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In The News:

Buying Groups Face Obstacles in the Road

August 25, 2010

Buying and marketing groups have evolved and continue to work to add value to the channel – each in their own unique way, as discussed in this blog, and this premium article earlier this month.

But they, like most organizations in this industry, face challenges in a market that is seeing slow sales, cost and margin pressures, and ongoing consolidation. In MDM's recent survey on buying and marketing groups, about a third of respondents said that loyalty and providing ongoing value to member distributors and vendors were top challenges for these groups. Other challenges noted included the ability for these groups to present a unified front, staying relevant in an industry dominated by growing national competitors, and cost structure.

(Read about the benefits/value that members say they get from buying and marketing groups in this recent MDM blog.)

About two-thirds of respondents belong to or are preferred vendors for buying and marketing groups. We asked those who weren't members: Why not? Here are some of the anonymous responses to that survey question:

  • "Our company possesses the critical mass and product breadth necessary to service our customer base today."
  • "We haven't been asked to join."
  • "Not familiar with the concept or benefits."
  • "We can deliver products to our customers at a lower price than through a buying group."
  • "We don't see any advantage."
  • "We don't see the benefit outweighing the cost."
  • "Additional expense would be incurred, requiring a reduction of our own direct program, which we're not yet willing to do."

Read more about challenges facing buying groups in the latest issue of MDM, part 2 of a report: Challenges Facing Buying Groups.

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