Factfile 28
Creating a channel advantage in b2b marketing
(Excerpt from The Channel Advantage by Tim Furey and Lawrence Friedman, with permission)
Successful companies like Dell, Charles Schwab and First Direct have at least two things in common:
First, they have all but dispensed with the idea of fighting on the battlefield of product features.
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They are leaving it to their competitors to tweak this or that gadget in the search for competitive advantage.
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In terms of what they actually sell, their products are about as good and often about the same as their competitors? offerings.
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Products, though, are not where they are fighting for competitive advantage. They have all decisively looked elsewhere for competitive differentiation and specifically on how they go to market with their products and services.
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These companies are achieving strong revenue and market share growth primarily by making it more attractive for more customers to do more business through more convenient sales channels. Put simply, they have all bet big ? and so far bet correctly ? that they can get more competitive advantage from how they sell than from what they sell.
Second, these are hugely successful companies, as measured in shareholder value and growth.
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Dell?s stock price has increased 29,000% since 1990, and its price-earnings ratio of 54, the premium paid by investors for anticipated future growth, is over twice that of the average company in the S&P 500.(As of March 6, 1998.)
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Schwab?s stock price has increased tenfold over the past five years.
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First Direct is one of the fastest growing banks in the UK and is well on track to reach its target of 1,000,000 customers by the year 2000.
The dramatic successes of these ?channel-centric? companies, in highly competitive markets, raises an important question. For many years, product differentiation was where companies made their stand.
Only recently, say in the last ten or fifteen years, have leading companies begun to look toward ?channel differentiation? as a key source of competitive advantage. The question is: what happened?
Click here to read how three companies translated this in to practice.