Case: Cemex: Rewarding the Egyptian Retailers
1. How does the Reward Program fit in its overall strategy? Why did Llontop choose the Reward Program and not another incentive program for retailers?
CEMEX’s overall strategy is to de-commoditizing the product in order to avoid the price pressures. However, the Reward Program, as far as I see, totally didn’t fit for this strategy. Because the de-commoditizing strategy is to create a fresh product image for the end-users rather than design a stupid game for the channel players.
I really don’t understand why Llontop choose the Reward Program and not another incentive program for retailers. Maybe he is so proud of his “creative thinking”, but I am very sorry to say this kind of “creative thinking” is called “YY” in China.
2. Did the Reward Program motivate retailers to sell more CEMEX products?
I’m afraid not. Here we have to define what the real motivation is? Yes, making money. Where is the money come from? Yes, the end-users. If CEMEX can de-commoditizing the product and crate really value for the end-users, its products will become money making products which can bring long-term cash for the retailers. This is the real motivation for the retailers.
The Reward Program somewhat motivate retailers to built larger warehouses and motivate retailers to spend more effort on how to win the game rather than to sell more CEMEX products.
3. What characteristics of the Reward Program do you like the most? And the least? Why?
I absolutely don’t like the Reward Program for at least three reasons:
First, this program crates the fake loyalty. The Reward Program, including the Loyalty Program, is to pay for the specific retailers to keep loyalty rather than the really loyalty because of the money-making products. If the incentives are not there, the loyalty will certainly go as well.
Second, this program forgets the end-users. The company pays too much attention on creating the complex games. It both confused the retailers and its end-users. The
CEMEX’s overall strategy is to de-commoditizing the product in order to avoid the price pressures. However, the Reward Program, as far as I see, totally didn’t fit for this strategy. Because the de-commoditizing strategy is to create a fresh product image for the end-users rather than design a stupid game for the channel players.
I really don’t understand why Llontop choose the Reward Program and not another incentive program for retailers. Maybe he is so proud of his “creative thinking”, but I am very sorry to say this kind of “creative thinking” is called “YY” in China.
2. Did the Reward Program motivate retailers to sell more CEMEX products?
I’m afraid not. Here we have to define what the real motivation is? Yes, making money. Where is the money come from? Yes, the end-users. If CEMEX can de-commoditizing the product and crate really value for the end-users, its products will become money making products which can bring long-term cash for the retailers. This is the real motivation for the retailers.
The Reward Program somewhat motivate retailers to built larger warehouses and motivate retailers to spend more effort on how to win the game rather than to sell more CEMEX products.
3. What characteristics of the Reward Program do you like the most? And the least? Why?
I absolutely don’t like the Reward Program for at least three reasons:
First, this program crates the fake loyalty. The Reward Program, including the Loyalty Program, is to pay for the specific retailers to keep loyalty rather than the really loyalty because of the money-making products. If the incentives are not there, the loyalty will certainly go as well.
Second, this program forgets the end-users. The company pays too much attention on creating the complex games. It both confused the retailers and its end-users. The