Manufacturers of children's shoes in Russia often consciously refuse to choose their target audience and, trying to win over as much market share as possible, strive to work with all parts of the distribution chain. What such a policy can lead to, says Alexander Borodin, an expert on the regional market for children's shoes, who manages Mila - Wholesale Shoes.
In the segment of children's shoes, I do not know a single manufacturer who could unambiguously answer the question of who is his target audience (CA). Today, all manufacturers are trying to cooperate with all parts of the distribution chain: large and small wholesalers, retailers, and even with end users.
Marketing claims that a manufacturer’s collaboration with a low-level link kills high-level links. This law is universally confirmed by practice: the manufacturer’s work directly with the store (first distribution level) bury all types of wholesale, and working directly with the consumer (zero distribution level) kills retail. Retailing remains only to the manufacturer with volumes equal to the volumes of the retail store. CA overtakes its seller.
After killing high-level links, the manufacturer is feverishly looking for ways to maintain sales. With the advent of offline and online networks, the illusion is born that these channels will save the manufacturer.
Let us analyze the structure of any network. In no network does the product from the manufacturer go directly to retail stores. Initially, it goes to distribution centers, and from them to retail stores. But what is a “distribution center”? This is a center that performs the same functions as a regular wholesaler, and network retail stores are similar to ordinary retail stores. Another example: some manufacturers, not wanting to become dependent on networks, create their own vertical network, which, like third-party networks, has representative offices (read: wholesalers) and company stores. Obviously, between the manufacturer and the consumer, there are still two links in the classic distribution chain.
But why are volumes not growing? The fact is that there are few such networks, and each of them is trying to monopolize the market through exclusive and dumping. As a result, only one network will remain at the disposal of the manufacturer. But no matter how powerful this network may be, it is not able to provide the level of sales required by the manufacturer. And dependence on one buyer makes the producer a hostage.
Manufacturer - breeding ground for the growth of monopolies
If the manufacturer has not decided on Central Asia and is trying to reach all customers (wholesalers, small wholesalers, retailers, consumers), then its distribution chain begins to develop according to the following scenario:
Monopolization is another side effect of the refusal of the manufacturer to choose his target audience. Some manufacturers are trying to prevent the monopolization of their product by prohibiting trading at prices lower than they set. But, firstly, this is no longer a market tool, and secondly, the buyer, not wanting to compete with the manufacturer, abandons its product. So wholesalers and then retail begin to burn out. The manufacturer has no choice but to trade himself, that is, turn into a regular retail store.
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