The electrical industry is undergoing significant change that will impact future strategies for distributors and manufacturers. How will you respond to the changes?

1. The Changing Landscape of Distribution

2. The Electrical Industry Evolves Change takes time, and Sometimes there are Hazards

3. Difference in Perception Drives Change We See What We Want to See … but Change is Occurring Mirror mirroron the wall, who is the fairest of them all?

4. Electrical Top 200 Electrical Industry Evolves…Still ≈3000 Distributors But 38-40% Belong in Marketing Groups , 25-30% Industry $ In 2005 Groups Represented 11% of Distributors & 16% of $ Preferred Relationships With 125-150 Manufacturers National Chains Increased % of Revenue 2005 – Top 5 Represented 26% of Industry Sales 2010 – Top 5 Represented 28% of Industry Sales 2002 – Top 250 Distributors Represented 50% of Sales #250 was $15M 2005 – Top 200 Represented 60.5% of Market # 200 was $30M 2010 – Top 200 Represented 56% of Market #200 was $15M

5. What is Driving Change? Recession After Affects Construction Outlook Industry Over Capacity Customer Needs “E” for Information & Entree Lack of Succession Investment Needs Non-Traditional Competitors Tax Codes & Incentives

6. From Graybar What would you consider to be the biggest changes you’ve seen the industry face throughout your career thus far?The biggest change I’ve seen is going on right now. It’s no longer just about products - it’s about listening to customers and focusing on solutions that increase their profitability and help them achieve their long-term goals. We look at current conditions as a tremendous opportunity to demonstrate our value in the supply chain and how we work to our customers’ advantage.Bill MansfieldVP Industrial & CommercialInterview with Industrial Distribution magazine

7. A Bakers Dozen Converging Generational Issues Size Captures Market Share Diversification of Business / Market Segments Managing Sales Differently Internet Vertical Marketing / Selling Role of Sales Orchestra leaders & Account Managers vs Sales & “Milk Runs” Specialists – Market Segment / Application Services / Solutions Focus Communicating Your Message, Identifying Markets, Understanding the Customer … Marketing Supplier Relations vs. Purchasing / Buying Operations Technology Applications & Improved Inventory Management Access to Capital Tax Issues

8. Acquisition Issues Recession Realities Coming to Light Business Outlook Lack of Diversification Technology Investments Generational Issues Quick Opportunities for Growth IES to Sonepar Yale (PA) CED City (IA) to 3E HD Supply Electrical Canada to SESCO (Sonepar) Heintz to Springfield Teknikor to Horizon Solutions Key to Elliott Treadway to Elliott Broken Arrow Branches to Crescent Central Wholesale to Alameda Midstate (VT) to NESCO AVAD to Graybar D&D Tool to OneSource RECO to WESCO TVC to WESCO EMSCO to Shealy HD Supply HVAC to Hajoca EDI to Shealy

9. Customer Issues Less Time, More to Do Product Costs Comparable More Companies Selling The Same Thing Distributors & Manufacturers … Less Differentiation At Times Transactional, At Times Solution Focus On Business Issues Responsible for More Information Eaters Do Business Differently

10. Sales Type of Salespeople Order Takers, Account Managers, Solution Providers Management Role of Relationships Products vs. Solutions = Value Sales, Marketing & Training Engagement Price Management ≠Selling Role of CRM Data Analytics

12. Vertical Marketing

13. Marketing Communications

14. Catalogs

15. Promotions

16. Events

17. Call centers

18. Databases

19. Data Analytics

20. Brand Management

21. Social Marketing

22. Supplier Planning

23. Strategy

24. and more

25. Promotions

26. Events

27. Collateral

29. Automate Repetitive Steps

30. Technology Serves Productivity

31. Staff that Can Manage Technology & Multi-Task

34. One / Few Market Segment

35. Product Specialist or Service Specialist

36. Target Marketing/Service Focus

37. Technologically Adept

38. Willingness to Invest

39. Succession Question

40. Multiple Geographic Areas

41. Diversified Market Segments

42. Broad Product Offering

43. Effective Marketer

44. Range of Value-Added Services

45. Strong Operational Platform

47. Few Market Segments

48. Broad Product Offering

49. Disjointed Marketing

50. Limited Value-Added Services

51. Decentralized Operational Platform

52. Succession May Be Question

53. Limited Geographic

54. One / Few Market Segment

55. “One Arm Paper Hanger”

56. Marketing?

57. Technologically Challenged

58. Limited Financial Resources

59. Succession QuestionSales

60. As a Manufacturer As a Distributor Where Do I Want My Company to Be Tomorrow? How Should I Deploy My Resources to Support My Customers

61. For More Information on How Channel Marketing Group Can Help You, Contact: David Gordon 919-488-8635 dgordon@channelmkt.com Visit Our Industry Blog Visit Our Website www.electricaltrends.com www.channelmkt.com