- Market leaders take an end-customer view of distribution and from it create precise refinements in how their channel systems meet the distribution needs of end customers. Their ultimate goal is ensuring that end-customers’ distribution experiences with their own products are demonstrably better than with competing products.
Diversification. Market leaders know deep down that there is peril in viewing distribution needs as homogenous. They work diligently to see the trees for the forest. They ensure that unique channel solutions are crafted individually for every potentially profitable segment of customers. Diversification is just as essential in distribution as it is in other portfolios. One-size-fits-all never works everywhere or always.
- Thus, attractive as low-cost channels can be, both Dell and Wal-Mart have seen their growth stall as they reach the saturation point of efficiency-minded customer segments. Both are now struggling to branch out. If they are successful, it will be by structuring direct sales, the Internet, and channel relationships into a portfolio of activities designed for unique customer distribution experiences.
Discipline. There is a critical distinction to be made between unhealthy channel conflict and healthy channel competition. Conflict tends to be marked by price wars between distribution channels that lack differentiation from each other. Healthy competition, on the other hand, flourishes when different channels create distinct sets of distribution experiences to attract different segments of end customers.
- Minimizing conflict and invigorating competition requires discipline in channel portfolio design and management. Above all, it requires making sure that channel mix, intensity, and management decisions are true to customers’ experience demands and shared manufacturer-distributor beliefs about how customers segment.
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Manufacturers and distributors can do a much better job of acting in concert with each other, assigning and coordinating downstream programs and activities to create powerful new total customer experiences.
By focusing together on experience innovations, they will give end customers higher, more desirable value and drive market share and profitability gains.