Brokers are in the midst of an identity crisis. Today’s brokers represent more than 3.000 manufacturers, comprising nearly 60 per cent of all commodity volume in package goods and 80 per cent of US grocery warehouse withdrawals. Mary brokers rank among the top 10 vendors of their major retail customers. Much to their continuing frustration, however, many manufacturers are experimenting with some combination of broker and direct resources in an attempt to deal with the new marketplace. Some of these models are working, but managers are not.
"While each manufacturer must develop a host of different strategies to match that of individual customers, the broker has the luxury to organize his total strategy around his individual customers," says National Food Brokers Association (NFBA) president and CEO Robert Schwarze. Brokers have always been regarded for their local market expertise, but the rapid shift to micromarketing is now regarded as their opportunity to ultimately weave themselves into the very fabric of their principles' go-to-market approach.
Consumers have a lot of shopping alternatives and are taking advantage of them, which is driving manufacturers and retailers to look for consumer information to give them a competitive edge. In just a few years, as brokers have accelerated their use of data, the number of brokers having online access to syndicated data has expanded to more than 200, according to an Andersen Consulting Survey.
Traditionally, panel and retail census data have been used by manufacturers to understand the components of volume and to determine what they can do to grow volume, including the primary variables of penetration and buying rates. Now these same consumer dynamics can be used to understand retail-shopping behavior. Instead of simply measuring how many households buy a particular brand, the data measure how many shoppers who buy the brand shop at a particular retailer or retail channel. Depending on where the manufacturer fits on the scale will affect how one thinks about marketing and promotion.
“In the final analysis, understanding a retailer's position in the market is the key," said A C Nielsen consumer information and national sales vice president Tod Hale. The knowledge about the competitive frame, including individual retailer shopper demographics, purchase behavior in a category, and measures of loyalty by account, are increasingly essential to promotional planning and evaluation. The ability to compare and contrast behavior in different accounts is essential to uncovering the opportunities.
- Do you see sources of conflict in this new arrangement?
- How will role determination be determined?