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Keys to Market Access, Part 4: Understand True Market Potential

Written by Mike Marks, Steve Deist on Wednesday, 15 April 2015. Posted in Distribution, Manufacturing

A market access strategy provides a framework for distributors to align their investments with real opportunities for growth. This blog is the fourth of five looking at the five keys to unlocking profitable growth.

The fourth key to a successful market access strategy is to understand true market potential.

Distributors tend to hold certain beliefs about their markets – but those are often based on gut feel rather than facts. Companies need to use a combination of external market data and customer insight to truly understand the dynamics of the markets they serve. We usually find that distributors significantly overestimate their current share of their customers’ total spend and underestimate the available potential in their markets.

It’s critical to understand that the value is not only in the data itself; it’s also in the conversations it provokes. Think of market data as the sand in the oyster that creates the pearl. Data is most powerful when it conflicts with existing assumptions.

Services such as MDM Analytics (previously Industrial Market Information) can provide data on growth potential by market or customer type, a benchmark from which to start a conversation. Are you reaching all the customers in your markets? What’s your share of wallet with existing customers? What’s your market share? Are there customer segments you aren’t reaching – but should be targeting?

But don’t just look at where the money is spent and what it’s spent on. Use external data to prime the pump for discussion and the gathering of more qualitative information.

Combine the data with customer insight, which can help you understand why your markets look the way they do. Customer insight can also provide a window into which customers are candidates for lower-cost sales channels, which are OK in the current channel but may need some changes, and which are candidates for more intensive, strategically driven sales and marketing initiatives. It will also help you understand the cost to grow those customers.

The next blog in this series will look at why investing in new capabilities to reflect the changing markets can help you capitalize on growth opportunities.

Download the 5 Keys to Unlocking Profitable Growth (PDF).

About the Author

Steve Deist

Steve Deist

Steve Deist has been a IRCG Partner for six years. He has over 20 years of experience working for hundreds of distributor, retail, manufacturer and private equity clients in dozens of lines of trade. He is a highly rated speaker, a permanent University of Industrial Distribution faculty member and a distribution company board director.

Steve has extensive knowledge of the distribution and supply chain space, with substantial experience in retail, construction and industrial channels. This experience includes:

  • Strategy, sales effectiveness, operations, supply chain, marketing and technology projects for over 100 organizations over the past 10 years. These clients have ranged in size from $5M family run businesses to Fortune 500 corporations.
  • Numerous marketing channel projects for top tier manufacturers which sell through dealers, distributors, retailers, etc.
  • Frequent industry speaking engagements for clients including, trade associations and manufacturers on a broad range of subjects. These engagements have included workshops, technical sessions for management level audiences, strategic sessions for executive level audiences and keynote speeches.
  • Due diligence and related projects for top tier private equity firms.

Steve is IRCG’s strategy guru, focused on helping companies achieve lasting competitive advantage. His hands-on approach enables him to apply leading edge concepts to the practical realities of daily business.

Prior to joining IRCG, he was director of consulting services at a major supply chain software vendor. Steve’s thought provoking articles appear frequently in premier industry publications such as Modern Distribution Management. Steve has authored three books published by NAW (The Five Fundamentals for the Wholesale Distribution Sales Manager, Value Creation Strategies for Wholesaler-Distributors and the upcoming What’s the Right Plan? Effective Sales Incentive Design for Wholesaler-Distributors).

Mike Marks

Mike Marks

Mike Marks co-founded IRCG in April 1987. He began his consulting practice after working in distribution management for more than 20 years. Over the years, his narrow focus in B2B channel-driven markets has created an extensive number of deep executive relationships within virtually every business vertical in construction, industrial, OEM, agricultural, and healthcare.

Mike has led project teams that improve market access by aligning resources to growth opportunities serving manufacturers, dealers, and distributors. Clients have ranged from small privately owned firms to many of the industry’s market share leaders. Ownership structures have included owner-operators, private equity, ESOPs, and publically traded firms. Mike is proud of the teams work and the confidence clients have shown with additional project work.

He has written extensively, and is frequently quoted on many industry issues. He has substantial board experience on both public and private distribution firms. His contributions to the field include serving multiple terms as a Research Fellow with the National Association of Wholesaler-Distributors, permanent faculty at Purdue University’s University of Industrial Distribution, eight years as Graduate Adjunct Faculty in the Industrial Distribution Program at Texas A & M University, and rendering several precedent-setting expert opinions in contract disputes between manufacturers and distributors.

Prior to forming IRCG, Mike held the position of Executive Vice President at Lex Electronics, an $800 million vertically integrated electronics distributor in Stamford, CT. Mike’s path to management in his early career was through increasing responsibilities in sales and sales management. He also completed a tour of duty as a manufacturer’s representative.

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