Harley-Davidson seems to being getting enchantment right, and Las Vegas Casinos (in general) are not. What could Las Vegas Casino do to start getting enchantment so right that (like Harley-Davidson) they grow a brand community filled with evangelists that will advertise for them?

6. Enchantment? Really? Do you think this sounds too odd ? Why? Do you think this is right on? Why?

Lesson 3

7. Imagine two moments. 

A) when you are walking into a store with the intention to purchase a beverage, probably beer. 

B) when you are standing in front of the aisle or shelves with lot of choices in the store about to put something into your shopping basket or cart.

What is the difference in what exact things your are thinking about in the two situations? Does the reason for the purchase matter, like if you are going to a small social gathering, or a big party, or just getting something to have with your own meal?  What do you think matters most, the reason for going to the store to make the purchase, the decision factor at the moment of selection, or the age of the person involved? All equal? No? Briefly explain your thinking.

8. Do you think that clear beer drinkers are fundamentally looking/needing/hoping for something different than craft beer drinkers? Do the two provide very different kinds of value? If yes, what might different value might those different segments be trying to add and provide?

9. Given your thoughts on the two questions above, and after watching the video, suggest one or two useful ways you might segments beer consumers, and the small differences in the value propositions you would have to make.

Lesson 4

10. What could happen to a strategy and specifically to the main goal of adding value, when data is not collected properly or the wrong data is collected?

11. What non-beer related business/organization do you think really has gotten research design right? Why do you think so?

Lesson 5

12. Many businesses have a similar situation, they are not directly selling to their end users. Sometimes a manufacturer's product is only a component of the end product, and sometimes it is not visible to the end user, like a vitamin in juice, or a cable in a tire, or software that helps run a cloud service. Give an idea or example of how a manufacturing firm can try to connect with end users to communicate value and drive demand.

Part 2

Lesson 6

13. Choose a business that you are familiar with, that was not discussed by Sinek in the TED talk. In no more than two are three short sentences, construct an impactful/attractive communication to the world that follows the "golden circle" principle.

14. What do you think is the why and the how of the craft beer industry that makes it feel like a "movement" or a "revolution" rather than a fad? Do you think this applies, or could apply to a broader "craft-businesses" trend?

15. Comment on the following: What value  gets added, and for whom, by understanding/applying the golden circle principal?

Lesson 7

16. Watch Rapaille's video lesson (hyperlinked in the white paper) on three brain theory. It takes about 32 minutes. What do you think, do you believe it? What was not so convincing, and what was quite convincing?

17. Do a bit of research on Clotaire Rapaille and culture codes - can you contribute one of Rapaille's culture codes?


Supplemental Readings/Materials

 Fortune Magazine – A Craft Beer Empire Is Being Built

Bloomberg.com Can Craft Beer Survive AB/In-Bev (Video)

BusinessWeek.com  The Plot To Destroy America’s Beer

Time.com: The Frothy Backlash to Budweiser Ad Mocking Craft Beer