Retailing software and hardware is not as unique as some vendors and suppliers like to believe. It can be compared with selling soft drinks and groceries, if only it can be understood how the masters of retailing, such as Coca-Cola, do it.
Suppliers and retailers need to work together, rather than against each other, to stimulate market growth. The best way to make this partnership work is to use retail programmes that go beyond the price point to engage the customer. This is why retail needs a thorough shake-out and a fresh approach to selling. It's not about sorting the boxes on the shelf, but categorising customer habits. The software industry is not unique, the customer is.
In selling software, retailers have to tackle the same issues as Coca - Cola, Mars or any other large supplier. It's a fiercely competitive market; customers are increasingly knowledgeable and more discerning in their choices.
This in turn puts pressure on everyone to know the customer, but this can only be done if there is communication between suppliers and retailers.
There is no point squabbling over one per cent here and there. What is needed is a framework to work together to discover what the customer is doing and why, and, perhaps most importantly, discuss what the ultimate aim is.
At present, hardware vendors only speak to hardware people; marketing talks to marketing; and sales to sales - a one-dimensional approach that is ultimately unsuccessful. For example, how many suppliers share store auditing information with their marketing counterparts? And how many buyers meet their account managers in the store, where they can get a feel for customer experience, observe decision-making and talk to staff at the front-end? All too often, key retail decisions are made in isolation, with minimum information.
A salesperson should manage a category and the buyer should have access to the same knowledge. Both should know the product marketing strategy, product functionality details and support functions, including public relations. A manager is then equipped to talk to every person involved in product promotion, and is able to effectively co-ordinate strategic and support activity.
The supplier has to know how the product gets to market and why the customer buys it. The real meaning of sell-through is demand creation. The design of the box alone does not achieve this.
There are several types of buyers - instant impulse, those driven by short-term promotional offers; demand driven, those influenced by product reviews and personal recommendation; and choice impulse. It is this last category that has yet to be successfully tapped.
It links customer interests with sales opportunities. Best Buy in the US has mastered this concept. Take digital imaging - it involves not only cameras, scanners and software, but also ink cartridges, printers and paper. Customers must be able to see the whole category in-store and as their interest grows, so will revenue.
Retail can only remain competitive by adding value. The web has the best growth opportunity but we shouldn't underestimate the power of retail therapy. Customers enjoy the retail experience; it's a challenge for retailers to ensure they come back. If suppliers and retailers come down from their ivory towers to talk and listen to each other, they'll be surprised.
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