2020-04-27

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributorsÍ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ñdistributorî is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: ´ Purchase goods from his supplier for stock ´ Actively promote and sell this stock to users ´ Provide advice and service as appropriate for the product he sells ´ Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region ? in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbersÍ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About DistributorsÍ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributorsÍ sales efforts. In fact, if a manufacturer tries to encourage a distributorÍs salesforce with training or incentives, it may well suffer a rebuff. The distributor doesnÍt want its salesforce locked in to one product. Furthermore, a day out on a manufacturerÍs training course is a day (ïoff the roadî) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: nan
2020-04-27

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributorsÕ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ÒdistributorÓ is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: ¥ Purchase goods from his supplier for stock ¥ Actively promote and sell this stock to users ¥ Provide advice and service as appropriate for the product he sells ¥ Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region Ð in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbersÕ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About DistributorsÕ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributorsÕ sales efforts. In fact, if a manufacturer tries to encourage a distributorÕs salesforce with training or incentives, it may well suffer a rebuff. The distributor doesnÕt want its salesforce locked in to one product. Furthermore, a day out on a manufacturerÕs training course is a day (Ôoff the roadÓ) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: NA
2020-07-09

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributors̍ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ̱distributor̨ is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: � Purchase goods from his supplier for stock � Actively promote and sell this stock to users � Provide advice and service as appropriate for the product he sells � Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region ? in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbers̍ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About Distributors̍ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributors̍ sales efforts. In fact, if a manufacturer tries to encourage a distributor̍s salesforce with training or incentives, it may well suffer a rebuff. The distributor doesn̍t want its salesforce locked in to one product. Furthermore, a day out on a manufacturer̍s training course is a day (��off the road̨) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: nan
2020-04-27

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributorsÍ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ñdistributorî is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: ´ Purchase goods from his supplier for stock ´ Actively promote and sell this stock to users ´ Provide advice and service as appropriate for the product he sells ´ Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region ? in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbersÍ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About DistributorsÍ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributorsÍ sales efforts. In fact, if a manufacturer tries to encourage a distributorÍs salesforce with training or incentives, it may well suffer a rebuff. The distributor doesnÍt want its salesforce locked in to one product. Furthermore, a day out on a manufacturerÍs training course is a day (ïoff the roadî) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: nan
2020-04-27

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributorsÕ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ÒdistributorÓ is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: ¥ Purchase goods from his supplier for stock ¥ Actively promote and sell this stock to users ¥ Provide advice and service as appropriate for the product he sells ¥ Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region Ð in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbersÕ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About DistributorsÕ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributorsÕ sales efforts. In fact, if a manufacturer tries to encourage a distributorÕs salesforce with training or incentives, it may well suffer a rebuff. The distributor doesnÕt want its salesforce locked in to one product. Furthermore, a day out on a manufacturerÕs training course is a day (Ôoff the roadÓ) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: NA
2020-07-09

The changing value of industrial distribution?

Blogs

Industrial distribution has grown apace over the last 30 years. It has been driven by pressures of ever-increasing selling costs and the demands from users for rapid service. Industrial companies which previously managed their own direct salesforces are having to learn how to pick distributors; and they are finding out the difficulties of training and guiding distributors̍ selling efforts. The skills which the industrial marketer needs today are not those of motivating reps to seek enquiries and stimulate sales but in pulling the demand through the distributor chain. The term ̱distributor̨ is used loosely to cover a wide range of middlemen. In its strictest sense a distributor should: � Purchase goods from his supplier for stock � Actively promote and sell this stock to users � Provide advice and service as appropriate for the product he sells � Invoice and collect money from his customers. Disputes over excessive discounting by distributors. Distributors work to a list price set by their principals and offer discounts to their own customers. Sometimes fierce local competition causes these discounts to get out of hand. For example, since 1980 electrical wholesalers have been forced to offer larger discounts to stop their customers (the electrical contractors) buying from DIY superstores. The pressure on prices spirals backwards to the manufacturers who periodically try to tame the distribution network. Disputes are frequent where products are of high value (or bought in volume) and an extra one per cent is worth a fight. Office equipment, commercial vehicles and compressors have become battlegrounds with discounts the main weapon. Peace is restored if demand rises and the availability of products become restricted. There is, however, much that manufacturers themselves can do. If Mita promote their copiers as being of a higher quality than others, their distributors do not need to cut prices as fiercely. Volvo trucks with a reputation for reliability and high residual values will not be discounted to the same extent as Renault or Ford. Disputes About Geographical Areas Distributors quite naturally want exclusivity in the territory where they sell. Manufacturers may be insensitive to this issue, preferring a multiplicity of distributors in a region ? in the hope that the wider spread of sales outlets will ensure more product will hit the target. If the product is a high turnover consumable such as abrasive discs, plumbers̍ requisites, cable, cutting tools and the like, the distributor cannot hope to be granted exclusivity. In any case the buyer of the consumable seldom specifies a brand for this type of product, and the distributor wins business by offering a wide range, a high level of availability, excellent service and good prices. However, where makes or brands are specified, geographical disputes between competing distributors can occur. If buyers buy locally, as in the case of shot blasting equipment, the principal can afford to carve the country into regions. If buyers buy nationally, as in the case of trucks, truck bodies and associated gear, there cannot be any geographical boundaries, and each distributor must accept competition with others. In practice, the franchise of a truck distributor is one of around only 20 to 30 spread across the UK, and in any area a distributor has the advantage of a local following which gives a lead over his fellow franchisees in other regions. Disputes About Distributors̍ Selling Efforts and Promotion Manufacturers soon find out that they have little or no control over their distributors̍ sales efforts. In fact, if a manufacturer tries to encourage a distributor̍s salesforce with training or incentives, it may well suffer a rebuff. The distributor doesn̍t want its salesforce locked in to one product. Furthermore, a day out on a manufacturer̍s training course is a day (��off the road̨) and has to be paid for. The manufacturer recognising these limitations of the distributor is tempted to adopt a hybrid approach, using its own salesforce to cherry pick the largest and most worthwhile accounts and leave the distributor to sweep up the rest. Distrust arises and the distributor starts to ignore the franchise guidelines and even double deal, offering alternative products even though a franchise agreement may prohibit this. The manufacturer must be quite clear about the trading arrangements from the start. Amicable solutions can be worked out based on the purchasing power of customers (over a certain size could be handled direct) or by end use (military customers may be handled direct). Introduction fees can be given to distributors to maintain their interest and keep them happy.

Tags: nan