How should start-ups choose distribution channels? (2)

Another choice of product marketing for new enterprises-intensive distribution "Well, let's discuss intensive distribution next". The professor raised his voice. "In the intensive distribution mode, everyone who wants to distribute your products is encouraged, and the goal is to make your products reach all places where end consumers can reach or may buy your products. Impulsive consumer goods such as candy, snacks and fashion products are usually more suitable for intensive distribution. Please look at the following case! " Case 2: lightning marketing, the victory of intensive cultivation of Wallwalkers KenHakuta is a master of intensive cultivation. In 1980s, he supported the launch of "Weird Climbing the Wall" with ingenious creative marketing schemes and intensive distribution methods. Because he used the method of "Blitzkrieg", he was lucky to establish a national public relations network, which led to amazing demand. Every store in the United States wanted to sell weird wall-mounted products. Weird wall hanging, as the name implies, is a small octopus made of plastic. If they are thrown on the wall, they will slowly walk down the wall, one leg pressing the other. After learning from CBS Evening News that this is the "latest fashion", every retailer wants to sell on the wall. Ken knows that time is the most important thing. He wants to take advantage of this extraordinary consumer demand and let as many walls as possible enter as many stores as possible in the fastest time. He knows that although he has an "exclusive license" from a Japanese manufacturer, competition for cheap products will come soon. In order to complete large-scale distribution as soon as possible, Ken will authorize toy and commodity distributors to sell products to retailers instead of using their own sales force and distribution team. The distributor starts the whole distribution system and quickly delivers the products to all retailers who are eager to participate in the wall blocking action. Willing to give these distributors extra bonuses as a reward for forming part of the distribution chain. In doing so, compared with the situation of using his own sales force and distribution system, his profit on each wall line has decreased. However, he correctly estimated that the total amount of products sold using this indirect distribution system is much higher. In less than a year, he sold more than 200 million walls, and the total profit was far higher than the profit he could get by trying to establish and use his own sales team and distribution system. Not only that, he can make full use of the huge consumer demand before the price reduction becomes the main factor. The power of cases is enormous, and an appropriate case may give more enlightenment than the reasoning of grand topics. After reading the story, someone commented immediately. "I think the biggest gain from this story is that Ken correctly guessed that the product life cycle of" Wall Up "is limited, so he doesn't intend to adopt the sales method of other products that are also aimed at mass market consumers. If he plans to develop long-term business, the relationship between retailers will become important, and it may make sense for Ken's company to sign more direct contracts with mass retailers. He regards climbing the wall as a once-in-a-lifetime opportunity, which is quite correct. On the wall, he brought' tens of millions of dollars in profits'-this is already a good result, not to mention only working for one year, and basically no assets at first. " "The previous discussion is only a static analysis of the choice of distribution channels. As an entrepreneur with an innovative plan, we should also consider that if the distribution channel changes over time, it may be more valuable. " The professor has always grasped the main line of entrepreneurship. "This is especially true for product lines that are constantly innovating, drastically changing or launching new products or models. For example, as time goes by, it is usually a good strategy to change the distribution channels according to the changes of products. If you can connect high-prestige products with high-prestige distribution channels and connect low-prestige products with low-prestige distribution channels, it is very likely to create a win-win situation for you and distribution channels. " "Changing the distribution channels of products over time will produce good results, which has a certain relationship with the needs and values of different types of channel members. High-end channel members who want to sell exclusive products with high cognitive value. They are unwilling to compete with low-level and low-profit retailers on the same product price. High-end stores think that they have a better service and shopping environment, and their prices should be higher than those of competitors in the mass market. " The demand of low-end channel members is just the opposite, and it is their dream to sell the same goods as high-end stores. They want to tell everyone that they have the same things as high-end stores and the price is lower. Faced with this situation, how to manage a huge system composed of different channels and maintain a delicate balance is a real challenge for many entrepreneurs. "Maybe failure can teach us more. Before the end of the course, let's take a look at an example-Super, a startup company that failed in the balanced management of distribution channels? Scope company. " Case 3: Short-sightedness stifles super vision-the goal of balance has not been achieved. Late' 80s, Super? Scope has purchased the right to use Marantz tags on hi-fi components. In Sue? When perscope acquired it, Marantz was the first manufacturer of high-quality audio components. The distribution of marantz is consistent with its high-level image. They have a very selective distribution channel-only the most prestigious and best audio-visual "consultants"/wholesalers in major cities in the United States are selected. Marantz's business is very profitable, but the sales volume is not very large. Marantz's market positioning and pricing strategy limited the target market to the high-income audio material sub-market. Based on this limited target market with high profit rate, marantz has developed a high-level audio market with an annual profit rate of about 10%. Superscope is not satisfied with the growth potential of Marantz. They infer that the perceived value of the brand is so high that if the distribution is further expanded and the advertising budget is increased, the sales volume will increase greatly. When is it super? When scope discussed this matter with retailers and distributors in the mass market, they were very willing to buy and promote Marantz series products. Retailers like Wal-Mart, Kmart or CircuitCity are eager to sell high-quality and high-profit products. Their practice is to discount the price list and greatly increase sales. In order to attract customer traffic, they sold marantz at a loss. They infer that consumers in the middle market will be happy to take advantage of this opportunity to buy high-grade products at very low prices. Therefore, Superscope began to implement an ambitious plan to rapidly increase the sales of marantz products by expanding distribution channels on a large scale. They began to provide products to mass market retailers. They encourage these retailers to advertise marantz products in weekly flyers and newspapers by using the method of tofu block advertising. Many retailers, such as CircuitCity or Camaro, have leaflets containing advertisements for temporary price reductions and other special offers. At first, the sales effect of the distribution expansion plan was very obvious. In the next two years, the sales of Marantz products of Superscope company more than doubled, and the total profit of the company increased even more due to economies of scale. In a year or so, Superscope has become a very popular stock in new york. Since then, things have become a mess. High-level exclusive retailers are very surprised by the price reduction competition and excessive publicity of mass retailers. High-level customers are very sophisticated, and they are willing to go to Kmart to spend less money on products that need to be bought from high-level franchisees. So high-end retailers have no business. What will they do? These high-level franchisees began to refuse to sell marantz's products and turned to other audio equipment manufacturers who only granted selective distribution rights to high-level monopoly channels without price competition. At first, Superscope didn't care about losing these distribution channels, because huge orders from mass retailers can far compensate for the losses of high-level enterprises. However, once most high-level retailers stop selling marantz's products, their reputation and prestige begin to really suffer. High-end retailers began to denigrate Manrantz products, calling them "cheap brands" sold by stores such as Kmart. Mass marketers are no longer willing to accept higher wholesale prices of marantz products, because these products are not as popular in their stores as before. This wholesale price pressure has brought great influence to the profit space of Superscope company. Therefore, Superscope decided to manufacture Marantz products overseas at lower cost and lower quality to increase profits. This change in production mode has kept the profit level of Superscope for a period of time, but it has also provided more ammunition for the high-level "beating Maranz", and they have created more rumors for the decline in the quality of Maranz products. Due to the worsening consumer demand for marantz products, mass market retailers began to cut orders. Sales of Superscope plummeted. They tried to launch a "gold medal" marantz product, which was produced in China and sold only in high-end stores. High-rise shops flatly rejected the idea of Superscope because they felt that the company had betrayed them on the Marantz product issue. They don't want to trust Superscope and repeat the mistakes of other marantz products in marantz. Super? Scope company has become neglected, and Marantz's name has lost most of its original value. Professor's comment: Superscope company made several mistakes. They have not created long-term value for their distribution and retail channels. When they expand their distribution and make their distribution channels become price competitors, they take advantage of marantz's reputation, which is partly attributed to high-level retailers, thus damaging them. They didn't give the top retailers the exclusive distribution rights they expected, and they lost their trust. They reduced the price, but also reduced the quality of the brand. In order to obtain huge short-term income and profits, they sacrificed long-term market positioning and perceived value. Their short-sightedness ruined the company.