Third-party intermediaries can provide an innovative solution for driving brands in emerging markets in a cost-efficient way. Outsourcing sales to a local "Mr. Right" organization through a distributor can provide benefits like faster market entry, lower costs without upfront spending, reduced financial risks, and easier money collection. However, distributors still require proper management through processes like market evaluation, goal setting, ongoing training, and clarifying roles. They are not just an intermediate step, and focusing on developing a partnership based on trust and transparency is key to success.

1. Utilising third-party intermediaries as
innovative way to drive your Brand in
Emerging Markets
InnoCos Conference, Véronique STEPHAN
Rome, May 23rd, 2014

2. 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
2

3. 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
3

4. Key requirements for a successful launch
4

5. What do we need to understand?
5
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?

6. Enablers of sales executional capabilities
6
Adequate
sales structure
Passionate and
skilled sales force
Negotiation power
with the trade
Relationship
to the trade
internal
external

7. We need a Mr. “Right” organization
for efficient go-to-market
7
Muscle Mr. “Right”
executional skills
Brain
commercial knowledge

8. We need to make a decision: own or rent?
8
Shall we rent the
services of Mr. Right
organization at a
third-party?
Shall we build our own
Mr. Right organization?
In-house Outsourcing

9. Different solution to outsource the selling
function
Involvement level + services
Cost $
Sub-distributor /
Non exclusive
Exclusive
distributor
Exclusive
distributor with
marketing
budget
Full Market Management
Access outsourced
Trading
Relationship
providing Access
Wholesaler
Agent
model

10. Key benefits of outsourcing Mr. “Right”
organization vs. full-fledged own organization
10
Speed
Financial
Limited HR challenge
Focus on brand-building
Flexibility
Quality

11. Saving time and accelerating launch
.No need to establish legal entity
.Limited recruitment
.4 months to launch with a distributor
11

12. Various compensation models
Conventional model
12
Innovative model
Revenues based on
market share company profit
Mixed model
Flat fee
for services
Mark-up/
Margin

13. Financial benefits
.Lower cost
.No upfront spending, “pay as you go concept”
.Less financial risks
.Easier to secure money collection
13

14. Third-party need to be managed properly
14
1. Market evaluation,
distributor selection
2. Appointment
.Legal,
Training
3. Management
.Goal setting,
Motivation,
On-going training
4. Termination

15. Changes in the retail environment impacting
the profile of the distributor
15
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

16. 5 key success factors to work with TPI
16
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

17. 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
17

18. 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
18

19. GRAZIE
19