Overcoming Common Brand Problems - 34

We're exploring Brand Management's 40 Most Common Brand Problems.

Enter Number 34...

Common Brand Problem Number 34: Limiting the brand to one channel of distribution or aligning the brand too closely with a declining channel of trade

Analysis: For years Tupperware was caught in the rut of only being sold directly through Tupperware parties. This very much limited its exposure and growth. It was generally perceived to be a stagnant brand and its US sales declined throughout the 80s and 90s, despite extending the brand into kitchen and baby products. Simultaneously, Rubbermaid extended its brand into numerous new product categories and sold its products in a variety of channels including Wal-Mart. In 1994, Rubbermaid was one of the best-known plastic companies around. However, a few years later it was struggling because Wal-Mart, which accounted for 20% of its sales, would not allow it to increase its prices to cover skyrocketing resin prices. Rubbermaid earnings plunged and then it lost the Wal-Mart account. Due to financial struggles, the Newell Company purchased Rubbermaid in 1998. Tupperware expanded distribution beyond direct to catalogs and mall kiosks in 1992. It also expanded into Target and Kroger stores, however this did not last more than eight months as these sales were cutting into home-based sales. Between 1996 and 1998, it encountered problems with its independent consultants because it did not allow for them to sell Tupperware products online.

This is an example of how Tupperware’s commitment to a primary channel has caused it to struggle with brand exposure and growth over time, while Rubbermaid’s increasing dependence on one retailer (Wal-Mart) for a significant portion of it sales created significant problems for it as well.

Key Point: Carefully craft your distribution strategy, think through pricing issues, be fair to your channel partners and expect and learn how to manage channel conflict. Strengthen your primary channels before entering new ones. And never become too dependent on one channel of distribution for your success.

Sponsored By: Brand Aid

Comments

[Rhonda Edwards]

Tupperware is doing well world wide. It has re-formatted its elf, and is going strong today. I have been with the company for over 14 years and have seen the ups and downs. But have always made money with it as a home based business. It's a great company to work with.

Rhonda Edwards

[Derrick Daye]

Sent Via Email:

Derrick and Brad,

Focusing on only single channel of distribution was not the issue at our Tupperware division. It was failure to contemporize the key components of the Tupperware business model.

That includes:

1) Product... as the category was commoditized there was a new to move to new products and categories with attributes we could demonstrate at parties.

2) Party... the company was built by stay at home moms. Now two thirds work. Our need was to convert the party from a technical demo of products to an entertaining girls night out.

Derrick and Brad, each has been accomplished and the US business has been growing in double digits.

All successful business models run out of gas if they are not contemporized. That was the issue at Tupperware. But we are fully committed to a single channel. A Tupperware Party starts every 2.3 seconds . There are 2 Million in the sales force in more than 100 countries.

By the way, we never went retail. Rather we enabled our sales force to set up kiosks and end caps in Target, Kroger and major malls for the purpose of dating parties, and recruiting new sellers. We withdrew the Target and Kroger locations as it confused consumers.

Best,

Rick

Rick Goings
Chairman & CEO
Tupperware Brands Corp