Category: Marketing

Source: Pixabay

Why do I go to that store? Because of the price and the brands. And let’s leave aside the ‘white label’ discourse – it is discrediting for brands that have already established themselves in their niche. Take the case of Quechua. Scouts don’t buy Decathlon white brand tents, but Quechua tents.

Sneakers chosen – tried on with more or less originality by the store – and proceed to the checkout. They are ready to wear.

If you buy the sneakers online, I don’t have the consumer experience – putting the sneakers on before you buy them and talking to a salesperson who also wears the same sneakers. But as a general rule, there are more options online. Physical stores have limited space (no matter how big they are) and that’s why you make range choices.

I know from buying online that I have to wait for the sneakers to make the trip from the store (or warehouse/factory) to my home. And if I’m not home at the time of delivery, the sneakers make one more trip to some warehouse, where I have to pick them up. No problem, what matters is that the sneakers arrived.

The challenge for today is to put ourselves in the shoe’s shoes.

What is the big dilemma? Sneakers don’t choose their route. They want to go home – the final consumer – but until then, they can have several homes. Or temporary foster families, is this the correct term?

The H brand and SUPER sneakers

I represent the brand H (let’s be inclusive and stop always using X or Y). We created some sneakers that, besides the futuristic design, have a technology that allows the foot to breathe, preventing the user from getting sweaty feet at the end of the day. We even baptized this model: SUPER.

SUPER sneakers are manufactured (we will not go into details here about where in the world) and are shipped to wherever we want. This choice is related to the business model chosen by my company.

We will speak here of the business model in the sense of the purchase/sale transaction.

Fonte: Pixabay

A brief introduction to business models

The acronyms in this part of the sales business are intuitive, but take note:

• B2C (business to consumer): Classic. Direct sale. The business relationship occurs between the company and the final consumer (or shopper) and involves no third-party action. 
• B2B (business to business | from company to company): The consumer relationship is between companies, not involving the end consumer. The sale/purchase has the purpose of supplying a need of the company – which may or may not reach the end consumer. 
• B2E (business to employee): occurs when the company provides discounts or forms of payment that are not applied to the market. This way, employees can buy the products/services of the company they work for in a differentiated way.
• B2G (business to government): is the business relationship between companies that sell, or provide services, to the government – either to municipalities or at a national level. These are companies with a track record of responding to public tenders. This model need not be exclusive.
• B2I (business to investor): the business relationship takes place between the company and the future investor and works as an accountability, where the company that is selling presents its projects, data, and information. Widely used in the real estate industry.
• D2C (direct-to-consumer): is a business model that resembles B2C. Here the difference is in the source of the product – instead of a company selling, the marketing is done directly by the manufacturing industry. It is easy to identify with the ‘factory price’ label.
• B2B2C (business to business to consumer)

… Well, we get it.

So where are the SUPER going?

The choice of a B2B or B2C model is closely linked to the storytelling of the product, its marketing strategy, and the way the brand decides to communicate with the shopper and the final consumer.

I want to manufacture SUPER and sell directly to the final consumer: it means quick sales. The brand is talking to those who use the product. It follows the more traditional model and opens a physical and online store, with its brand name: H. It will be present in malls and traditional commerce – OR exclusively in one of them. This choice is related to the persona created/chosen by the brand (the ideal consumer).

When we choose a B2C, the most common thing is not to have the financial fit to have a store/warehouse, a large space with aisles, and more aisles of products lined up and organized by price. Better known as retail.

These stores/warehouses are built from scratch (preferably) by B2B business models – WARNING: this is not that taxing, but it is the most common. For this example, we are talking about such multi-brand stores: the MM store sells sneakers of its brand, but also of other brands, for which it has no influence on the construction of the product or its history. The MM store can, if the H brand so allows, insert SUPER sneakers in its range and sell them in-store. But the decision is on brand H’s side: B2C, B2B, or D2C.

In the digital world, the choice of business also differs.

There are many decisions to be made:

• Do we sell exclusively on our site?
• Do we sell exclusively on the site of multi-brand stores?
• Do we sell both?
• Do we sell both, at different prices? – Yes, the law of the market allows it, because…

… the price of the product also depends on the journey it takes.

What is the great advantage of selling online?

Besides increasing the volume of business?

We know who buys our product (shopper) and we know who uses our product (consumer). Buying and using are different things. The best example is toy stores. Who buys? Adults. Who uses? The children. So here we have two audiences to analyze.

We want to know everything, EVERYTHING, about them. Everything is recorded, like history, like the digital footprint. Wonders of e-commerce.

ONLY THAT…

… if I only sell the SUPER ones in multi-brand stores, I don’t know who my final consumer is. I give up this data. But that data is what enables us to have products that meet the needs and interests of the customers.

Choices, choices, choices.

Source: Pixabay

In B2C, the sales process is focused on the individual needs of the customer, and the sales cycle is short, with a large (or medium) emotional component.

In B2B, we expand our cycle.

Do we have to choose one of the models?

Yes and no. In typical Portuguese, it depends.

But we can have a hybrid business model.

A hybrid model allows you to bring together, on a single platform, the entire digital structure: customer databases, product information, content, graphic arts, pricing, profit margins… well, all the information you want to cross-reference. So the hybrid model has a single e-commerce platform. And who will analyze this data, will also be a single team – a reinforced team, of course. Because here, the data analysis work requires creating and analyzing multiple customer profiles.

All this for the better…

… business optimization. Obvious. Everything is in a single system, even marketing strategy. Strategies. Plural. For the same product, we can have different images and canopies, depending on the location of the sale.

This hybrid model will have an advantage over your competitors: you can create customized products and different marketing strategies for shoppers and consumers.

Source: Business Webstars

What about merchandising?

Ah, who doesn’t love an offer of a tote bag, a pen… a notepad!

Businesses whose commercial exchanges are exclusively B2B do not invest much in merchandising. It makes sense: why invest if we are not selling directly to the consumer? They can, and usually do build a layout for their product at the point of sale. A good example of this is the huge and colorful furniture full of cookies, also full of sugar, in small grocery stores. There is no brand store for these cookies, but the brand invests in creating displays that are compatible with the small business that sells these cookies.

Already in a hybrid business, merchandising is important and everything is chosen and described on that one platform, with a well-defined budget.

In conclusion:

A hybrid business model is a crossover. Yes, like when the characters from Grey’s Anatomy take a trip to the world of Station 19. This analogy makes perfect sense: in the first episode of Grey’s Anatomy, there were no streaming platforms. We had to wait for RTP2 to buy the series and we were only allowed to watch one episode a week. Today, we can watch Grey’s Anatomy online, on our pc, tablet, and smart. It is the natural evolution of things to the digital world.

The key phrase of this hybrid model is EXPAND: more customers, a bigger database, and a bigger business volume. And on the other hand, SAVE is a single e-commerce platform.

It’s all a bed of roses. But it isn’t.

These are choices, above all.

By changing your business, customers will be more demanding.

Let’s talk about Nespresso. What else?

Nespresso has been among the most profitable projects at Nestlé with steady growth for two decades, although the beginning of its history dates back to 1970. You can read more about this long journey here. 

Nespresso arrives in Portugal with a physical store in Chiado, Lisbon in 2003. Not store – Boutique. So, I, who am from Coimbra, had to go to Lisbon to buy the machine and the coffee capsules. No. The website had that option. Mainly for the capsules. In 2007, they decide to open a new boutique in Norteshopping. The brand is no longer only in prime locations, but also in shopping centers. In 2009, they opened a new boutique in Porto, and from then on these boutiques – small stores where the capsules are displayed for sale and consumption, in a customer experience logic – became the norm. But until we reached this point, the Nespresso consumer in Coimbra had to buy the coffee capsules directly from the Nespresso website. Why? Because Nespresso doesn’t sell on large commercial surfaces, it doesn’t sell to small businesses or the retail trade.

In 2022, Nespresso still doesn’t sell the capsules for other commercial surfaces to sell, but the Nespresso brand coffee machines are within our reach in any home appliance store.

It is indeed an interesting example that shows different choices, without exclusivity.

Will we live to see Nespresso coffee capsules for sale in big supermarket chains? The red one? Or that green one… Baby steps, without ever escaping the original concept of the brand.

Fonte: Pixabay

What about Nike? Nike has moved to the hybrid option: we can buy on Nike’s website, in Nike’s stores, and multi-brand stores. And at the multi-brand stores’ websites.

So Nespresso’s preferred commercial exchange is D2C: direct to client. Nike is B2B, D2C, B2C.

In a D2C, my SUPER sneakers may even have a lower price, because they don’t have many miles to go. But if brand H decides to sell to retail as well, it has the right to increase its value, because there is more logistics work. To match the value, the multi-brand store has to lower its profit margin. Easy math to do.

For this hybrid model, we have decided to give an acronym name: B2E – business to everyone.

Does it make more sense? Or is it too populist for the business world?

We won’t end this article without mentioning C2C – client to client. Yes, we can also sell our Nespresso machine on the OLX of this life. The internet made e-commerce possible and social networks developed C2C. And here, there are no taxes, no fees, no legislation, and no control of the exchanges.