EXPORT STRATEGY AND DISTRIBUTOR MANAGEMENT
guidelines and suggestions
Choosing countries
Take time to make some strategic choices, not only based on size or distance. More important is to take countries with familiar trading structures and the possibility to spend extra time to invest in the new export countries. Make a list of countries and based on ratings: size, competition, culture, distance, trade channels, risks, etc and make A,B,C and D countries, A= own sales force, B is distributor (and potentially A), C = agents only, no investments, D= No deliveries.
Finding and selecting distributors
Collect sufficient market data first and start from a wide list realizing that a good choice is far better then a quick choice. Take the time needed to find distributors and asses their potential. A good method to find distributors is to work backwards from end-user to customer/retailer, wholesaler and manufacturer. All people in this channel can be relevant informers. Motivated and focussed distributors with knowledge and contacts at the major clients are generally more effective than large companies. Convincing a dealer to take on your products needs real selling skills. Check and crosscheck all data about distributors you are planning to use. Avoid distributors with too many product lines.
Market knowledge
Before any choice can be made you must know who the main competitors are, what is the market size, what trading channels exist, major retailers ranking etc. It does not hurt to make your own store-checks or visits to potential customers. Never depend on the distributor's information alone because he will use your ignorance to improve his position, get better prices or product adaptations that might not be needed in the market. Also after start keep track on what happens in the market by using professional magazines, publications or buy market research. The distributor will always fight the data and tell you his data are better but he will be careful in any reports to you, knowing you have other sources as well.
Negotiating with distributors
Understand each others strategy and exploit the mutual potential. Use market figures as a base for any discussion. Be clear on your strategy and your possible alternatives. A good personal understanding can be very helpful but avoid being soft.
Setting targets
Do not set any unrealistic targets. Start using "fair share" targets based on one or two clients or channels and develop regular evaluations with the distributor based on these figures and the situation at these customers.
There is no need to change your strategy, prices etc. unless you have clear unbiased evidence that the market situation is different than expected at the time of starting the cooperation.
Motivating the distributor
Especially the start must be good. Provide good quality materials, brochure, training etc. and a strong kick-of meeting. Try to get a priority position in time and attention and let the distributor make money on your product. Realize that the other products of the distributor's sales line are your real competitors. If things work out well he should realize that his margin growth comes from your products. Especially at the start some incentives are important.
Joint visits to main customers
Most distributors don't like this, but you must agree to this in an early stage and make these visits effective for both parties. It will help you understand the clients needs better be armed in any discussion about it. It might also give creative input for you. But the visit should be done as a team and both partners should talk as we, leaving very clear that the leader is the distributor. NEVER interfere in price discussions between the distributor and his client. If you have a suggestion give it afterwards. Take the time to evaluate the visit and the importance of the joint presence. It does not hurt to write the evaluation yourself agree also to repeat these visits at a set interval.
Contracts
Primarily needed as guidance for the termination if things don't work out very well. Motivation cannot be contracted. Making a contract is good to write down the mutual expectations, the period, conditions etc. (see separate checklist for contracts)
Yke Veraart