dlehnersauder

Craig DeWolf, a channel management professional, wrote a blog post titled “The 3 Basic Tenets of Channel Marketing” which breaks down the 3 most important aspects of channel marketing that are often overlooked or violated. The 3 tenets are:

1)The channel is made up of independent businesses—each having their own agenda.

2) Channels are about efficiency–they should be the preferred alternative to you engaging customers directly.

3) Your channel strategy should be aligned with how, and where, your customers want to buy.

His blog post reminded me of a blog post I wrote last year about Best Buy’s difficulties in managing their marketing channel during the economic recession. After reading DeWolf’s post, I would like to reexamine Best Buy’s channel strategy failure as defined by the “3 Tenets.”

1)The channel is made up of independent businesses—each having their own agenda.

Best Buy failed to fully align their market strategy with their suppliers. Their largest failure in this respect was recognizing the differing lifecycles of their partners’ products and adjusting their engagement strategy accordingly. Best Buy typically orders their products 6 weeks before they want the stock on shelves, which is often not enough time for suppliers to meet demand. Demand declined during the recession and retailers cut back inventory orders so suppliers frantically decreased production. Retailers were understocked and unable to meet consumer demands and upkeep with product lifecycles – which is relatively short in the consumer technology marketplace.

2) Channels are about efficiency–they should be the preferred alternative to you engaging customers directly.

“Unsold inventory only loses value as newer technologies hit the market.” Therefore, efficiency is essential. Best Buy’s indirect sales model is becoming outdated. In the age of online sales, consumers can peruse through a larger variety of consumer electronics and components at cheaper rates than offered through Best Buy’s retail experience. An indirect marketing channel will result in more inefficiency than a direct model – with more levels comes a longer process and higher final price on the final good. Best Buy has failed to effectively address this issue in their channel strategy.

3) Your channel strategy should be aligned with how, and where, your customers want to buy.

Predicting consumer trends is a very difficult aspect of marketing. Because Best Buy is not a trendsetter – but simply a retailer – they must market themselves as completely up-to-date in technology trends. DeWolf states that Best Buy is dying because “[it is] no longer the preferred shopping outlet for consumers.” Best Buy has not aligned their channel strategy to efficiently move their products to end users – a trend that began during the recession. With online sales, direct sales and various other channels for consumers to buy products stocked in Best Buy’s stores, Best Buy is failing to deliver the shopping experience favored by consumers. This is largely due to their antiquated channel strategy.

Though I can point out some of the flaws in Best Buy’s marketing channel, I do not have the expertise (or appropriate word count) to offer solutions. Best Buy is experiencing what countless other companies are experiencing – uncertainty in an everchanging market. It’s going to take a team of highly trained professionals to solve Best Buy’s channel problems. I just hope I got the ball rolling…

Daniel Boissonneau-Lehner