The Importance of
Distribution Channel Marketing
With the development of global markets came an
excess of manufacturing capacity.
This has dramatically changed the marketing
environment.
From the Post War years into the 1980’s,
manufacturing capacity was the bottleneck in the
supply chain. Finding operators that could produce
to deadline was always a challenge. Companies could
produce for one turn a season with little
flexibility.
It was difficult to maintain a supply of retail
winners. This limitation helped protect margins
quite simply through scarcity.
Today’s worldwide markets for the first time offer
sufficient capacity. Manufacturing is no longer a
bottleneck. It is also no longer a barrier to entry.
Somewhere in the world is the equipment and the
availability to produce.
Readily available manufacturing capacity has also
affected product differentiation.
Competitors can mimic a winning design quickly and
inexpensively. The result is the consumer has
alternative options for substantially
undifferentiated products.
When products are not different, price becomes the
driving influence.
With excess manufacturing capacity, volume is king.
Everyone is seeking volume production to keep plants
running efficiently. Retailers are finding products
more readily available with incentives for volume
and facings.
The Net Result
Marketing today is less a battle of product and
more a battle of distribution.
There are a multitude of fine competitive products
available. Access to distribution has become the
bottleneck.
The Opportunity in Channel Marketing
The biggest sales opportunity you may be able to
achieve, is the development of a new distribution
channel. Open a channel, become a leader in that
channel and your competitors may be blocked from
access for some time.
Examples of Emerging Distribution Channels
Hearing Aids
Hearing Aids were always sold by audiologists
wearing white coats in small shops. When
manufacturers opened Costco to serve the aging
boomers, the market place changed substantially.
Airport Food Service
As the airlines cut their overhead by
eliminating onboard food, distribution opportunities
opened up for fast food services in airports. The
barrier became retail space available in the
terminals, which savvy operators grabbed.
Channels in
Changes
Physician Offices
When will physicians begin to offer retail sale
of non-prescription products?
As reimbursement reduces, physicians will
increase their revenues with retail wrist and ankle
braces, plantar fasciitis solutions and such.
Look for retail displays to begin creeping into
doctor offices.
Airline Tickets
When will a point-to-point fixed price airline
begin to sell impulse tickets through a major
supermarket chain?
Right next to the flowers and candy, airlines could offer $79 flights to nearby cities
for weekend getaways. The majors can’t follow because
their pricing strategy is too complex.
FedEx or UPS
Can these giants steal the baggage service from
the airline gravy train by delivering luggage more
conveniently for less money? It is getting very
close.
Knee Bracing
With the huge increases in osteoarthritis
bracing and preventive ACL bracing, why can’t
patients be conveniently
fitted for a brace at Costco? Insurers require off the shelf bracing more
frequently making it even easier for sporting goods
megastores, tennis clubs and golf clubs to all begin
fitting braces for their customers who certainly
don’t want to visit an Orthotic & Prosthetic shop.
How else can your product be distributed? Who else
can use it? Who else can profit from it? Where can
you sell where usage isn’t bottlenecked? Creative
ideas here pay huge dividends.
Solve the Call
Pattern First
Establishing new
distribution isn’t easy.
Once you’ve had the idea, you’ve got to convince the
channel to try it.
More importantly, you have to decide if your current
sales force will call on them.
The call pattern of your sales force will be the
biggest impediment to selling the new channel.
Can your current sales force conveniently make the
call?
Will an independent operator even be able to make
the call?
Do they have the expertise to make the call?
Will it pay them to make the call?
Do you need a different sales force?
The channel won’t open if someone doesn’t think
through these obstacles.
How Stratcom Can
Help
Channel marketing is
one of the biggest long term revenue opportunities
you can develop. We love the creative
challenge of finding and developing new
distribution.
Stratcom offers expert distribution channel
analysis.
We can offer hands on help in:
- Evaluating or creating the plan
- Validating and revising the plan based on the
sales organization.
- Creating the Business Plan and testing it with the
new channel.
- Implementing the Final Program.
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