Distributing and Selling High-Tech Products

One may estimate thatthe distribution channels account for 25% to 40% of the retailprice of goods and services in high-technology businesses,while the sales channel represents between 15

Distributing and Selling High-Tech Products

The greatest technology is useless if it cannot be sold Indeed asmart distribution strategy has been one of the key success fac-tors for many of the high-tech firms that managed to surviveand even thrive during the recent economic downturn In thatmatter the success of Dell [1], Logitech, eBay, and Cisco Sys-tems—among others—illustrates the fact that only when cus-tomers are purchasing a product does it ultimately succeed,indicating that the product meets those customers’ needs orwants

Decisions about marketing channels are among the mostcrucial decisions facing marketers [2] The first decision is

to choose how to balance push and pull marketing A pushstrategy means that the different channels will promote andsell the product to the customers A pull strategy relies onadvertising and promotion directly to the customers motivatingthem to come and ask channels for the product Usually, apush strategy makes sense when brand loyalty is low, whenthe choice of the product is made in the store A pull strategy isbest when customers choose the brand before going to thestore, because of a strong brand loyalty or a high involvementfor the product

The push/pull decisions have a significant impact on theother elements of the marketing mix, as well The communica-tion strategy will be different if a company decides to godirectly to the consumers, as opposed to going through variousintermediaries Similarly, the pricing strategy will be affected

by the selection of distribution channel One may estimate thatthe distribution channels account for 25% to 40% of the retailprice of goods and services in high-technology businesses,while the sales channel represents between 15% to 35% ofthe final sales price for industrial products Consequently,distribution channels managed efficiently can have a signifi-cant impact not only on sales but also on profit margins

Channels may also have an impact on product design, because some largedistributors have enough power to impose their own requirements ontheir suppliers Finally, a channel strategy requires a long-term commit-ment vis-à-vis other partners Once a contract has been signed with anational or international distributor, for instance, a company cannot backoff within 1 day and switch to another channel Conversely, it takes a longtime and experience to build an effective Internet channel or an efficientsales force.

As we shall see in this chapter, if the essence of high technology is sidered in the process of creating a strong distribution strategy, its character-istics will impose certain priorities and choices in the selection of the variouschannels [3], as well as in the effective management of those different chan-nels [4] In addition, we dedicate a specific section to the management of aproprietary sales force, which is a very common characteristic of B2B high-tech firms

con-7.1 Selecting distribution channels for high-tech

products

Selling a good or a service requires the combination of three distinct nels: a sales channel, a delivery channel, and a service channel Those chan-nels can be joined together or can be discrete from one another Forinstance, successful direct marketing firms employ the Internet, the phone,and mail as sales channels, express mail services as the delivery channel,and regional maintenance people as the service channel Those firms inte-grate all the information about customers obtained through those differentchannels thanks to sophisticated customer relationship management soft-ware programs (previously introduced in Section 3.3), in order to develop acomplete overview of customers’ needs, wants, and requests

chan-For each of those three channels, the strategic decision always will bebetween using a direct (in-house) channel, belonging to the firm, or a thirdparty indirect (outside) channel, or a hybrid solution combining the use ofdirect and indirect channels This comes at a time when new channels likethe Internet and on-line services continue to emerge [5], and new manage-ment tools, like data networks tracking in real time the inventories of all dis-tributors in a market, have combined to speed up the evolution of moretraditional channels

As a matter of fact, the majority of the high-technology companies usetheir own sales forces to sell products directly to customers However, themost successful organizations also count on other distribution channels

in order to reach all the customers of a targeted market segment in themost efficient way [6] Today, for instance, value-added resellers, systemintegrators, and distributors are becoming more prominent in the distribu-tion of electronic and telecommunication solutions For instance, Cisco Sys-tems depends on its 35,000 partner channels for more than 90% of itsrevenues [7]

Selecting a distribution channel is very important because it can make orbreak a product, since distributors are part of the reinforcing loop leading toincreasing returns, as seen in Chapter 2 Inasmuch as their revenues depend

on the size of the market they can serve, marketers tend to concentrate onthe solution that appears to produce the most potential buyers For instance,

in addition to the application developers, distributors have been a major forcebehind the success of Microsoft Windows and the decline of Apple Computer.Companies must continuously reevaluate their distribution choices tomaintain the most efficient networks Take the case of Logitech Today retailoutlets account for 85% of Logitech’s sales, while just 15% stem from Origi-nal Equipment Manufacturer (OEM) partnerships However, until the late1980s, it was the opposite: The OEM business outpaced retail and the com-pany believed that its retail business would soon die, because every PCwould be sold with a mouse In contrast, OEMs figured out that PC priceswere key for consumers, thus they kept up distributing PCs with standardkeyboards and mice Consequently, Logitech stuck with its retail businessproviding them with products slightly ahead of those sold by its OEM part-ners, such as optical wireless keyboards and mice

Five selection criteria can assist a marketing manager in his or herchannel-design decisions: the size of the market, the cost of the distributionnetwork, the type of product to be marketed, the degree of control on thedistribution channels, and the channel’s flexibility

market

The size of the market and the variety in customer profiles often justify theuse of indirect distribution channels so as to eliminate gaps in market cover-age This is even more important for high-tech products, especially whenthey are entering the growth phase at full speed, meaning that they try toreach the majority of mainstreams customers, which make up the bulk ofthe market At that time, it is necessary to add channels and even sometimes

to switch from one category to another [8]

The computer market, which unquestionably follows this pattern, hasgone through four characteristic phases During the first phase (the 1950s),the systems were sophisticated and potential customers were few; this cor-responded to direct sales through contact between sales engineers and cus-tomers From the 1970s on, the arrival of minicomputers and the increasednumber of users led to the development of external distribution channels,usually in the form of OEM, which added specific applications to computersbefore the actual sale

The development of microcomputers during the 1980s led to a greateruse of distributors, who became the key success factors for Apple and Com-paq Similarly, the popularity of microcomputers brought about the devel-opment of direct marketing Dell was the first company to sell its computersdirectly by mail order without any physical intermediary and has since beenimitated by a score of other firms

Since the onset of the 1990s, large computer firms that want to reach agreater variety of market segments have to manage different marketingstructures These companies sell some of their smaller products, such as serv-ers or PCs, through authorized dealers, establish marketing agreements withdistribution chain, such as Comp USA, Computown, or U.K.-based TinyComputers, and are in contact with dealers in the used computer market.For consumer goods such as MP3 players, digital cameras, or PDAs, vendorssuch as HP, Samsung, and Sony also use electronics retailers Major electron-ics retailers in the United States are Best Buy (500 stores), Radio Shack(5,300 stores), Musicland (1,100 stores), Tweeter, and Ultimate Electronics.Sales can also be made directly from computer to computer using elec-tronic data interchange (EDI) or the Internet, which both are experiencingstrong growth.

Though worldwide market estimates vary significantly from one tute to another as shown in Table 7.1, clearly on-line B2B is bigger thanB2C Today it can be estimated that e-commerce represents 12% of reve-nues for telecom and technology companies For instance, the Cisco Sys-tems and the HP Internet sites allow prospective business customers tosearch for products and services, review the specifications of Cisco or HPmachines, and contact sales representatives to place orders or even orderdirectly through the Internet Similarly, Oracle Corporation, the leadingdatabase software vendor, now distributes a new product over the Internet,

insti-as well insti-as through physical channels In the consumer business, Dell hinsti-asimplemented a direct order system through the Internet, a practice imitated

by Apple Computer

The rise of e-marketplaces has spurred the growth of on-line B2B,because this is where buyers and sellers could meet to procure productsthrough on-line catalogs, auctions, or direct exchanges At the outset most

of the e-marketplaces were public or driven by consortia, such as Covisint orSupply On in the automotive industry, Aeroxchange or Exostar in the avia-tion industry, or consortium-led E2open and Converge for the high-techindustry

However, e-marketplaces are now more frequently private, functioning

by invitation only and focusing more on process than price In fact, becausepartners on a private exchange already know each other they can share cru-cial aspects of their business more efficiently: information, production

Table 7.1 Estimates about the Worldwide B2BE-Commerce Volume in 2003 (Millions of Dollars)

B2B

Dollars in Millions B2C

Dollars in Millions

e-marketer, February 2002

1,409 e-marketer,

February 2002

250 Jupiter Research 2,940 Merrill Lynch 1,317 Computer

economics, June 2002

1,853 Goldman Sachs 1,392

planning, inventory management, and other supply chain processes, as well

as auctions Firms like IBM or Sun Microsystems have bought a billion lars of computer hardware components through private exchanges Morethan 30% of Fortune 2,000 companies had set up their own privateexchanges in 2003 and the trend is accelerating, according to AMRResearch

dol-In B2C, on-line markets provide better visibility of what consumers arebuying, when they are buying it, and from whom they are buying it; best ofall, they bring this information instantly to marketers Some firms such asNedstat, NetIQ, SteelTorch, and Red Sheriff are providing marketers withreal-time information about what, when, and where customers are buying

In a way, those firms are the Nielsens of the Internet On-line businessesalso provide better margins since on-line commissions tend to range from5% to 10% of sales according to the category of the goods [9]

On the other side, privacy concerns may impede this new customer bility In the United States, Microsoft was compelled to halt its automaticdownloading of information about user system configurations as part of theprocess of registering from Microsoft Network In France, getting electronicinformation on consumers or businesses is severely restricted by law:Anyone always has the right to see the content of the information storedand may refuse to have this information used for business purposes, such asbeing listed on a customer database

visi-Figure 7.1 illustrates and summarizes this development of design choices and its consequences in terms of the organization for a majorcomputer vendor The increase in channels parallel the computer technol-ogy life cycle as much as it is necessary to reach more mainstream customers

channel-in the early or late majority The problem with runnchannel-ing so many tion channels is that they overlap on customer reach and, as a consequence,risk conflicting with each other The solution for avoiding such a difficulty is

distribu-to differentiate products and tailor margins distribu-to distinct retail channels, likePackard Bell NEC has done In 2003, Packard Bell NEC introduced a distri-bution plan, dubbed “NEC Now Program,” allowing more than 250 qualifiedresellers and Value Added Reseller (VARs) to deliver notebooks and otherproducts directly through direct access to NEC’s build-to-order manufactur-ing plants The different channels are not competing because customers paythe same price, whether they purchase direct or through resellers

On-line services

markets Producer

quickly because a distributor’s payment represents a percentage of the totalsales revenue An instructive example is the evolution of Dell and Gatewaydistribution strategy, which successfully pioneered a direct “build to order”model when the traditional PC vendors such as IBM, Compaq, and HP wererelying on an indirect “resellers” model.

In 1990, Dell decided to add “resellers” to its direct-sales channel inorder to boost growth Dell PCs were distributed through retailers such asBestBuy, SoftWarehouse Superstores, Wal-Mart, and Staples In 1994, thecompany decided to pull the plug from the indirect channel, after consider-ing its associated cost and the reduced gross margin On the average, theannual selling, general and administrative (SG&A) expenses for runningone retail store total about $2 million

Gateway made a different move In 1996, it decided to create its ownretail chain, Gateway Country Stores, with about 250 stores in addition toits direct channels The rational was to make customers more comfortablewith purchasing PCs while offering the best presales and postsales services.Very quickly, the cost of its strategy had a direct impact on the totalSG&A expenses of Gateway, while the volume did not grow as fast as thedirect channel Both sales and profits suffered, especially compared withDell, which was at the same level as Gateway in 1996 and had made a cleardifference in 2001 as shown in Table 7.2

characteristics

High-technology products can be divided into two categories: ized products and standard products Nonstandardized products require adirect sales force Because these products are manufactured on request for a

Table 7.2 Evolution of Dell Versus Gateway Revenues and Operating Income

1994 1995 1996 1997 1998 1999 2000 2001 2002

Dell Net sales (dollars

in millions)

2,873 3,475 5,296 7,759 12,327 18,243 25,265 31,900 31,200 SG&A

particular customer, personal contact with the users is necessary The salesforce has to be very knowledgeable about the product and its application, tohelp customers understand and employ the product.

Standard products justify the use of external distributors These productshave well-defined characteristics; products such as a computer memory or

a standard microprocessor are sold in large quantities and at unit costsmuch lower than those for nonstandardized products, justifying the use ofdistributors

For products that are neither entirely standard nor truly ized but rather in between these two categories, a marketing channel should

nonstandard-be selected depending upon the technical complexity of the product and theneed for customer service depending upon the distributor’s ability

On one side, if a company does not have enough resources to provideany customer service, it should depend upon its distributors On the otherside, if the distributor is not able to perform customer service, the product’s

or the technology’s quality image can be seriously jeopardized, which inturn can challenge an entire marketing strategy It is said that Michael Dellstarted Dell Computer to sell PCs directly by phone to consumers after hestrove to buy PCs from dealers who knew less about computers than he did

A failure in the PC distribution channel gave birth to one of the most dable new entrants in the PC industry

formi-This is one of the reasons why Apple Computer changed its channel tribution strategy in Europe at the end of 2002 Apple changed the marginsthat it was offering dealers It reduced the basic margin of small, independ-ent dealers from seven to 1% or 2%; at the same time, it significantly raisedthe margins for large dealers providing customized solutions, demo facilitiesand after-sale support with a well trained staff and third-party productsstocks Apple’s goal was clearly to enhance “the development of the bestpossible experience for our customers” according to Mark Rogers, AppleU.K director

control over a distribution network

Some channels decisions are dictated by the bargaining power of the pany Actually some distributors are “open” and willingly share their cus-tomer and price lists as well as any other information about customer Butothers are so independent that they are unmanageable They are secretiveabout not sharing any information and carry out their sales policy as theythink best This has been the case recently in China on the PC market [10].Many western PC makers have found that most of the local distributorswere not able to provide technical support, customer service or mainte-nance services, contrary to what they claimed The most capable distributorshave quickly been taken over by leading Chinese PC manufacturers, such asLegend, which had cultural advantages Furthermore, when a distributor issuccessful, it has a financial interest in being secretive and in handling itsown marketing policy

com-However, it is potentially dangerous for a manufacturer to see a growingbarrier between itself and its market because it would miss out on customerfeedback Furthermore, its technology can be copied by or through the dis-tributor, which the manufacturer could fail to realize until the distributorcancels an agreement For instance, Legend, the leading PC maker in China,started in 1994 as a distributor of foreign PCs Six years later, it moved tomaking and selling its own technology and quickly took control of thebooming Chinese market By 2003 Legend had more than 27% marketshare, $3 billion revenues, and more than 3,500 sales points.

Ultimately a strong distributor may become a direct competitor For thisreason, in July 2002 HP and then Cisco in October 2002 ended their distri-bution agreement with Dell Besides being a distributor for their digital pro-jectors and communication switches, Dell had developed its own line of lowend products in the two previous years Some of those products were com-peting head to head with high end (and profitable) HP or Cisco equipment,especially in the large business, corporate customers segment

7.1.5 Channel-design decisions according to the flexibility of the distribution network

A distribution contract is often specifically for a fairly long period of time Aconsumer electronics manufacturer could not easily change from a special-ized sales force to direct sales through superstores

However, recruiting and training a network of distributors takes timeand requires an investment since this network cannot be put into effectimmediately In the high-technology-product world, product ranges followeach other at a high rate and market segments are constantly changing,which makes establishing a distributor network even more difficult

In the telecom or the computer industry, distributors have replaced

a traditional sales force but are now threatened by direct marketing nels, such as phone or the Internet However the most successful market-ing companies do not throw out the baby with the bath water Theyknow that it takes time and energy to set up, train, motivate and manage achannel Consequently they try to extract the maximum value of their dif-ferent channels instead of turning one off, as soon as it is seems to be lesseffective

chan-For instance, in 2002, Cisco initiated some major changes in its tion strategy in Europe, as well as in Middle East and Africa Among its dis-tributors, Cisco differentiated two different categories and created 7 CiscoDistribution Partners (CDP) and 10 Cisco Authorized Distributors (CAD) Inthat two-tier scheme, CDPs only have a direct purchasing relationship withCisco while CAPs procure Cisco products from a CDP and no longer directlyfrom Cisco Except for procurement, CDP and CAD have a direct relation-ship with Cisco for information, service and expertise

distribu-Such an organization actually means that CAD can focus more efficiently

on the selling of services and Cisco solutions while relying on CDP for thelogistic and supply side It provide them with much more flexibility, faster

product lead time, no more inventory costs and risks, as well as freeing theirworking capital for use in developing their business.

As for the CDPs, they get a better use and profitability from their fixedcost infrastructure through larger shipments They also get the opportunity

to generate new revenues on activities such as configurations, staging or vate label; finally they increase their customer base to include CAD Byoffering win-win solutions and maximizing the synergies between the dif-ferent categories of distributors this program has been extremely successful

pri-It has allowed Cisco to increase its market share so far

7.2 Managing distributors of high-tech products

The decision to sell products through a distributor is only one step in theprocess A distributor must be selected, directed, and evaluated Again, thecharacteristics of high technology impose slightly different criteria compared

to those of more traditional products

Every company that is looking for a distributor judges that distributor onits sales experience, financial situation, image toward customers of the tar-get markets, the number and quality of its sales people, and the quantityand brands of its current product portfolio Moreover, since high-technology products have a high degree of innovation, a distributor musthave unquestionable knowledge about a product to be able to respond tocustomer questions Due to the frequent and rapid changes of high-technology products, a distributor must also be able to guarantee almostimmediate availability in order to respond to demand at the right time Adistributor who sells technologically outdated products will see his custom-ers go to competitors translating into lost sales Usually, lost sales are largelyunderestimated One computer manufacturer approximated its lost sales at5% to 10% of total sales, eventually to realize that they were actuallybetween 15% and 20%, almost two or three times its original estimate.Furthermore, obsolescence is especially quick for some high-technologysolutions with high variable costs, like computers or consumer electronics.Cellular phones or PDAs, for instance, may lose as much as 10% of theirvalue each month; so after 7 months, their value is more than halved Thus,today major cellular phones or PC distributors have negotiated the right toreturn unsold products to the vendor at no cost

Unquestionably, the best solution for restraining the impact of lost salesand obsolescence is to gauge them by running periodic customer and dis-tributor surveys Consequently, inventory and order management forhigh-tech products is obviously more sophisticated than that for standardproducts and is fairly similar to the management of fashion stores Forexample, one high-tech company received first-month orders for its latestproducts surpassing its manufacturing capacity by more than 25% Itdecided to adapt by increasing both component stock and production How-ever, 3 months later, orders plummeted, creating an enormous inventory.The product ended up being a flop What happened was that tight initial

capacities had actually boosted early demand for phony orders placed bydistributors concerned about short supplies Then, products did not movebecause the market was not buying, but the producer did not figure that outand wrongly decided to expand production on the sole basis of first impres-sions Such a situation explains why the most successful B2C high-techcompanies have adopted the “build to order” model By doing so, they havemanaged to cut their inventory cost dramatically and boost their cash flowand profitability while improving the satisfaction of their customers.Finally, the high-technological content of these products calls for techni-cal know-how and a professional organization These two requirements areoften important in assuring the quality of customer service Manufacturerswho are looking to engage distributors often stumble on this last criterionbecause customer service entails different skills than sales.

However, customer service is a basic necessity for succeeding in hightechnology because customers must be assured of quality products that con-firm their confidence in the manufacturing company The best marketingplan for a highly technical product can be instantaneously ruined by a dis-tributor whose customer service does not respond quickly and correctly tothe frantic telephone calls of a customer demanding the repair of his or herDVD reader, digital camera, or 3G cell phone Usually, the solution is totrain technicians to make them more competent, but if their compensation

is based on the quantity of services delivered rather than the quality, extratraining may backfire and create a negative feedback cycle, as illustrated inFigure 7.3, because it erodes their working time and puts them under timepressure Accordingly, technicians will make a slapdash diagnostic, fallingshort of detecting problems early and, hence, leaving customers moreunsatisfied than before High-tech products require that distributors makeuse of more and better marketing, financial, and human resources in order

to respond efficiently to these additional constraints of high technology.Manufacturers, however, must also devote time to helping distributorsassume these additional responsibilities Every company must keep in mindthat an intermediary is an independent company and more a customer rep-resentative than a manufacturer’s “puppet.” An intermediary is interested

Failure to repair

at first try

Extra training

Time pressure

Slapdash diagnostic

in selling products that customers will buy from it and, hence, in making it aprofit For example, a high-technology company like Hi-Shear Industries,

an American subsidiary of the French group Lisi Aerospace, learned this thehard way Originally, in the military aerospace business, Hi-Shear exploitedits original technological know-how to build a new activity in automotivebraking cable and fastener Contrary to the military markets, automotiveOEMs demand suppliers to significantly decrease their prices as long as vol-ume is building Thus, when Hi-Shear thought it had its distributors locked

in the same way as its military customers and tried to increase its tion prices, the distributors reacted strongly and almost put them out of thisbusiness Thus, Hi-Shear had to adapt quickly to its new distributionchannel

penetra-A distributor is not instinctively sensitive to these requirements of nical knowledge, optimal product management, and quality of service butshould be made aware of different incentive programs [11] A partnershipshould be set up with marketing objectives, inventory management, and

tech-Case Study: Cisco Distribution Program

In 2002, Cisco introduced two new initiatives to make business easier forits distributors and its corporate customers

Before that time, Cisco provided education and information to nel partners but left them alone in the deployment at the customer’slocation The Partner Consultative Support program setup in 2002included:

chan-◗ A new Web portal for partners;

◗ A leasing program for demonstration lab equipment;

◗ A process to call on Cisco engineers to help out with deployments ofnew technologies at customer sites;

◗ A more efficient system for setting up and renewing equipmentservice contracts

A second program, labeled Services Management System (SMS),aimed at the simplification and the automation of the process of getting asupport contract Up to that time, customers received a packet of paperswith a new product; they had to fill them out and return them in order

to register the product before getting the service contract With the SMSprograms, customers but also resellers and product distributors can sign

on and renew service contracts on-line In addition they can trail the lifecycle of a service contract on-line from purchase date through contractrenewal

Question 1: What are the benefits of those programs for Cisco vis its distributors?

vis-à-Question 2: What are the opportunities and risks of those programsfor Cisco distributors?

promotional activities that are established by both parties, taking intoaccount each other’s needs.

It is the responsibility of the marketing and sales departments [12] tomonitor and manage distributors, organize training sessions for new prod-ucts, present previews of new technologies, plan sales promotions, and ver-ify that distributors’ technical questions are answered by the company Thisentire operation is usually secured by a contract in the form of a joint mar-keting plan (JMP) or common marketing plan (CMP), and it means that cre-ating and maintaining a successful partnership requires resources

The final step is to monitor distributor performance, and clearly salesquotas as the only criteria do not suffice in the high-technology industry Amarketing manager must monitor the level of inventory and its rotation, thequality of customer service operations, and the training level of salespeopleand must follow up on sales promotion campaigns A marketing managermust also ensure that the distributor has correctly reported information onthe customer, price, and product according to a previously determined for-mat This useful data could be needed to prepare new product launches Thebest distributors can only be rewarded if they fulfill all criteria with anexceptional effort

Figure 7.4 illustrates the ideal ranking of skills that the marketing agers of successful high-tech firms expect from their distributors Marketknowledge is clearly considered as the most important skill, which comesbefore good image, active selling or maintenance capability

man-One last word about organization Due to the dramatic impact of the tribution channels on the revenues, the profitability, the customer satisfac-tion or the manufacturing activity, the smartest high-tech firms alwaysmake sure that the responsibilities for channel management belong to upperlevel sales managers [13]

dis-7.3 Selling high-tech products

In 2003, Boeing beat Airbus and won a $4 billion contract with Air Tran ways, to supply at least 60 jet planes The same year, Airbus signed a $20 bil-lion deal with NATO, its largest contract so far in Airbus history In January

Air-2003, IBM finalized a $5 billion 7-year outsourcing agreement with JP gan Chase, its largest-ever contract In April HP signed a $3 billion out-sourcing deal with Procter & Gamble Here are some examples of recentmega-deals for high-tech products or services The sheer size of those con-tracts underlines the importance of the capacity of some successful high-tech firms to sell complex and strategic solutions to some very largecustomers

Mor-Indeed, all the successful high-technology companies that sell to zations or businesses do rely on a direct sales force Most notably, in order toimprove their relationship with their main customers and to compete moreeffectively, they have set up key account management structure and pro-grams [14] Instead of assigning one sales representative a geographic

territory, successful high-tech firms have dedicated their representativesaround a few key large accounts Those key account managers talk to thevarious contacts within the large organization, from users to top manage-ment, and represents the complete capabilities of the supplier as well as themain/unique interlocutor Winning key account managers possess veryhigh level selling skills and experience [15].

However, setting up a direct sales force does not translate automaticallyinto extensive market coverage Indeed, in many high-tech companies, onemay estimate that roughly 20% of personnel work in sales, of whom 25%are salespeople spending about 25% of their time face-to-face with custom-ers That means that such companies spend a little bit more than 1% of theirtime dealing with customers, and this does not include the time spent atcustomer locations by maintenance people, which may represent up to 8%

of company time

The distributor: 0 20 40 60 80

Number of responses

Shares financial risk

Stores products

Provides forecast

Supplies maintenance and customer service

Is actively involved

in selling products Has a good reputation

Provides information about customers and competitors

Knows the market Percentage of respondents grading the item as important or very important

Percentage of respondents grading the item as important or very important.