Wisdom is better than Weapons

Volume 2 Letter 10

Wisdom is better than weapons of war and one mistake can undo many things done well.

The strategy was brilliant, the market segmentation was perfect and the product was going to be well positioned to move from a niche product to a mass market. Developed in the back of a pickle store in Queens NY, Snapple drinks had blossomed into a company with over $600 million in sales. Most of these sales were through lunch counters and delis as the drink was unavailable in supermarkets and other mass outlets. Enter Quaker Oats who paid 1.7 billion for the drinks company. With their sites clearly set on the mass market, Quaker Oats looked to leverage their mass marketing strength and take the brand to new heights. In 1997 after several years of falling sales the product was deemed a total flop. What happened? Did people’s taste for Snapple change?

Quaker Oats had a very strong mass marketing strategy and felt they could take the Snapple brand and make it fit. Quaker Oats however made a serious mistake with their mass market approach. They ignored their other customer, the local distributors and sales people. These are the people who supply the small delis and lunch counters where Snapple sales were soaring.

The Snapple group of drinks had given local independent distributors more identity. The outrageous packaging and what were called in one magazine “adventurous flavors” gave these independent distributors something unique. This wasn’t just another drink – another Coke or Pepsi – it was a revolution!

Ignoring your customers is never a good idea. Often we forget that distributors and the sales force although not end users are equally customers. Strategies that ignore or treat lightly the needs of these groups are both ill conceived and incomplete.

Sales people and distributors know that their value is determined by two things. The strength of products or services they represent and their relationship with their customers. Of these two, the relationship with their customer is paramount. To test if this is true in your company, see how easy it is for sales people to move from one company to another within the same industry. When these people move, they don’t take your product with them but they take something far more valuable – your client (or as they might say – their client) with them.

When Quaker Oats took Snapple to the mass market they all but ignored the independent distributors. With their eyes clearly fixed on the wrong customer Quaker Oats eventually sold the troubled Snapple division for 300 million incurring a 1.4 billion dollar loss on their investment. What did the new buyers do? What any good market strategist would do – they focused on their customers – both the end users and the distributors. Sales once again soared and they in turn sold the Snapple brand of products to Cadbury Schweppes three years later for cool 1 billion.

Remember the internal market strategy aimed at the sales force and distributors is as important as the external one aimed at the customers. Your internal marketing campaign must:
1. Ensure that the company systems and company structure are aligned to drive the strategic initiative
2. Communicate to the sales force the vision and goals for the product or service
3. Provide your people the skills and knowledge to properly promote your product or service
4. Align the sales force and distributors’ compensation with the goals of the product or service
5. Ensure that there are sufficient resources to back up your product or service with promotional materials, events, technical support etc.

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