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Jonathan Bein of Real Results Marketing, who MDM has partnered with on a series of distributor marketing articles, recently surveyed distributors about how they position their companies in their markets when it comes to price and value. Interestingly, he found that about 90 percent of respondents – all distributors – believe they deliver more value than their competitors for a comparable price.
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In the latest issue of MDM Premium, Bein writes that all things being equal, we would expect that 55 to 65 percent of companies would position around value instead of price. He says: "Although we have seen similar trends in other markets where suppliers have an inflated sense of the value they offer, none is as stark as in the distribution market."
So what is contributing to this? He names three factors:
1. Price pressure – Bein writes that price pressure has led to many distributors providing additional services often at no charge to the customer to avoid losing customers or lowering prices.
2. Unclear understanding of value – Bein says that while some distributors focus their messaging on benefits to the customer such as reduced inventory costs, most messaging we hear focuses on features – such as product selection. According to Bein, companies whose messaging is primarily feature-oriented often have a limited understanding of the value they create.
3. A messaging challenge – It's difficult to differentiate in a market where many competitors carry the same products and offer the same features. Read more about this challenge in the blog: What do you claim about your product?
Read more about the results of the MDM marketing survey in Price vs. Value: How Distributors Position Their Businesses.
Bein also addressed the question of positioning in a recent MDM Executive Briefing episode. If you haven't already, check it out below.
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