Mark Twain once said, “If you don’t like the weather in New England now, just wait a few minutes.” His point about constant change could also apply to channel strategy. Many companies don’t pay enough
attention to market forces that will affect their channel success; hence change sneaks up on them. To stay ahead of these changes, here are the top ten reasons Frank Lynn & Associates has identified that cause companies to rethink their channel strategy.
#10 The Aftermarket
Manufacturers often overlook best practices, market changes and competition in this highly profitable segment of their business
An acquisition sets off a broad series of choices manufacturers must make about their potentially combined channel programs. Acquisitions at the distributor level can significantly shift the power in the relationship (see #7 below).
#8 New Competitors
New competitors have the freedom (or necessity) to explore novel routes-to-market. To cut off the competitors, market leaders may need to consider some unique strategies, such as creating a second brand, developing a skunk-works approach, etc.
#7 Shifts in Channel Power
A manufacturer can innovate to gain power, or it can allow its products to turn into commodities and hence lose power. A channel can add more value and gain power or it can merely book orders thereby losing power. Power is a key component of channel strategy and manufacturers need to constantly measure it, track it and devise plans to retain and/or increase it.
#6 New Channels
Entrepreneurs are always looking for ways to improve upon the existing methods of distribution. Probably the best example of this today is online resellers. Manufacturers need to consider if, when and how they should utilize the new channel and under what set of rules.
#5 New Markets
To successfully cover new markets manufacturers often must develop new channel policies, programs or partners.
#4 New Products
truly innovative new products often have sales or support requirements beyond the skills of existing resellers. Knowing when and how to match new products with the right type of partner is a key element of channel strategy.
#3 Changing Economics
Channel roles and responsibilities shift. Manufacturers must make sure they compensate their partners in a manner commensurate with the functions the channel currently performs.
#2 Excessive Channel Conflict, Insufficient Coverage
Strategically, manufacturers need to determine which of their actions will lead to conflict, how much conflict is acceptable and which mix of tactics will work best to manage conflict.
#1: Shifting End-User Needs
End-customers’ needs often evolve slowly. A shift in end-user buying, usage or support requirements is probably the biggest factor driving the need for a new channel strategy.
To read the entire article please Click Here. To learn more about these 10 factors or to discuss other aspects of your channel strategy you can reach Bob at email@example.com or 312.558.4808.