Defend or Critique Your Firm’s Channel Strategy, Essay Example

Sto Corporation is clearly a company with storied success. For generations, this company has excelled at providing expertise, innovative products and inventions that have improved their industry. Sto touts itself as the world leader in cladding, coating and restoration systems. They have doubtlessly been emulated and envied by their competitive peers, but they have much work to do in order to improve and elevate their channel strategy in order to more effectively market their products.

For a company with a rich history and proven success, one of the biggest challenges is to continue to stay innovative in how you approach your market. As one article relates, there is a challenge with adopting new approaches because of old habits. This article (Bassett, 2010) cites cross channel marketing as an example, which is described as targeting customers based on channel preference and permission. it is not easy to implement with obstacles in creating a user friendly environment that is equally accessible through mobile, email and social networking methods.

As you review their market orientation and channels, it is clear that Sto is highly dependent on a wholesaler/distributor strategy. Sto provides the materials and products and relies on over 200 distributor locations spread throughout North America to sell their products. To support this effort, marketing tactics appear to focus on business-to- business trade show marketing and their website. The website is largely geared toward educating, training and informing the public about Sto products, and how to use them. It contains ancillary services such as “esubmittals” and “restore” that are designed to consult interested parties by providing expert opinions and advice on how best to use Sto products for their project. In addition, the site offers pre-purchase services such as Q & A information to assist prospective customers with their buying decision, and post-purchase services such as installation videos that supports use of products. All of these services have great potential to improve sales, and also create a closer connection between the company and those who are interested in their products.

Based on a review of their website, one way that Sto is deficient in its channel strategy is the fact that you cannot purchase products directly from Sto online. This creates a barrier between customer and their products as they are required to find a distributor from a long list and then contact them directly. The site includes a map showing many distribution locations and contact information. Information is basic, inconsistent and not thorough. Many of the distributor listings do not include websites or emails.

I also noted that their online services are static. For example, there is a way to log in and ask a question, but this is sent in the form of an email that you are told will be sent to you. When you do this, it takes days to receive a response. The system is clearly designed to provide information over a period of time with little thought to producing a sale.

An additional challenge is that Sto cannot create a consistent atmosphere or experience when the retail space is controlled by distributors that likely have few commonalities as it relates to lighting, music, layout, etc. You cannot control the shopper experience, and thus lose much ability to try to enhance sales of your products to consumers, which in turn limits the sales produced by your distributors.

An important step that Sto should undertake is to implement an ecommerce channel system that includes online sales, a more direct and instant relationship with customers of their products, and social/digital channel marketing. Such a step will have to be made without alienating their distributors whom they are heavily reliant upon.

To ensure that their traditional distributor network remains intact, they will need to educate their constituents. One article sums up the argument best that differentiation can be achieved based on the different distribution channels. These channels can offer different coverage, expertise, and performance (Berry, 2011.) Sto providing online sales could be positioned in a way that not only benefits Sto Corporation, but the distributors as well.

Another option would be for Sto to do away with their current distribution model and consider franchising as a way to produce a more consistent and stable retail environment for their products and customers. This approach would also have the added benefit of having franchisees pay for the right to be a part of the Sto system. As Sto is a manufacturer of a product that is both known and successful, this can be an effective option.

To support immediate sales and relationship building, Sto should also implement an electronic cross channel marketing strategy. This would involve creating an online chat room for immediate assistance that could lead to better sales. Utilizing social media as a marketing channel through Facebook, Twitter and other sources taps into the rising popularity of such services and can continue a close relationship with those who have used your products. A survey of 500 marketers concluded that there is a social media “land-grab” going on as aggressive organizations are vying to control this fast growing and important channel for their future successes. Dell, as an example, generates over $2 million in sales annually from their Twitter feed (Deutsch, 2009.)

Article marketing is another channel that can often complement an overall strategy. Seen as inviting and informative instead of invasive such as traditional tv, radio, or magazine advertising, article marketing provides opportunities to inform and influence when effectively used (Sahoo, 2010.) Social media requires many postings of relevant and inviting information, which is the type of need that article marketing is designed to fulfill.

In closing, Sto Corporation has the necessary infrastructure to produce some dynamic improvements in their channel strategy, and they have shown from their corporate history that their company can be innovative. In order for them to find more efficient ways to allow customers to obtain their products and services, they will need to innovate their channel strategy in a way that takes advantage of current marketing trends.

References

Bassett, G. (2010, August 22). Moving from Multichannel to Cross Channel Marketing. Forrester Marketing Paper. Retrieved from http://technorati.com/business/article/moving-from-multichannel-to-cross-channel/page-2/

Berry, T. (2011). Channel Marketing Moves Goods from Producers to Consumers. Mplans. Retrieved from http://articles.mplans.com/channel-marketing-moves-goods-from-producers-to-consumers/

Deutsch, R. (2009, Oct. 9). Social Media as a Direct Marketing Channel. CRM   Magazine. Retrieved from http://www.destinationcrm.com/Articles/Web-Exclusives/Viewpoints/Social-Media-as-a-Direct-Marketing-Channel-56357.aspx

Sahoo, S. (2010, July 28). 5 Reasons to Choose Article Marketing over Traditional       Marketing Channels. Marketing Expert. Retrieved from http://www.site-booster.com/blog/2010/07/choose-article-marketing-over-traditional-marketing-channels/