2011

In a recent survey on price increases, 94 percent of respondents said they expect prices to go up in the first six months of the year. This article examines what respondents plan to do in response to what one called a ‘tidal wave of price increases’ in the first quarter. MDM also spoke to pricing and channel management experts on best practices in communicating price increases and managing profitability in a time of cost volatility and ongoing customer price sensitivity.

More than half of respondents to the fourth-quarter MDM/Baird survey expect price increases of 1 percent to 5 percent from their suppliers over the next six months. About 35 percent expect an increase of 6 percent to 10 percent.

And just 6 percent expect no increase.

Many manufacturers held off on price hikes in the past two years, due to heightened price sensitivity during the recession.

In research for the new book from the National Association of Wholesaler-Distributors, Facing the Forces of Change: Decisive Actions for an Uncertain Economy, author Guy Blissett found that 51 percent of survey respondents offer value-added services associated with products, and 43 percent offer discrete services for a fee, with no product purchase required. Most plan to do so by 2015.

But while nearly half place “high importance” on assessing service offering profitability, only a fifth say they actually do an “excellent” job of this. MDM Editor Lindsay Konzak spoke to Blissett about these findings and what distributors can do to take a more strategic approach to building a profitable services portfolio.