Utilising third-party intermediaries

as innovative way to drive your

Brand in Emerging Markets

InnoCos Conference, Véronique STEPHAN

Rome, May 23rd, 2014

Why I am talking to you today

• Efficient go-to-market model is required to succeed in new markets

• Third Party Sales Intermediaries are often underestimated

• Sales Intermediaries can provide innovative solution

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The background

• In today’s economic context, generation of revenues is a priority

• Revenues to be created by geographical expansion

• Emerging markets identified as a great opportunity

• More risk averse culture to protect current profit

• Essential to strive for cost efficient and low risk market entry

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Key requirements for a successful launch

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What do we need to understand?

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What are the local commercial

policies?

What are the sales channel/

retailers?

What are the local

commercial policies?

What is the strategic

role of the channel/retailer?

Enablers of sales executional capabilities

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Adequate sales structure

Passionate and skilled sales force

Negotiation power with the trade

Relationship to the trade

internal

external

We need a Mr. “Right” organization for efficient go-to-market

7

Muscle Mr. “Right”executional skills

Brain commercial knowledge

We need to make a decision: own or rent?

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Shall we rent the services of Mr. Right

organization at a third-party?

Shall we build our own Mr. Right organization?

In-house Outsourcing

Different solution to outsource the selling function

Involvement level + services

Cost $

Sub-distributor / Non exclusive

Exclusive distributor

Exclusive distributor with marketing budget

Full Market ManagementAccess outsourced

Trading Relationship

providing Access

Wholesaler

Agent model

Key benefits of outsourcing Mr. “Right” organization vs. full-fledged own organization

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Speed

Financial

Limited HR challenge

Focus on brand-building

Flexibility

Quality

Saving time and accelerating launch

.No need to establish legal entity.Limited recruitment.4 months to launch with a distributor

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Various compensation models

Conventional model

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Innovative modelRevenues based on

market share company profit

Mixed model

Flat fee for services

Mark-up/Margin

Financial benefits

.Lower cost.No upfront spending, “pay as you go concept”.Less financial risks.Easier to secure money collection

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Third-party need to be managed properly

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1. Market evaluation, distributor selection

2. Appointment. Legal, Training

3. Management. Goal setting, Motivation, On-going training

4. Termination

Changes in the retail environment impacting the profile of the distributor

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Yesterday

• Unstable economy• Fragmented trade• Few local KAs• Focus on

distribution, not display

• Technical distributor capabilities

Today

• Maturing free market economy

• Rapidly increasing trade concentration (top 10>50%)

• First international KAs

• Competition among retailers

• Focus on display and distribution

• KAM required from distributor

Tomorrow

• Growing economy• High trade

concentration (top 5>50%)

• More international KAs

• Free cross-border trade

• Focus on display, not distribution

• KAM skills as key success factor

5 key success factors to work with TPI

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Relationship based on partnership and trust

1.

• Understand the role of your brand for the distributor

2.

• Clarify roles and responsibilities

3.

• Share and align on brand potential and plan

4.• Strive for transparency

5.

• Educate your own organization on specificities of the go-to-market model

• Clarify roles and responsibilities

• Share and align on brand potential and plan

• Strive for transparency

• Educate your own organization on specificities of the go-to-market model

• Understand the role of your brand for the distributor

Misconceptions towards distributors

• They are an “intermediate step” until we reach critical mass

• They do not “own the business, they do not feel it”

• Their staff are not as competent or well trained as us

• Distributor margins are too high, these costs reduce our top line

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Conclusion

• Key to have a “Mr. Right” organization to ensure commercial execution

• Often more beneficial to outsource

• Innovative and tailor-made

• Specific distributor management approach

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GRAZIE