Stihl is the world’s leading manufacturer and marketer of chain saws, with annual sales exceeding $2 billion. With innovations dating to its 1929 invention of the gasoline-powered chain saw, the company holds over 1,000 patents related to chain saws and outdoor power tools. The company’s chain saws, leaf blowers, and hedge trimmers sell at price points well above competing brands and are sold only by its network of over 8,000 independent dealers. The company boasts in its advertisements that its products are rated number one by consumer magazines and are not sold at Lowe’s or Home Depot. How does Stihl’s choice of distribution channels and advertisements contribute to its differentiation strategy?
Stihl holds a big history of around a century being in the business and further with their excellent sales, it also suggests that they’re doing really well. They’ve over one thousand patents related to the products they offer which would mean that the competitors can’t copy them exactly as they do due to the company reserving the rights of the process and product. They focus on a particular segment and excel while dominating any new entrants in the market.
One of the core strategies they use to differentiate themselves from the market is their closed operation such that the product is only sold through their independent dealers and none other secondary stores (Thomas & Wilkinson, 2015). This allows them to retain more profit for themselves or provide the product to the customer at a comparatively cheaper price compared to if they had to sell it from other third-party stores.
Another element in the mix is that they have got an excellent team of support staffs and sales team in all their distribution stores. With their huge revenue, they can afford the best of the staff which is not the same for their market rivals. The items they sell are usually those which need one to have hands-on experience and also know how to use it. In case of one not being aware of how to use it, they may harm themselves or someone else in the process. So, customers look for assurance and with an excellent team, they’re able to do exactly that. They’re showed practically by the team at Stihl store on how to disassemble the items they sell, how to add fuel or other elements into the product and also how to start and stop the product offering. Further, they also teach the customer on the safety techniques and what can be done if something unexpected happens suddenly based on past similar events.
Stihl also tries to differentiate themselves from the mass by providing their website targeting to two different segments - one being the United States while the other being for rest of the world. The products they offer differ on the same as well and targeting varies a lot based on your past activities if any within the website. They also seem to have catered the website for so many different countries. What surprised me the most was they also have Nepal as one of the nations listed in the website which no other products in the category does (Stihl, 2018). Let alone these websites, even Twitter fails to recognize Nepal in their website while a store like Stihl doesn’t and shows that they care of the nation encouraging people to take action and buy.
They have a strong brand with over 8,000 stores spread around the United States and other parts through which they can cater to the needs of the customer (Stihl, 2018). Their network and communication is so strong and with the ability to be able to ship the order to the customer within 24-hours of the ordering. The closed-circuit allows them to manage stocks better, provide support to the customer and preserve their brand image while also be able to serve to the customer in the best way possible.
Stihl does advertise but they do in a lot different way from any other product in the market. Backed by their slogan "Real People Stihl People”, they tell the story (Stihl, 2018). The story of a customer, their journey and their experience of using the product and how it simplified their life. With their brand image, strong presence in the market and telling a story that resonates with the people, they persuade others to associate themselves with the product more and more.
The closed distribution channel and advertisement which speaks the language of the customer and to them directly differentiate them from the mass a lot. This allows them to connect with the customers directly on a personal and emotional level and persuade them to buy from them. This has differentiated them against all the competitors in the market and has been a dominating player in its category.
Stihl About Us. (2018). Retrieved from https://www.stihl.com/stihl-about-us.aspx
Stihl Country Options. (2018). Retrieved from https://www.stihl.com/
Stihl Store Locator. (2018). Retrieved from https://www.stihl.com.au/store-locator.aspx
Thomas, A., & Wilkinson, T. (2015). The Customer Trap (2nd ed., pp. 75-90).
Stihl has a varied range of chain saws and outdoor power tools some of which need more technical understanding and knowledge. Determining how to set you and your product apart from others may it be being more eco-friendly or having better services will eventually be the determining factor to success (Whyte, 2007). Customer service in every distribution channel of Stihl is a strategy they use to differentiate themselves. Customers do not just buy products but are taught by the sales person on how to disassemble the bar and chain, how fuel is added, process to start and stop, and how safety features are to be used (Honebein, 1995).
With their subsidiary company opened in the US in 1974, Stil Inc. started off with 50 employees and only one product. In their 40 years in the US they now have 12 branches overlooking 8500 dealers national wide and can deliver with a day. In the words of Ken Waldron, Stil Inc. national marketing director, "In choosing to make a quicker profit through mass merchants, others have, in some cases, had to cheapen their products or moved manufacturing off-shore, ultimately eroding their brand (Danes, 2014).” Thus, Stil Inc. prefers to put their distribution private and close to the market. This strategy has worked well for them.
Their advertisement on the other hand is not manufactured just to promote their brand but it is done in a form of a campaign honouring the real people who have helped develop it into a brand. With their slogan as “Real People Stihl People” it has collected real life customer comments and their side of the story with the use of the product. This has become not only a buyers review but have prompted an authentic form of advertisement that customers connect with and has been a huge success for the company. "As a manufacturer, we are expected to speak to the benefits of the products, but people are more influenced by the authentic experiences of other customers. By sharing those, we are able to increase awareness and get in front of the next generation of Stihl users. The messaging in this campaign is particularly credible, because it comes from real people-those who build, sell and use Stihl products (Danes, 2014).”
In this way their distribution channel is strong and well managed by themselves. Their individual advertisement scheme is also made on a personal and emotional level where the customer convinces the customer from their testimonial. This has been a differential strategy for Stihl and also a competitive strategy against competitors such as Husqvarna.
Danes, L. (2014, May/Jun). Stihl Shows Staying Power. Green Industry Pro; Fort Atkinson , pp. 16-17.
Honebein, P. C. (1995, January 2). If you teach them, will they come? Marketing News; Chicago , p. 4.
Whyte, F. J. (2007). Service Differentiation is a Key to Success. Pro, suppl. Contractor Success Guide; Fort Atkinson , p. 2.
STHIL is a world largest chain - saw family business. The founder of STHIL is an Andreas Sthil. First he didn’t want to involve her daughter in this business because he wanted that her daughter start some innovative work than this. But when she complete her studied from Munich University in Economy and Language After that she directly involved in same business in Marketing Department. After few years later she served as a Vice - chair a chief finance officer for STHIL Company. In 1982 it was popular worldwide and it had sales of $355 million a years. It had 5300 employees at that times now they have more than 15000 employees in worldwide (STIHL - A pioneering force for garden and power tools, 2018). They have a more than 8000 plus independent dealers. Their revenue is increasing day by day because they update their product and technology on time and they have 12 plus manufacturing plants in world, and they also have a strong, and knowledgeable human capital so that they provide a better customer service to their customer. For example, they have cordless saw technology now which is portable, and cheaper than heavy saw. So the cordless saw is for private use and it has high demand. They are the one of the largest Mechanical manufacturing company. They have many products like, Cordless Saw, fuel and oil accessories clearing saw, special harvester, and hedge trimmers. From the report of 2017, "they sold more than 10 million motor units in worldwide for the first time” (Waldron, 2014) this means they have high quantity manufacturing strategy. If we manufacturing a product in a big volume then it definitely decrease the cost of product. So that customer can buy easily those product. Now they also sold fuel, oil and gasoline which make their growth in double digit. They are popular not only in Germany they are popular in worldwide America, Europe and Asia.
STHIL Company has applied two major strategy in his business. One is product differentiation strategy and next is low cost strategy. They have a competitive price strategy (Dickson & Ginter, 1987). They have variety of product in market which already mentioned above so that they provide better customer relation strategy. First they sell their product to their customer after that they give basic training to them "How to operate a system”. So they have very knowledgeable employees. After selling the product there is any problem with the product they provide fast and reliable service to maintain those this. They have 8000 plus independent deals and they support them faster and reliable service. So that only customer have a high trust in the product and company. They have variety of product in different size and wait. They have also customize product as well. For example, they offer power saw for manufacturing and big furniture industry and cordless saw for private home application both machine can use for same purpose. So they specially design the on the basis of work and budget.
The distribution process of this company is very simple they have 8000 plus dealers in different places and these independent dealers helps to sell the product easily and these are the main distribution process. Second is, they have an online distribution channel system. Customer can order the product through online and then they deliver it to customer location. Hence, this is how STHIL uses autonomous channels of distribution and advertises its products which will contribute to STHIL differentiation strategy (Yuen & Robyn, 2017).
Dickson, P. R., & Ginter, J. L. (1987). Market segmentation, product differentiation, and marketing strategy. The Journal of Marketing, 1-10.
STIHL - A pioneering force for garden and power tools . (2018). Retrieved from stihl: https://www.stihl.com/index.aspx
Waldron, K. (2014). Stihl Shows Staying Power . Retrieved from green industry pros: http://www.greenindustrypros.com/article/11430548/stihl-manufacturing-and- -strategies
Yuen, M. R. L., & Robyn, M. (2017). Ambient Advertising: An Examination of Ad Features Influencing Consumer Engagement (Doctoral dissertation, University of Warwick).
Stihl is the world’s leading manufacturer and marketer of chain saws that produces more than 80 models of equipment with the help of skilled employees and automated technology. One of the broadest range of diverse handheld gasoline, corded-electric and battery products produced by Stihl are used in professional forestry and agriculture, landscape maintenance, construction sites and discerning households. The products of Stihl are distributed throughout the country with the help of 11 regional branches, sold through network of 9,000 servicing dealers and are exported in more than 90 countries throughout the world. The operations of Stihl is guided by the philosophy of building quality product that are sold and serviced by quality people (Stihl).
As mentioned in the question, Stihl uses differentiation strategy to distinguish itself from other competitors. One of the major differentiating factors for Stihl is its distribution channel. It wants to keep the distribution, marketing and selling of its equipment in close observation of the company. So, all the products are sold through servicing dealers as the company believe this will help in building customer loyalty and keep the customer satisfied (Stihl). By using the selective distribution channel and offering the products only through dealers, it tries to provide customers with full range of services and education to make right purchases and use the product safely (Farwell, 2008).
Selling through dealers will be beneficial because the dealers possess adequate knowledge about the products that will help in providing proper guidance and expert advice to the customers. Leveraging the website as hybrid channel to guide the customers to nearest dealer is also a strategical move to ease the customers’ access towards the company’s products. The elimination of third party in the distribution process will shorten the time of delivery and provide better customer support services. The independent dealer network of Stihl is also contributing in big dividends as mentioned by Chicago Strategy Associates (2018).
To get noticed and stand out from the competitors, Stihl also uses advertisement campaign to capture new customers and retain the older ones. The advertisement contains of stories of people using the products to make people connected and engaged emotionally. The "why” campaign conveyed the message that products of Stihl are available only in its dealers, not in Home Depot or Lowe’s because the on-site technical assistance that the products need cannot be offered by mega-stores that sort of created a buzz in the people and make the brand noticed (Waldron, 2009). Some of the advertisements challenge gender stereotype by depicting women using power tool which is not easily acceptable in the society we are brought up in. The advertisement and communication strategy are formulated by keeping people in the center that is bound to attract customers (The Drum Marketing Awards).
Thus, we can conclude that Stihl uses selective distribution to ensure delivery of quality products by quality people and advertisement is directed towards addressing the sentiments of people that makes it different than others in the market.
Chicago Strategy Associates. (2018). Winning With A Counter-Intuitive Distribution Strategy. Retrieved from Case Study: http://www.chicagostrategy.com/case-studies/stihl/
Farwell, S. (2008, February 13). Thinking Outside the Box (Stores): Stihl VP Talks Channel Strategy with Kellogg Students. Retrieved from Kellogg : https://www.kellogg.northwestern.edu/news_articles/2008/peterburton.aspx
Stihl. (n.d.). About Us. Retrieved from Corparate: https://www.stihlusa.com/information/corporate/about-us/
Stihl. (n.d.). Why Stihl Chooses Servicing Dealers. Retrieved from Dealers: https://www.stihlusa.com/locator/benefits-of-servicing-dealers/
The Drum Marketing Awards. (n.d.). Why I Choose Stihl? Retrieved from http://www.thedrummarketingawards.com/drum-marketing-awards-2016/advertising-strategy-of-the-year/thats-why-i-choose-stihl
Waldron, K. (2009, December 10). How Stihl Fulfilled Brand Promise of Supoerir Product, Customer Service. Retrieved from AdAge: https://adage.com/article/cmo-strategy/marketing-stihl-fulfilled-brand-promise/141015/