In an article which appeared in the July 20, 2009 issue of Advertising Age titled: “Wal-Mart Browbeats Marketers for Bigger Slice of Their Ad Budgets”, the country’s largest retailer has been quietly rolling out a system that directs marketers to divert money proportionate to their share of sales to Wal-Mart co-marketing programs. Wal-Mart is looking for a share not just of trade-promotion funds but also consumer-ad dollars.

As an early developer of co-marketing programs on behalf of marketers I was disappointed to see their latest evolution as described in this article. Originally designed as a way to communicate jointly the equities of both the marketer’s brand and the retailer’s market positioning, co-marketing was designed as a strategy to avoid pricing as the key criteria for driving consumer purchase.

Historically, retailers have referred to marketers as vendors or suppliers. Marketers on the other hand believed they had a higher calling than those terms implied. After all, they created markets by carefully researching consumer wants and needs, and then satisfied these needs by developing products which delivered superior benefits to the consumer. The higher calling was building brands around these products and creating new categories. Marketers tried to be forward thinkers… what are the new needs to be met? How do we make our products better and more competitive? How do we more effectively communicate to our consumer constituency? And, how can we share this with our retail partners so we can mutually build profitable business relationships?

Conversely, many retailers of consumer package goods tend not to look forward and concentrate on next day sales. Their questions are:  How do we commoditize existing products so the point of differentiation is price?  How do we copy existing product categories to make our own private labels?  How do we make money on both the buy and sell?  And, unfortunately in my opinion, it is this strategy that will win if other retailers follow Wal-Mart’s lead. But that’s not a given. I believe co-marketing programs can still developed by marketers which build on the joint equities, and offer a point of difference versus Wal-Mart. This was a strategy adopted in the past by Target to successfully defend itself against Wal-Mart, while the K-Marts of the world followed Wal-Mart’s lead and languished.

Should many retailers follow this Wal-Mart lead, however, not only will it have major ramifications on the advertising and promotion industries, but also the consumer who will be denied new product innovations, because they require investment.  Then marketers will truly live up to their given names as vendors and suppliers.

Share This

• 
• 
• 
• 
• 
• 
• 
• 
• 
• 
• 

About the author

Jack Brown