SWOT ANALYSIS – The Starting point………..Strengths, Weaknesses, Opportunities, Threats.
It is important to point out that when a company matches internal strengths with external opportunities, it creates sustainable competitive advantages in meeting the needs of its customers. In addition, you should act to minimize your internal weaknesses and to confront the external threats. The SWOT analysis is a simple and powerful tool in developing a strategic marketing plan. With reference to the past blogs, this is an attempt by Chris Brown and yours truly to present the most significant SWOT analysis of the traditional Electrical / Lighting distributor.

History has shown that this relationship between the electrical manufacturer and the electrical distributor has in essence developed a formidable industry, making its products readily available and effectively serving the changing needs of the end-user customer. So, the most profound question we can ask is, will your success continue? You decide…

1. Relationships – manufacturers, manufacturers reps, contractors, specifiers, designers, architects, and END-USER CUSTOMERS
2. Integral part of the manufacturer’s selling, engineering, service and order entry process
3. Knowledgeable, Experienced, Personable Teams
4. Credit / Financial Support / Payment Terms
5. Product Availability: Inventory in Stock / Staging / Special Handling / Delivery/Return Policies
6. Purchasing power: National Chains or Buying Groups / competitive pricing thru bid process
7. Broad (length and depth) product offerings
8. Electrical, Lighting, Technical and Technological Expertise
9. On-line and In-Person Customer Service
10. Value-added services….audits, rebate management, routine maintenance, data collection and analysis etc.
11. Trade Organization Memberships and Benefits (NAED, NAILD, NAW, IESNA, etc.)
12. Marketing programs / trade shows
13. Local market knowledge – STREET SMARTS

1. All distributors are alike……..customers’ perception
2. Short-term sales focus……….satisfy demand vs create demand
3. Commodity orientation………..reactive vs. proactive
4. Lack of innovation
5. Stuck in old business models
6. Victims of tyranny of the urgent
7. Not up to technical / technology challenges……, selling. marketing
8. Not capable of pivoting from product distribution to providing services / solutions
9. Poor “new product” sales history – rather stock and sell existing products
10. Do not have a compelling knowledge of the energy market segment
11. Not fully developed sales skills to sell the benefits of new energy efficient products
12. Limited value-added energy services……added cost with little added value

1. Advanced SSL technologies: LED, OLED, Nano-technology, Laser Diodes
2. Technological opportunities: Integrated Controls / IoT / IoE / Li-Fi / PoE / Smart Lighting / Wi-Fi
3. Lighting as the core connector to IoE
4. Light as a service / selling light not light bulbs
5. Demand response & Automated demand response
6. Value & Benefits of Smart Lighting
7. Innovative applications and services
8. Mobile integrated communications
9. Indoor location technology using lighting / research the space i.e. retail store activity
10. Digital marketing platforms / home and office automation
11. Connected LED lighting infrastructure
12. Network technologies / plug-and-play interaction / integrated security \ facial recognition
13. Energy monitoring & verification
14. Zhaga Consortium / ZigBee Alliance / Connected Lighting Alliance / Smart Lighting Engineering Research Center
15. Opportunity to differentiate yourself from your competition
16. Selling the new advanced technologies to new customers
17. New markets / new technologies / leading edge / incremental sales

1. New competitive threats: Apple / Cisco / Corning / Google / Foreign Competitors
2. Channel threats: Amazon Supply / Best Buy / ESCOs / HD Supply / Internet Shopping
3. Technological threats: Integrated Controls / IoT / IoE / Li-Fi / PoE / Smart Lighting / Wi-Fi
4. Industry threats: Disintermediation / Leased Lighting / Loss of Aftermarket / Lower Margins on SSL / Socket Saturation / Tyranny of the Urgent
5. Legislation / regulation: Automated Demand Response / Demand Response / Standards / Title 24
6. Other threats: 3rd Party Logistics / Big Data / M&V / Death of Brick & Mortar Retail / Home and Office Automation / Reverse Logistics

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  1. David Gordon says:

    Bill / Chris – interesting that the channel threats you mention are all transactional entities (perhaps except ESCOs) who are more focused on sell things via self-serve modes. Given the expected increase in product complexity, and the opportunities that brings about, what other channels could be used. We know of companies selling through IT VARs (they know how to sell technical products) and through telecos (thinking that they have 1) much office space and 2) a salesforce that is already calling on the customer) as well as companies selling to medical wholesalers, food & beverage food service distributors and petroleum distributors. As you know there are manufacturers selling direct via web as well as via their own sales organization. All of these, however, represent only a small % of lighting sales. Distributors who see the opportunity and are investing in it are growing at a faster rate than others … and getting more manufacturer support. Lighting manufacturers will also need to take more responsibility for creating demand through a direct specification / awareness oriented sales force (a la Dialight) that is supported by reps that are focused on supporting distributors and the manufacturer (perhaps a different model than lighting agents which would be an interesting topic for the two of you to address!).

    And yes, it is a work in progress.

  2. Rod Heller says:

    I think you did a good job on the SWOT, but there are some debatable issues. As a lighting ESCO our view of the distributors and reps is they add very little value to us.
    *We know much more than they do about lighting and what makes projects work.
    *They stock very little because the technology changes so fast.
    *We do not need their financing because we are well financed ourselves.
    *They seldom call on us to show us new product because we stay ahead of them on the technology.

    Other than that, what value do they deliver?

  3. David Gordon says:

    Rod, while neither audience provides value to you, they do provide value to the manufacturers as they help generate / service demand that enables product development for a significant % of a manufacturer’s business … and hence the ability for you to have access to continued product development. Each element of the channel should recognize that they are part of an ecosystem that supports other elements … but that each needs to be appropriately economically compensated (through discounts or margins).

    Curious, what percent of the overall lighting market do you think sales through ESCOs represent today? What do you think it could be in 3 years?

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