Know-How Exchange : Student Questions

This is done all the time in the B2B industry where we call it "brand labeling." In particular, if your company has a portfolio of products with some holes in it and the investment to develop the product yourself doesn't pay, you can market a competitor's complementary product under your label. This works particularly well if you are a systems provider and the competition is a "components supplier" since your business is heavily based on your "value-added" services versus the components. A reason you'd do this is if your customers see benefits in having a "one-stop" shop for the products versus maintaining multi-vendors. Generally, you want to select a competitor with whom real competition isn't huge because of channel differences or geographic market differences. Guidelines for this kind of business is that you want iron clad contracts with him on guarenteed deliveries, leadtimes, pricing, etc. This is risky business. If you have better connections to customers (in a geographic area) and they are giving you information for defining the "next generation" of products, you could enter into an agreement with your competitor to develop the new product with your development funding and then ask for an exclusivity agreement or a non-compete agreement where he is bound by contract not to sell the product you funded for a period of time that allows you to get a return on your investment. This becomes complicated, however! Get a good IP lawyer in your camp.

Those are my thoughts. I hope this helps.

Wayde

Start by figuring out (and explaining to us) what value you add? Why should anyone buy from you when they can get the same product for less by getting it from the manufacturer?

If you don't add some value, I don't think there's any way to build a sustainable advantage. Do you ship faster, give better payment terms, have superior customer service, consultative sales people who solve other problems for your customers, etc.?

Or do you just expect your customers to be stupid and pay a premium because you want them to? If this is your answer, your customers probably won't survive, and you'll both be in deep trouble.

Ask the question: Why does my supplier sell thru me? He obviously knows you're reaching a market he can't. You have the option of ceding that market slowly or sealing it tightly.

As most everyone has said keep adding value to the point (don't forget to keep a profit!) where no one would consider buying "their's" without your value.

Any more specifics you can add?