Accelerating Growth Through Better Sales & Marketing Decisions

Avoiding the Trap of Mass-Market Distribution

Mass distributors often determine prices and terms to their manufacturer suppliers because they control how these manufacturers get their products to the end users.

Yet, often, the best way for a manufacturer to brand, market and sell their products is by selling direct to the consumers. Can companies dodge the mass distribution deceit, maximize their sales and profits, plus salvage jobs in the US? 

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.”

For more information on the book, voted by the American Marketing Association, as best marketing book of 2010 and guidance on how to avoid the mass distribution trap, visit the Distribution Trap site.

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.  

Find out more about trade area analysis here http://infogrow.typepad.com/sales_marketing_effective/trade_areas then check out our market analysis guides here http://infogrow.typepad.com/sales_marketing_effective/market_analytics/.

 

Trade Area Analysis is Important to Manufacturers Also

Trade Area Analysis isn’t just for the Retail world, or even Retailers with a B2B component.  It’s also a powerful marketing tool for certain manufacturers. 

Just as some retailers have B2B components, many manufacturers have “retail-like” components in the form of multiple sales and service centers. 

So take, for example, a company that manufactures contractor equipment and parts, plus has 220 nationwide sales / service centers.  Obviously, they need to attract contractors to their centers.  No different than a retailer trying to attract consumers to their sites.  They need to know everything about the trade areas around their centers so they, too, can focus on their best customers and prospects and grow their business. 

That’s where Trade Area Analysis comes in. With effective Trade Area Analysis, they can:

- Know who and where current customers are around each site
- Determine who and where best prospects are around each site
- Discover any missed opportunities
- See where competitors are and understand the impact on profitability
- Learn who is the "best" customer/prospect by size, type and value
- Focus corporate marketing mailing to the "best" targets
- Point telemarketing to target the less profitable prospects, forcing them to raise their hands to purchase or push them into the retail centers.

What do you know about your trade areas?

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Trade Area Analysis - Moving Beyond Site Selection

A prospect recently asked me about the exact difference between trade area and site selection analysis. He needed to learn more about analyzing his trade areas, but in most research he combed through, trade area analysis was usually linked to the site selection process. He didn’t need site selection, just wanted to analyze his trade areas or, as he called them, sales trade areas around his current sites. He was confused and I can see why.

I told him that trade area falls to marketing while site selection is usually found in real estate.  Though the site selection process needs to understand the potential trade area around a possible store site, marketing lives with it and must know where customers actually come from in order to target their efforts at keeping and attracting more ‘best’ customers.  That means dynamic or current information is required as opposed to the static analysis undertaken before the site was built/occupied. Yet, surprisingly, it appears the majority of companies don’t invest in any comprehensive trade area analysis after the site is occupied.

Are you using trade area analysis to maximize sales and profits for your established sites? Please share you insight.

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B2B Trade Areas

Often a retail outlet has a B2B sales component.   For example, in the auto aftermarket industry many retail stores have an assigned sales rep who calls on local garages, body shops and automobile dealers.  The challenge as seen with Jerry Widmer’s NALP store is understanding the trade-area around the store in order to focus the sales rep on the right prospects and optimize the delivery responsiveness.  It does your rep no good to promise quick delivery as one of your key differential points, if anything but quick is what you can deliver.

How are you solving this issue? 

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