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A U.S.-based software firm was attempting to enter Asian markets. It thought the quickest way to success was to find accomplished distributors who would carry its software.
After spending months finding a Singaporean distributor, the firm thought it had gained a foothold in Asia. All the signs were good:
The firm learned the Singaporean legal process mirrored the
A year after this distribution partnership was formed, there were no sales. The
To start to understand this quagmire, let's see what the expectations were -- and what went wrong.
The reality of a distributor not selling aggressively isn't unique to
Think of a distributor as a convenience store. The store may carry many items, but doesn't seem to vigorously sell or market most of them. The store leaves the marketing up to its suppliers. Thus, Coca-Cola will run promotions in convenience stores more often than the store itself will push the soft drink.
The same is true for distributors. It's best to think of them as aiding in logistics more than marketing. There are exceptions to this rule, but usually distributors are driven by their clients.
Once demand for a firm's product is stimulated, good distributors can work well with qualifying prospects, financing, delivery, merchandising and collection. Generally, they leave the marketing to their vendors.
Distributors often have two main questions when they meet with suppliers:
What will you do to stimulate demand (advertising, public relations, direct sales)?
What is my cut?
Researching the market, the promotional tools available and answering these questions satisfactorily will give the partnership the right start. In the
The VAR will be interested in how its suppliers will aid in sales.
Will they advertise?
Will they attend sales meetings with them?
Will they train its sales force?
Will they supply relevant, professional marketing materials?
Will key executives be available when needed?
Have they built a strong brand, and are they protecting the brand?
Are they providing any marketing dollars or in-kind contributions (such as company vehicles, cell phones, offices and call center services)?
Obviously, a distribution strategy needs to be well thought out. Add
In examining our example firm's assumptions, it's wrong to suggest the distributor is "lazy" when much of the above criteria aren't met.
"Unethical" is a term that should never be used in international business. Ethics are a suit of clothes, and your ethics don't equal my ethics, which don't equal Singaporean ethics. The distributor may think the
Last, many firms throughout the world feel that "once distribution is won, the deal is done." In addition to many of the support techniques, it's vital to develop a personal relationship with any Asian business partner. Frequent visits to the distributor and its key clients are necessary.
A solid Asian distribution strategy should encompass continuous support, both on business and personal fronts.
When was the last time you took your distributor to dinner?
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