and many stock a manufacturers brand leader, their own
distributor’s brand and possibly and manufacturer’s brand.
Trade interviews have also shown that distributor brands
offered better margins than the equivalent manufacturers brand,
with estimates indicating the extra profit margin to ‘be about 5
per cent more than the equivalent manufacturer’s brand.
of the reasons why manufacturers become suppliers of
distributors’ brands are:
economies of scale through raw material purchasing,
distribution and production;
any excess capacity can be utilized;
it can provide a base for expansion;
substantial sales may accrue with minimal promotional or
it may be the only way of dealing with some important
distributors (e.g. Marks & Spencer);
if an organization does not supply distributor brands, their
competitors will, possibly strengthening the competitors’
structure and trade goodwill.
Consumers benefit from distributors’ brands through the
lower prices being charged, but it is interesting to note that our
own research found that consumers are becoming increasingly
confident about distributors’ brands and no longer perceive
them as ‘cheap and nasty’ weak alternatives to manufacturers’
brands, but rather as realistic alternatives.
Brand and its Distributors
Brands should establish a relationship based on ‘love’ to collect
a large number of loyal customers. The relationship based on
‘respect’ for superior performance is difficult to sustain. In this
millennium, brands are promoted on customer experience.
People today are not buying products, but experience. Even
acquisition experience matters and so the distribution channel
must live upto expectorants. A brand gains a lot by favourable