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Volume-driven approach is not best for distributor profitability

July 25, 2007

The last five years have been rough for distributors. Price pressure and intense competition have eliminated razor-thin margins, pushing many distributors to the brink. In addition, distributors have gotten into the habit of "giving away" value-added services in hope of winning deals, driving costs to historic heights. The solution: Revamp pricing based on the value you provide in each segment.

Many distributors believed that a resurgent economy would allow them to raise prices, but customers have been resistant. For most distributors, attempts at price increases are simply not taking hold.

Fortunately, there is a better, more profitable approach. The solution is to develop products and services that target unique segments with very specific offers. For most ...

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