CASE STUDY – Market Penetration
When this small business asked KEYSTONESG professionals to build them a best of breed consumer electronics product so they could sell it under their own house brand at a premium price, we were excited to take the challenge. However, we quickly saw that they didn't have the sales volume to source direct. Our solution: build their brand to drive volume. A KEYSTONESG professional was needed to act as a National Sales Manager. In six months they went from a non-player to one of the top three brands in North America by focusing on real product advantages, superior customer service, and creating sales person confidence in the product. With their increased volume they are buying direct, saving nearly 50% on cost, and adding nearly $200,000 per quarter to their gross margin.
SMB, Inc. knew that a house brand could make them more money. They'd have the advantage of being able to sell the product with their service guarantee and they'd be able to demand a premium price based on their brand value. They asked KEYSTONESG professionals to help them source the product in Taiwan and mainland China. The challenge was that SMB, Inc. did not yet have the sales volume to get the level of customization they desired. The KEYSTONESG professionals were prepared to address the challenge.
Through a multi-staged process SMB, Inc. got what they wanted--a fully customized, private label, best in class consumer electronics product.
Stage 1: Maximize Impact
While SMB, Inc. did not have the volume to customize and private label the entire product they almost had enough volume to private label a key component of the product. This one component would have provided enough difference that the SMB, Inc. sales force would be able to use the unique selling advantages to convert customers over to the house brand. The KEYSTONESG professional found the right supplier who was willing to share mold costs to produce a unique product at the modest volume that SMB could support up front. The KEYSTONESG professional sold the supplier on SMB's commitment to make this a top seller. The supplier took a risk and is now reaping the reward.
Stage 2: Sales Training
While the product was not yet fully customized it was already better than most of the competition. Through a strategic sales training program the SMB, Inc. sales staffs were educated on the unique selling advantages of the new product. They were also made aware of future advantages that were only feasible if sales increased dramatically. The SMB, Inc. sales manager made a challenge to the sales staff that 50% of all units sold should be the private label brand. The sales people responded by immediately converting 75% of customers to the house brand. This was achieved by designing unique features into the product during stage one and offering an incentive to the sales reps for selling the house brand.
Stage 3: Full Customization
SMB, Inc. now had the volume necessary to customize the remainder of the product. The KEYSTONESG professional went back to the local Asian factories and negotiated significant cost savings and arranged for the final touches required to fully private label the product. SBM, Inc. now sells a truly best of breed product that fully supports their house brand. The product looks stunning, promotes the brand, and adds substantially to the bottom line.
Stage 4: Market Leader
With a best in class product, SMB, Inc. has taken a significant portion of US market share and is now the top customer for the Asian factory producing the key component. To go from a non-player to a top customer is an easy way to earn respect and support from the factory. The KEYSTONESG professional onsite in China routinely visits the factory to look for future opportunities to develop new products for SMB, Inc. Recently the factory gave SMB the opportunity to be the first to launch a new product to North America under the SMB private label.
SMB, Inc. is adding over $200,000 per quarter to their gross margin by selling their house brand product. KEYSTONESG professionals have been retained to oversee factory operations in China and to work on adding additional features to the product line. The factories that didn't want the business because it was too small are now working hard to keep up with the new demand.
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