The Elements of ValueBy Duane Carey | February 19, 2019 << Back to Articles
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If we were to travel back about three decades, we would likely find some jansan distributors marketing the same products they had been promoting for several years.
This has nothing to do with the distributors, but with the jansan industry in general. Put simply: Three decades ago, the industry, as far as technological advances, was not changing all that much.
However, all of that changed in the late 1990s, most likely as a result of the growing customer demand for more environmentally preferable cleaning products, as well as the big push from cleaning contractors to help improve worker productivity. This led to the establishment of green certification organizations that defined what a green cleaning product is and is not, helping to foster their development. At the same time, new cleaning tools and equipment were introduced that helped reduce cleaning times and effort.
All of this product expansion was great for the industry and welcomed by many end-customers. But then something new set in that had not played that much of a role in the professional cleaning industry before. What evolved was product life cycles. While cleaning related products in the past were marketable for years, these newer products typically went through the following four life cycle stages:
- Product introduction
- Sales growth
- Product maturity
- Sales decline.
The amount of time it takes for a product or line of products to travel through these four stages can vary. However, today, with more and more online purchasing, many products now travel through these stages fairly rapidly.
Typically, a product is considered in decline when it no longer meets the needs of today’s end-customer or when new products are introduced that perform more effectively or are more cost-effective.
To avoid losing business, manufacturers must update their products with new, more competitive products. This leaves distributors with three choices:
- Stick with their manufacturing partner, waiting for their new products to be introduced.
- Partner with different manufacturers already offering updated and more marketable products.
- Expand their product line, referred to as product line extension, which involves introducing entirely new products to their product mix.
When revenues are down, distributors may consider taking all of these steps. However, the one that can prove most beneficial in the long run is the third: product line extension.
Typically, this involves marketing new products or bundles of products that complement current offerings. This is a growth strategy that makes the distributor more valuable to the end-customer and has the potential to help distributors increase revenues, gain entry into new markets, compete with online merchants, and expand their market share.
Understanding product line extension
Product line extension comes in different forms. In many cases, when a manufacturer introduces, and a distributor starts marketing, a new product that features slight but valuable differences from existing products, this can be interpreted as a product line extension.
Another example is for distributors to introduce entirely new products or bundles of products to their customers—not necessarily to improve on a specific product, but to complement other products already offered by the distributor. This type of product line extension can help turn distributors into a “one-stop shop” by meeting many more of the end-customers’ current and expanding needs.
A perfect and often underappreciated example of this falls under the category of “warewash.” Many jansan distributors already market products in this category, which typically includes restaurants, commercial kitchens, school cafeterias, and other food services. Among the items marketed to these customers are the following:
- Low- and high-temperature detergents and rinses for commercial dishwashers
- Scale removers for commercial dishwashers, coffee urns, and stainless-steel surfaces
- Disinfectants and sanitizers explicitly made for food service facilities
- Stainless-steel cleaners
- Drain and grease trap cleaners
- Griddle and fryer cleaners.
While these are the types of products a jansan distributor might market to their food service clients, what about extending this product line into bundles of products that include, for instance, food-labeling systems or, going a step further, entire menu-management systems?
For those who do not know, the U.S. Food and Drug Administration has introduced strict requirements for food labeling and menus:
Calorie information [is] required on menus and menu boards in chain restaurants (and other places selling restaurant-type food) and on certain vending machines. This new calorie labeling will be consistent nationwide and will provide easy-to-understand nutrition information in a direct and accessible manner.
Many food service outlets have been voluntarily doing this for a couple of years. However, today, consumers want more than just calorie information. They also want to know what ingredients are in the food they consume. This is especially true in schools and school cafeterias, a huge and growing market for many jansan distributors.
As to the importance of labels, this was proven last year at the University of Montana. The school began removing labels on food items sold in the cafeteria because, frankly, students were taking too much time reading them. “It was slowing down the line and delaying the checkout process,” said Campbell Howard, the school’s dining director. To expedite the line, Campbell stated that the food-labeling information was posted online. However, the students did not find this to be a helpful alternative. They wanted to be able to read what was in the food they were considering, when they were considering it. As a result, the university reinstated the labels.
To provide the required food labels, the University of Montana likely worked with food service distributors to select food-labeling and menu-management systems. However, these systems can also be offered by jansan distributors, bundled with the other warewash product offerings previously mentioned. Although these systems were once complicated, today’s technologies have made them easier to use and much easier to sell.
So, instead of working with multiple distributors, in this case, the University of Montana could work with just one, their jansan distributor, becoming the one-stop-shop for their client mentioned earlier.
‘One bloke to choke’
For manufacturers, introducing products that meet the ever-
changing needs of the end-customer, as in the preceding example, is an important driver of product line extension and profits. It also offers distributors new opportunities, revenue sources, and a way to compete against online retailers, all without the additional cost and effort necessary to secure new customers.
Further, most end-customers prefer to work with one vendor in the procurement process, and with good reason. It simplifies purchasing and should issues arise, there is only “one bloke to choke” to get the problem fixed. Working with multiple distributors often results in end-customers going from one distributor, or vendor, to the other as they attempt to address an issue.
Additionally, extending product lines can help increase customer loyalty. When distributors offer a variety of products, they begin to better understand their customers’ needs and the challenges they are grappling with. By becoming the one person who understands their clients’ needs and works to address them, distributors can build partnerships that cannot be procured online—partnerships which have the potential to last for years.
About the Author.
Duane Carey is head of business development for DayMark Safety Systems, which manufactures a variety of product lines for the jansan, hotel, hospitality, and food service industries. He can be reached through the company website at www.daymarksafety.com.