As suppliers, we’re seeing a growing trend where large companies demand that their brand be placed on the products we manufacture. This strategy, reminiscent of Intel’s famous “Intel Inside” campaign, aims to increase brand awareness among average consumers.
While this can potentially lead to greater market reach, it also comes with several challenges.
Exclusive Sales Demands
These companies often require exclusivity, meaning you can no longer sell directly to their customers. This can result in a significant loss of revenue, potentially amounting to millions of dollars annually. Big Co might demand low prices from you to maximize their profit margins, putting additional pressure on your business.
Key Questions to Ask
Before agreeing to such terms, it’s crucial to get clear answers to the following questions:
• How will they sell your products? Understand their strategy for marketing and distributing your product.
• Sales Plan and Forecasts: Request their detailed plan to sell your products, including monthly, quarterly, and annual forecasts.
• Contingency Plans: What if their sales efforts are not successful? Ensure there are clear commitments and plans in place to drive sales growth.
Insist on a Solid Sales Plan
In return for agreeing to their branding and exclusivity demands, insist that Big Co develops and commits to a comprehensive plan to increase sales of your product. This ensures that your partnership is beneficial and that there is accountability on both sides.
Weighing the Risks and Benefits
If faced with threats of being blacklisted, conduct a thorough analysis. Calculate the current business you have with Big Co’s customers and potential future business. Compare this to the benefits Big Co is offering, considering any price reductions you have agreed to. This will help you make an informed decision about whether to proceed with their demands or seek alternative strategies.
In conclusion, while putting a big company’s brand on your product can offer new opportunities, it’s essential to negotiate terms that protect your interests and ensure mutual benefit.