When Ronn King started his own company to make a new type of
paint mixer, the toughest part wasn't coming up with the
idea--or even figuring out how to manufacture it. The toughest part
was persuading retailers to stock it.
Most national retail chains would rather buy a hundred products
from one supplier than one product each from a hundred different
suppliers. So small manufacturers have a tough time breaking into
the game, says King, 47, co-founder of Site-b in Spokane,
Washington.
King's company makes a paint-stirring device called the
Squirrel Mixer. More than 120,000 were sold worldwide in 1997
through such major stores as Home Depot.
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The inventor's success came with the help of distributors
and independent sales representatives. These allies can pioneer
your product into new geographic areas, get it into stores that
won't even talk to small manufacturers, and provide valuable
services, such as fast order fulfillment.
But distributors can be as difficult to woo as retail buyers.
Winning them over takes time, research and hard work. Here are nine
steps to success:
1. Get your product market-ready. "Most
new manufacturers aren't prepared to go to market," says
Joseph Coen, president of ASKCO Marketing Services in Kure Beach,
North Carolina. Coen's company serves as a matchmaker between
manufacturers and distributors to food, drug and gift retailers.
Before going to market, manufacturers must resolve issues ranging
from the most appealing packaging to the best way to ship their
products, he says. They also must find a price consumers will pay
that still means good profit margins for retailers, distributors
and, of course, themselves.
"The product needs to have a point of difference,"
Coen says. "If the product is lotion, the only difference is
the fragrance and maybe a few ounces [more product] per bottle. The
manufacturer must create a perceived difference with
packaging or marketing."
New manufacturers must prepare sales materials that tell
retailers the product's benefits and its statistical
information, such as how much space it needs in the warehouse and
on the shelf. Production capacity is also a major issue, Coen says:
"You can't sell to Wal-Mart unless you're ready to
manufacture millions of units."
2. Understand whom you're selling to.
Most manufacturers don't sell directly to the consumers who
eventually use their products. Instead, the manufacturer's
marketing strategy must aim at sales through dealers or
distributors.
Most manufacturers, distributors and independent sales reps deal
with a narrow range of products. They know each other and refer
work to each other. That worked to King's advantage when he
first tried to sell to retail chains. Several turned him down, but
one buyer referred him to a manufacturer's representative who
carried dozens of products for many companies. That rep took on the
Squirrel Mixer and referred King to reps in other areas.
A distributor or sales rep wants to carry products that sell in
high volume. If you can't promise huge sales, you might have to
lure distributors with high profit margins, King says. If you
can't raise the retail price, that extra margin will come out
of your profit. "It sounds expensive," King says,
"but compared with the cost of reaching customers yourself,
it's not."
3. Target your market. One way to focus your
marketing is with targeted mailing lists, which you can often find
through trade associations.
If you use such lists for direct-mail advertising campaigns,
plan to send out at least three separate mailings, then follow up
with phone calls, advises John Metscher, a business analyst with
the Central Ohio Manufacturing Small Business Development Center in
Columbus, Ohio. "One mailing is a waste of money. Don't
give up; you'll be surprised at the results," says
Metscher. He also recommends advertising in carefully selected
trade journals targeted at the industries most suited to your
product.
4. Create demand. The manufacturer--not the
distributor or retailer--must make consumers want to buy a product.
That can involve cooperative advertising campaigns with retailers,
display stands, signs, fliers, brochures and other marketing
materials, Coen says.
"Each year, about 25,000 new mass-market items are
introduced," Coen says. "The manufacturer must do
everything possible to encourage [consumer] acceptance."
5. Prove your product will sell. A new
company may have to prove its product will sell before distributors
and major retailers take notice, King says. He first started
selling the Squirrel Mixer by mail order and to a few local retail
stores to prove consumers would buy the device.
"Distributors' sales forces started seeing the Squirrel
Mixer in several stores and asked [the stores] about it," King
says. "Even then, the distributors didn't call us. We had
to call them."
6. Ask questions. Many new manufacturers
don't even know where to look for distributors and sales
representatives. King found many of his by asking questions. He
asked retail buyers for names of distributors; he called
manufacturers of similar products and asked whom their distributors
and sales representatives were; and he studied industry magazines
for names and ads.
Many trade groups have distributors and reps as members.
Encyclopedia of Associations (Gale Research) lists thousands
of associations; look for it in your local library.
7. Attend trade shows. "Take an exhibit
booth, either by yourself or in partnership with another company
with complementary products," Metscher says. As with other
marketing efforts, choose a trade show targeted to your market.
At the show, collect business cards from prospective
distributors or sales reps, then follow up after the show is over.
Even if you can't afford your own booth, attend the shows that
target your industry. "Shows are good places to network and
identify the people and companies that will buy your
products," Metscher says.
8. Select distributors and sales reps
carefully. Ask others in your industry for referrals to
good sales reps and distributors. When considering reps, ask for
their credentials and references. Look for reps and distributors
who carry similar but noncompeting products and who sell to the
same geographic territory and type of retailer who carries your
type of product.
Distributors usually buy some of your product and store it at
their warehouses. Good ones fill orders quickly and accurately and
help build a market for your product. Independent sales reps
don't buy your product, but they should aggressively sell your
product in markets you can't reach.
"You need to check out each
representative,' " says Jill Ford, author of Gift
Trade Marketing (J. Ford Co., $33.95, 949-240-3333). "We
recommend you hire three. You'll find one will produce, one
won't, and one will be somewhere in the middle."
9. Find private label partners. Even though
King has succeeded in getting the Squirrel Mixer into thousands of
stores, attracting distributors "continues to be a problem for
small companies even when you prove you have a good product,"
he says.
That's one reason he allows some major paint companies, such
as Hyde Manufacturing and Red Devil, to put their brand names on
his mixer. This is called a private label agreement. Larger
companies have more products to sell, which distributors and
retailers prefer, and have more extensive distribution channels.
Like building relationships with distributors and sales reps,
attracting private label deals takes time and effort but can be a
valuable part of your marketing strategy.
Jan Norman is a freelance writer who specializes in
small-business issues. She can be reached at jnsmallbiz@aol.com
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