Question

Your friend just developed a new weed control system that works GREAT but requires several steps that homeowners can do themselves – but is somewhat complicated because if the steps are not taken correctly – it will also kill their grass. He hears that you are an EXPERT on channel partnerships, and you will tell him the best way to partner with retailers? Give your response in a 1-2 page essay

Answer 1

“Channel Partnership is when a third party buys and sells on behalf of the manufacturer.”

The channel partner will reach your products to the end customers. The various channel partnership strategy is as follows:

1. Online partners: E-commerce sites and online partners, where the products sold on various online portals and orders are placed directly on the manufacturer to supply to the end user. The orders will be received directly by the manufacturer. This a B2C model and you can reach product to end users directly. Here margins are relatively higher as you pay a nominal amount to e-commerce partner and the profits and benefits are passed on to the consumer. The logistics and marketing are handled by the e-commerce partner.

1. B2B (Business to business): The manufacturer can start selling to a large distributor who will further sell to many small retailers through his existing retail network, he would be adding your product line to his existing setup which is already marketing a similar product line like fertilizers, seeds etc.

• Margin For Distributor/ Retailer: In this model, you will have to give a fixed margin to the distributor and he will also have a fixed price for the retailer. This normally will reduce manufacturer’s margin of profits.

• Incentive & Bonus Schemes: You will also have to create incentive and bonus schemes in addition to sales margins on the volume or value of sales if it exceeds a certain amount. This will be an added benefit and will encourage the retailer to promote your brand.
• Brand associate: You can also support them by paying the salary for one employee in each large store who will be based in that store and specifically promote only your product line.

To sum it up a channel of distribution has been planned accordingly to our product line to reach homeowners and farmers directly through many small local retailers in the region who are sourcing from a large distributor our B2B partner.