What kind of distribution channel will you chose if you are a manufacturer?
My humble opinions on direct approach and distribute through distributor.
Distribution channel - Direct
Advantages
1. Better control over pricing and delivery time.
2. Ensure quality after sales support ( in term of technical).
3. Aware of market movement - Price, technology, demand.
4. Direct feedback from end-user.
5. Fast response to customer inquiries.
Disadvantages
1. Single product. Some customers prefer 'one-stop service'.
2. Limited market penetration - manufacturer tend to forgo 'small' customers.
3. Different cultural - example, manufacturer may not entertain 'special arrangement', especially MNC.
Distribution channel - Distributor
Advantages
1. Distributor represent principle to provide one stop service.
2. Market penetration - Let the local deal with local.
Disadvantages
1. Information/ feedback from end-users are filtered, somehow.
2. Conflict of interest - Occur when 2 distributors compete in a same battle field.
3. Almost 'ZERO' relationship between end-users and manufacture, therefore, low brand loyalty.
4. Company revenue depends on third party.
5. Less market awareness - technology, demand and pricing.
Distraction. There should be points. Please feel free to share you views..
Thursday, November 20, 2008
Something brief about business... real brief
Posted by Max Ee at 11/20/2008
Labels: maxyv business, maxyv finance
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2 comments:
Bro, if I am a manufacturer that's keeps a long term view of things, it's going to be like this:
1) Find a trusted distributor I can rely on. Work with the distributor on realistic and flexible expectations. This is actually the hardest part.
2) Give him a huge profit margin to work with. This is the easier part. A good profit margin will give distributors a better room to plan their strategies, and avoid resorting to 'hanky-panky' models, the typical member-victimise-member scheme. The latter is for manufacturers who are going for the quick bucks.
3) Of course, once the distribution rights are given, stringent monitoring must be practiced, not just for quality control purposes, but also to send the message to the distributors that we mean business.
Bro, thanks for your comments. however, there are some values which i would like to add on to you views.
1. trusted distributor, agreed - is the toughest part in any business. On top of that, the partner need to be real aggressive, a business do not rely on someone who is in comfort zone.
2. personally, I find Huge profit for distributor to work only workable when your business is the market pricing leader. That's means you set the market price. Then, you are allowed to play with your transfer price. Else, it will end up with nothing but price war. example, Toyota altis is the benchmark ( pricing ) for 1.6L car in SG.
3. 100% agreed. Sometimes, 2 distributor in one area work better than we expect.
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