Protect Your TurfThe short-term financial allure of eliminating rep and/or dealer percentages appeals to manufacturers when they fail to recognize the true ?value-added? benefits of the distribution channel. 3/29/2006 6:58 AM Eastern
Protect Your Turf
The short-term financial allure of eliminating rep and/or dealer percentages appeals to manufacturers when they fail to recognize the true ?value-added? benefits of the distribution channel.
“We've cut out the middleman, so our costs are less.” Consumers have heard that phrase from manufacturers since Madison Avenue was a dirt road. In a commodity market, it implies reduced distribution costs and theoretically lower prices for the end-customer. But when manufacturers offer a “total solution,” the idea usually comes from an accounting person spending too much time in the sales and marketing department. When we start to hear this refrain in pro AV, it's another sign of a collapsing distribution channel that spells trouble.
The short-term financial allure of eliminating rep and/or dealer percentages appeals to manufacturers when they fail to recognize the true “value-added” benefits of the distribution channel. Such organizations also tend to be product-oriented, and don't understand exactly what pro AV customers are really buying from systems integration firms and consultants. Much to their dismay, it's usually not their products, and it's not even systems. They're buying solutions. And even the most highly evolved manufacturer can't build a solution. Despite the marketing appeal of such a notion, there's just no such thing as a solution in a box. For any pro AV project, someone has to determine the right system, installation methodology, and budget for the application. Then somebody has to actually install and configure the system. And someone needs to be available for service after the sale. These things just can't be done effectively via the Internet or over the phone.
Consumer electronics manufacturers edging their way into pro AV seem to be approaching our industry this way. Even more disturbing is when established pro AV manufacturers, perhaps encouraged by industry outsiders, start to develop this logic of direct selling. We already have manufacturers selling audio and video direct to end-users from their websites, and factory reps are in the field. But losing sight of the value-add may not be entirely their fault. Dealers and reps must also share the responsibility when they fail to proactively communicate that value.
Let's face it; we're an industry of techies. We're much more interested in the latest product than in marketing our businesses. And, frankly, most of us are so busy with our next install that promotion is the last thing on our minds. So we rely on a handful of regular clients and word of mouth recommendations, but that will never spread the gospel of the value we add to a group of commodity products. The custom home theater integrators have done an amazing job of elevating their “solutions” over the brands they install, while traditional pro AV integrators continue to have their systems dominated by brands. The profile of the systems integrator simply has to evolve if we want to become inoculated against commoditization and the threat of direct selling.