Handing over Demand Creation

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As a note from Allen Ray: This is a Duplicate Post from 1-22-2015 due to some technical difficulties. All comments previously submitted have been re-created.

It tis the New Year of 2015 and most distributors have successfully handed over demand creation to their customers. That’s right. You read it correctly. Very few distributors are actually proactively in the business of demand and value creation.

Nay, Nay say some of you.

The actual business that distributors are now in, is responding to customers needs and fulfillment of orders. The distributor’s customer has been so successful in telling the distributor(s) how they will buy, that distributors are using more and more Special Pricing Authorizations (SPA). Which would cause most business people to want to conduct error free business and increase margins. Such is not the case. The order fulfillment function for many of these distributors is based on price and generally everything else is secondary. Some distributors will jokingly laugh and say that their sales people have taught the customer how to buy. I suggest you need to change your thinking.

During the 3rd quarter of 2014, we asked a fairly large number of distributors about just how smoothly their own business operations were running and were they increasing their margins. Along with those questions, we talked about creating demand and value services. We are happy to report that many distributors were having banner years with some bragging about increased margins. The problem was the most doing the bragging were in the center part of the US and one suspects it might have something to do with Oil and Gas.

Back to the subject of demand creation. just listening to distributors talk about their businesses, most don’t talk about demand creation. Many will talk about taking market share, but they equate that with taking a project, not creating new demand for product. Demand creation is about looking at a number of different existing and potential customers and actually making the call to sell products and services. In other words looking at new customers/markets to sell your brand and products to.

So the two sixty four dollar questions are:

• Is this a distributor role?

• How do you as a (manufacturer / rep and distributor) go about creating real demand for your goods and services in today’s market place? What are you doing that works or is demand driven by those who decide to invest in development?

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An experienced distribution business owner and industry consultant supporting distributors and manufacturers in areas of operational efficiency, ERP system evaluation and effectiveness, price optimization and profit generation. After over 40 years in the industry, Allen retired August 2016.

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