The Marketing Group’s of Today … Agents of Growth or Protector of Profit and Brands?

Today let’s talk about a topic that is near and dear to many distributors’ and manufacturers’ hearts … marketing groups.

Why near and dear? Because, for many distributors, they represent their profit lifeline. For manufacturers they can be the “Good Housekeeping Seal of Approval” … you’re either in the club or your not.

MDM is in the midst of a two-part series on marketing groups. The first part, which is synopsized here on their blog, highlights a number of initiatives that groups in many industries are doing to support their members. A-D and IMARK are mentioned and quoted.

It’s been an interesting couple of years for marketing groups in the electrical industry, leaving many to ponder their future direction and the impact on NAED’s initiatives:

• IMARK, using MDM’s word, “acquired” Equity / EDN and now represents 1068 distributors. They’ve also added quite a few suppliers to be able to support the new membership. The group now represents about 33% of the distributors in the industry (about 3,000 in the industry) and 2.5 times more distributors than NAED, albeit many many small distributors (that was the core of the Equity / EDN membership.)
• IMARK has also conducted an Energy Summit (with another one coming in November) to help its members enter this growing market.
• Using the strategy of “opposites”, A-D has remained selective in its membership and supplier line card approach. The group has about 150 distributors, albeit many of the larger companies in the industry. And in today’s market, the larger distributors appear to be taking share and being more progressive, hence generating growth. A-D has also recently:
• Recruited another “core” IMARK distributor, Buckles-Smith. This is the third one in two years.
• Added 3M while keeping its line card relatively stable
• Hired a Director of Clean Energy to lead their energy initiative. This is the same individual who was responsible for CED’s energy initiative and took them into the solar market.
• And now a new group, Premier Purchasing and Marketing Alliance (PPMA) is trying to get a foothold in the market.  They are targeting small distributors and reportedly have an initial group of manufacturers and distributors that they are testing their system with.  PPMA was started by an ex-EDN/Equity member.

With the two main groups engaged with over 1200 distributors and representing $20+ billion in industry sales it begins to beg some questions:

• Can the groups be advocates of new technologies (especially LED and solar) or are they protector of brands, especially when their role is to maximize rebate income and essentially protect incumbent manufacturers?
• Especially since the groups only want to involve manufacturers that generate a “significant” revenue stream immediately.
• Do manufacturers continue to view the groups as vehicles of growth or tools to help them defend against competition?
• Which is “better”, a saturation approach where essentially, or perceptually, all receive the same, or a selectivity approach? Better for the manufacturer? For the distributor? For the group? Or are they equally “good”?
• With so many members in one group, what is their responsibility to the industry association, or will the eclipse the industry association and become their own?
• What new services should group’s provide to help their members improve sales and profitability, or should they focus on rebates and leveling the playing field (since so many distributors are essentially now receiving similar rebates) or, in the words of one distributor, “The groups help protect us from ourselves.”

So, what should the marketing group of tomorrow offer?