Distributor Marketing Survey 2014: Survey Results

Distribution Strategy Group conducted an electronic survey of 305 participants to better understand trends in distribution marketing. This survey was conducted with Modern Distribution Management in July 2014.

Key Trends

• Objectives and marketing plan
  • Increasing retention, gross profit, wallet and market share
  • Annual marketing plan for most companies is driven by corporate strategy or sales
  • Adherence to the plan is limited due to tactical nature of most distribution marketing
• Vehicles and channels
  • Big shift towards digital vehicles including email, search marketing, and social media
  • Print catalog remains the most important for driving revenue
  • Big increase in revenue from web sales and outbound telephone sales
• Organization and infrastructure
  • Except for large distributors, most have only marketing communications or digital marketing specialist on staff.

Objectives and Marketing Plan

Objectives

The highest priorities are:

• Increase gross margin through price improvement – Larger companies are also improving margin through supplier management
• Grow wallet share
• Retain customers – This is a bigger issue for small companies
• Grow market share

Marketing Plans

Almost 80% of respondents create an annual marketing plan. However, less than 40% of respondents rely heavily on the plan. Activities are driven by corporate strategy and sales which, in turn, reduce the reliance on the marketing plan.

Marketing Activities

Marketing activities are driven mostly by corporate strategy and the sales department. The marketing plan and competitive actions play a minor role in what marketing does.

Vehicles and Channels

• Email: More than half of respondents do email marketing one to two times per month; 16 percent do it daily. Overall, email marketing is the most heavily used marketing vehicle and considered the most important marketing vehicle. It was the sixth most important marketing vehicle in the 2011 survey.
• Search engine marketing: Search engine marketing and display marketing have switched places regarding frequency of usage from the last survey to this one. More than 35 percent use SEM daily; 17 percent use SEM weekly or monthly. A third of the respondents do not use SEM at all, most likely because they have a limited Web presence or no e-commerce. The portion of respondents who use SEM at least monthly grew from 45 percent in the prior survey to 53 percent.
• Social media: The percentage of companies that update social media at least monthly grew from about 30 percent to just less than 60 percent. Midsize companies use social media the most frequently.
• Display merchandising: The portion of respondents who perform display merchandising at least monthly shrank from 60 percent in 2011 to 45 percent. While companies still use display merchandising, it was third most important in the prior survey and seventh most important in the current survey.
• Branch- and stored-based events: Though used infrequently, branch- and store-based events rate moderately high in importance to respondents from this survey.
• Catalog: The portion of companies that publish a catalog at least annually increased from 58 percent to 70
  percent. More respondents chose catalog as the most important vehicle in the current survey than any other
  marketing vehicle.
• Print flyer: Almost 90 percent of the respondents publish a print flyer, with 30 percent producing it monthly or weekly and 20 percent producing it quarterly. In the prior survey, the print flyer was considered the most important vehicle; it is now second most important.
• Telemarketing: Companies that performed telemarketing at least weekly remained around 30 percent.

Marketing Vehicle Frequency

Search engine marketing, display merchandising, social media, and email are the most frequently used marketing vehicles. Nearly half still do print catalogs at least annually or quarterly 10% or fewer use mass media – radio or TV.

Marketing Vehicle Importance

While more respondents select email or print flyer as important, over 20% chose print catalog as the most important, followed by search marketing, and branch events.

Sales Channels

While outside sales remains important, big changes from the prior survey are:

• Web sales increased from 40% to 55% important or very important
• Outbound telephone increased from 50% to 65% important or very important

Organization and Infrastructure

Marketing Personnel

Product management is the most heavily staffed job function, followed by pricing. For many companies with less than $50 million in annual revenue, the only marketing job function is marketing communications. Marketing research is the least heavily staffed job function, followed by market segment management. Few companies with less than $250 million in annual revenue have dedicated marketing research personnel or segment managers. In midsize and smaller companies, market segment management is combined with product management.

Sales Tools

• 70% use email marketing tools.
• 60% use CRM.
• 50% use Google analytics or some web content manager.

Survey Respondents

Respondent Annual Revenue

• 50% have less than $50M in revenue.
• 17% have over $500M revenue.
• 33% have $50M to $500M.

Company Description

• 70% distributor.
• Nearly 20% manufacturer.
• Others included:
  • Buying group
  • Association
  • Manufacturer’s rep

Respondent Business Sectors

• Nearly 60% are industrial.
• One third are safety.
• About 20% are building materials, HVACR/plumbing, hardware, oil and gas, electrical, jan/san, chemicals and plastics.

Branches/Stores

• 11% have no store.
• Half have 10 or fewer stores.
• 12% have 10 to 25 stores.
• 10% have 25 to 100 stores.

Respondents by Job Function

• 60% executive management
• 18% marketing
• 8% sales
• 8% general management

Trade Association Memberships

• 15% to 20% respondents from: ISA and NAW and PTDA.
• 10% to 15% respondents from PTDA and STAFDA.