Optimum Sales – Distribution Channel Development II: The Efficiency of Planning for Distribution Channel Development
If the answer to these questions leads us to decide that we need to implement a distribution channel, to succeed, the first thing we must do is a prior planning process, where the levers that should shape this commercial strategy are defined.
The first phase of this planning process is to define the market we are targeting:
- Is it a B2B market or a consumer market?
- Is it a selective or mass market?
- Is there an already established natural channel, or should we use a sales channel for related or complementary products?
Once we have answered these questions, we must establish an identification of the possible distributor profiles we need for the development of our channel. It is obvious to say that any potential distributor will develop the market for our product. To establish a correct definition of the distributor profile for our future channel, in the case of a natural channel existing, we must objectively know our position of strength in our market, and the situation of our competitors, whether direct or substitute products.
With this initial assessment, we will be able to start narrowing down which distributors we can present our value proposition to. In the case of being an allied or complementary channel, we should assess which distributor profile most effectively targets potential consumers of our products and services. In this type of distributor profile, we need to know if our product or service complements their portfolio of products or services to sell.
The definition of the distributors’ profile should not be unique; it should be consistent with the values they bring and, above all, where they bring them.
Another important element in planning the development of a distribution channel is the number of levels we need to incorporate from the moment we sell the product until it reaches the final consumer. (Wholesaler, local sub-wholesaler, point of sale, consumer, or Purchasing Center, store, or Wholesaler, systems integrator, engineering, or…)
The next step in planning the development of a distribution channel is the optimal density that our channel should have, that is, how many distributors should we have? What profile? Where should they be?
The main defining lever of channel capillarity is the potential number of consumers of our product or service. The analysis of the number of clients or consumers that a distributor can manage will determine the optimal number of distributors we should have.
The optimal capillarity of the distribution channel is one where there are no channel conflicts due to hyperdistribution that erode the price of our product or service, or where there are NO shortages of distributors selling our products, generating issues of unmet demand.
The last element of planning in the development of a distribution channel is to understand the business development motivations of our distributors and what value proposition our direct or substitute competitors are offering them. With this final analysis, we can establish a winning and differentiating value proposition.
Consolidating the analysis of all the elements we have described, we will be able to establish the operational plan for the development of the distribution channel.
At Optimum, we specialize in the development of distribution channels. If you need to build or optimize a distribution channel, contact us at optimum@optimumventas.es
| David Galve | General Director www.linkedin.com/in/davidgalve |  |
