3M’s Post It® and Scotch® brands have not only seen copycats in the market for many years; in Australia these winning brands also see cheaper grey products, known as parallel imports (a non-counterfeit product imported from another country without the permission of the intellectual property owner).
As parallel imports are non-counterfeit products, 3M dealers have access to the same products from pirate-like importers who offer low prices.
3M sales were consistently being undermined, with the ultimate result being 3M dealer network relationships souring due to them purchasing non 3M like for like products, eroding 3M volume and margin.
When 3M approached 212F, it was evident that companies selling parallel imports were merely competing in price. This was an opportunity for 3M to run an incentive that would add value and see dealer principals rewarded for purchasing through 3M Australia. Dealer engagement began to grow as they returned to buying from 3M approved wholesalers in Australia.
Due to the cyclical, unstable nature of grey product importation, these ‘shadow’ companies cannot always offer the same low price, their offer depends on availability and do not have the ability to sell products only offered in Australia. Although sophisticated, parallel imports rely on market price and overseas product buyers and merchants. Competitive advantages of 3M in combatting these grey imports were identified. 3M could offer marketing support, owns a wide range of products not offered outside Australia and can bundle products to add value and make price appear more attractive.
The above had a direct impact on the strategy and design 212F proposed:
The Race To Win! Rewards Program saw unprecedented levels of excitement amongst all dealers in Australia and New Zealand. The incentive program demonstrated that purchasing grey imports was a short-term benefit and that it made more business sense purchasing from 3M Australia who was adding value to the trading relationship forged over the years. The rewards program brought dealer principals closer to the manufacturer, as well as obviously providing them with financial rewards.
An engaging brochure launched the incentive, asking dealers to register their interest in the program. Monthly digital communications and teasers were sent to the network, with more than a third of dealers regularly visiting the website, reading program emails and enquiring via phone about promotions and how they were tracking on their Race to Win journey.
Most importantly, 3M exceeded their overall target set at the beginning of the program – a great example of winning back dealers, motivating its network, driving growth and protecting a threatened market share.
As the program targeted a shift of grey market sales, an ROI wasn’t determined at the start of the program. To the delight of all involved, when the program delivered a result of 4:1 return of investment it exceeded expectations, not just breaking even but returning the program budget $4 for every dollar invested in the program.
Post It® and Scotch® sales managers hosted the trip to Melbourne to reward dealer personnel face to face and had the opportunity to further discuss where 3M can support their business.
