Dealer networks, distribution channels and demand generation
It’s a common mistake for overseas manufacturers entering the UK and Irish markets to appoint a series of dealers and think ‘job done’
FACT: Dealers don’t generate demand – they react to it. It might (just….) work in FMCG, where a specific retailer gets behind a product – usually because they have it on an exclusive basis – but the consequences for the manufacturer/supplier in terms of loss of control and conflicts of interest are never good.
Dealers vs. your own distribution in the context of market entry
You’re a new entrant with no dealerships in your target market. If you’re lucky, there’s demand for your type of product out there, but you don’t own any of it.
FACT: Dealers don’t defect for the cheapest deal just based on margin. While you are doing the hard work creating interest in your products, getting the product to your customers with the service levels they expect is a parallel challenge. This can often mean an early geographic focus combined with local, in-house, service support to get revenue flowing.
Accelerated Market Entry
Like Diversification Strategy, there are two main routes to market entry – build it or buy it. Both are viable and there are pros and cons for each.
HOWEVER: Every now and then an opportunity presents itself that allows a company to leapfrog the wait or the expense of conventional techniques but, like the third diversification strategy, it’s not without risk. Here’s an example of a build and buy case that broke the rules.