Markovsky On Distributors' Leverage: Benefiting From Your Manufacturers' Brands And Services
In today's extremely competitive marketplace, it's simply smart business to use every tool available to you. Even the slightest advantage can result in getting the order - or a larger order! Perhaps two of the most often overlooked tools that distributors possess are (1) the power of their locally captive brands, and (2) the ability to leverage the services provided by the manufacturers they represent. Because distributors today are often forced to either compete at the commodity (read: price) level or differentiate themselves to command a higher price, brand and additional services have taken on significantly greater importance. Let's consider each aspect in turn.
BrandsThere's an old marketing expression that applies to distributors who hold exclusive rights to brands in their territory. It says that there are two things that the competition can't offer: Your captive brands and you! That simple phrase speaks volumes about differentiation. Businesses representing premium brands, who have embraced this philosophy, usually have less to worry about with respect to product commoditization and its resultant price struggles. Businesses that represent lower level brands, or who haven't embraced the philosophy, continue to cut margins to get the order!
Brands are defined as a collection of personally perceived attributes that portray the good or ill will felt by customers toward a specific product or service. Brands can be a powerful tool in both differentiating you and establishing a higher perceived value for your offering. To the extent that you can use a brand to establish a “better” perceived deliverable in your customers' minds, they will often be willing to pay more for it. For example, consider the possibility of a $15,000 entry-level Lexus car. If such a product were offered, it would undoubtedly be perceived as a much better product and value than a $15,000 version of a lower perceived brand. In truth, the Lexus might be de-contented to a point where it is completely inferior, but the perception in the marketplace would clearly favor the highly perceived Lexus brand.
Even if a customer isn't necessarily willing to pay more for a superior brand, at the very least, its inclusion in your offering may sway the project your way, assuming reasonably comparable pricing. The point is that if all things are equal, people will go with a more highly perceived brand of product. It has, however, been our experience that distributors quite often avoid pressing their premium brands as a way to establish a greater value in their offering.
Leveraging the perceived strength of your brands is a great way of either supporting a higher overall price or differentiating your bid from others, at a similar total price.
Special ServicesPoker players like to get ahead in the game early so they can “play with the other guy's money.” It's a special advantage in knowing that you may be able to participate and win, with minimal risk of your own resources. To a point, two-step product distribution often provides a similar advantage to wholesale distributors. Consider this: Both the wholesaler and the manufacturer share similar objectives - that being to sell the manufacturer's products. However, the manufacturer often has resources made available to specifiers and distributors that can be leveraged into additional business, without cost to distributors.
A number of manufacturers offer specialized services, which are available free of charge, aimed at enhancing their offering to specifiers and buyers. These services, such as Haws' Engineered SolutionsTM, provide added value to your customers, without any cost premium to you. By way of example, the Engineered SolutionsTM service enables your customers to consult directly with the manufacturer's engineering staff on ways to tailor standard products to fit specific and unique applications. Oftentimes, customer involvement with the Engineered Solutions team results in both winning the order over competition and winning it at a higher than standard products price.
Between the leveraging of captive brands and special services available from manufacturers, distributors have a unique and often overlooked opportunity to differentiate themselves from their competition. Differentiation, other than by price alone, is an incontrovertible reality of business success in the coming years. Happy New Year… now, go sell something!