Creating Value Propositions for Intermediary Customers

The job of Marketing as the prime business activity of any organisation is to create value propositions for end users – consumers.  As part of marketing , the sales department should focus on how to maximise these value propositions this while gaining  business share (such as more sales; shelf space and the available gross margin.  Margin being  the difference between the price the end user  pays and the total costs incurred in producing the product (goods and services) which must be shared between manufacturer and distributors (agents, wholesalers and retailers).

An effective value proposition needs to clearly articulate the primary benefits that the organisation delivers to its customers; and these benefits are both differentiated from what competitors offer and need to be genuinely valuable to customers. Too often, the latter criterion is not met because value propositions are conceived and articulated internally, in company – rather than in  customer focused (customer-centric) language. To avoid falling into this trap, one question that marketers need to always ask is ‘What is the benefit of the benefit to our customer(s) – the target market/segment?’

Within the general marketing activity of the organisation, the marketing department’s (the department charged with managing marketing functions) focus with value propositions is on value creation (the value offer – Product, Price, Promotion and Place).  The sales departments focus is on negotiations about volume and pricing for value extraction.  The more value that is created for all customers, including intermediary customers the more can be extracted.

As intermediate customers are part of the value creation chain, the marketing department needs assist the sales department in create value for their intermediary customers beyond giving a greater share of the available gross margin

Creating a value proposition for intermediary customers requires the same basic approach as developing one for end user customers. The sources of value are the same.  However, as they are a different target market, the balance will be different – what creates most value for the intermediary customer will be different to what creates value for the end-user customer.

How interactions are developed and managed with intermediaries is important as the volume, scale and impact of interactions between a manufacturer and its distributors are far greater than with an end customer.

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