In a powerful book called The Distribution Trap: Keeping Your Innovations from Becoming Commodities, co-authored by professors Andrew R. Thomas, Ph.D, assistant professor of international business at The University of Akron and Timothy J. Wilkinson, Ph.D, professor of marketing and interim dean at Montana State University, they explain why mass-market distribution can be a problem. They write:
“Mistakenly, many companies see deals with Mega-distributors as the way to boost sales and market share. In reality, the Megas, as we call them, live by high volume and low prices. The Megas use their powerful leverage to demand price cuts and other concessions from their suppliers. Companies end up with thin profit margins, and their innovative products and services are often treated as little more than commodities.”
Manufacturers can help their Mega and/or non-mega distributors to better target and engage their best customers and prospects through market analysis. Enabling manufacturers’ reps with distributor trade area and market share knowledge strengthens the relationship between distributor and manufacturer.
What distributor doesn’t want to know how to sell more of their product and to whom, regardless of their size? A manufacturers’ selling no longer stops just by putting out a product through a single distribution channel. Savvy manufacturers recognize that the amount of attention they get from a distributor is directly related to how easy it is to find prospects and close sales.
I have yet to help a manufacturer understand the trade areas around their distributors and not find countless opportunities to grow the business either through the existing channels, or other channels.
For more information, check out our market analysis guides here.