Asia Medical Device: Know and manage the channel smartly
As customers demand greater value and a more customized buying experience, market players need to constantly manage, evaluate their distributors and channels to determine if they meet both customers’ demand and company’s sales goals. In addition to direct sales, dealers and distributors play an important role in medical device’s sales force. It is a cost-effective and crucial channel in Asia to reach its large expanse of territory, overcome some language and culture barriers for most of the multinational companies, and win over the local players. Channel sales is all about finding the right partners. When the market is complicated with different layers, channel structure is critical in acting like a road map to guide the company on who truly cares about the product and brand, who can and can’t generate volume sales and who true performers are. Especially when there are only limited partner options, partner selection can make or break the growth targets.
There are several challenges that multinationals are facing in managing its channels. Many MNCs got trapped in an exclusive distribution relationship, which produces mediocre results. It is important to classify the difference influencing power of distributors, and clarify the nodes within the channel facilitate the greatest volume of sales and seek the underlying reasons for lower volume throughput from other channel partners. It also seems uneasy to gauge the motivation of their distributors. MNC sales managers complain about such missing or unclear information sharing when they talk with their distributors, sometimes it becomes impossible to find out how the distributor thinks about the brand carried, and what can motivate him. Sales KPIs in this fluid situation often become unrealistic and inconsistent to the full potential that be achieved.
When complicated layers in the distribution chain makes the end customers bare a higher cost and limit the market growth. Many of the companies are deciding if they shall go straight to markets and create a hybrid model, using distributors in conjunction with direct sales force. This model can usually be seen in countries where public healthcare is relatively developed, like in Thailand and Malaysia. It leads to inevitable channel conflict management, which may be a big pain point. Great strategists know that one of the most important decisions is “when to compete & what to compete”. A good channel strategy shall produce a portfolio of moves that allows the company to develop a winning formula over time.
- Is it possible to have a full visibility of our strategic channel map? And how should we do this?
- Is our go to market channel decisions based on clear decision making processes? Are they based on a clear comprehension of the decision makers/ influencers and their attitude towards brands? Do we realize who ultimately holds power in getting your product included in specifications and recommendations?
- How capable and motivated are our channel partners to sell our product? What do they think of our brand?
- Are the channel enhancement decisions clear and logical enough for you to make the right decisions?
- Are our channel enhancement decisions directly addressing the issues that would boost distributors’ sales motivation and increase their sales ability?
- Do we have a good balance among your direct sales teams and channel sales that allow us to maximize our sales potential?
- How should our organization measure effectiveness and ROI of the new channel policy/ strategy?
- Is the channel strategy translated into clear actions and reallocation of resources?