Chapter 9: Helping Business Customers to Become Profitable

Overview

Most manufacturers sell their products through wholesalers, dealers, brokers, or agents. They don’t have to deal directly with the ultimate consumer of the product. This situation has both a good and a bad side. The good side is that the manufacturer is selling in wholesale quantities. It has hundreds instead of millions of customers to worry about. The bad side is that if the intermediaries are not good at their business, sales will falter, and there is not much that the manufacturer can do about it. It is hard to introduce new products when you cannot communicate with your ultimate consumers.

Database marketing has provided a new method of handling the marketing of business products. If the manufacturer can just get its hands on the names and addresses of the ultimate consumers, it can correspond with them, introduce them to new products, and drive them to the dealers. Many dealers resist this approach. Their fear is that the manufacturer will use this information to go around them and sell products directly to the ultimate consumers.

This situation almost drove Compaq out of business. Compaq had a network of wholesalers and retailers that were the exclusive marketers of its computers. Beginning in the middle 1980s, Compaq developed an excellent database of registered users of Compaq products. The company knew their names, their addresses, their positions in business, their occupations, the software they used, and scores of other pieces of information about them. But it never once contacted any of them directly, for fear that its retailers would stop promoting the Compaq name.

Meanwhile Dell, Gateway, and then IBM began to sell PCs directly to the public, stealing market share away from Compaq. When Compaq finally woke up to its losing strategy and began to sell direct, it was too late. Compaq had dropped to the back of the pack.

With database marketing, the ideal strategy for a supplier is to work to make its dealers, agents, and brokers successful. The supplier wants to help them to succeed in their business. As a result, the dealers will push the sale of the supplier’s products. Presented in this chapter are several case studies in which suppliers have done just that.