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The Principles of Distribution

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I have been studying distribution & reading over 30 books on distribution and I wanted to outline some broad principles I have learned which I am calling the “principles of distribution”.

The best three books on this topic of them all were three historical books:

 
All three of these guys, especially P.T. Barnum, were quite the characters and they were some of the early pioneers into what we now call marketing, advertising, PR, and the ever-so-fashionable distribution hacking.

Very broadly there were three principal methods these guys used to get distribution for new products.

The first is through gaining access to an already pre-existing widespread pool of customers. A good story of this is how Claude Hopkinks marketed Van Camp’s evaporated milk.

Back in the 1900’s evaporated milk was a completely standard product where: none of the existing products had an advantage over one another, a few brands controlled 90% of the market, that those brands held that share for many years against many competitive attempts.

Given those conditions Claude’s plan for getting distribution in this highly competitive evaporated milk market was this. In an advertisement he inserted a coupon good at any store for a 10 cent can of Van Camp’s evaporated milk. In return he paid the grocer his full retail price and for three weeks the advertisement he ran told the personal story of Van Camp’s evaporated milk with the coupon insert.

He sent copies of this advertisement to all of the grocers and told them that every one of their customers was to receive one of these coupons. It was at that point evident that they must have Van Camp’s evaporated milk on stock because every coupon meant a 10 cent sale and if they missed it (remember this is 1900’s money), it would go to a competitor.

The result was universal distribution at once. They first tested this plan in a few small cities and next rolled it out to New York City. In three weeks, in New York City, Van Camp’s evaporate milk achieved 97% distribution in groceries stories in the entire NYC area. Just through this campaign alone 1,460,000 homes were all trying Van Camp’s evaporated milk all in the same week.

The second is through making an offer so compelling, literally on the verge of being altruistic, that no one could refuse your offer. A good story of this is the 1900’s a coffee vendor who sold coffee by wagon in 500 cities who wanted to increase his sales.

His experiment was instead of trying to sell coffee to each person he would drop by each persons house with a half-pound of coffee and say, “Accept this package and try it. I’ll come back to you in a few days and see how you like it.” When he came back, he came with both a small gift and a if the person liked the coffee an order to charge the person 5 cents on each pound he delivered from that point forward.

Instead of trying to directly sell his coffee he offered a free sample, service, a gift, and found that such an offer was resistless. The result was 9 out of 10 trials leading to reoccurring sales.

The third is through creating a situation or stunt so outrageous that every media channel will want to write about what you are doing. A good story of this is how P.T. Barnum bought a old woman named Aunt Joice who was believed to be 160 years old and believed to be the nurse of George Washington (keep in mind this was in the 1830’s and its probably illegal to purchase somebody now, so please don’t try this).

She was bed stricken, blind, and couldn’t move much but she was really sociable and would talk for hours about her “dear little George”. Everyone who came to see her absolutely believed her age and she even came with a “bill of sale” detailing her life story with a guarantee on the claims and her age.

P.T. Barnum made on average $1,500 a week (~$30,000 in todays value) showing Aunt Joice off and using the press extensively to drive people to his showings across the country. He would invite journalists, doctors, and researchers to come study her and write their accounts and his exhibitions attracted tens of thousands of people in every city he visited.

When the novelty wore off and visitors started falling off he would secretly write articles disproving the age of Aunt Joice and even went so far as to claim she wasn’t a human being but a “constructed automation made up of whalebone, india-rubber, and springs ingeniously put together.” After these reports came out thousands who had previously not seen Aunt Joice came out to inspect for themselves if she was real and if they had been deceived.

The result of all the press was always a larger audience at every show P.T. Barnum put on. This specific story might sound a little ridiculous in 2012 but the principal still stands: do something outrageous and every media channel will want to write about what you are doing.

Conclusion. These are the three broad principals used over and over again by the distribution hackers of the 1800 and 1900’s: gaining access to pre-existing distribution channels, offering no-brainer offers, and gaining press through outrageous stunts.

These principals were sometimes used separately, in conjunction with each other, or on varying degrees but in every case tapped strongly into one of these methods.

My goal is to apply these lessons to the 8 products I am helping out with and report back to you with some case studies and real examples on how you can use these principals too. Stay tuned.. 🙂
 

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Written by Chris McCann

August 4, 2012 at 2:38 am

6 Responses

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  1. Chris, check out http://tractionbook.com/ also. They are trying to address similar questions. Very interested in learning more about what works with examples.

    Mukund Mohan

    August 4, 2012 at 5:02 am

  2. That was another excellent post today. You make it look so easy. Thanks so much for sharing. I really enjoyed reading it very much. Have a wonderful day!

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    August 4, 2012 at 5:51 am

  3. I like it, I think the point here is that you have to get creative if you want to succeed in marketing when you’re at an inherent disadvantage (because of budget/market saturation/dominant players/whatever). This has got to be the #1 challenge for startups, since unless you have that awesome product that everyone needs, you’re always going to have this disadvantage in one form or another. Creative marketing and distribution (which in many cases, like the ones above, are essentially one and the same), are the only way to succeed, and that’s a lesson that I feel many budding entrepreneurs could have hammered home a little more. Of course, I feel that living the “startup lifestyle” tends to attract the more creative, out-of-the-box thinkers, so game on.

    Great post, can’t wait to read more.

    Jack Connor

    August 6, 2012 at 3:37 pm

    • I would go even one step further and say there is no “awesome product everyone needs” and its psychology/marketing that builds the craving for what you have. Probably less true in pure technology innovations but even more true in commodity markets & anything consumer facing.

      Chris McCann

      August 6, 2012 at 3:40 pm

      • That’s for sure. In fact if you have something that’s new to market I’d say the marketing challenges get even harder from a psychological standpoint. It may be tough to convince someone that they need a product upgrade, but at least there’s a basis for comparison. Something new (or new-ish) has the inherent problem of convincing consumers they need it in the first place when they’ve been doing fine without it.

        Jack Connor

        August 6, 2012 at 3:57 pm

      • I agree that it all comes down to distribution and creative marketing when you are referring to commodity markets. But for startups that are creating something new and innovative, I feel like the product needs to be awesome for adoption. Successful startups of recent history in the internet space that I can think of had something unique/new/innovative.

        Rahul Simha

        August 9, 2012 at 7:00 pm


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