10 - How to sell to distributors Flashcards
What does ‘selling to distributors’ actually refer to?
The process by which a supplier secures a listing with a distributor to act as a route to market.
This includes promoting the supplier’s products through various marketing strategies.
What mindset should suppliers adopt when approaching distributors?
A sales mindset focusing on persuading the distributor of the merits of their product or offering.
This involves understanding the commercial relationship and building a partnership.
What do distributors primarily seek from suppliers?
Distributors see suppliers and their products as means to achieve their strategic and commercial ends.
This includes earning and turning products to create value.
What factors can make a supplier the preferred choice for a distributor?
- Higher gross margin for the distributor
- Investment in customer awareness and brand preference
- Exclusive distribution deals
- Consignment inventory or extended credit terms
- No competing direct sales force
These factors help the distributor maximize profits and reduce risks.
What is the first stage of the sales process when engaging with a distributor?
Understanding the distributor’s needs, business objectives, and challenges.
This includes identifying their points of pain and operational vulnerabilities.
What common mistakes do suppliers make when pitching to distributors?
- Failing to grasp the distributor’s strategy
- Focusing on low-margin products when the distributor needs higher margins
- Not highlighting potential marketing campaigns
- Burying important terms in small print
These mistakes can waste time and hinder successful partnerships.
What should suppliers do to position their offerings effectively?
Analyze the distributor’s strategy and align their offerings to help achieve the distributor’s objectives.
This involves creating a bespoke business case that addresses the distributor’s needs.
What is the significance of understanding a distributor’s business model?
It allows suppliers to tailor their proposals to show how they can improve the distributor’s key performance measures.
This enhances the supplier’s pitch and increases the likelihood of success.
What is a critical differentiator for smaller suppliers in distributor relationships?
The quality of their account management and understanding of the distributor’s commercial dynamics.
Active account management can leverage the supplier’s position despite a smaller market share.
In the case of Edrington, what strategy did they employ to win Taittinger as a distributor?
They developed a proposal to supply Taittinger with a quality upmarket Scotch blend alongside Glengoyne distribution rights.
This addressed Taittinger’s need for a cash-generating product.
What approach did Uniroyal take to secure distributor support in Italy?
They sourced a cheap no-name brand and badged it as Uniroyal to dominate the low-price segment, thereby protecting their premium brand.
This strategy helped strengthen their position in distribution.
True or False: Distributors prefer to switch suppliers frequently.
False
Distributors prefer long-term relationships due to the high costs of switching.
Fill in the blank: The sales mix for the 4 mm widgets must be ______ in total.
50 percent
This is calculated based on the other product lines in the category.
What should suppliers focus on when preparing and pitching their business case?
How their proposals will help the distributor achieve its business objectives.
This includes selecting key performance measures that resonate with the distributor’s management.
What are the eight measures that suppliers should consider when pitching to distributors?
The specific measures are not listed in the text, but they should focus on those that the distributor’s management prioritizes.
Examples may include return on invested capital, gross margin, etc.
What is the importance of visibility in account management?
It helps suppliers understand how key performance measures are performing on a daily basis.
This insight allows for proactive adjustments and better support for the distributor.
What is the blended margin of National Distico’s widget category?
10.65%
This margin is against a target of 11%.
Which product line accounts for 22% of the total money margin in the widget category?
4 mm widgets – Megabrands
What is the gross margin percentage for widget accessories?
15.00%
What potential risk is associated with losing sales from Megabrands’ 4 mm widgets?
Loss of volume discounts and diminished marketing support
What action could increase the blended margin to 10.9%?
Increasing cross-sales from widgets to widget accessories
What is the sales mix percentage for 6 mm widgets in the proposed margin mix?
19%
What should be the focus for a market-share leader when making a business case?
GM$ generated from high unit sales
True or False: Smaller vendors should primarily focus on GM% to gain distributor attention.
True
