Some competitors have formed partnership services with their channels of distribution

Symptom: Performance innovation, in the form of increased information and partnership services to distributors, has accelerated.

Implications for the market:

  • Many competitors have begun to tie larger customers to them by offering software packages that help their customers manage inventory, for instance, and by supporting these customers with other broad-based information and communications services.

  • These innovations can be powerful tools by which established suppliers can shut out other competitors.

  • These services are designed to help customers purchase more efficiently, and thereby significantly reduce customer costs over a long term.

  • When successful, such programs can established a real partnership between supplier and customer. The more a customer's costs are reduced through the service it receives, the more reluctant that customer will be to bring another supplier into the relationship or to give another current supplier more volume.

Recommended Reading

For a greater overall perspective on this subject, we recommend the following related items:


Perspectives: Conclusions we have reached as a result of our long-term study and observations.

  • "Commodities and Hostile Markets"
    Conventional wisdom tells us that a commodity market is one in which the products are virtually indistinguishable and the buying decisions are based on price. Conventional wisdom is wrong.

  • "Convenience: Much Tougher Than it Looks"
    Convenience is best described as short order time. It is the time between the customer's discovery that he has a need and the meeting of that need. Convenience is a very important aspect in customer decisions – more important than price.

  • "How Customers Buy"
    Customers are often faced with a large number of possible suppliers. How does the customer screen these suppliers to find the one best choice for his need?

  • "The Tallest Dwarf"
    A suppliers' goal is to take advantage of any market volatility, to take share wherever possible. Doing that requires understanding of what customers need. What are buyers buying?