Know-How Exchange : Strategy

Good question.

Currently, I am a marketer "employed" by several manufacturers. I have exclusive licenses with most of them.

Why? Not to hog all the business, but rather to maintain a congruent and peaceful playing field.

If there is more than one marketing company servicing the same product , you basically create one big mess...."too many chefs in the kitchen", so to speak....since these companies are likely to compete against each other for commissions.

Might sound like a good thing from your standpoint: to have a bunch of people fighting for their lives to sell/market more of your product. But in the end, it can results in inaccurate orders, confusing paperwork (since you have to keep up with so many marketers and their progress), and poor tracking mechanisms just to name a few ...which can all lead to wholesaler disatisfaction which trickles on down to the consumer.

Having one company to deal with is much more efficient.

The only exception is with International distribution. For example, I am in the USA, so naturally, I usually obtain US distribtuion rights, while another company, say in the UK will have EC rights etc. We work together to reach a common goal for the manufactureers without worrying about stepping on each other's feet by being in the same country.

Having multiple "continental" marketing firms is sound and organized. But having multiple marketing firms on one continent or country can lead to havoc.

I assume you are already experiencing this since you have inquired about such a situation.

Please email me for more info: jett_enterprises@cox.net

I would be glad to help!

I’m not agreeing or disagreeing with any earlier replies because they are all right.

However, I think the question is more about different channel types, than multiple similar types of channel.

The approach to deciding whether you have too many or too few channels to market depends on several things:

1. How is the market segmented?
2. Do segments gather to buy in different places?
3. What is the value chain through each channel?
4. Do channels conflict, or do they act in concert with one another?
5. Is business through channels split roughly equally, or is one channel getting the lion’s share, while the others contribute less, or, worse still, become cost centres?

I would recommend the value chain analysis of each channel to determine which channels add value to the enterprise, and some market research into buyer behaviour, and preferences, to determine where the customer sees the value.

Ultimately the segments will gravitate towards their channel of choice. You just want to hope it’s one you operate, and your competitor doesn’t!


Good Luck!

You asked about attractiveness of Internet as a direct sales channel for manufacturers and how this would impact the "middlemen"...

IMO, one of the great advantages to the Internet is that you can reach the world without the added cost of a worldwide sales force or broker.

As you alluded, one problem with selling directly to the end consumer from the Internet is encroaching upon your partners in other distribution channels.

In a small cookie company where I was VP of Marketing, we were faced with a similar question. We had a line of specialty cookies sold in specialty stores through wholesale distributors and to some mainstream grocers through a route sales force. There was a demand, however, for direct shipments.

The big conflict was price. Our distributors/sales force were worried they would lose sales because consumers would begin purchasing off the Internet. We alleviated that concern by always keeping the Internet price at full, suggested retail plus charging full shipping. This always made it less costly for consumers to buy the product at a retail outlet, so the players in our other channels no longer perceived we were trying to push them out.

As far as the point of people wanting to touch, feel, see the product in person, I think that depends on the product itself. In that regard, Internet sales are no different from mail order, a channel that is alive and well.

Taking this off on another tangent, direct selling is not the only way you can use the Internet as a marketing channel. Here are a couple of additional ideas:

Product Information: Many consumers use the Web to research a purchase before buying. Later, the purchase itself may be at retail, telephone, mail order, through the Internet, etc. By including specs and other information on a Web site, you can help your partners in other channels by helping to educate the consumer (or retailer).

Sales Leads: Rather than sell direct, you could have a form or other means on your Web site for those interested to contact you. The appropriate intermediary could then follow up on each lead.

You also asked "when is too many, many" channels? I think it is less a matter of how many and more a matter of implementation. To me, the keys are (1) being able to handle all of your channels administratively (customer service, order fulfillment, etc) and (2) effectively managing any real or potential conflicts between channels.

Here is an article about different business and marketing models for a Web site. It may give you some more ideas:
https://www.websitemarketingplan.com/MarketingObjectivesArticle.htm

Hope this helps!

Bobette Kyle

I don't that for either manufacturer or consumer you can have too many channels (more eyeballs for the manufacturer and potentially cheaper goods for the consumers) ... its the poor wholesalers I feel sorry for!

I guess we all realise that, in the end, these multi channel tactics are just tools. Each marketer will have to decide how to employ them as part of a larger marketing strategy that takes into account their industry's unique dynamics.

I bet they work well when plotting consumer drop-off rates.

I guess a really good example right now is in music, you can buy tracks in brick retail outlets, click retail outlets, SMS for ringtones.