Negotiation Strategies that Benefit Distributors
The place of the distributors in the supply chain is never in doubt. And there are a whole lot of systems that come to play when ironing out the concept of distribution. This include the distribution strategy and how well distributors handle their negotiations for healthy compensations.
With a little scan through the types of distribution strategy and more focus on negotiation strategies, this article is will provide proven negotiation tips and put distributors on the side of benefits.
A Quick View on Distribution Strategy
A product distribution strategy is the wholesome process of making that product available for the target market. The target market could be a business in terms of business-to-business model or it could be a consumer in terms of business-to-consumer model.
As the market keep evolving, there have also been an evolution of the distribution strategies employed. Hence, let’s look into the types of distribution strategy.
Indirect Distribution Strategy
This strategy involves a long distribution channel. It is more like the most usual distribution method, starting from the manufacturer to the distributors, then to the retailers and finally the consumers. Hence a larger number of players are involved in this strategy.
Direct Distribution Strategy
This is a direct opposite to the indirect strategy. Several players are eliminated as there is direct delivery of product from manufacturers to customers. Brands desiring a quicker reach to their customer base employs this strategy.
Intensive Distribution Strategy
The intensive strategy is used when the goal is to penetrate farther into the market. So this distribution strategy will use several outlets to cover as much grounds as possible.
Exclusive Distribution Strategy
Usually employed for exclusive products. Here the focus is not utilizing outlets in every city or region but exclusive– region based outlets that meets the brand needs. Exclusive distribution strategy help maintain high brand value and image irrespective of the number of customer base.
Selective Distribution Strategy
This strategy selects outlets in specific locations. These are locations that fits into the product needs.So it’s safe to see this as a more strategic mode of distribution
Proven Negotiation Strategies
With the quick view into distribution strategy done and dusted, let’s shift the focus towards helping distributors get negotiations right. Here are proven negotiating strategies for the benefits of distributors.
Research the Market Price
It’s understandable that every player in the supply chain desires to make profits. But for every industry and product line there is a standardized pricing structure. The game now is jostling between the standard market price range to maximize profits.
Going too low is not beneficial for distributors and charging outrageous amount can take the distributor out of business. So, do quality research on the market prices, weigh the prices of competitors too and come up with the best offer to win the deal.
Negotiations is won by communication. This can go as basic as having elementary communication skills. This will integrate approach, responsiveness, and attentiveness to yield desired results. Smooth communication can play out as a factor to winning client’s heart as a distributor.
Do not Make it all About you
An ideal distributor should have the win-win mindset– both distributor and client winning. This makes the supply chain better and accommodating. Don’t be selfish and place focus on your gains, but consider the client’s needs, growth, results, and sustenance. This will even go beyond winning the negotiations but foster a long term relationship that could lead to bigger deals.
This is about displaying your experiences, track record, and successes. Such references can drive trust and automatically give you a high class in terms of pricing. References are important because you may not be the only distributor currently negotiating with the brand but can provide a competitive edge.
Offer Something Unique
To beat the competition and win favorable deals, you will need to stand out by bringing something beyond the usual to the table. This factor is given several terms such as “the wow factor”, “unique selling point” etc.
It could be discounts, super faster delivery, innovative distribution solution or some value added services beneficial to the business.
Be clear and Transparent
Who doesn’t love transparency, especially in business? Leaving matters unclear creates a sense of doubt which could breakdown the negotiation. Be transparent in every area of the negotiation such as pricing, service method, track records, promises, and resources on ground.
Track Client’s Previous Distributors
You can gather different sorts of information that will help the negotiation using this strategy. Dig into the previous distributors that have worked with the client and find out the following useful information.
- Price offered and what the business was willing to pay
- Possible reasons why both parties ate no longer doing business together.
- Client’s needs, strengths and shortcomings when doing business
With these pieces of information, you have a skeletal view of the client and possible the thought process of the client.
Show Your Credibility
Now it’s time to try the shoes of the client virtually. This involves seeing through their brain and thought and trying to figure out how they think. You will find their spot where they need credibility. Then display your credibility and this will likely win their hearts.
Build on the First Price
The first price is what the client is offering to pay. This may not be what you are ready to accept. Rather than build tension or react funny, start off conversation on that price. Discuss why the price isn’t favorable. Highlight the limitations that may occur due to the price and hit areas that will make the client possibly change his mind.
Al Sharqi – A Reliable Distribution Service Provider
Full Truck Load (FTL)
When the shipment requires the use of the whole truck, this option is the best as it can offer the required solution at an affordable rate.
Less than Container Load (LTL)
When the shipment is relatively small, LTL is the best choice. The orders are consolidated, so the delivery can be made at a budget.
For small or emerging businesses, our distribution includes speed, efficiency, and cross-channel consistency.