Posted by Jack Brown on Wed, Dec 02, 2009 @ 01:19 PM
In the November 30, 2009 edition of Advertising Age, two articles appeared: "From CVS to Costco, retailers put the screws to 
brands," and "Walmart ups the ante with brand co-op ads in more ways than one." The first article posits that well advertised brands are not indispensible to retailers, while the second discusses how Walmart is taking over the role of communicating the brand's equity message in 30 second television spots, paid for by the marketer of the brand. The common thread to these articles is how retailers are dominating the marketing to consumer process, which was once the purview of marketers. How has this role reversal evolved, and how is the term marketer becoming a misnomer? Let me explain.
Traditionally the marketer and retailer roles had been clearly defined in terms of interaction with the consumer. The marketer understood the consumer in terms of their wants and needs and created products to meet those criteria. In order to build a market for those products, the marketer, through its appointed advertising agencies, created compelling messages to create awareness and purchase intent among consumers, and then executed these messages through traditional media, including broadcast and print. Concurrently, retailers played their role as the distributer of these brands to the consumer, and used the tactics of price and promotion to draw these consumers to their store locations. Although this may be simplistic, there was a clear distinction between the keeper of the brand equity... the marketer, and the promoter of the brand... the retailer. What evolved over time, however, was the balance between what the marketer spent on their equity building efforts versus what was spent on retailer driven activity... and this balance shifted significantly in favor of the retailer. So what happens over time when marketers spend a fraction of their marketing budget on convincing your consumers of the value of their brand at a regular price, while the bulk of the marketing budget is spent with the retailer who is convincing the consumer that the brand has value only when it's discounted? Brands become commodities.
During the 80's and 90's, my agency had the opportunity to help 
Procter & Gamble develop a unique approach to overcome this dilemma by developing shared equity advertising programs. The concept was to combine the equity of the brand with the equity of the retailer in a seamless fashion so as to communicate the value of the brand, and the positioning of the retailer as a preferred place to shop. No mention was made in these executions of pricing or promotion. P&G clearly received value in converting marketing funds that would normally have been spent on price promotions into equity reinforcement, while the retailer received bonus advertising support. This concept worked because P&G had the courage to implement an approach which was difficult for retailers to accept initially, but proved successful for them over time. It was then, with interest that, I read the second article in which Wal-Mart has introduced co-op ads that seamlessly integrate the brand into a 30 second television commercial, without mentioning price or promotion. And by the way, funding for these commercials come from what remains of marketers' advertising budgets.
In the article: "From CVS to Costco", the question is asked: are brands truly indispensible? Mentioned in the article is the fact that Costco has recently stripped Coca-Cola products from its shelves in a pricing dispute. The answer to the question of whether well advertised brands are indispensible to retailers may be no, unless real value can be added. I urge marketers to take the initiative of developing shared equity programs, before remaining retailers duplicate the Wal-Mart strategy.