Private brand: Non Compete
NON-COMPETE BRANDING CHALLENGE LIMITING GROWTH OPPORTUNITIES
Project Outline:
A company with a supplier philosophy to not compete directly in the sales and distribution of products that its customers take to market can limit its potential for growth. More importantly by not being involved the manufacturer does not gain any of the important market information obtained and necessary for developing and delivering successful products and programs to the marketplace for its customers. I is always at the mercy of its customers to provide any information and the data provided is usually proprietary. The client needed a program that enabled it to maintain its non-compete philosophy while at the same time be able to participate in the marketplace to earn and learn.
Project Outcome:
The strategy developed and deployed required an understand of the term non-compete. Once this was clearly defined and understood, an initial product brand strategy was developed, tested and deployed. The fist brand developed which I will call “R” included a broad range of popular products. As a private brand manufacturer the client received many requests from small companies that wanted to develop its own brand but could not execute it due to the costs associated with developing packaging, labelling and supporting cataloguing. Once this was completed, then a distribution network was setup through a sales agency to enable the distribution and marketing of the “R” brand. making the “R” brand gave smaller marketing companies the opportunity to test their ability to market and sell a private line of products. The distributor provided each of the customers with a semi exclusive distribution contract with time and performance targets for the use of the “R” brand. The semi exclusive clause protected each of the “R” brand users by ensuring that diect competitors in the same market channel would not be ables to use the “R” brand. Most importantly because the “R” brand was marketed and distributed by a sales agency, this added an extra step in the manufactures customer structure and as a result it avoided the non compete hurdle as the manufacturer did not sell a brand of products directly against its customers. The “R” brand was deployed initially in the automotive channel however due to the overwhelming success the brand was extended to the industrial, marine, motorcycle/ATV and bicycle industry channels
A major benefit to the manufacturer in executing this program was that any small marketing organizations that achieved success in developing and executing the “R” brand as their private brand would convert the product line to a private brand directly with the manufacturer. It provided the manufacturer with a great opportunity to develop and grow new customers. For the distributor, a shift in the supply relationship opened up the opportunity to once again fill the open market or channel for the “R” brand with another customer. The program was such a success that it was necessary to develop a second brand “T” to expand and duplicate the effort in the automotive and industrial market channels without making it appear that the manufacturer was working against its new smaller private brand customers.
Having made the investment in developed and invested in a brand portfolio, the manufacturer was realized that it was able to develop new distribution and sales opportunities in the export market, more specifically the Southeast Asia. The demand for established and proven product brands for the automotive service channel in this part of the world was a new and unexpected opportunity. Export distribution opportunities for both the “R” and “T” brand were established in China and Taiwan. Due to the rapidly expanding market in China, the manufacturer is currently developing a third brand “C” for the China market and if needed will be introduced in the north American market through the sales agency model.