Cola War in Nigeria (Day 5)

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Another strategy to use as the battle in the Cola category continues is the exclusivity of distributors. It is incontrovertible that Coca-cola and Pepsi have a strong network of distributors and retailers. They have their network nationwide.

Obviously, distribution is not a problem for the two giants in the Cola industry. However, Big Cola, Bigi Cola (the indigenous brand) and RC Cola who are all new entrants may be struggling to meet up with the kind of network held by the two market leaders.

The practice for new entrants in any category is to use the same network of distribution that the market leaders are using. This will save them the cost of reinventing the wheel of redistribution. The existing distributors already have their chain of retailers and buyers

These distributors will sell your products to their customers. Basically, it means no new customers are recruited. Old customers patronizing the old brands are going to be exchanged for the new brands. These existing chain will convince their buyers to abt the new products.

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The use of existing distributors is a cost and time-saving approach but the success of it is dependent on the allowance is given by the market leaders who own them.

Cola War in Nigeria (Day 5) - Brand Spur

It’s possible that the bond that exists between each of the distributors & these big brands is a difficult bond to break into. This may be due to some signed agreements between the companies and the distributors to ensure exclusivity and to forestall occasions like this.

When the big brands have locked down their distributors for exclusivity, the new entrants will have to look for and develop their own network. It will cost them money and time. However, when exclusivity is not signed, new entrants leverage on existing distributors.

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To prevent new entrants gaining the advantage of your existing networks, the big brands: Coca-cola and Pepsi need to ensure exclusivity of their distributors.

Exclusivity can be achieved through the signing of agreements but the most potent approach is by offering such distributors an incentive for ensuring exclusivity. With that, the new entrants can be edged off.

Tomorrow, we will look into what the new entrants can do if they are being edged out by the big brands with exclusivity.

Written by: 

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Oluwole Dada, (Regional Sales Manager at Nestle Nig. Plc; Member, Chartered Institute of Marketing (UK))

For more insightful conversations, follow Oluwole Dada on Twitter  @oluwole_dada

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