Getting Product to Market: 8 Questions to Ask Before Deciding on the Right Channel

Bringing industrial products and services to market involves more than development of the product and preparation for commercialization; it also requires a strategic decision on how to reach your customers. Selecting the right sales channel is critical, as it directly impacts two fundamental areas of business success: the investment of resources, cash flow, and risk management, as well as the speed at which your company can generate revenue from its products. The effectiveness of your chosen channel will determine how quickly you can capitalize on your market opportunities and drive growth.

Before selecting one or more of the various sales channels, it's important to ask the right questions. These questions will help you align your strategy with your overall business goals and ensure you choose the channel that best fits your product and market needs.

8 Critical Questions for Leaders to ask to Guide Channel Selection

1. What are our primary business goals?

?? Determine whether your focus is on market penetration, revenue growth, brand awareness, or customer engagement. Different channels support these objectives in various ways.

2. What level of control do we need over our brand and customer relationships?

?? Assess how much direct interaction with customers you want to maintain. Direct sales offer more control, while distributors and reps may dilute this.

3. What resources can we allocate to sales and distribution??

?? Evaluate your available resources, including budget, salesforce, and logistical capabilities. Some channels require significant upfront investment, while others may be more cost-effective.

4. How complex is our product, and what level of expertise is required to sell it?

?? Consider whether your product needs detailed explanation or customization, which might necessitate a direct sales team or specialized manufacturer's reps.

5. What are the market characteristics and customer preferences?

?? Understand the specific needs and behaviors of your target market, including geographic considerations, customer buying habits, and competitive landscape.

6. What level of market coverage and speed of entry do we need?

?? If rapid market entry and broad coverage are priorities, channels like distributors or online marketplaces might be more suitable.

7. How do we want to manage inventory and logistics?

?? Decide whether you prefer to handle inventory in-house or outsource these functions to distributors who can manage warehousing and shipping.

8. What are the long-term scalability and profitability prospects of each channel?

?? Consider how each channel will support or hinder your business growth over time. Think about potential margin impacts, scalability, and ongoing costs like commissions or platform fees.

Choosing the Right B2B Channel to Market

After answering these questions, you'll be in a better position to evaluate the different sales channels that are typically used to get industrial products on the market. The main ones are:

1)???? Direct Sales

2)???? Manufacturer’s Reps

3)???? Distributors

4)???? E-Commerce Channels

?Each channel offers distinct advantages and challenges, and understanding these can help you make an informed decision. Below, the different channels are explored in more detail, and the pros and cons of each listed - helping you guide your selection based on the answers to your questions.

1)???? Direct Sales

Direct sales give companies the ability to maintain tight control over customer relationships and brand messaging. This approach is particularly effective in markets where personalized service and customization are crucial. European manufacturers often prefer this model in their home markets, as it allows them to better control brand representation, gather local feedback, and drive tailored sales strategies.

Pros:

? - Strong brand control and direct customer feedback.

? - Ability to tailor solutions to specific customer needs.

? - Focus on one brand and one solution only.

? - Higher margins realized.?

Cons

? - Resource-intensive, requiring a skilled sales team.

? - Challenging to scale quickly without significant investment.

?

2)???? Manufacturer's / Architectural Sales Representatives

Manufacturer's representatives, or architectural sales reps in the building products industry, act as independent sales agents within specific territories. They do not take ownership of inventory but earn commissions on sales made. They are especially valuable for companies looking to quickly establish a market presence without the overhead of a direct sales team.

Pros:

? - Extensive local market knowledge and established relationships.

? - Lower upfront costs compared to maintaining a direct sales force.

? - Ability to scale quickly across multiple regions.

?Cons:

? - Less control over the sales process, especially for complex products.

? - Potential conflicts of interest if reps carry multiple product lines.

? - Variable performance based on the rep's focus and motivation.

? - Reps may prioritize higher-value products over those with lower commissions.

?

3)???? Distributors

Distributors purchase products from the manufacturer and resell them to end customers or other intermediaries. They often specialize in specific industries, such as aerospace, medical, or material handling, and may offer additional services like parts supply, routine maintenance, and repairs.

Pros:

? - Reduced cost of market entry by leveraging distributor networks.

? - Distributors take ownership of inventory, reducing the manufacturer's risk.

? - They handle logistics, warehousing, and shipping, offering a scalable solution.

? - Immediate cash flow from upfront product purchases.?

Cons:

? - Shared profit margins can reduce overall revenue.

? - Potential loss of control over customer interactions and brand representation.

? - Distributors may not prioritize complex or new-to-market products.

? - Non-exclusive distributors might promote their brand over the manufacturer’s.

?

4)???? Online Marketplaces

Online marketplaces offer a cost-effective way to reach a wide audience, especially for commoditized or low-cost products.

Pros:

? - Expansive reach with lower resource and financial investment.

? - Quick entry into multiple markets simultaneously.?

Cons:

? - High competition and pressure on pricing strategies.

? - Potential margin erosion due to platform fees and discounts.

? - Difficult to demonstrate the value of a premium product.

Choosing the right Channel to Market

Choosing the right B2B channel for your industrial products is not a one-size-fits-all decision. Depending on the needs individual market, a company may decide to have several different channels.

For example: a building product manufacturer may have a direct sales team in the major cities, and use architectural reps in smaller cities. A manufacturing company may chose to have direct sales on certain pieces of equipment, and use an e-commerce platform to sell ancillary items. An energy company may use distributors to sell to utility companies and a direct sales force to sell to large enterprises.

Conclusion

Channel Strategy requires a deep understanding of your market and customer characteristics, available resources and business goals. The aim is to maximize resources, minimize risks, and accelerate revenue generation. By asking the right questions and carefully evaluating each option, you can choose channels that align with your strategic objectives and position your product for success in the market, driving growth and competitive advantage.

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