Does channel conflict concern you? It should. Thanks to the innovations of our digital age, manufacturers have more choices than ever when it comes to distributing their products. But with choice often comes confusion that can even lead to over-saturation of a particular market or the souring of relationships between manufacturers and retailers. The Problem Not long ago, retail followed a fairly straight path in which a manufacturer worked with resellers and outlets to sell their products. Today, this same path is winding at best. Due to e-commerce, manufacturers don’t need to solely rely on retailers and distributors to get their products in the hands of consumers. Yet, these channels are still essential and profitable. So what do you do? Channel conflict is the term used for competing interests within your marketing and distribution channels. This could mean that your bricks and mortar and online channels are competing with each other or even with you if you sell directly to consumers online. The biggest risk posed by channel conflict is to your relationships with these businesses. You want to maintain strong relationships, but it’s hard to do so if you’re going head-to-head with your own distribution chain. What You Can Do Let’s not focus on the negative--so what can you do? And how can you maintain strong relationships that are fruitful for both you and your resellers? The solution is something we like to call channel harmonizing. Instead of risking confusion, competition and miscommunication, you need to strategically manage each relationship. Your business can’t afford to undercut your largest retail outlets by selling direct to consumer. Does this mean you shouldn’t sell directly to consumers? Not necessarily, but perhaps. One main area to consider is how you price products as well as where and when to run promotions. Consumers are savvy and they now have all the technology they need to find the best price right in their pockets. This means that if you are selling the same product at different prices across online and brick-and-mortar outlets, someone is going to lose out. You need to coordinate your pricing and promotion, but it’s hard to keep track of so many moving parts. This is where your data comes in to answer questions about when and where to run a promotion. There is no one-size-fits-all solution to channel conflict, which is why you need hard data to make the best decisions. With data, you can see sales numbers, growth and ROI for a specific outlet. Is it worth the risk to the relationship to sell D2C? Crunching the numbers will reveal this answer. At Ironbridge Software, we can help you make sense of your own data and make the decisions that will nurture relationships. For instance, if you have a relationship with a retailer such as Target, you want to nurture and grow that area. Target likely has more marketing strength to distribute your product than you do, but you may still participate in D2C for certain products. You’ll want to tweak your prices to find a sweet spot between maximum ROI and maximum consumer interest. The best way to fine-tune these numbers is to look at your data! Are you ready to dig into your own data and strengthen your distribution channels? Contact Ironbridge today to learn more about our suite of products. Written by Kim Kelly Consulting

After more than a year without the giant toy retailer, U.S. residents will once again have a chance to shop at Toys ‘R’ Us for the holiday season. The retailer, now owned by TRU Kids Brand, announced that it will return to two brick-and-mortar locations in time for the 2019 holiday season. You can read more about the deal and the new locations here. In terms of retail strategy, why would TRU try to return to the U.S. market when it formerly closed all 735 locations? It seems that the retailer is banking on a new sales approach. The new TRU has partnered with experiential retailer B8ta to create in-store experiences. In a rather cynical article, Gizmodo writes: “Instead of just being rows and rows of shelves stocked with what kids actually want, the new Toys R Us stores will be more like interactive playgrounds with pre-planned events and activities every day, and the opportunity to play with a handful of toy samples.” On the one hand, this switch in strategy may spark renewed interest in the retailer. Afterall, the two locations set to open (one in New Jersey and the other in Houston) are both located in shopping malls. Consumers need a good reason to walk into a physical store these days, let alone a mall. Perhaps this new model will draw buyers in for both the experience and the nostalgia. But critics pose that the original model of stocking loads of toys was working for TRU. The reason the company failed had little to do with its sales strategy and everything to do with its massive amount of debt. So why change the one thing that was actually working? TRU still has 900 stores abroad in Canada, Europe and Asia. If this year’s experiential experiment goes well, the retailer plans to open more U.S. locations next year. What do you think of TRU? Do you think it’s a giant work resurrecting or something better left as a fond memory? Let us know your thoughts in the comments section! ____________ Do you ever consider changing up your business model? Want more accurate data insights to help you make decisions big and small? Contact Ironbridge today to learn more about our suite of products. Written by Kim Kelly Consulting

Once upon a time, factoring retail pricing was as easy as choosing a fixed margin, adding it to your cost of production and printing out the price tag. “Cost plus” pricing is still a popular strategy for many retailers and manufacturers, but the dawn of e-commerce has once again complicated things. Your customer now has all the tools at their disposal to price compare within seconds. There are even apps that let consumers check to see if they’re getting the best price. So what are manufacturers to do? How do you price effectively and keep your brand and bottom line in tact? One strategy is to use value-based pricing. This model factors price based on the value you offer the customer, not necessarily a fixed profit margin. The trick to value-based pricing, is calculating that value. For most brands, you’ll need to do extensive market research and demographic studies to learn about your customers and what holds value to them. Ironbridge Software has found that one of the best ways to keep tabs on your customers and their values is to leverage your own data and cross reference demographic data. You can purchase demographic data from providers like Nielson and use it to gain insights on your customers. Your own data can reveal what is selling and how often. Use this information along with insights on your customers (such as age, income, location and much more) and you’re well on your way to drilling down on that value question. Ironbridge’s suite of programs can help you integrate all of these findings and even display them in dashboards that make sense to your team. One brand that is pricing based on value is the clothier Everlane. Everlane provides pricing right on their website. They actually give customers a chart for select items that details production cost, labor, etc., and a calculated “true cost.” They call this “radical transparency” and then compare their prices to traditional retailers. So customers see that they’re paying as much as a 50% markup, but they also see what a traditional retailer may charge (i.e. much more). For Everlane customers, the transparency and ethical element of the brand holds enough value to pay the markup. So what happens when you sell on a third-party site such as Amazon or Walmart? This is when your data and that of your competition is imperative. You need to monitor your sales in real-time to catch the moment a product starts to slip. If a competitor drops their price, they may see a surge of Amazon traffic or even be chosen as “Amazon’s Choice.” This could really hurt your sales, so having that information available immediately is key. Ironbridge’s NetBench will help you see these trends so your team can adjust prices to compete within a specific site’s search results. Furthermore, Ironbridge’s software tools can search customer reviews on third-party sites. Ever notice how customer reviews talk about price? A customer might say “this is really great quality for the low price.” Or, in contrast, a customer might comment “this felt cheaper than I’d expected and wasn’t worth the price.” Gathering this customer feedback is imperative to your brand’s strength and can also help inform price adjustments. Ironbridge’s software suite can analyze this type of review data and deliver valuable insights for your team. Pricing is a tricky business, but it doesn’t have to be daunting. Using your own customer data and a value-based approach, you can successfully compete in today’s high-speed online market. Are you ready to take your pricing strategy to the next level? Contact Ironbridge today to learn more about our suite of products. Written by Kim Kelly Consulting