Establishing Reseller Strategy

The success of all businesses rests in the marketplace.  From the vantage point of the product suppliers, earnings come almost totally from sales and usually through the efforts of resellers, both distributors and retailers.  Resellers provide a range of services to their customers and thereby influence the value of products they sell.  In addition, they provide a range of non-tangible benefits to their customers.  In many cases, the resellers influence can dominate the customer brand purchase decision.  As such, the relationship between resellers and suppliers can be critical.  However, those relationships can vary widely from contractual arrangements to arms-distance transactions.  At one extreme through resellers programs operations and pricing policies may be greatly effected if not controlled by the supplier.  On the other side with strictly arms-distance transactions, ultimate pricing will be up to the reseller with little or no control by the suppliers.  In many cases, suppliers do not even know the actual market prices of their products.  

Effective reseller strategy must be based on reliable marketing research data and on providing a pervasive marketplace awareness.  The development of reseller strategy must extend beyond just understanding the marketplace but must include answering provocative what-if questions.  Applications of Your-Marketing-Toolkits vary widely from early product planning to the repositioning of existing products and businesses and may include the development of reseller programs.   The toolkit is not an end-point creation.  It grows, it must be customized and it changes to meet the varying needs and distinction of businesses and their competitive situations.  As such, for the Toolkit to be fully effective in addressing Reseller strategy issues, the information gathered from the market and the analytical tools employed need to be sufficiently comprehensive. 

Your-Marketing-Toolkit provides an interactive assessment environment that allows the evaluation of potential reseller programs in respect to at least three issues: (1) the competitive reseller performance, (2) the resellers’ perception of the customer behavior and attitudes, and (3) optimum channel pricing.




How do the Resellers’ perceive the Market?

Your-Marketing-Toolkit provides a means of examining different groups of customers and market influencers.  If Resellers are surveyed and their responses included in the Toolkit, then those results can be examined and compared to those of end-users and other influencers.  In this way the differences and similarity of groups of resellers and customers can be assessed.  Note that the full range of tools, charts, and models are available.  This allows for extensive comparisons and testing of hypotheses. 





What are the Resellers/Distributors doing for our business/products?

Your-Marketing-Toolkit also allows for the selection of sub-groups of features and attributes to be considered.  This is particularly useful regarding resellers, if attributes associated with the resellers are included in the survey.  In this way, for example a value map can be constructed based solely on the performance of the resellers.  Here we can compare the relative value of competing products based on the perceived difference among their resellers’ performance.




What price should the Reseller sell our products?

In order to influence the market price, suppliers use seller programs.  This is based on the potential that the optimum market price to maximize the suppliers’ earnings may be different from that which would maximize the resellers.  Two optimum pricing concepts are useful:  (1) Sequential optimum which is the optimum price for the supplier given that the reseller will optimize his price and (2) the Pareto optimum which is the optimum if both the supplier and the reseller acted together.



How to affect Resellers’ Prices?

These optimum prices depend on the market price sensitivity that is typically measured as a part of Your-Marketing-Toolkit process.  The sequential optimum prices represent the arms-distance transactions and typically result in higher prices and lower earnings.  Reseller programs are typically used to get resellers to decrease the market price.  The issue is to what extent that should be undertaken.  By comparing these optimum price values a measure of value to the supplier can be estimated providing guidance for the development of these reseller programs.

Applications of Your-Marketing-Toolkit

·   Overall

·   The Marketing War Room

·   Business Assessment

·   Product Design

·   Offering Design

·   Product Pricing

·   Segmentation

·   Marketing Six Sigma

·   Branding

·   Customer Satisfaction

·   Reseller Analysis

·   Innovation





For more information on developing Your-Marketing-Toolkits:

Eugene B. Lieb

Custom Decision Support, LLC

(831) 854-2256