Principia Consulting

Strategy Consulting for Companies
in Materials-Related Industries

Channel Strategy

We believe that innovative channel management can do more to increase market share and improve profits than many other business activities.

For all but the most concentrated end markets, reaching the customer requires effective channel strategy. That strategy must consider the technical and sales support required by customers, average order quantities, desired lead times, and other distribution factors. The best channel and distribution strategies not only provide superior levels of service and support to customers, increasing their loyalty, but also contribute to profitability by minimizing inventories, reducing order-to-collection cycles, and lowering overall distribution/logistics costs.

Optimizing a distribution strategy can be complex and risky. Detailed evaluation of the customer base and their needs is required. Careful selection of sales, marketing, and distribution methods is important. Today, e-commerce represents another level of complexity to channel strategies. Most companies recognize that e-commerce is important, but do not know the best ways to incorporate it into existing channel and distribution programs.

Principia Partners assists clients in analyzing and developing effective channel and distribution strategies. Successful channel and distribution programs are always based on insightful planning, successful implementation, competent resources and timely transitions to new channels when market conditions warrant. We provide expertise and assistance in developing channel and distribution plans including:

Understanding key points in your company's supply chain
Defining specific performance expectations that customers have of you
Ensuring the distribution channels can meet customers' expectations
Identifying the most appropriate mix of sales & marketing resources
Developing an appropriate e-business strategy

CASE STUDIES

Dramatic Sales & Profit Growth

Push-Button Convenience

Electronic Equipment Marketing

Serving Smaller Customers

Redefining Channel Strategy

Channel Strategy:
Reposition Metals Service Center Distribution Strategy

Challenge:
A leading international metals company urgently needed to improve its service center distribution business.

Principia helped define the needs of the service centers, then developed a new strategy to better serve the channel. Principia recommended supplying multiple metals, including aluminum and steel, add value-added services to the portfolio, and reorganize resources to more effectively serve multiple regions both in the United States and abroad.

Result:
The Client gained a better understanding of the market, including demand patterns and customer requirements. Ultimately, per recommendations, the Client increased sales by nearly 40% and improved profitability by nearly 30% within 18 months in this important market channel.

Channel Strategy:
Establishing the Strategic Role of E-Commerce

Challenge:
A leading producer of nylon resin and compounds was an early adopter of the Internet as a marketing channel. The company desired a integrated e-commerce program as part of its overall sales and marketing strategy.

Principia conducted an extensive review of processors' and OEMs' use of the Internet and the role that on-line purchasing would play for them. We determined that the e-commerce functionality would not be a substitute for traditional sales methods, but an extension of the EDI, fax, phone, and e-mail systems currently used.

A web presence was developed that mirrored the capabilities of the traditional systems and added functionality that was difficult to deliver in other forms (e.g., interactive product selectors, part design).

Result:
The Client established a multi-modal sales strategy that allowed customers to use communication methods most convenient at any given time. An integrated database was implemented, accessible by web, phone, or automated fax-back for checking product availability and shipment status, placing or changing orders, and other information requests.

Channel Strategy:
Sales & Marketing Strategy for Semiconductor Test Equipment

Challenge:
A $5 million producer of highly engineered test equipment used in the production of semiconductor wafers relied on the superiority of its engineering and equipment design to attract customers. The company worked with manufacturers' representatives and distributors to generate sales, but larger competitors were gaining market share.

Principia analyzed the structure of the marketplace and assessed the effectiveness of the Client's sales team. Principia helped implement a new sales program, including training inside sales personnel, developing product literature and other marketing communications, identifying and retaining new representatives, and eliminating unproductive resources.

Result:
Within six months of implementation, the Client increased order volume by 30% and reduced its lost order rate by 10%. The Client continues to apply these sales and marketing strategies, with periodic refinements.

Channel Strategy:
Develop Approach to Serving LTL Customers in Carbon Black Market

Challenge:
The leading supplier of carbon black focuses on large-volume applications and customers that purchase in truckload quantities, but recognizes that LTL customers represent a significant portion of demand. The company needed a cost-effective approach to serving these small accounts.

Principia analyzed the carbon black market, and evaluated competitive producers' approach to serving LTL customers. Based on small customer purchase volumes, support requirements and such other factors as credit risk, Principia determined that little opportunity for value creation existed in the LTL segment.

Result:
The Client continues to serve this segment of the market through several distributors that provide the small order volumes and support needed, and assume the credit risk from these customers.

Channel Strategy:
Define a New Channel Strategy for Advanced Prepreg Products

Challenge:
A major producer of carbon fiber and prepregs for the sporting goods, industrial, and other non-aerospace markets needed fresh, accurate insights on the channels to market, and customer requirements.

Principia mapped the entire industry structure, including all producers, processors and other intermediaries, as well as OEMs and end users, then determined the tactics required to win new and existing customers. Principia then helped quantify the sales and marketing resources to apply to each market segment. A well-defined marketing strategy was developed from internal and external assessments.

Result:
The Client implemented the new channel strategy and gained several new significant customers for its product line. The Client has also identified several new products to add to its offering to help expand share of customer at existing accounts.