The Philippines is one of the largest archipelagic countries in the world. As of the latest official government data in 2018 it has 7,641 islands, with about 2,000 inhabited. This presents a huge logistical challenge for marketers. How do you efficiently and effectively reach consumers in this geography?
I have been connected with major FMCG & consumer healthcare companies that are some of the best at reaching their target consumers in the Philippines. Regardless of the products, services, or company resources, I have learned that you need to ask yourself these four key questions as you develop your channel marketing strategy:
WHO are your customers and consumers?
The first important step in developing a channel marketing strategy is to first identify who your target customers and consumers are. What is the difference? Let me explain.
By customers this can mean either your direct consumers, or shoppers of your products and services. For instance, if you sell consumer goods like toothpaste and shampoo the most likely shopper will be mothers. The consumers though will be both the mother and the family. If you sell telecoms services by the load like in the Philippines, your customers and shoppers can be anyone, regardless of socio-economic status, gender or occupation.
WHERE are they located?
You then need to understand where to reach them. Where do they usually spend their time? They can either be in offices, malls, or other public areas for instance. Do they use public transport or private vehicles? Do they spend more time at home or outside their homes? These key questions will later help you identify what types of products and services to offer them, as well as through which channels.
If you are targeting the huge demographic of business process outsourcing workers for instance, your products should be present in a convenience store located on the ground floor of the building where they work. Some of the fastest moving goods in a convenience store include ready to drink products, snacks, and to-go fast food. If you are in these businesses, you need to be there.
Consumers of healthcare products, on the other hand, can either be in the hospital, at the mall or in the streets where drugstores are present. You need to understand where your customers are when you develop your channel strategy.
WHY are they there?
Why are they at a certain place and what is the potential buying occasion? For example, people in restaurants, bars, and food stalls consume soft drinks on the spot. We call this “on-premise” consumption. You need to decide what pack types will be made available in these locations.
How about groceries, supermarkets or mom and pop stores, or commonly called sari-sari stores in the Philippines? There are thousands of groceries and supermarkets and more than a million sari-sari stores in the Philippines. People usually buy soda and other consumer products in groceries and supermarkets for family consumption. Sari-sari stores usually sell packs for individual consumption, though sometimes for family use as well.
Shoppers in both retail formats consume these products “off-premise” or at home. You will then most likely choose to make larger or family size packs in retailers like groceries and supermarkets, but single use packs like sachets in sari-sari stores.
WHAT channels do you utilize?
Armed with insights and relevant information about your customers and consumers, where they shop or consume products, as well as why they shop or consume in certain places, you then need to decide at which channels you need to be visible in order to reach your consumers.
The ones you use will depend on your objectives and your resources. Is your product newly-launched and you need to promote awareness and trial? Or are you a strong market leader looking to further increase consumption and distribution? Do you go through retailers, wholesalers and distributors or do you go direct to restaurants, bars, hospitals and other on-premise locations? How wide and deep you can go in a particular channel also depends on your targets and appetite for investment.
With the advent of e-commerce, we are in exciting times in terms of channel marketing. While traditional channels like distributors, wholesalers and retailers still dominate the landscape, both start-up companies as well as the big local and multinational companies are starting to utilize e-commerce channels to reach customers, shoppers and consumers.
Recent data show that more than 80% of Filipinos own a smart phone and more than 70% of them have bought online in the past year. This has huge implications not just today but in the near future for companies who want to reach consumers directly throughout the islands, especially in places not reachable by traditional channels.
Lazada, Shopee, and Zilingo combined have been aggressively growing their business especially over the last 12 months as Filipinos become more comfortable buying online and the payment and logistics infrastructure catch-up with the demand and volume of transactions. Gen Z or those born in 1996 onwards now comprise 65% of the Philippine population. They are the most digital savvy consumers and will impact how brands are shopped moving forward.
Given the many choices of how to reach the hands of your consumers, you also need to think about how to maximize the return on your channel investment or ROCI. Hence, the volume and value you generate vs the cost to eventually reach your consumers should be a fundamental guide on whether to continue using a particular channel as part of your channel marketing strategy.
