Distribution Channels

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ISBN: 9780749462697 | 0749462698
Cover: Paperback
Copyright: 8/28/2011

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Distribution Channelsexplores the ways in which a business can optimize its routes to market, through a thorough understanding of its go-to-market partner's business models. It defines the role and importance of the various partners involved in the distribution chain, including distributors, wholesalers, final tier channel players and retailers; and provides advice on managing these relationships for optimum market exposure and successful product delivery. It provides a detailed description of the various business models which can be used between these parties, and how to adapt them in order to maximize routes to market. Taking into account both the tactical and strategic dimension of channel economics, Distribution Channelsprovides you with the knowledge needed to improve your business model, whether you are responsible for the distribution channel of your company or are part of that channel.

Preface	p. viii
Preface to second edition	p. x
Acknowledgements	p. xii
Introduction	p. 1
How to get the best out of this book	p. 3
Who this book is for	p. 3
What do we mean by business model?	p. 5
How the book is set out	p. 6
The business of getting products and services to market	p. 9
Distribution matters	p. 9
Challenging business dynamics	p. 11
Business models are key to value propositions	p. 17
A structured approach to positioning your value proposition	p. 19
Be careful with comparisons	p. 21
Distributors and wholesalers	p. 27
The role of the distributor	p. 27
Distributors/wholesalers	p. 27
Customer role - core functions	p. 27
Supplier role	p. 31
Supplier role - core functions	p. 34
How the distributor business model works	p. 39
Role defines business model	p. 39
Profit is a very small number between two very big numbers	p. 40
Managing working capital is a balancing act	p. 41
The measures that matter and how to manage with them	p. 44
Margins and profitability	p. 45
Multiple margins	p. 45
Gross margin and value add	p. 45
Margin mix or blended margin	p. 48
Contribution margin	p. 52
Net margin and operating margin	p. 57
Working capital	p. 61
Working capital management	p. 61
Supplier credit	p. 62
Inventory	p. 63
Customer credit	p. 66
Working capital cycle	p. 68
Productivity	p. 73
Earn and turn	p. 73
Contribution margin return on inventory investment	p. 75
Returns on working capital	p. 78
Sustainability	p. 83
Sustainability - longer term business health	p. 83
Return on net assets and return on capital employed	p. 83
Return on invested capital	p. 84
Value creation	p. 86
Managing value creation on an operational basis	p. 92
Managing growth	p. 97
Growth dynamics	p. 97
Internally financed growth rate formula	p. 98
Economies of scale - profitability	p. 99
Economies of scale - working capital management	p. 103
Risks of growth - diseconomies of scale	p. 104
How to sell to distributors	p. 107
What we mean by selling to distributors	p. 107
The sales process	p. 108
Managing the account relationship	p. 113
Some rules of thumb for making compelling business cases	p. 117
Summary	p. 121
Final-tier trade channel players	p. 123
The roles of the final-tier trade channel players	p. 125
The final-tier trade channel players	p. 125
The possible roles of final-tier trade channel players	p. 129
Matching channel roles to channel players	p. 133
Different roles command different compensation models	p. 137
Customer advocates and sell-with players	p. 143
Sell-with players and strategic alliances	p. 145
Applying this framework to your industry sector or channel	p. 147
How the business model of the final-tier trade channel players works	p. 149
Role defines business model	p. 149
Services come from people, either directly or indirectly (eg web-delivered)	p. 150
Managing a service business	p. 151
The web-based service business model	p. 168
Overview of service business model measures	p. 170
Sales and utilization	p. 175
Sales	p. 175
Utilization	p. 183
Gross margin and recoverability	p. 191
Gtross margin	p. 191
Recoverability	p. 196
Measures for the web-based service models	p. 198
Working capital management	p. 201
The cash-to-cash cycle	p. 201
Improving working capital	p. 204
Value creation and growth	p. 209
Value creation and improving the numbers	p. 209
Managing growth - the integrated product and service business model	p. 215
How to sell to final-tier trade channel players	p. 219
What we mean by selling to final-tier trade channel players	p. 219
Segmenting the final-tier trade channel	p. 220
What the final tier looks for in a vendor	p. 222
What the final tier looks for in a distributor	p. 231
Managing the account relationship	p. 236
Some rules of thumb for making compelling business cases	p. 238
Selling 'with' the final tier in an advocacy role	p. 242
Conclusion	p. 243
Retailers	p. 245
The role of retailers	p. 247
Retailers and retailing	p. 247
Online retailing and catalogue	p. 251
How the retail business model works	p. 259
Role defines business model	p. 259
Earn and turn	p. 264
Layout and planograming	p. 267
Ranging and merchandising	p. 270
The measures that matter and how to manage with them	p. 275
Sales (or takings or revenues)	p. 275
Margins	p. 279
Direct product cost (DPC) and direct product profitability (DPP)	p. 285
Turns and productivity	p. 288
How to sell to retailers	p. 291
What we mean by selling to retailers	p. 291
The sales process	p. 292
Retailer challenges and their implications for suppliers	p. 292
Managing retail relationships at a strategic level	p. 300
Managing retail relationships at a tactical level	p. 307
Selling in to the retailer's buying cycle and open-to-buy	p. 312
Should you deal with retailers direct or through a wholesaler?	p. 316
Summary	p. 316
Franchising as a route to market	p. 319
Why franchise?	p. 321
What is a franchise?	p. 321
What's different about franchised businesses?	p. 324
Where does franchising make sense?	p. 328
How the franchised business model works	p. 333
The typical franchise system players and their roles	p. 333
Growth and store development	p. 340
Territory and operational management	p. 346
The measures that matter and how to manage with them	p. 351
Franchise outlet level measures	p. 351
Franchise system-level measures	p. 358
How to sell to franchised systems	p. 365
Who's the buyer - franchisor or franchisee?	p. 365
Managing franchise systems relationships at a strategic level	p. 372
Managing franchise systems relationships at a tactical level	p. 374
Key ratios	p. 379
Glossary of technical terms	p. 385
Index	p. 395
Table of Contents provided by Ingram. All Rights Reserved.

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Distribution Channels

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