Some companies in the industry have begun to replace their direct sales forces with independent distributors (or vice versa)

Symptom: Some companies in the industry have begun to replace their direct sales forces with independent distributors (or vice versa).

Implications for the market:

End-user needs will drive changes in the methods and channels of distribution. Some end-users will need less counsel, modest support, and bigger deliveries. Others will need a good deal of support in every area, though the type of support may change. In general, distribution evolves from high value added to low value added as end-user support demands decline.
End user needs can also bring about the creation of new price points to better match product characteristics to evolving segments. Most commonly, the new price points are low end product/service combinations built for the low value added channels.
All competitors in the market must react to these changes. As the end user needs and channel shares change, so must the company's product and service business proposition.

Recommended Reading

For a greater overall perspective on this subject, we recommend the following related items:

Analyses:

Perspectives: Conclusions we have reached as a result of our long-term study and observations.

"Staying Alive in a Hostile Marketplace"
A few companies survive and even prosper during periods of hostility. How do these companies avoid being the victims of tough market conditions?
"Finding the Open Door"
Volatility is the movement of volume from one supplier to another. A company can not gain volume unless customers are willing to make a change in suppliers. Volatility has special rules in hostile markets.
"The Big Slice of the Pie"
The head of one industry leader explains his company's insistence on being a key supplier to each of his customers: "The guy with the big slice of the pie doesn't go hungry." The workings of the typical hostile market provide solid support for this philosophy.
"Which Customers Matter Most?"
Average customer profitability differs dramatically in non-hostile and hostile markets. Does the relative importance of one customer versus another change as well? The answer is less evident than many business leaders believe.