2. Learning Objectives:
• Understand the value Distribution brings to
the end-users, contractors, manufacturers
• Understand the roles of the various channel
members, and how they impact Distribution
• Understand the types of distribution models
• Understand Co-op marketing
• Understand Spa’s (special pricing
agreements)
3. Wholesaling:
• Accounts for 10% of every consumer dollar
spent in the U.S.
• Employs approximately 7 million people in the
U.S.
• Distributors are a type of wholesaler
Welcome, lunch, 20 years ago when I was I/S, I would have been pleasantly surprised to be in a room with 90+ other female professionals in the industry. My name is Desiree Grace, I am a district sales manager for Panduit. Our team of 14 direct sales reps and I are responsible for growing sales of our network connectivity and electrical products in 5 mid-western states. I’d like to get to know a few of you. Could I get 4 or 5 volunteers to tell us what they do, where they work, and how long they’ve been in the industry, please?
Have you ever heard the phrase “cut out the middleman?” The purpose of today’s conversation is to address that misconception.
During our conversation today, we’ll discuss
Feel free to ask questions as we go along. This is a conversation. Sound good?
Wholesaling is actually those activities that involve selling to other merchants or to industrial, institutional, commercial users or contractors. Merchant Wholesalers actually OWN the products they sell. According to the bureau of Labor Statistics, out of the approximately 7 million employed in wholesaling, 1, 679,500 are female, as of March 2012. (24%) The good news? 2012 NAED National: distys 208, women 16 (7.7%), mfg 254, women 23 (9%). Combined total 462, women 39 (8.4%), highest percentage ever, courtesy of Egret Consulting.
The value of distribution can be transactional, logistical, or facilitating in nature. Let me expand.
Sales force: Relationships, information, customers, coverage
Product assortment: complementary goods and services, options good, better, best, such as contractor and industrial grade wiring devices
Cost savings: bulk buying
Warehousing: local inventory
Delivery: quick, with local transportation and associated costs and timing
Financing: pay manufacturer, “carry” customer, possible extended terms, lein-waiver issues
Risk: obsolescence
Technical expertise: help end-user, proactive/consultative, reactive/service
Other effeciencies: inv. Management, bin-stock, consignment, kitting, assembly, market information and research, pre and post sales activities
Successful Wholesalers add value to the channel, They perform 1+ functions BETTER than either the manufacturer or the customer.
Customers/ End-users BENEFIT from getting the goods and services they want when they want, where they want and in the f
Several factors affect channel choice and strategy:
Environment: economic, demographic, cultural/social, regulatory, legal, political, technological
Consumer:
Product:
Company business model
Manufacturers ask, when considering channel choices,: What’s the best coverage of the target market: Exclusive, Selective, Intensive? What will best satisfy the buying requirements of the target market? Info, convenience, variety, etc. Which channel will help us be profitable? Exclusive give manufacturing the most control and makes the most demands of distribution, yet offers exclusivity in a given geographic area, Intensive is the opposite and seeks to set up as many outlets as possible for ultimate in customer convenience and choice. Selective is the most common and seeks to find a middle ground.
Factory Direct: control, mindshare, company initiatives, high cost
Rep Agency: (NEMRA), agent wholesalers actually have inventory, overall, pay for performance, straight commission. Great for low sales potential areas, and introduction of new products. Expectation of NON-COMPETING lines. Sometimes a transition occurs from rep agent to direct model.
Co-op: “cooperative” marketing: relationships, brand management, ROI, cost-sharing. Can be % of sales, flat rate, per event. Push vs. Pull.
Pricing: Goal: profitability. Example: T-8 lamps 1.25 vs. .50 for large end-user. Maintain market. Spa’s: volume, type of customer, etc.
Rebates or JBB vs. into stock: control, margin retention, protection. “Cost” to manage minimal with electronic transactions.
Direct marketing NOT Direct Sales to end-user. That said, it happens. Why? ABC, competitive opportunity, low margin, customer preference. Find out ahead of time when/how/if this happens. Well-informed is well-prepared. Dual distribution: different buys via different channels.
Example: New high school Greenfield vs. new smart classrooms on first floor Brownfield.
