The CE industry continues to be a difficult place to do business, with cutthroat competition, very short product life cycles and increasing product commoditization. Perhaps today's biggest problem is that net margins remain thin, even while manufacturer revenues are reaching record highs. Today, a CE manufacturer needs to be "consumer centric", knowing intimate details about the end consumers in target market segments. It has to know what those consumers really want, and has to reach them effectively. However, the consumer relationship has largely been managed by traditional CE retailers. CE manufacturers have neglected it, but this cannot continue. They need to act to deal with the changing sales landscape (see Figure 1). 
How can CE manufacturers succeed in the changing sales environment?
CE manufacturers need to take specific actions to deal with the changing sales landscape today (see Figure 1). Each of these actions will be discussed in the following sections: - Leverage new sales channels and manage channel conflicts – Re-evaluate current channel strategy and analyze the potential use of direct channels and how channel conflicts can be mitigated
- Tighten collaboration with retail partners – Establish common supply chain processes
- Deal with competition from retailers – Develop strategies to proactively drive new solution development in alliances with large retailers
- Achieve global integration – Leverage full power by establishing a truly global enterprise
- Herd small retailers – Efficiently manage relations with smaller retailers
- Align brand and channel strategy – Evaluate the need for alignment
- Meet consumers more effectively – Understand customer wants and needs to deliver truly valuable solutions.
Where do CE manufacturers go from here?
While there is no "one-size-fits-all" approach when determining the right actions for a CE manufacturer, a detailed channel strategy for products is vital – one that identifies each channel partner, along with ways to manage them so the manufacturer can achieve strategic business results. Mistakes in sales channel management can be costly and difficult to correct. First, a CE manufacturer should answer these questions for each consumer product and solution: - What is the market size for each of your solutions, by geography?
- What are your detailed sales expectations by customer segment and by product?
- How much control does each channel partner exert over each sales channel?
- How much power does the manufacturer have in each channel?
- What impact does competition have on each sales channel?
The channel strategy can then be developed to answer these questions: - Which channels bring the most value, and how can you encourage those high-value channels?
- What channels are causing conflict, and what should be done about that? Are the conflicts strategic or tactical?
- Do some channels need to be de-selected?
- How many channel partners should sit between you and the end consumer?
- Do you have the power to push other solutions through the channel, or is it the channel that's pulling from you? Does this need to change?
- What channels use which distribution models?
- To what extent do you want to be exposed to the challenges of selling directly to consumers? Perhaps you just want to be a manufacturer that leaves all that to retailers and distributors?
In the CE industry today, how to sell is now almost as important as innovating the products themselves. CE manufacturers need to make innovations to their business models for better focus on how to sell. CE manufacturers quickly need to learn to create a well thought-out channel strategy. And, as the CE marketplace continues to evolve, they need to continue to gather customer intelligence and innovate their sales channel strategies.
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