Most laboratory product manufacturers use overseas distributors as a route to market as it is fast and is the least expensive alternative. However, developing distributor networks is one of the most difficult management tasks as the manufacturer has little power or authority over their partners or potential partners.
Because of the dynamic, high tech nature of the products, finding and developing relationships with channel partners who have the appropriate technical skills and backup and who visit the right customers is essential. The time, effort and expense that goes into managing, training and supporting distributors is often wasted when an inappropriate partner is in place.
A manager responsible for export sales via distributors has two key roles:
Network Development
- Identifying gaps
- Identifying potential partners
- Distributor selection and recruitment
Relationship Management
- Negotiating the terms of the agreement
- Motivation monitoring and evaluation
- Identifying and resolving barriers to sales
Distributor management responsibilities are much easier to handle if the right distributors are in place. The ideal distributor will vary for different manufacturers in terms of technical and selling skills, product portfolio and backup support for example, but most manufacturers want a distributor who will be committed to representing their products in an appropriate way, achieving sales targets and who will regularly communicate feedback from the market.
The first step in developing successful distributor networks is to proactively search for channel partners who have the closest possible strategic fit with the manufacturer. In a recent survey, 70% of lab product manufacturers claimed that they had some difficulty recruiting reliable distributors and most state that they are not reaching their full potential in export markets.
There are several reasons why most manufacturers have gaps in their distributor network, e.g.
- Historical set up of the network was reactive and ad hoc
- The manufacturer's portfolio has changed due to new product developments or company mergers and some of the original distributors do not now have a good strategic fit
- The distributor's portfolio has changed and new products are taking up their mind share
- The distributor manager is stretched because of time wasted on inappropriate distributors they may have lost the attention of some of their other existing partners
- New markets have become attractive to the manufacturer but there are resource issues restricting their development
When it is necessary to change a distributor who is not performing or when it is appropriate to enter a new market, the opportunity cost of reducing the time spent on managing current distributor relationships can be high. The relationships with the distributor in terms of support, motivation and involvement are the key determinants of export sales, profits and growth. Loosing their mind share to another manufacturer in their portfolio can be difficult to pull back.
Outsourcing distributor location and evaluation is not common among lab product manufacturers as the industry is both niche & dynamic. Because of the high tech nature of most of the products and the need for personal technical selling, generalist organisations who offer these recruitment services may not be able to recognise compatible partners. Consequently, due to the typical resource issues faced by most distributor managers, manufacturers are sometimes obliged to compromise and usually do not come close to reaching their potential in export markets.
Use BioChannel Partners to bridge this gap!
We have a wealth of experience in the laboratory product industry as well as in distributor network development and management.
Please do not hesitate to contact us if you would like further information.