Regional marketing is a thing of the past due to increased market knowledge. For instance, competing distributors, if they are part of a national chain, are aware almost instantly of new pricing programs and will demand the same. Also, steady customers in say, Northern Wisconsin, can use their Internet shopping programs to find a lower price in other parts of the country like Alabama. They can order months worth of the product at the lower price, wiping away expected profits for the next quarter.
Do you see your own company in this farce? How many unsuccessful promotions will companies run before we begin to understand that the market has changed? We are all in a nationwide market, not a regional market.
Everyone has access to every price you have ever posted. In a matter of minutes a two-man cabinet shop in Wisconsin can know the best price on any slide, laminate or edgebander nationwide.
How Does This Affect Pricing?
If we start looking at every program as having a national effect on pricing, what would we change?
Look at Dyson vacuums for a good example of how to run a national program. No matter which store sells Dyson it is always the same price. When they run a sale, the price drops at every Kohl’s, Target and Wal-Mart simultaneously. The stores have a protected profit margin and everybody has a level playing field, not only in cost, but in profit.
It is time for the woodworking wholesale supply market to take note of the new reality. Forget rebates, spiff’s, regional promotions, distribution territories, and negotiated special pricing. The market knowledge has moved beyond the promotional systems of the last decade.
Focus instead on providing your product quickly, at a fair price throughout the whole market, not the region. Realize that every regional promotion just takes margin away from your existing loyal distributors and rarely brings new customers in the long run. Work with the best distributors you have, help them by setting an agreed markup and work with them to build your business instead of making your product into a commodity.
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