Competitors are upgrading their channels of distribution
Symptom: As manufacturers have suffered through the last several years of hostility, the dealerships have also been severely squeezed. Many of them need the attention of the manufacturers to help them restore their profitability — and their effectiveness with their own customers. Several competitors are now working to upgrade their channels of distribution.
Implications for the market:
A manufacturer should consider the merits of two different approaches to helping its channels of distribution.
Reduce the costs that the dealers incur in ordering, accepting, and selling goods from the manufacturer.
Improve dealers' revenues by clarifying territory protection and by instituting programs to help their distributors market more effectively.
Either approach to helping the distributors will produce a stronger and more effective dealer group in the future. The better manufacturers will follow one or the other. As a consequence, the performance bar will rise for all suppliers in the market. Within two to three years, the market will be much more competitive.
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.