A Classic Mistake: Expanding Distribution Before Your Customer Demand Is Established.

There is a tragic mistake which has ruined many excellent products and tanked many small businesses. It goes like this:

1. You create an exceptional product with many advantages, better than the competition. It’s excellent for many reasons, packaged well, priced appropriately and it works.

2. You receive accolades from the test market, build a local following and experience much repeat business. Every indication says it is a winner.

3. You roll out regional—or even national—distribution based on local or test marketing success.

4. You’re unable to support the rollout with huge advertising campaigns. After all, this is about small business.

The result?

The product gets deep distribution, is on many shelves and… collects dust. Another great item dies a terrible death because it does not sell through.

The small business depends upon demand pull, the large business creates supply push. The small business operator does not have the fire power, the ad budget, the free goods, all that is required to create instant demand that supports forced distribution. The small business operator must rely on market demand and consumers asking for the product and purchasing when they see it on the shelves. It’s a very different approach, a very difficult challenge and a huge trap to fall into. Once in it, it is near impossible to get out alive.

It’s one thing to create local awareness, demand and local success, supported by word-of-mouth promotion, but moving beyond your local area is an entirely different beast. Customers tell their neighbors, “Buy this! It’s new and good, I got it at Joe’s,” and it flies off the local shelves indicating that its a winner!!! The product is good, so repeat business is strong. Then, you roll out large scale distribution without the “local” aspect on your side… and it fails. Word-of-mouth promotion is very difficult to create, control or direct, let alone rely on to support your emergence.

This is why large national businesses spend a veritable fortune on roll-out campaigns, advertising products to death to create the supply push pressure that results in successful sell through. Without the huge advertising budgets, a product must rely on viral support, i.e. word-of-mouth advertising, and this is frequently a lot slower then the distribution channel’s penetration of the market. Thus, if the product sits on the shelves and does not sell through fast enough, it will die a horrible death before the word-of-mouth message gets to that market. The result is failure.

Consumer awareness needs to be created before distribution occurs, not the other way around. Consumer awareness must lead distribution. If it cannot be done through conventional big budget advertising and marketing, then it must be done by developing consumer awareness through word-of-mouth promotion, and this takes time and much effort and is a lot trickier to direct and support. Basically, it is like herding cats.

Many great products have died because of no advertising budget and success being built on early consumer satisfaction and awareness, with distribution then outpacing consumer awareness. The products failed to move off the shelves and died before they had a chance to demonstrate their potential. It is a huge trap for the unwary and must be clearly understood to experience success with your product. It is extremely difficult to say no to distribution opportunities based on local success. Wholesale distributors may be wanting to jump on a winner but it’s important to recognize when the market is really not ready to accept such expansion.

It takes patience, caution, prudence and a clear understanding of market dynamics and your own product. Be careful. If you have a winner, protect and nurture it. Grow it up slowly but surely, one success at a time.