pow The y contractors for ine th BOX 7.10 : {An Example of Channel Positioning ely on the: improvement cen functional dis. ckeeping units rae | tures a line of specialty repair parts for equip- iment used in one segment of the chemical | process industry. The fm hasan established ‘marketplace position of technical excellence in the production of top-quality parts for use in highly acidic or caustic applications. The firm selis the lines exclusively to industrial Aistebutors for resale. Although Chemparts' line had distinct quality advantages, distributors’ selling efforts ‘were limited because the products required a dificult, technical sales approach. Distributors found it easier to sell less-complicated,better- known lines on price than to initiate discus- sions of value-in-use. For years, the firm ‘made halthearted efforts to improve distribu. tor performance, relying on incentive pro- grams, Results were mixed at best ‘Then Chemparts’ managers decided to fake a strategic approach using channel posi- fioning. Because the firm sold only to one seg- ‘ment, managers decided to establish one ‘channel position and to provide a single chan- ‘nel offering to industrial distributors. The firm ‘began the formal process by summarizing its ‘expectations of distributors. These included selective penetration ofits target market and augmentation ofthe products with technical ddesign and problem-solving assistance, The firm also sought increased distributor profes- ‘sionalism in technical selling and marketing. Second, Chiemparts’ managers reviewed reseller requirements of a channel offering. Using market research and sales force intel ‘ence, the firm identified the channel offering ‘elements of its two key rivals, MicroChem and CLT Equipment (also disguised names). ‘They quickly discovered that their functional discount did not correspond to the required level of distributor competence and effort. Technical assistance and national advertising ‘were also deficient. We summarize this infor- ‘mation in Figure 7.6 Managers identified gaps in the offerings ‘and contrasted these with Chempasts’capabili- ties and reseller requirements. They decided larget at larger market the line contractor cus. ly specialized of SKUs, sub. it purchase a can be used buildings, the girders. They Compared ily from the tener staffed pplications fnicates the tional tools that a value proposition could be but around technical suppor leadership: both end-asers and distibutors placed a high value on techni cal asistanc the positon had been ignored by competitors and the frm had strong technical ‘capabilities Chemparts’ marketing managers woe this value proposition: "Let Chemparts unsurpassed technical support help make your firm the one customers cal when they need critical design work and emergency service!” ‘Third, Chemparts’ managers reformu: lated the channel offering, listing elements needed to meet distributor requirements and establish a technical support leadership post tion. They improved quality, including eom- pleteness of product line and new product development. Chemparts created technical design, selling, and technica-service training programs, They hired more technical reps and problem-solving specialists, The firm offered sales leads, market research, and joint sales call assistance: Managets pruned unnec- eséary incentive programs. We outline their revised channel offering in Figure 77 Fourth, Chemparts communicated tts value proposition fo distibutors through a series of advertisements in two lending distribu tor publications, Managers gave a presentation ofthe position a the anna distributor sales meeting. Chempars" distibutormarketing ‘manager made calls on each distributor. Also, Chemparts presented a policy manual in which the value proposition was articulated toa distvators As a result of its channel positioning efforts, Chemparts simplified and gained cor trol of its distrbutor programs, created a rep- tation among distributors asthe industcy's technical support leader, improved distribu tor technical selling and assistance enpabili- ties, and most important, strengthened the fiem’s presence in the final-customer market place. For three years following implementa- tion, Chempart’ sales of the line grew ata rate significanty higher than that of its pre cipal competitors, MicroChem and CLT Equipment Continued)7.7 Revised Channel Offering for Chemparts, inc. SE Aap tom spring Sih © By Sane ee 330 Section III Creating Value