Who has the most at stake, manufacturers or distributors? When it comes to reputation, who puts more on the line? Who do consumers tend to trust and rely upon? Is this true for all industries, i.e. computers, cars, consumer goods, insurance, etc...? What are your thoughts?
Frank Lio’s answer:
It depends on whether the manufacturer or distributor “owns the customer”…where the customer sees the value added. Distributors can be considered as vertical competitors, e.g. Sony is a manufacturer and can use big box stores, online stores, or their own web site to sell. You may seek to buy a Sony TV, not particularly seeking to buy a TV only from Best Buy. Some people may buy any insurance based on the recommendation of a trusted local agent (a distributor). Would you switch mobile cell phone providers if they did not offer a particular cell phone, e.g. iPhone? If you wanted an iPhone and would be willing to walk out of a T-Mobile store (which does not offer an iPhone) and switch to Verizon or AT&T to get an iPhone, then Apple (the manufacturer) owns the customer. On the other hand, you may have had a great experience with T-Mobile and willing to accept a different phone. Products or services seen as commodities or with little uniqueness will then tend to favor a distributor.