1. Unrealistic Expectations
Category growth ranges from 1 % to 5 % in most Western countries. So how can a manufacturer demand a 10 % increase in sales in a mature market ? It’s possible if the brand plans a major increase in marketing spending. However, normally, business growth parallels overall market conditions.
2. Direct Contact with their assigned Retailers
Tricky retailers attempt to bypass a distributor by contacting the brand owner. Normally, the retailer has his hand out for more money or wants to “buy direct”.
Be polite, but ask the buyer to work with the distributor or schedule a joint meeting for your next visit.
3. Cut Marketing Budgets
Leading distributors depend on joint business plans, often created up to one year in advance. Last minute squeeze’s, translating to budget cutbacks sometimes need to happen, but still hurt. The distributor is left with delivering the bad news and also hitting the sales target, even with reduced support.
4. Short Shipments
Everyone loses due to short shipments. Distributors could be assessed penalties by retailers. Store level shelf space may be lost and need to be recaptured.
Keep the pipeline filled, particularly during peak seasonality.
5. Price Increases
Rising raw material input costs may require adjustments in list prices. The reality is that price increases are brutal to implement in many countries. Eventually, they are incorporated after months of stand-off’s. In many cases, distributors are forced to accept the price increase from the brand, but are forced to swallow the increase until they can negotiate with the retailers.
6. Endless Reporting
Some brands are guilty of a constant stream of reporting requests that take time to complete. Ask: Is the report really necessary ? Legitimate requests are forecasts, shipment results, major retailer listing maps, price surveys, and new product launch status updates.
7. Frequent Market Visits
Your partners require time to accomplish their objectives without constant oversight. Distributors appreciate short, productive visits on a quarterly basis. More frequently for a big company and less often for a small brand. Get in , conduct your business and off to the next country. Week long visits to small markets represent a distraction.
8. Margin Reductions
Distributors depend on their margin to cover fixed overheads like logistics and cost of their sales team. Often, their net margin is only 3-5 % or lower. Margin reductions or increased costs challenge their ability to operate a financially healthy business.
9. Last Minute Requests
End of the year volume pushes and rush orders are part of the business. However, everything functions better when normal lead times are respected. Separate “must do” demands from “nice to have” requests.
10. Delayed Response to Local Ideas
Manufacturers encourage distributors to create unique local approaches to brand building. Retailer buyers also call their favorite distributors with short term promotional opportunities to participate in a special event. Distributors need quick decisions on your ability to support their idea. Few things are more frustrating for a distributor than a lengthy wait while their proposal is debated by numerous levels of your company management.
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