SUMMARY OBSERVATIONS -
or limited distribution
want control over their marketing area so it can provide them
with a profitable return. The market place judges what is
reasonable, and what is not. Distributors want a balance of
suppliers so no one dominates them.
or contract pricing
all want the lowest price available, but they know it will
vary by their commitment level. What does comes across as
important are: (a) known price schedules, (b) ability to ask
for help in special circumstances (c) "a level playing
field" and (d) structure to the program.
discounts or incentives
do generate visibility and sales activity. Major hard goods
distributors are well financed and take advantage of volume,
promotional and/or payment discounts. The moderate size distributor
can, if the benefit is significant, by switching buys. The
minor distributor does not have the where-with-all for major
purchases and sell to non-price sensitive customers.
want to have confidence that their order will be delivered
when promised; they do not want surprises. The reason is that
their customers are depending on them. Confidence in delivery
is paramount, whether a small or large order. Delivery problems
make them look bad.
want their customers to be satisfied with what they purchase.
This is defined by performing as expected. With production-oriented
customers, this is even more critical because downtime is
far more costly than the raw materials. There are different
quality levels and most distributors have become very good
at matching them to the customer's need.
carry a myriad of products; supplier support is essential.
Manufacturer support can include market focus, leads, product
knowledge and a communication link. Field reps have to be
seen as working with the distributor. The Internet is quickly
becoming a support vehicle tool.
of a distributor is determined by their focus on manufacturing
and distribution cost efficiencies in order to provide "total
program value" and "pull-through demand". Distributors
continue to represent lines that generate repeat business.
New lines have to provide more value, features, uniqueness
programs must allow the distributor to be viewed as an extension
of the manufacturer and be recognized for his valued support.
It is not uncommon for successful distributors to display
reward plaques from their suppliers, be on Distributor Councils
and have logo-wear.
various distribution channel assignments, Hadley Associates
has observed these trends during the past five years:
Has heightened as a business strategy, led by more
demanding customers and competition; this is defined in
many different ways; it is essential that "customer
service" is well understood by all concerned
"Niche-type" product line strategies and
programs are winning; some manufacturers are very creative
in designing products and leveraging specialty items; technological
advances have become a given; most companies, unfortunately,
underrate the importance of customer feedback in product
Continues on three fronts, namely with end users, distributors
and suppliers; has not changed in most industries; continue
to see more concentration among the larger and the addition
of more niche suppliers
Growing as a strategic advantage, especially guaranteed
cost reduction programs; technical support becoming more
valuable than the field sales presence; the Internet has
become a real force in technical areas
Remains the single most important variable in marketing;
few firms excel at it; for most companies, effectiveness
varies widely from excellent to poor; the Internet is becoming
a formable substitute
Implementing change is taking less time with the better
distributors; often it is the "new" distributor
who is being more successful at it because he has little
to lose and has fewer "favored" practices to justify
Low key success factor for most distributors; suppliers
and producers are the leading force in computerization;
the better distributors are adapting because the investment
in proprietary system is too great
Some independent distributors are becoming more retail-oriented;
will not be the primary channel for years to come; e-commerce
maybe a more successful business strategy for most distributors
customers' needs, Hadley Associates recommends both manufacturers
and industrial distributors review their situation every 3-to-5
years by assessing the following:
Level of distributor competition
Feedback of performance
New product introduction
Suggested inventory levels
investment and turns
Product line profitability
Brand visibility and loyalty
Associates is well experienced in completing program assessments
and redefining distribution strategies. Please contact us
if there is a need to revisit your situation.
Associates is a consulting firm focused on industrial market
research and facilitating strategic change. Drew Hill, principal
consultant, is a certified focus group leader and management