Recent Experience in Channels of Distribution Management

Assessment of IT applications in retail and wholesale distribution for an IT provider: For a major provider of IT (information technology) products and services, Hamilton evaluated current developments in retail and wholesale distribution, with an emphasis on the costs of underlying business processes. Hamilton staff interviewed senior executives in a number of important retailers and wholesalers, as well as drawing extensively from secondary research. From this analysis, Hamilton identified the major IT applications over the next 5 years which showed the most promise for cost savings and increasing consumer satisfaction.

Marketing and distribution strategy for a tire wholesaler and retailer: For a leading wholesaler of private label tires, Hamilton analyzed the current business environment, identified future growth opportunities, and developed a distribution strategy to maximize sales and service while optimizing efficiency. Further, for their retail operation of over 300 tire stores, Hamilton developed a marketing and distribution strategy to support the chain's growth strategy in light of increasing competition from other retail formats, especially mass market discounters.

The consulting team interviewed customers, potential customers, store operators and management and developed a model demonstrating the cost-service trade-offs between various distribution options. As a result, the company was able to select the most efficient distribution network to support its long-term growth strategy.

Acquisition evaluation of an auto parts distributor: A diversified company seeking acquisitions in distribution-based businesses retained Hamilton's president to evaluate a particular acquisition candidate in auto parts distribution. Through field interviews in which the client was not identified, the consulting team concluded the candidate had a poor market reputation. This information, coupled with the client's evaluation through direct negotiations, led to the client dropping this particular acquisition from consideration.

Acquisition of an industrial distributor: For a multi-billion dollar producer of basic materials which also operated a multi-branch wholesaling operation, one of Hamilton's principals conducted an extended acquisition search among several distribution industries. Industries examined included industrial bearings, electronics, electrical supplies, fluid power products, and pipes-valves-fittings. Based on evaluation along a set of ten criteria, five candidate companies were identified. As a result of the study, a pipes, valves and fittings company in the Southwest was acquired for $150 million.

Marketing audit for a plumbing and heating supplies wholesaler: The grandson of the founder of a plumbing and heating supplies wholesaler, and now its president, was faced with stagnant sales despite being in a region with strong construction activity. Soon after becoming president, he commissioned a marketing audit to evaluate operations and assess opportunities to revitalize the business.

The audit included interviews with management personnel, visits with plumbers and industrial accounts accompanied by salespeople, reviews of financial and sales data, and interviews of executives in similar firms. Primary recommendations implemented as a result of the analysis were to:

Revise the sales compensation system, emphasizing incentives

Increase use of trade promotions to improve sales

Form a product screening committee to evaluate new products and pare existing lines

Initiate market planning efforts for the combined three branches

Place additional emphasis on an underdeveloped branch by building inventory and adding to the selling force

Increase involvement by the President in contacting customers

Product and distribution policy for a boat manufacturer: For this leading manufacturer of high performance fishing boats, Hamilton conducted a comprehensive marketing audit in response to eroding sales and unrest in the manufacturer's distribution channels. Extensive personal interviews were conducted with the client's management team, independent sales representatives, stocking marine dealers in five regions, competitors, and trade associations. The consulting team also conducted computerized trade-off research with boat owners to evaluate the value of different product features to end users. The team analyzed sales and internal operating data to determine product line profitability.

As a result of the investigation, the consultants advised management on how to deal effectively with a specific "renegade" dealer causing unrest in the channels. They also suggested ways to improve profit through better pricing and a clearer distinction between different products in the product line.

U.S. market entry for European fine cigar company: A very successful European manufacturer of expensive cigars asked one of Hamilton's principals to determine the best approaches for entry into the U.S. market. The president of the company was predisposed to mail order, because early experience had indicated traditional U.S. smoke shops were not interested in his company's high-style, fancily packaged cigars.

The consulting team interviewed retailers, U.S. cigar companies, and other experts in the trade, including the president of the leading cigar mail order company. The team believed that general mail order would not work, because of limited sales potential, and the fact that consumers did not know the brand. The team recommended five different trials, including specialty goods mail order (the unique cigar packaging would stand out in color catalogs) and specialty retail such as high priced hotel gift shops. The hotel gift shops proved later to be a good channel for the company.

Development of a brand and distribution strategy for sporting goods: For a leading manufacturer of fishing tackle that had recently completed a major acquisition, Hamilton identified the optimal means of leveraging its portfolio of strong brand identities in a rapidly changing, but not growing, wholesale and retail environment. Consultants conducted in-depth face-to-face interviews with every major customer, in order to craft a strategy for better meeting the highly diverse needs of the customer base, including the ability to better compete with each other.

As a result of this project, the client had a clear view of priorities for integrating their new organizations and product lines, and a clear strategy for reorganizing the customer contact process.

Development of a distribution strategy for Caller ID telephones: For a major telephone company, identified the optimal retail channels and marketing strategies for a new generation of residential telephones that identifies the number of the calling party. Consultants conducted 150 interviews with retailers at all levels, analyzed consumer demand research, and examined Caller ID's track record in other parts of the U.S. The team evaluated ten retail channels for their appropriateness, and identified retailers' requirements for channel support. A profitability analysis of the recommended distribution plan and marketing strategies was included in the recommendations to the client.

As a result of this project, the client had a coherent retailing and distribution strategy that allowed it to aggressively target selected retailers for Caller ID phone distribution. The client used economic projections to identify what support it could offer to the channel. Customer segmentation schemes identified the customers most likely to buy, and the relevant advertising messages and media to reach each benefit segment.

Marketing and distribution strategy for a major oil company: For one of the "Seven Sisters," Hamilton's president led a large study of consumers to determine how present customer buying behavior should impact strategy. Consumer segmentation and purchase sensitivities to price, credit card, brand name, self-service and other parameters of gasoline purchase were investigated. A major upshot of the study was the determination that brand loyalty in gasoline purchases is very low, and that distribution decisions should be made on the basis of distribution cost and competitive pricing. As a result of the study, the company pulled back from retailing in some markets as a way to improve profitability.

Market penetration strategy for a European wine region: A European government agency was concerned that wine sales from its region into the U.S. were not increasing, despite an expensive U.S. newspaper and magazine advertising effort. Hamilton Consultants interviewed retailers, wholesalers, restaurants and wine writers in eight major U.S. metropolitan regions to determine reactions to the advertising campaign and the image of the region's wines compared to its competition.

As a result of the research, the consulting team recommended a major redirection of the advertising themes, an increase in missionary selling effort coupled with a reduction in advertising, and some fundamental changes in the packaging and branding of the products. The client is currently implementing portions of the recommended strategy.

Retail opportunities in the men's apparel market: For a major retailer, Hamilton analyzed the size of the men's big and tall apparel market, and projected future growth based on demographic changes. The consulting team evaluated regional opportunities and identified under-served markets based on segmentation of the retail stores, their distribution, and customer buying behavior. It also analyzed the changing patterns in distribution channels, and evaluated competitive threats on the client's niche. As a result of the study, the client committed to a program of aggressive expansion into underserved markets and areas.

Design of the distribution and sales strategy for a flooring products company: For a producer of a newly patented flooring product, Hamilton researched customers and distributors to determine why sales were not expanding more rapidly. The team determined that, in fact, the new product was well regarded by existing customers and knowledgeable architects, and was selling profitably in the two geographic markets where there was intense selling effort through specialized distribution channels. The company adopted Hamilton's recommendation to double the size of the sales force and focus on two primary market segments, using the specialized distributors instead of traditional floor products wholesalers. This has resulted in increased sales and prospect generation for the company, allowing the business to move more quickly to a break-even operation.

Re-design of distribution channels for a major financial services provider: Hamilton surveyed distribution models from other industries to find innovative approaches to the distribution of existing financial products. The consultants identified management systems and practices that could serve as models for managing many related services. The team also investigated further automation of existing services and explored space utilization issues. The client has taken the recommendations forward and is implementing new sales channels for complicated products.