Today’s marketer must make brand decisions, either forced by supplier consolidation or simply brought to the forefront by low-cost unbranded competition. Should a marketer stay major-branded in today’s marketplace? If yes, which brand? Suppliers know marketers are wrestling with brand decisions and responding in new ways to sway marketers to their brand’s favor.
Most suppliers are cognizant of the vital role marketers play in the marketplace. These same suppliers, however, are faced with shrinking economics caused in part by the most value-conscious end-users this nation has ever seen and stiff competition. Suppliers are being forced to actively develop innovative strategies to help their marketer customers gain and retain gallons. By helping marketers be successful, they ultimately help themselves achieve increased market share. Let’s look at how refiners are bringing marketers new value to their brands.
Lowest Transaction Cost Wins – When the price of product is even across the playing field, marketers with the lowest operational cost win. Cost structure is often based upon scale; therefore, many suppliers recently increased their minimum volume contract requirements. Although met with resistance by smaller marketers, the new minimums are expected to significantly reduce supplier costs.
Suppliers realize tomorrow’s successful marketer will be sizable — estimates are at least 100 million gallons or better. In response, suppliers are assisting mid-size jobbers grow to this size through acquisition support. Support can be expertise, reimbursement of valuations, asset purchase help, loans, etc. Suppliers are becoming valuable resources for jobbers expanding volume via competitor acquisition.
Super Jobber Concept Gains Ground – Understanding the economics of marketer consolidation, but not wanting to drive their smaller customers to predatory competitors, suppliers are helping smaller jobbers remain brand loyal through sub-jobber/super-jobber structures, keeping the smaller marketer in the brand, but shifting cost of multiple customers to the super-jobber. To not sink under the burden of this structure, the super-jobber must be highly efficient.
Technical Efficiency – From ordering through delivery and collections, jobbers must continually lower the cost of doing business to remain competitive and support their smaller jobber and dealer networks. Branded suppliers are leading the way in technological efficiency, using their R&D dollars to innovate and streamline processes, then giving super-jobbers access to these latest technological advances. From pricing information, through automated inventory and ordering and EFT collection, refiner systems are serving as models for jobbers to drive down their own costs. In the end, expect to see totally paperless transactions through outstanding partnerships between suppliers and marketers.
Buying Clout – Innovative suppliers are negotiating “deals” for marketer customers on equipment, hardware and software. Today’s suppliers know they must bring cost-savings to the table of their jobber customers. From computers to tanks, marketers are enjoying cut-rate deals via supplier partners.
Product Availability – As tensions continue in the Middle East, crude supply and subsequent pricing pressure are top issues. Brands that offer contractual supply stability have a distinct advantage. On the other hand, marketers completely loyal to a single brand are easily harmed by unexpected supply disruption. Any supplier wanting complete loyalty must demonstrate fail-safe supply contingency plans.
New customers – A few years ago, misguided suppliers actually “stole” customers from jobbers with the idea of serving them directly. After losing market share and finding themselves in “price-only” bidding wars, smart suppliers now help marketers obtain new customers and keep them. From marketplace information, to technical sales support, to pricing support, suppliers are selectively giving marketers aggressive support to boost volume in targeted regions. With this support, plus most marketers’ outstanding reputation for customer service, sales are closed and customers retained.
Marketer Employee Productivity – Suppliers are leading the way with research and education in performance-based pay systems. First implemented internally, that expertise is now being moved out to marketer customers. Always at the forefront of product training, suppliers know they bring value to marketers through a wider variety of employee education programs, including performance-based pay systems. Knowledge leads to empowerment, which leads to employee performance, which ultimately leads to more gallons at lower costs — exactly what suppliers crave.
The degree to which any supplier supports its marketer customers will have direct impact on brand choice and loyalty. The reality of today’s marketplace is that support will vary based upon the brand’s objectives in a marketer’s service area. Marketers must take the initiative to uncover each brand’s objectives, and then make the correct brand(s) decision, whether that be single brand, multi-brand or no brand.
Ultimately in the family business, it’s your name, your service, your ethics that attract and retain customers. That’s why one of the most important advantages we bring to our clients is clarity of “family brand” that overshadows supplier choice.
