Toshiba’s mobile marketing team has conducted a formal review of its channel strategy realigning marketing support for 29 of its tier one customers with tier two dealers in an effort to encourage ‘product sale’.
Replacing its Five Star Direct Dealer program is a new range of options that will see the vendor invest more than two million dollars into the Toshiba Growth Fund, in addition to the restructure of its current marketing spend of about $3 million dollars per quarter.
National marketing manager for Information Systems Division, Mark Whittard, said the aim of the new program was to "arrest the margin" and encourage resellers to sell on value, rather than price differentiation.
“Channel has lost a little bit of a gift in terms of selling best-of-breed product,” Whittard said. “The new program is looking to the channel getting back into the mode of helping us grow.”
Under the new program, Toshiba resellers will be divided into three categories - Toshiba Authorised Resellers, Mobile Plus and Mobile Education Resellers.
It is the group one, comprising tier one resellers and systems integrators, that will be hardest hit by the new structure as their soft dollar rebates get reduced under the new scheme.
“Our expenses in looking after this group have always been higher than expenses of looking after the rest of our resellers, yet this group tends to be less able to sell our product against other products, “ general manager of Information Systems Division, Ralph Stadus, said. “We are going to pay them less soft dollars, but they’re not overly concerned as Toshiba product is less of their revenue stream. They focus on services.”
While changes to the soft dollar program will affect all groups as it moves from a target-based to the straight commission model, Toshiba hopes this will be offset by the introduction of the Toshiba Growth Fund.
“The problem with the soft dollar system is that at the moment this money goes into the bottom line and price, reducing the margin, “ Whittard said.
“The idea of the Toshiba Growth Fund is that resellers be given support for intelligent marketing programs based on good selling and good marketing ideas."
Whittard and Stadus insist no resellers will be worse off as a result of the changes, claiming their soft-dollar program is still ‘good 1-2 per cent better than any similar program in the industry”.
In addition, assistance from the $2 million Toshiba Growth Fund, which will be ‘rewarding mobile solutions specialists selling on value, and growing their business and margin’, will be available to all three groups at all levels of the channel.
Resellers wanting to access those funds will be expected to submit a simple marketing plan to their retail sales managers, citing the objective, target customer and expected ROI of the project. Funds will be allocated on merit for a range of marketing activities including seminars, co-op funds and demand creation.
Although marketing funds are actively used by no more than 150 Toshiba resellers at present, the vendor hopes the support would now trickle down to more of its tier two resellers "with a clear idea of their value proposition".