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Identify Your Distribution Channels

Distribution is the gate that separates the small time, local business from the growing business that leverages it's production capabilities into the greater marketplace.

EVERY industry niche has a distribution system...it is a natural way to leverage excess capacity without doing everything "yourself." Yet many new and small companies have not discovered their own opportunities that come from scaling up their marketing and sales efforts through their industry distribution system.

Here are some niche industries, with a list of the players in the distribution system. The system is made up of information providers, product sales, service systems, and even support services such as financing and consulting.

NATURE CENTERS

If you "follow the money" you identify a critical distribution channel, but there is more: social groups affect attitudes, media affects image, and members keep the place running on a day to day basis. Here are some of the key members of a nature system: government natural resources agencies, foundations, school systems, volunteer coordination groups, members, staff, donors, visitors.

MOTION PICTURES

Leaders in motion picture production and distribution include acquisition and development executives, agents, attorneys, directors, financiers, film commissioners, producers and writers. They have conferences in which they exhibit, directories in which they are listed, Web sites they sponsor or provide information, and all have some role in the financial flow in their niche.

SPORTS

Arena management, sports merchandising, sports training, and ticketing systems

MANUFACTURING

Industrial manufacturing has long used a distribution and wholesale system in which products are sold mainly through distribution channels by many companies. That is changing. Following are some of the trends affecting industrial distribution in 2004:

Distribution is not a panacea...this sales channel also has its "issues". According to Modern Distribution Management the shrinking manufacturing customer base int he U.S. is the top curent issue and a "driver of the future." The top three trends in distribution are:

1. Offshore manufacturing
2. Distributor consolidation
3. Margin erosion.

Medium-sized regional distributes will get squeezed out as more customers go to "auction mentalities" and drive lean initiatives.

Integrated supply agreements are pushing into smaller customers -- reflecting the growth and maturing of these markets.

Sales through catalogs will grow as customers of all sizes gain mroe comfort with online purchasing tools.

Consolidation in both manufacturing and distribution is expected to be the trend for the next few years.

"Low-cost" is the trend that is taking over traditional service models.

OPPORTUNITY: Quality technical sales engineers attraction and retention will require training with vendor assistance. Sales engineers need a new vision for a prosperous future.

Growth, success is happening for:
Highe-margin opportunities fo rsmall niche distributors who have built high-value relationships and play off the "limited-service' nature of many integrated supply agreements.

Use distributor knowledge for cost reduction and productivity projects.

Consignment and vendor-managed inventory programs

Unbundling of services from product fees will need to take place. (No clear path available!)

TREND: 2003 grew slowly from a siege mentality to survivor mentality in industrial markets. Fall of 2003, resumed a planning mode. See some limited growth and a clearer picture of how their company can build its unique position in these shifting synamics.

Manufacturers have indicated their their key concerns are:
1. The need for more technical support
2. More niche representatives and disbributors to reach specific customer segments.
3. Increasing complexity of pricing and chnnel managment
4. Customer segments are shifting rapidly to alternate purchasing models.
5. Consolidation of purchasing to fewer vendors (MROP purchasing) that can support multi-plant and national grements
6. Integrators and outsourced purchasing entities are taking more of the large-customer markets.

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