Marketing, Growth & Management Consulting

Envere Assists Skin Care Device Manufacturer Sort Out Distribution Issues

As the designer and manufacturer of a patented and market leading microdermabrasion system, a California firm had been hard pressed to stay on top of U.S. distribution and sales matters. Unexpected demand forced management to focus on manufacturing issues until five months before domestic contracts were due to be renegotiated. Additionally there was a need to ignite European sales through the appointment of independent distribution partners in the region.

As a provider of market research, business growth assistance and distribution and sales solutions, Envere was engaged to provide research, suggest solutions and arrange for European introductions.

Because U.S. contracts were due for renewal in a few weeks and a formalized European network was non-existent, work on the domestic situation was given top priority.

About 20 to 30 independent distribution firms of varying size calling on cosmetic clinicians and medical estheticians were responsible for U.S. sales. Some firms were one-person operations while others employed a team of sales specialists organized by either geographic demands or potential customer density.

Upon realizing that U.S. contract renewals were looming management made two vital decisions:

1. Now was the time to cleanup a number of issues. Plans to release distributors were not a part of this decision but it was determined that what was necessary for sales improvement would be of primary concern. If sales goal achievement caused some distributors to leave the fold then so be it - the products were hot enough to withstand such activities and new distribution firms were clamoring to add the firm's products to their line.

2. A series of meetings with each distributor were booked for contract discussions. Management would travel the country and meet each distributor on their turf for negotiations and to provide support for any issues distributors felt that home office expertise could benefit.

Prior to meeting with distributors Envere completed research to determine clinician population densities, align distributor geography with staff size and call patterns, sort and rank distributor sales performance and establish a ranking system for distributors that accounted for territory potential. This work entailed contacting various professional associations (including the A.M.A.) for member location statistics, analyzing distributor sales values and creating projections to show where improvements could result in positive change.

The company formulated a plan per Envere's recommendations and activated it as new agreements were executed. No distributors were lost and sales have continued to boom with greater profits and less rancor amongst distributors.

Next, several weeks were spent establishing contact with Western European distributors and related organizations. Early on several key characteristics of the European approach to microdermabrasion were encountered:

o A system of physicians operating secondary aesthetic spas was far more pronounced than in the U.S.

o Generally European cosmetic physicians are very keen to follow key thought leaders.

o Distributors are very segmented in terms of the specialties they cater to.

o One stop shopping medical catalog sales are much more prevalent across Europe than in the U.S.

o Financial rewards are less important to European distributors and physicians.

o There are a vast number of medical / surgical societies throughout Europe.

o As expected Eastern European distributors are very eager to gain product lines to represent but economics can be limiting factor.

o Pricing issues are very complex requiring that each distributor be allowed to determine their own retail pricing (this aspect resulted in a revamping of company dictates regarding published list prices).

o The European market for microdermabrasion products and services peaked across Europe a few years ago but the success of new equipment designs and U.S. market activity has begun to cause a resurgence.

Ultimately out of several hundred distributor contacts a handful were distilled into a short list and turned over to the client for discussions and ultimately contract negotiations. This has resulted in a growing pool of carefully selected partners and an evolving European presence. Slow growth throughout Europe has been a key to the company's ability to establish a reasonable presence while they learn to deal with Euro sales and keep pace with demand in the U.S.