Distribution business

Professional Profile
Magdy Abdel Sattar Omar,
Loca%on:
Cairo-‐Egypt

Experience:
22
years
of
experience

managing
business
unit
and
commercial

divisions,
supported
with
Solid
academic
founda%on
(EMBA).

Educa%onal
background:
B.SC
degree
in
telecommunica%on
coupled
with

Execu%ve
MBA,
major
Marke%ng
strategy’s
formula%on
and

implementa%on

Business
Special%es: Sales, Marke%ng,
Business
Development,
Product
/
Brand
Management,
Customer
service,
and
Opera%on.

Business
industry:
telecommunica%ons,
household
appliances,
and
FMCG

business
in
the
Egyp%an
market.

Profile:
l  Proven experience and knowledge of telecommunications, household appliances,
and FMCG business in the Egyptian market.
l  22 years of experience as professional Management at multinational
environment .
l  Fully competent and skilled in planning, organizing, controlling, and leadership.
l  Proven experience in building new business from scratch in the Egyptian market.
l  Reliable awareness of the Gulf area market "customers culture and habits"
acquired during his 12 years living in Kuwait,
10/8/15Mr.Magdy Abdelsattar
2

Topics
§  Steps to start!
§  How to Create a Distribution Business Model?
§  What is a Distribution strategy?
§  Sales Management.
§  Push and Pull Strategies.
3
Reff: Reliable Sources of Internet Informations

8-Steps to start
When you start a distribution business,
you need to follow a number of steps--
from financing the business to finding
businesses that are interested in your
products. You need to ensure that you
cover all the necessary areas involved.
Consider the following list of steps if you
want to start a distribution business.
10/8/15Mr.Magdy Abdelsattar 4

1
Decide what you would like to distribute.
§  You could focus on a specific
product or offer a variety of items.
Your decision could be based on a
passion or on a product that is
hard to find. Whatever you decide,
you need to partner with
manufacturers.
5

2
Do your market research.
§  Find out what the need for the
products you plan on
distributing and what
resources are currently
available. If there are
competing distributors,
determine whether you can
offer a better service.
6

3
Put together a business plan that lays out the full
vision of your new distribution business.
§  A business plan allows you to
follow a direction for making
your business a success.
Additionally, you can submit
your business plan to a
financial institute if you plan
on getting financing.
7

4
Make your business official by getting it licensed
and registered.
§  Find out what the law is for
starting a distribution
business and make sure that
you follow it accordingly. Take
care that you understand the
tax laws also. And if you plan
on making business
deductions, familiarize
yourself with the applicable
requirements.
8

5
Find a location for your distribution business start-up.
§  The size of the space you
need to hold your inventory
will be determined by the size
of your product. You should
consider starting off small as
your business builds a
reputation. Some distribution
businesses have started in
basements. As your business
grows, you can move into
larger facilities that can
accommodate your inventory
needs, such as a distribution
warehouse.
9

6
Determine how you will be funding your business.
§  You may have funds available
on hand to begin your
business, but you may still
need a loan to keep your
business running. Inventory
would be your largest cost,
unless you plan on drop
shipping, but you will still
need to consider payroll and
large expenses. If you have
home equity, opt for an equity
line of credit or loan. Another
option is a traditional loan.
Sign up for a business credit
card for day-to-day business
expenses.
10

7
Establish a marketing budget for your
distribution business start-up.
§  Put together a marketing plan
so that you can promote your
services. Opt to print
brochures for your company.
You can send these to
potential clients who may be
interested in purchasing
product from your distribution
business. You could also
submit an ad in trade journals
and magazines.
11

8
Design a catalog that lays out your
products.
§  You can send these out to
potential clients so that they
can see what you have to offer.
Another option is to highlight
a few items, and then lead
your potential clients to a
website that you can design
specifically to show off your
full inventory
12

How to Create a
Distribution
Business Model?
Steps

What are the steps?
Determine the
types of
distribution
services you will
offer your
customers.
Take some time to
understand your
cost structure.
Create a pricing
structure for your
services and
determine the
ways in which you
plan to accept
payment.
Put a plan in place
to leverage
economies of scale
to steadily increase
profitability over
time.
14

Step 1
§  This will affect your cost
structure, your pricing structure
and the profit margin that you
can expect to achieve.
§  Select the types of goods you
will transport for customers,
including the maximum sizes
and weights, and whether you
will offer specialized services for
refrigerated, highly perishable
and fragile goods and
hazardous materials.
§  Select the modes of transport
you will use to serve your
customers, whether by truck,
rail, ship or air transport.
15

Step 2
§  After laying out all of the
services you wish to offer,
consider the equipment you will
need to provide those services.
§  Determine how many trucks you
will need to reliably cover your
service area for ground
transport, for example, and
where you may be able to
secure long-term air-freight
contracts, as another example.
§  Remember that a business
model is all about bringing in
more sales revenue than you
pay out in total costs; fully
understanding your cost
structure is essential to setting
the right prices.
16

Step 3
§  Create a pricing structure for
your services and determine the
ways in which you plan to
accept payment.
§  Pricing and sales are at the
heart of your business model.
§  Determine whether you will
accept cash, checks, outside
credit, supplier credit or any
combination of these.
§  Decide on your payment terms,
including the amount of time
you will offer your credit buyers
to pay, what incentives you will
offer for early payment in full
and what penalties you will
assess for late payments.
17

Step 4
§  Put a plan in place to leverage
economies of scale to steadily
increase profitability over time.
§  Economies of scale are an
integral part of any distribution
business mode. Simply put, the
larger your fleet of vehicles and
the larger your service contracts
with logistics providers, the
lower your incremental costs
will be for each job you perform.
§  As you leverage economies of
scale, you can steadily increase
prices–due to the growing size
and reliability of your services–
while decreasing costs at the
same time.
18

Example: How to Open a Wholesale Beer
Distributor Business?
Apply for a
license to
distribute liquor.
Contact major beer
manufacturers.
Acquire a warehouse.
Work up marketing strategies based on
the research you did when assessing the
impact of other beer distributors in
your geographic region.
Track beer
trends.
19

What is a
Distribution
strategy
?

Distribution strategy
§  Distribution strategy lays out
the details of how you plan to
get your product in the hands of
your customers.
§  Your distribution strategy would
identify which paths you intend
to take in order to get your
products to the end user.
§  You may decide to sell to
wholesalers, retailers, or both.
§  Either way, you’ll need a
strategy that identifies and
outlines how you plan to move
your product so you can
generate the best return on your
investment.
21

Strategy Formulating Steps
Evaluate the
end-user.
Identify potential
marketing
intermediaries.
Research potential
marketing
intermediares.
Narrow in on the
profitable distribution
channels.
Manage your
channels of
distribution.
22

Step 1: Evaluate the end-user.
§  Does the end user need personalized service? If so,
who is the best person to provide that service to
them?
§  Is the end user more likely to purchase this product
online or at a physical store?
§  How much will you need to educate the end user on
your product? Who is in the best position to help you
educate the end user?
23

Step 2: Identify potential marketing intermediaries
§  There are only two ways for you to sell product to the end user:
§  Directly – you can sell directly to the end user through a sales force.
§  Indirectly – or you can sell indirectly to the end user through marketing
intermediaries.
§  You can typically group potential marketing intermediaries into a couple
different categories:
§  Agents and Brokers – Agents and brokers are marketing
intermediaries that act, essentially, like an outsourced sales force. The
main difference here is that agents and brokers don’t typically buy the
product from you. Instead, they sell it for you and make a fee
or commission.
§  Wholesalers and Distributors – Wholesalers and distributors are
marketing intermediaries who purchase product in bulk from the
manufacturer and store it until they can sell it to retailers or
contractors at a profit.
§  Retailers – Retailers typically purchase products from wholesalers/
distributors and resell it to contractors and end users.
§  Value Added Resellers – And lastly, value added resellers such as
contractors typically purchase products, bundle them within their
service, and sell it to the end user.
24

Step 3: Research potential marketing intermediares
§  The point here is to make sure that you really get to
know them…more than just what’s written on paper.
§  Here are a few questions that you may want to
consider asking:
§  What are some ways that you think we may be able
to partner?
§  What are some of your weaknesses that we could
potentially address?
§  What are some of your strengths that we may be
able to take advantage of?
§  Who would you sell to and at what markup?
25

Step 4: Narrow in on the profitable distribution channels.
§  We now need to find which types of distribution channels are available and
then narrow in on the most profitable distribution channels.
§  In most cases, it’s common to have multiple channels of distribution that
you manage. Different channels of distribution may have different sets of
marketing intermediaries who help you move your product.
§  Distribution can typically be grouped into three primary categories:
§  Intensive distribution – intensive distribution means there are a lot of
intermediaries. An example of intensive distribution may be snack foods;
one product may be stocked in many stores and may have many different
channels of distribution.
§  Selective distribution – selective distribution means there are a few
intermediaries. An example of selective distribution might be a particular
type of fruit that is only sold within a certain geographical area.
§  Exclusive distribution – exclusive distribution means only a few
intermediaries and those intermediaries have to carry only their
products. An example of exclusive distribution might be high end fashion
products that are only sold in very specific stores.
26

Step 5: Manage your channels of distribution
§  Manage your channels of distribution to make sure that
you are maximizing your return on investment.
§  Make sure that you track the progress of each
distribution channel against the goals that you laid out
in the previous steps.
§  If a distribution channel starts to under perform, meet
with your distribution partners and figure out where the
leak is in your distribution model.
§  More importantly, determine how you can get things
back on track and optimize each channel of
distribution.
27

Sales Management
What is the process ?

Definition
§  Businesses exist to make sales. The sales
management process monitors and measures each
staff member's ability to either support sales or do
the actual selling to customers.
29

Effective sales management
strategy
§  Setting goals,
§  Providing sales support and training,
§  Creating or updating the sales strategy,
§  And monitoring results.
30

Setting goals,
Sales management process can include goals for
individual staff members, departments, and the entire
company.
These standards must be discussed with staff. This
includes communicating updated goals based on
performance, the economy, and the competitive
environment.
31

Providing sales support and
training,
the sales management process continues by providing
tools and training to reach those goals.
This can include in-depth information about the
company's products, target audience, and sales
strategy.
Effective training is not a one-time occurrence. Ongoing
training is needed to ensure success.
32

Creating or updating the sales
strategy,
The sales manager needs to determine where any
problems lie and offer a solution.
The sales manager must review whether the product is
competitive and is delivered on schedule.
33

monitoring results.
Sales managers typically monitor results to determine if
the current sales process is working.
This review should include the entire sales process,
from taking the order to delivery to follow-up service
34

If goals are not being met,
§  Poor sales can be the result of an inferior
product, non-competitive pricing, manufacturing
or deliver delays, customer service issues, or
employee issues.
§  The sales manager will usually rely on several
departments, including:
§  Production,
§  Customer service,
§  And marketing,
to find the root of any problems.
If the product is not the issue,
§  The sales manager must ensure that proper
support and training were provided during the
sales management process.
§  The sales manager also can work closely with the
marketing department to be sure the product is
being advertised effectively to the correct target
audience.
35

If goals are not being met,
§  The sales manager must review the
salesperson's personal ability to do the
job.
§  The manager can provide more training
or personal coaching to help the
salesperson achieve stated goals.
§  If additional training or coaching is not
effective, the sales manager may decide
to terminate the employee.
36

Sales managers must,
§  sales managers must also be keenly
aware of what is working in the sales
management process so that successes
can be duplicated.
§  Sales managers need to know which
products are selling, what sales
techniques work, and must solicit
customer feedback.
37

Sales managers must,
§  Include a recognition program for top
performers in the sales management
process.
§  Employees who meet or exceed goals
generally want to feel appreciated for a
job well done.
§  Various incentives such as cash bonuses,
a larger office, time off, or trips can be
used to show appreciation.
§  Such reward programs can help a
business retain its best employees and
keep them from moving to a competitor.
38

Push and Pull
Strategies
What is the Push and Pull
model?

The tactics associated with each.
Push Tactics
§  Any tactic that results in a third
party stocking your products.
§  Trade shows demonstrate
your products or services to
win new distributors.
§  Sales visits to retailers asking
them to stock your products.
§  Competitions with retailers to
increase sales.
§  Point of sale displays to make
it easy for retailers to stock
your products.
§  Videos demonstrating the
product or service.
Pull Tactics
§  Any tactic that results in
customers demanding your
product from retailers.
§  Advertising.
§  Viral marketing.
§  Word of mouth (on-line & of-
line).
§  Social media; Facebook is an
especially good example of
push tactics as when your
friends like a product, this
can be shared with you,
making you aware of
products you didn’t know
existed.
§  Blogging.
§  Email marketing.
40

How to use the Push and Pull model?
It depends on your business:
§  For instance, Manufacturers tend to use a push strategy for
finding distributors to promote their products.
§  For example, Mars who manufacture chocolate bars, sell via
distributors. It would be impossible to manage requests to
buy single bars of chocolate!
§  They have a large product portfolio and sell ranges into their
distributors.
§  For a Service Business, they often use pull strategies, for
example.
§  Intel, the computer chip company created 'Intel Inside' their
brand ingredient programme by persuading manufacturers
that their computers would have higher perceived value if they
featured Intel in their own marketing, resulting in customers
wanting to know if the PC they were buying included an Intel
chip.
41

Pros and Cons of the Push
and Pull Strategy.
Advantages of the Push Strategy
§  Useful for manufacturers
seeking distributor for product
promotion.
§  Useful for those
manufacturing or those selling
low value items as a
distribution who is likely to
place bulk items.
§  Creates product exposure in
potentially large retail
environments.
§  Good way to test new
products in the market.
Disadvantages of the Push Strategy
§  The distributor may source alternative
products (cheaper, faster delivery) once
your product has established the
market need.
§  Distributors may not organise a formal
contract, so no guarantee of regular
orders.
§  Distributors may demand financial
contribution towards promotion.
§  Distributors may demand lower prices
to fit in with their promotional
campaign.
§  Distributors can establish dependence
and then request price reductions
§  Distributors can demand lengthy credit
terms.
42

Pros and Cons of the Push
and Pull Strategy.
Advantages of the Pull Strategy
§  Direct contact with customers.
§  Instant payment as customers
do not have credit facilities
and pay online or in store at
the checkout.
§  Greater margins as no
discount needed.
§  Customers can generate ideas
for new product development.
§  Ideal for premium priced
products.
Disadvantages of the Pull Strategy
§  Greater administration
required in-house to fulfil
customers’ orders.
§  Many smaller and one-off
orders.
43

Watch for !
To grow a business you may need both strategies. A push
strategy gets a larger volume of products out to customers
faster. A pull strategy can take longer and involve many
smaller orders.
44

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