Product Marketing Rule #23: Successful Channel Plans Start with Strategy
Product Marketing Rule #23 from the best-selling book, 42 Rules of Product Marketing, was written by Mara Krieps, Founder and Principal, Pivotal Product Management
Success in channel planning requires near-perfect alignment with company strategy
Successful channel planning consists of managing distribution channel partners and developing channel marketing programs. In working with both large and small product organizations, I’ve found that novice Product Marketing Managers (PMMs) tend to view the scope of channel management as a series of promotional programs to be planned and executed. But seasoned product marketers start with the strategy, even if their work is focused on promotions. Here’s what they know that you should too!
You’ll have a far greater chance of promoting a successful channel plan when you start with the company strategy, clarify the product strategy, and align the channel plan with the other four Ps of the marketing mix.
Start with the Company Strategy
Success in channel planning requires near-perfect alignment with company strategy. For example, if your company is following a “price leadership” strategy and you are creating a distribution channel for a new product, you’ll select channel partners based on how operationally efficient they are, or you may choose to sell direct in order to keep costs down. On the other hand, your company may pursue an exclusive, “first to market” strategy. If so, and assuming your product strategy follows the company strategy, your channel partners may need to be hand-picked (or a direct sales team), and your channel marketing programs need to reinforce that. So your first step is to get acquainted with your company’s strategy, whether stated clearly in a document or implied through budget allocation and action.
Clarify the Product Strategy
Product strategy usually follows company strategy. But sometimes it doesn’t. Think Starbucks “Via”—an instant coffee product from the purveyor of fresh brewed coffee and coffee beans.
Before you start channel planning you’ll want to clarify how much your product strategy aligns with the company strategy and what direction your product strategy follows (“product differentiation,” “cost leadership,” or other), so you can be very clear about how the channel plan will support them.
Continuing the Starbucks example, if you were the PMM for “Via,” which channel strategy would you promote: selling through all existing Starbucks stores and distributors, or through only a subset of them, or selling through a whole new group of distribution partners?
Align with the Other Four Ps
The plan for distribution channel partners and channel marketing programs needs to line up with the traditional Four Ps:
- Is the product easy for channel partners to explain, sell, and support?
- What opportunities exist for channel partners to provide add-on services and customization?
- What are the available margins to support the channel? Can partners make money?
- How many channel partners do we need to support the product revenue goal?
- What ramp-up time do we realistically expect for channel partners? Have we built this into our revenue model?
- What budget is available to provide marketing programs (or marketing funding) to channel partners?
- What is our competitive positioning?
- What channel structure would support our competitive positioning?
These questions are a good starting point for discussions with other cross-functional team members, including Product Management, Sales, Operations, Finance, Product Development, and Customer Support.
The successful Product Marketing Manager will get clear on the strategies, form a team, and begin these discussions.