Subscribe to this Blog

Blog Archive

Subscribe Via Email

Enter your email address:

Saturday, November 11, 2006

Channel Management - Less is More

Managing channel conflict for any consumer products is a major challenge.  This challenge can prove daunting if the supplier utilizes multiple distributors. 

Distributors allow a company to expand the horizontal breadth of their channel push, however they can also dilute the factual information available to assess and manage that same challenge.  In other words you can get much more leveraged bang for your buck, but you may loose the ability to monitor and control the channel.

Suppliers can often times become besieged by multiple requests from distributors looking to become a direct representative of the supplier.  Yet a supplier will leave profit on the table if they do not take more accounts direct themselves.  If they are prepared, organized and focused on providing service to multiple customers a distributor might not be needed.  If not, then a distributor can be a lifeline.

Distributors will compete with each other and this is where the channel conflict enters into the picture.  Serialize products can allow a supplier to keep up with what is actually happening in the channel.  However, if the product is not serialized controlling the channel with more than 2-3 distributors can be virtually impossible.

Cross channel cannibalization between the distributors and sometimes between the supplier and distributors can create a competitive landscape that will rapidly evaporate the dollar value of the products that are being sold.  In an unserialized situation the optimum number of distributors is 1 and with tight border control 1 per bordered region.