For every one salesperson a company has servicing market there are probably several wholesaler salespersons or other types of trade dealerships covering the same market base of customers. This is an enormous resource available to help us build our businesses if we can develop and exploit it to mutual advantage – that is, to the benefit of both the supplying companies and the wholesalers or other trade distributors.
The role of the wholesaler or trade distributor
In most market sectors wholesalers exist at two levels:
The typical key functions of the wholesaler or trade distributor in the distribution chain include:
In some market situations it might be advantageous for a supplier to form special relationships with a few key wholesalers who can act as sub-distributors, supporting your efforts to develop the brands and the market,including:
If the supplier expects his or her key wholesalers to match this outline of their role, then his or her first priority will be to address the main concern of most wholesalers that the supplier is in direct competition with the wholesalers in supplying products to what they see as their traditional customer base. When working through a network of wholesale distributor or trade dealers who you expect to support your products, complement their activities rather than compete head-on for sales to the same customer group.
Auditing the wholesalers
Since it is highly unlikely that all wholesaler swill add value to the product development and distribution activities in the market, the supplying company should start by auditing the wholesalers, with a view to identifying:
And to this we should add one more key question:
The sales manager can use the earlier principles of trade channel mapping to help him understand the wholesale structure for his or her market. Table illustrates a scenario for a supplier of electrical products into various trade channels in the two main market sectors of retail and trade sales.
In this example, the company is looking to expand sales and distribution in its southern area, which has 40 per cent of all national outlets(according to the company’s best information).
The company, in turn, only covers with direct selling calls some 1198 customers from 2707 in the southern area, i.e. 44 per cent outlet coverage. The objective is to increase that by developing relationships with a number of specialist wholesale distributors. Data could be collected by direct contact with the distributors, and asking for cooperation.
Obviously, there would normally be a significant overlap with often more than one distributor servicing the same customers. That aside, the overall information did show just how important the wholesale sector was in terms of the outlet universe it served, and highlighted some key wholesalers worth special attention to develop cooperation.
The analysis shows the supplier’s sales manager that the 10 wholesale distributors covering the southern area have a total of 63salespersons, and the 2707 outlets in the southern area are receiving a total of 8764calls from the various wholesalers – meaning an average of 3.2 wholesalers were calling on each outlet.
Since the supplier covers only1198 outlets (those he views as the more important outlets) with his eight salesperson sin the southern area, the opportunity to expand distribution and outlet coverage by working more closely with some of these wholesalers is apparent.
The example analysis also shows that some wholesaler distributors are relatively stronger in servicing particular trade channels,and that kind of knowledge is useful toga supplier’s sales manager in deciding which wholesalers to focus his or her attention on and in developing programmers to support individual wholesalers.
In this example, since the supplier covers all the DIY superstores, and is strong in covering the category A and B outlets in the other trade channels, he might want more supporting covering high street multiples (smaller,local chains), independent hardware stores,and the multiplicity of small trade dealers who supply trade electricians.
With that objective, while he might decide not to restrict the sale of products to any creditworthy wholesaler, he might focus on developing special relations and customized support activity with wholesalers B, E and I, but Cand G might be worth some additional effort to develop as they have some niche trade channel strengths. The sales manager looking to improve his or her market distribution and management through wholesale distributors and trade dealers can:
Problems in managing wholesalers
The problems a supplier normally sees in managing wholesalers arise at two levels:
Attitudes of wholesalers
The main concern of most wholesalers – that the supplier is in direct competition with them – is usually expressed in two ways:
Any programmer to develop and manage wholesalers must address these wholesaler concerns, and we will look at ways of doing this in a later section.
Limitations on the supply company’s ability to manage wholesalers
Wholesalers in general will have limited resources and a lower level of management and selling skills than supplier operation sand sales personnel. Some of the typical problems encountered by suppliers in managing wholesalers are given below.
For manufacturing suppliers to progress their relations and develop their business through wholesalers they must recognize and tackle these problems.
Developing the partnership and motivating distributors
Suppliers will only achieve their objectives for the brands in the wholesale sector by directing efforts to helping wholesalers achieve their own business goals. Both supplier and wholesaler have a common interest in developing sales volume. The supplier is well placed to help the wholesaler generate more volume, and also has the expertise to contribute to the other areas of wholesaler interest.
In many markets, where a manufacturing company does supply wholesalers, the traditional relations between supplier and wholesaler is largely based on long-term familiarity with each other, what we might term ‘personal relations’, but the wholesaler’s feeling that the supplier is also the ‘competition’ is not reduced. In large part this is because the supplier sells products to the wholesaler, but then does little to support its products through the wholesalers, but does have it sown active sales force out promoting direct.
We can build on traditional personal relationship sand focus on an adding-value approach to developing and managing wholesalers (see Figure ). This is the partnership approach to motivating and managing wholesalers. Supplier and wholesale reach focus on what they can do best in the partnership.
The focus of value-adding activities
The manufacturing supplier’s sales team should focus on those selling activities that add most long-term value to trade development and management, and therefore require greater skill and product knowledge, such as:
The wholesalers can focus on those activities that may seem to require less specialist skill and add less long-term value, but are very important in building the market, such as:
The focus of activities with key wholesalers must be aimed towards building trust, commitment andcooperation. The manufacturing supplier will do this by:
Practical ways to add value to wholesaler relations Once you have taken action to demonstrate this commitment to developing your wholesalers,there are some specific activities you can take to add value to your relationships with your wholesalers. These include:
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