Channel strategy was the main topic of discussion at ACG New York’s 3rd Annual Consumer Brands Conference on Oct. 18, where panels included Lou Marinaccio of North Castle Partners and Victoria Lozano of Crayola.
One panel, which focused more on how a channel strategy could affect M&A, included: Fuad Sawaya, managing director and co-founder of boutique investment bank Sawaya Segalas & Co. LLC; Jack Belsito, group chief executive of luxury water distributor Voss of Norway ASA; Brett Brewer, chief executive of weight-loss product Sensa; Marinaccio, managing director at private equity firm North Castle Partners; and Alexander S. Panos, managing director at private equity firm TSG Consumer Partners.
Sensa, a weight-loss product, started exclusively online and stayed there for 18 months to build buzz before it entered other channels, Brewer said. That allowed the company to get real-time feedback before it expanded into radio, infomercials, print and eventually retail. The product needed to establish a direct relationship with the consumer, Brewer said.
Sometimes, a strategic buyer is attracted to a product just because of its competence, the panel said.
Proctor & Gamble wanted to buy Doctor’s Dermatologic Formula from North Castle and basically asked how much they needed to pay, Marinaccio said. Estee Lauder did something similar for Smashbox, Panos said.
Panelists agreed that “runway” needs to be preserved for the next buyer – there needs to be a place for them to expand.
Sensa is taking its time growing in Europe, because even though it could expand into a bunch of countries, the company doesn’t know that it makes sense to take on a big international challenge when there are partners who’ve done it a bunch of times already. The company now sells in a few European countries, Brewer said.
Belsito agreed that leaving expansion room is a good thing. Other products have come to Voss, which makes and markets water for the high-end luxury and restaurant markets, and asked them to sell their brands. Voss has declined, as it’s focused on its own brand, Belsito said. But having those options will always be valuable, he said.
The other panel, which included: Lozano, vice president of corporate strategy and development for crayon-maker Crayola; Alison Chaltas, executive vice president of shopper and retail strategy at marketing research agency GFK; Adrian Barrow, head of planning for marketing-communications company JWT; Michael Ferrara, former senior vice president of marketing and sales strategy for Coty, which sells beauty products; Cindi Goldberg, growth strategist for pharmaceutical company Boehringer Ingelheim; and Matthew M. Poli, vice president of marketing for brand developer Emerson Group; talked about the impact the location of the product, such as Macy’s or WalMart, has on branding and sales.
The place where a product is first launched is critical, experts said. If a product is launched at Macy’s, then higher-end stores like Neiman, Sachs, Nordstrom or Bloomingdales may look at it like it was launched in WalMart, Ferrara said.
For the launch of pop singer Justin Bieber’s fragrances, which was a perfume placed in a dog-tag necklace and sold at WalMart, Ferrara had $20,000 dog tags made for Bieber and “couldn’t get him out of the mirror.”
Bieber was photographed in the jewelry. Eventually his girlfriend, pop singer and actress Selena Gomez, was also photographed in the tags. When Coty developed a cheap version and put them on the brand’s website, it sold almost as much online as it did at WalMart stores because of all the buzz, Ferrara said.
The panel offered the audience one “do.” Barrow suggested people acknowledge the power of communities and figure out how to meet a community’s needs.
Taking time to figure out the right channel strategy is crucial, Ferrara said. Golfberg and Lozano agreed with him – suggesting that marketers think through decisions and be pragmatic, respectively. Audience members were also reminded to remember the three C’s – consumer, category and competition.
The panel also discussed how small brands should consider taking their ideas about product display to companies like WalMart, who receive ideas from big companies like Nestle or Proctor & Gamble, but don’t want to be the “Nestle - Proctor & Gamble store,” Chaltas said.
“They want those fresh ideas,” Lozano said.