How to Analyze Your Marketing Claims Commentary:

Transcription

VOL. 41, NO. 16
AUG 25, 2011
How to Analyze Your Marketing Claims
INSIDE
A methodology to gain insight into how distributors position online
When it comes to positioning and messaging,
the overwhelming majority of distributors in
a recent MDM survey featured in the July 25
issue say they value similar things: product
selection, training and technical support capabilities, among others. But when their websites
are put to the test, online messaging on those
important attributes often fails.
In this article, part two of a two-part series,
Jonathan Bein, Ph.D, and Rob Kelley, CFA,
of Real Results Marketing explore the gap
between the value and the message and how
distributors can better align their online messaging with their values and capabilities.
Part 1, Price vs. Value, appeared in the July 25,
2011, issue of MDM.
By Jonathan Bein and Rob Kelley
In a recent MDM survey, distributors
ranked a list of attributes they believe are
important in messaging (see Figure 2 on
page 3). But when we analyzed content on
websites of large and mid-sized distributors, there was something missing.
We found little to no messaging on
several attributes that were considered
important in the survey including professional outside sales reps, onsite sales and
service, warranties, speed of delivery and
the sourcing of non-stock products.
It may be that many distributors are
just guessing when it comes to positioning
and messaging. (In the survey, 70 percent
of respondents said they used informal
methods to develop messaging.)
Their beliefs about what attributes
are important to emphasize in messaging
and positioning is based on scant market
research. And even when they believe
these attributes are important, only about
half of these attributes become part of their
messaging.
For example, if you look at websites
from many small and some mid-sized
distributors, you will often see that they
overemphasize how long they have been
in business or focus too much on the history of the family business. To be sure,
your customer wants to know that you
have been around and that there is an
interesting legacy. But the year of your incorporation should not make its way into
the company tagline or slogan.
The problem is most pronounced
among mid-sized and small distributors,
but it is by no means limited to them. This
article offers a systematic approach to
describe and compare how distributors
position and message. It relies on a semiquantitative technique that we call “message claims analysis.” We have used this
message claims analysis successfully in
marketing engagements and are currently
using it to analyze more than 100 distributor websites.
This process can also be applied to
other marketing vehicles including print,
social media, and mass media.
Message Claims Analysis Example
We start with a simple example to illustrate the concept of message claims analysis. The radar charts shown (Figure 1 on
page 3) quantify messaging claims made
by large public distributors MSC Industrial
Supply and Applied Industrial Technologies on their respective websites. By comparing these charts, one can see that both
MSC and Applied place a similarly large
emphasis on product selection, solutions
and cost reduction.
MSC also places particular emphasis
on easy web ordering and product availability, whereas Applied highlights its
technical expertise, training and proximity
Copying or reprinting all or parts of this newsletter without specific permission violates federal law!
continued on page 3
Commentary:
The Power of Data
Channel partners should
use market data to find
opportunities for growth.
Page 2
Jan-San Industry
Sees Green in
Green
Environmentally friendly
product demand
continues to grow.
Page 5
DXP’s Precision
Acquisition is
Target of Lawsuit
Conflict arises between
the Circos and DXP.
Page 1 of the Industrial
& Construction Markets
Update
MODERN DISTRIBUTION MANAGEMENT / VOL. 41, NO. 16 / AUG. 25, 2011
2
PERSPECTIVE

Commentary by Thomas P. Gale
The Power of Data in Channel Partnerships
A recent conversation about resistance to sharing point-of-sale data between distributors and
manufacturers made me slap my forehead. If
the past three years have taught us anything, it’s
that partnerships and sharing of market information are critical to success. That’s not a new
concept, but the volatile economy reinforces just
how important partnerships are to staying lean,
focused and profitable.
What does it take to change behavior so out
of sync with current markets? How many of the
core relationships in your business are based on
mistrust rather than partnership? What’s that
cost in terms of managing those relationships
defensively, rather than finding new growth opportunities together?
Point-of-sale data sharing was a daring concept in the 1990s. Sellers in industrial markets
could afford mistrust when there were more customers and more vendors available. Today there
are still distributors of all sizes that don’t trust
their suppliers – including key ones – enough to
share sales history and market planning information. As a result, the same marketing “plan”
approach is still used, based mainly on a “trust
but verify” approach or simply an arbitrary annual goal number.
Of course, this data-free planning has an
impact on the sales force. They are prodded by
MODERN
DISTRIBUTION
MANAGEMENT
Contact Information
Questions, comments, article proposals, address changes
or subscription service to:
Founded in 1967
by J. Van Ness Philip
Gale Media, Inc.
3100 Arapahoe Avenue, Ste 500A, Boulder, CO 80303
Tel: 303-443-5060
Fax: 303-443-5059
Website: http://www.mdm.com
Publisher
Thomas P. Gale
[email protected]
Editor
Lindsay Konzak
[email protected]
Associate Publisher
Craig Riley
[email protected]
Associate Editor
Jenel Stelton-Holtmeier
[email protected]
Subscription Rates
To subscribe to Modern Distribution Management, please call
303-443-5060, email [email protected] or http://www.mdm.com/
subscribe.
Subscriptions are available by online delivery and/or first-class mail.
Nine years of archives of MDM are available online to
subscribers.
Published twice monthly; $345/yr., $365 U.S. funds other
countries; $169 each additional subscription to a company
($189 other countries). Six-month and two-year terms are now available. For group subscription rates and site licenses, please contact
Hadley Fable at 303-443-5060.
Copyright © 2011 by Gale Media, Inc. All rights reserved. Modern
Distribution Management® and mdm® are registered trademarks of
Gale Media, Inc. Material may not be reproduced in whole or in part
in any form whatsoever without permission from the publisher. To
request permission to copy, republish, or quote material, please call
303-443-5060.
ISSN 0544-6538
management to meet a goal that’s often derived
solely from last year’s results. But they aren’t
given the support or focus that comes with a
data-driven discussion that they need to fully
target and exploit the potential from existing
customers, much less prospects.
Your competitors are delighted if that’s the
case for your company. I’d suggest it’s a red flag;
either change the relationship or change the
vendor to one you can trust. The same applies
for manufacturers that experience a brick wall
when it comes to sharing market insight. You
can’t sit on your hands and hope to maintain or
gain market share. Distributors and their suppliers are gaining market share today by investing in market-planning activities based on data,
not hope. As a result, the sales force is given a
focused and clear plan on how to develop specific opportunities and segments with the best
potential for profitable growth.
Distributors align with manufacturers who
engage and support their frontline marketing
investments. Manufacturers align with distributors who commit to growth. It’s not rocket
science. Yet this industry still continues to consolidate as more efficient models based on data
sharing between partners outperforms more
traditional business models, and customers vote
for where they find the most value.
MDM Editorial Advisory Board
John Allenbach
SVP, Professional Sales, Apex Tool Group
Kevin Boyle
President of Industrial Distribution Consulting LLC
Ted Cowie
Safety distribution industry
Larry Davis
President, ORS Nasco
Larry Goode
President of Goode Advisors Inc.
Julia Klein
President and CEO, C.H. Briggs Company
Stuart Mechlin
SVP, Industrial Supply Division, Affiliated Distributors
Doug Savage
President and CEO, Bearing Service Inc.
Burt Schraga
CEO, Bell Electrical Supply
www.mdm.com
MODERN DISTRIBUTION MANAGEMENT / VOL. 41, NO. 16 / AUG 25, 2011
Marketing Claims
Continued from page 1
Figure 1 - Example: Comparing Two Distributors
MSC Industrial and Applied Industrial Technologies
to customers. Neither company messages at all
regarding customer account privileges.
To determine the score for each attribute in
the message claims analysis, we review the distributor website looking for prominence (placement, size of font, etc.) and frequency of claims
related to the attribute. As an example, for the
product selection attribute, we look for the following types of claims:
Number of SKUs
Breadth of product categories
Number of manufacturers
Leading brand manufacturers
Individual Radar Charts
For each attribute, Real Results Marketing
uses a set of keywords and phrases that we look
for to determine messaging emphasis. Claims
that appear on the home page are weighted
more heavily than claims on the company page
and claims on the product or other pages.
Of course, if the claim is in the company slogan or tagline or it is part of the company logo,
it has the highest weight of all. Claims from all
of the pages reviewed are combined into a total
score.
The analysis shows that Applied Industrial
places greater emphasis on proximity to its cus-
Applied Industrial Technologies
MSC Industrial Supply
Figure 2 - Elements that are very important or important to messaging
www.mdm.com
3
4
tomers than MSC as evidenced by the following
quotations from their website:
MSC (About page): Our network of 4 regional
Customer Fulfillment Centers and over 90 branches
nationwide assures you same day shipping, at no
extra cost, no matter where you’re located.
Applied Industrial (Company page): The
Applied network of approximately 470 facilities,
4,600 employee-associates, seven strategic distribution centers, and more than 40 specialty repair
and rebuild shops ensures that the products and
support you need are always close by. With locations throughout the U.S., Puerto Rico, Mexico and
Canada,…..
Finding the White Space
By using messaging claims analysis, companies
can develop better positioning and messaging.
There are limits to quantitative techniques, but
this method provides useful directional guidance.
The first step in the process is to analyze the
message claims for each attribute. On the radar
graph below (figure 3), we have overlaid message claims analyses for nine large distributors
- Airgas, Anixter, Applied Industrial, Fastenal,
Ferguson, Grainger, Graybar, MSC and Watsco on 10 different attributes.
The next step is to determine the customer
and market requirements. Simple market
research – both qualitative and quantitative –
can be used to determine how important each
attribute is to customers in the market. If the research shows the attribute has no importance to
the marketplace, you may need to change your
approach to how you message that attribute or
abandon it all together.
As in the example provided, if the market
research reveals that product availability is very
important to the market, it could become a compelling basis for differentiation because it is not
heavily claimed by most distributors.
By contrast, differentiating on product selection will be difficult because most distributors
identify that as a key attribute.
The third step is to assess the capabilities
of the competitors in the market. For example,
it may turn out that one distributor is more effective at reducing cost for its customers than
other distributors in the sector. So, even though
several distributors are messaging on cost reduction, the one distributor who is superior at cost
reduction can make a unique claim about its
capability.
Just claiming to be the superior provider of
cost reduction solutions is not enough, however.
Distributors who really wish to capitalize on superiority have to be able to quantify their claim
as well; for example, “We reduce supply chain
costs by 3 to 5 percent.”
The objective is to find attributes with some
combination of the following characteristics:
Not heavily claimed by competitors
Important to customers based on market
research
Unique or nearly unique capability of the
distributor
There are several possible outcomes from
doing this process:
From a high level perspective, it is clear
that most of these distributors place medium
to heavy emphasis on product selection, technical expertise, solutions and cost reduction
attributes. There is relatively less emphasis on
product availability, web ordering, core values,
account privileges, and training attributes – the
white space on the radar graph.
This white space identifies areas of opportunity for distributors if they have the capabilities
to take advantage of those opportunities and
focus their messaging on those attributes.
An attribute has all three characteristics – This
is the best case and it rarely happens. When it
does, it should be leveraged heavily for positioning and messaging.
An attribute is not heavily claimed, and it is
important, but not unique – In this case, it may
be possible to combine the non-unique attribute
with a unique attribute to form a new benefit.
Or, it may point out a key capability that needs
to be developed or improved to then have a
dominant basis for positioning.
www.mdm.com
An attribute is not heavily claimed, and it is
unique, but not important – If the attribute really should be important to customers, but is not
perceived as important, then it may be necessary
to invest in educating the market on its importance. On the other hand, it may point out an
area where a capability is over-developed relative to what the market requires. Scaling back
that capability will reduce the cost-to-serve.
An attribute is unique and it is important, but
also heavily claimed – This is a great opportunity for marketing to communicate the unique
capability. Customer proof of the unique capability in the form of testimonials, customer satisfaction surveys, ratings, analyst endorsement, etc.,
is the key to exploiting this advantage.
Distributors have enormous opportunity to
improve messaging and positioning. The key to
improving is to apply more formal techniques to
understanding competitors’ messaging, market
requirements and competitive capabilities.
The process described in this paper is reliable in identifying the white space where it is
possible to differentiate. Without investment in
these techniques, many distributors will continue to suffer from “me-too” positioning and
messaging.
Jonathan Bein, Ph.D. is a senior partner at Real
Results Marketing. Rob Kelley, CFA, is a partner at
Real Results Marketing. Contact them at jonathan@
realresultsmarketing.com or visit
www.realresultsmarketing.com.
Jan-San Industry Sees Green in Green
Demand for environmentally friendly products continues to grow
Demand for environmentally friendly products has
continued to grow over the past couple years, even as
the general economy has remained stagnant. But in
some sectors there is still hesitation when it comes to
making the “philosophical change” necessary to take
advantage of the opportunity and to build out the
capability to profit from it.
By Jenel Stelton-Holtmeier
The focus on using more environmentally
friendly products – particularly chemicals – has
become more pronounced in recent years. While
consumer interest drove much of the development early on, commercial and industrial interest has also risen in recent years, according to
Bill Balek, director of environmental services at
ISSA, the international association for the cleaning industry.
“It’s a much more mature marketplace now
than it was 10 years ago,” he says. “It’s still in
the minority, but it’s an area where we’re seeing
double-digit growth.”
For WAXIE Sanitary Supply, a distributor of
sanitary and related supplies based in San Diego, CA, sales of environmentally friendly products has been a bright spot in recent quarters.
“Green is something that in a stagnant economic
time, we’ve seen continued growth in the line,”
says Keith Schneringer, marketing manager for
WAXIE.
State and local governments have helped to
drive the growing demand in recent years by introducing green procurement policies for public
facilities. Ten years ago, no state had a requirement to consider green products in purchasing
janitorial supplies; today, 22 states have some
kind of policy, including Illinois, which introduced a mandatory green procurement policy.
But it’s not just about adding a product
line to your catalog, even if you’re primarily a
jan-san distributor, Balek warns. The biggest
difference between “traditional” cleaning products and green cleaning products is the level of
knowledge needed – and the ability to effectively communicate that knowledge to customers.
Green Cleaning Defined
“When you’re talking about green cleaning, the
answer is really about two things: the products
and the processes,” Schneringer says.
From a product standpoint, the products
are designed to do the same things as traditional products, but with an additional focus
on human health and the environment. “You’re
applying a new philosophy and adding new
considerations in the selection of the products,”
Schneringer says.
From a process standpoint, it’s about being
more conscious of what you’re putting into the
environment and how, Balek says. For example,
the traditional way of cleaning a window would
be to spray the chemical cleaner right onto
the glass. With a green process, the cleaner is
www.mdm.com
5
6
sprayed onto the cleaning cloth, which keeps potentially harmful chemicals out of the air.
And green cleaning programs can save
money, Balek says. “You tend to use less of the
chemical when it’s applied in a green way,” he
says.
Operational Savings with Green
Cleaning is often viewed as something that simply needs to be done, not an area where savings
can be found. It’s sometimes difficult to communicate the potential savings of updating your
cleaning program, Schneringer says, particularly
when it comes to the tools used.
“The mop and bucket has existed in the
same basic configuration for over a hundred
years, and people look at it and say ‘It’s worked
for this long, why should we change now?’” he
says. “They’re hesitant to look at new options
because they don’t understand the impact it
could have.”
And that mentality applies across nearly every aspect of cleaning, from the chemicals used
to the equipment on hand. Ninety to 95 percent
of the cost of cleaning comes from labor, Balek
says. Upgrading how you approach that and
investing in better tools can lower labor investment significantly – and get the job done better.
“It’s a natural process of having to educate
those folks to these new technologies,” he says.
But to do that, distributors of these products
must also overcome persistent myths about
green.
Persistent Myths
“Ten years ago, green products cost more and
generally were less effective than traditional
products, so it really was a nonstarter for most
people,” Schneringer says. “They really had to
be committed for some other reason to even consider looking at green cleaning options.”
But as demand has increased, so has the
quality and quantity of what’s available.
“For industrial companies, the first question
is usually, ‘But is it strong enough to do what I
need it to do?’” Schneringer says. “And the truth
is that yes, there are products that are definitely
strong enough to meet your needs, as long as
you’re applying them correctly.”
In the mid-90s, there were only about 50
green-certified products available in the marketplace; today, there are more than 2,500. And
the price – another persistent myth about green
products – often is comparable or even less than
the traditional products.
“There’s been a migration recently to customers looking for alternatives, and there have
Other Distributors Continue
Expansion Into Jan-San Market
The janitorial and sanitation supply sector has
become a popular target for distributors from
other sectors looking to expand into adjacent
markets.
“It’s a natural extension of their product
offerings that allows these distributors – particularly MRO distributors – to penetrate their
existing clients deeper,” says Bill Balek, director of environmental services for the ISSA, an
international trade association for the cleaning
industry.
“They’re already providing maintenance
supplies, and it could be a good strategy for
growing sales.”
But while it may seem like an easy addition to make, being successful in the jan-san
sector requires more than just adding cleaning
products to your existing product lines.
“In our industry, in order to be successful,
you need to have extensive product knowledge and be able to provide key value-added
services,” Balek says.
Distributors need to be able to provide
their customers with training on the proper
use and applications of different products.
And they need to keep up on the latest regulations governing chemical usage and disposal.
Before making the decision to expand, talk
with your customers and find out what they
need from a jan-san distributor, Balek says.
This will help you determine whether you
have the resources to commit to making it a
successful endeavor.
If you don’t have the capabilities or resources in-house, consider partnering with a
local jan-san distributor to provide additional
services to your customer base.
been enough customers expressing interest that
there are now economies of scales that allow you
to get good daily cleaning products at a comparable price, and sometimes at a better price, to
traditional products,” Schneringer says.
Greenwashing
As with any industry expanding into green
technologies, the jan-san sector is not immune
to greenwashing – the practice of making unsubstantiated claims about the environmental
impact of your products.
“I don’t think it’s out of any actual malice,”
Balek says. “Rather it’s a problem of not being
able to effectively identify and communicate the
www.mdm.com
real environmental attributes of a given product.”
Third-party certifications, available from organizations such as Green Seal or the U.S. Green
Building Council, help alleviate some confusion
by providing verification that the products meet
minimum standards. But they also fall short of
providing an effective scorecard for comparison,
Balek says.
“Essentially, these certifications are passfail,” he says. “They don’t provide a way to differentiate between products that go above and
beyond those minimum requirements and those
that barely meet the standards.”
A new initiative being undertaken at ISSA is
expected to help address this challenge. Branded
Transpare, the web-based system will establish a
set of common metrics for environmental preferability and provide information about products
that can be compared across those metrics.
“You’ll be able to see why something is
green, and be able to really evaluate which
characteristics are most important to you,” Balek
says. Transpare is scheduled to launch at ISSA’s
annual meeting in October.
Survey: Salary Budgets Remain Tight Among U.S. Employers
Reflecting uncertain economic conditions and
a conservative cost-management environment,
U.S. employers are projecting moderate pay
raises for employees next year. Employers do
expect to fully fund their annual bonuses for
workers this year, as corporate profits have increased, according to new survey data by global
professional services company Towers Watson.
A survey of 773 U.S. companies conducted
by Towers Watson Data Services found that
companies are planning pay increases that will
average 2.8 percent in 2012 for their salaried
nonexecutive employees.
This represents a moderate increase from
the average 2.6 percent raise workers are receiving this year and 2.6 percent they received
in 2010. Similar raises for 2012 are planned for
executives and nonexempt employees.
“Until the economy shows some solid and
consistent improvement, most companies are
keeping their salary budgets relatively tight,”
said Laura Sejen, Rewards Global Practice
Leader at Towers Watson.
“At the same time, companies also recognize the need to reward their top performers or
risk losing them to competitors and, as a result,
continue to differentiate pay raises based on
individual performance.”
According to the survey, workers who
receive the highest performance ratings will see
median salary increases of 4.5 percent this year,
which is 80 percent more than workers with
average ratings, who will receive 2.5 percent.
Workers with below-average performance ratings will receive median merit increases of 1.4
percent.
A separate survey of 316 North American
companies conducted by Towers Watson found
that companies’ average projected bonus funding for current-year performance is 101 percent
of target, marking the second consecutive year
that companies are able to fully fund their annual bonuses for workers. Companies funded
annual bonuses in 2010 at 111 percent of target.
“Despite the recent economic turmoil, many
companies are experiencing stronger profits
and higher revenues this year. Since funding of
annual bonus pools is typically based on these
financial measures, companies are anticipating
being well positioned to fund their annual bonus
pools at target or better at year-end,” said Sejen.
The Towers Watson North American Talent
Management and Rewards Survey was conducted in May and June of 2011 and includes
responses from 316 companies from the U.S. and
Canada.
The Towers Watson Data Services Salary
Budget Survey was conducted in June and July
of 2011 and includes responses from 773 U.S.
companies representing a cross section of industries. The Towers Watson Data Services Salary
Budget Survey Report provides data on actual
salary budget increase percentages for the past
and current year, along with projected increases
for next year. Reports for both surveys will be
released in September.
Renew Your Subscription Online in Three Easy Steps:
1. Log-in online at the top left of www.mdm.com using your email address and password.
2. Click on My Account.
3. Under My Publications, click Renew.
Call MDM at 1-888-742-5060 for log-in information or click Forgot Password?
www.mdm.com
7
Monthly Wholesale Trade Data
8
Monthly Inventories/Sales Ratios
of Merchant Wholesalers: 2002-2011
June 2011 wholesale revenues, except manufacturers’ sales branches and offices, were $395.8
billion, up 0.6 percent from May and up 15.4
percent from June 2010. June sales of durable
goods were up 1.6 percent from last month and
up 10.2 percent from a year ago. Sales of nondurable goods were down 0.2 percent from May
and up 19.9 percent from last year.
(Estimates adjusted for seasonal and trading-day differences, but not for price changes)
RATIO
1.45
1.40
June
ratio =
1.16
1.35
1.30
1.25
1.20
1.15
1.10
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Source: U.S. Census Bureau
Inventories. Inventories were $458.7 billion at
the end of June, up 0.6 percent from May and up
15.8 percent from a year ago. Inventories of durable goods were up 1.3 percent from last month
and up 12.1 percent from last June. Inventories
of nondurable goods were down 0.4 percent
from May but up 21.4 percent from last June.
Inventories/Sales Ratio. The June inventories/
sales ratio was 1.16. The June 2010 ratio was 1.16.
Sales and Inventories Trends: June 2011
Sales
$Millions
Inventory
$Millions
Stock/
Sales
Ratio
Percent
Change
Sales
5/11-6/11
Percent
Change
Sales
Percent
Change
Inventory
5/11-6/11
Percent
Change
Inventory
6/10-6/11
NAICS
Code
Business Type
42
U.S. Total
395,837
458,667
1.16
0.6
15.4
0.6
15.8
423
Durable
174,581
265,718
1.52
1.6
10.2
1.3
12.1
4231
Automotive
26,487
41,019
1.55
8.7
4.7
4.3
14.6
4232
Furniture & Home Furnishings
4,519
7,087
1.57
-0.1
-4.9
-0.4
7.9
4233
Lumber & Other Construction Materials
8,457
11,916
1.41
0.4
5.2
-0.7
0.1
4234
Prof. & Commercial Equip. & Supplies
31,097
31,806
1.02
0.6
3.4
1.2
9.3
42343
Computer Equipment & Software
16,408
12,460
0.76
-0.8
1.2
3.5
10.1
4235
Metals & Minerals
12,134
25,690
2.12
-1.2
11.2
2.6
23.6
4236
Electrical Goods
33,829
39,756
1.18
-0.2
10.2
-0.7
11.7
4237
Hardware, Plumbing, & Heating Equipment
8,720
17,406
2.00
1.2
8.1
1.1
15.3
4238
Machinery, Equipment & Supplies
29,272
66,122
2.26
2.1
18.9
1.8
10.1
4239
Miscellaneous Durable
20,066
24,916
1.24
-0.3
25.9
-1.5
12.1
424
Nondurable Goods
221,256
192,949
0.87
-0.2
19.9
-0.4
21.4
4241
Paper & Paper Products
6,980
7,508
1.08
-1.0
2.7
-0.1
6.8
4242
Drugs
34,227
31,370
0.92
-0.5
8.3
2.1
1.9
4243
Apparel, Piece Goods & Notions
10,856
22,101
2.04
-1.6
0.8
2.4
30.2
4244
Groceries &Related Products
48,013
32,141
0.67
1.8
9.9
0.1
13.3
4245
Farm-product Raw Materials
23,422
23,977
1.02
0.5
67.8
-6.2
72.8
4246
Chemicals & Allied Products
9,635
11,472
1.19
2.3
13.5
2.2
18.5
4247
Petroleum & Petroleum Products
60,291
25,301
0.42
-2.9
40.5
-4.0
32.8
4248
Beer, Wine & Distilled Beverages
9,713
12,459
1.28
4.0
7.3
-0.9
10.2
4249
Miscellaneous Nondurable Goods
18,119
26,620
1.47
1.7
5.0
2.5
21.6
6/10-6/11
U.S. Bureau of the Census, Current Business Reports, Monthly Wholesale Trade, Sales and Inventories Series: MDM compilation and analysis.
Adjusted for seasonal and trading day differences. Figures for sales and inventories are preliminary adjusted estimates.
www.mdm.com
Industrial & Construction Markets Update
VOL. 41, NO. 16 | AUG. 25, 2011
Circos File Lawsuit Against
DXP; DXP Files Counterclaim
Dennis Circo and Chris Circo filed
a lawsuit earlier this month against
industrial distributor DXP Enterprises,
Houston, TX, over alleged contract
breaches related to the acquisition of
their company, Precision Industries,
Omaha, NE. The acquisition closed in
September 2007.
DXP denied the claims and filed
a counterclaim against Dennis Circo,
Chris Circo and Circo Enterprises LLC/
Circo Holdings LLC, alleging Circo
made false representations regarding inventories when the acquisition
of Precision was made, including that
adequate reserves had been reflected in
the balance sheet for obsolete, excess,
damaged, slow-moving or otherwise
unusable inventory.
DXP alleges the value of Precision’s
inventories were “grossly overstated”
and its reserve was “grossly understated.” In the Circos’ complaint filed with
the U.S. District Court for the District of
Nebraska, they allege that DXP wants
to adjust the value of the inventory and
the sale price “in order to extract from
Plaintiffs [the Circos] sums not due
Defendant [DXP] and also to avoid paying to Plaintiff Dennis P. Circo certain
earned buy-out fees called for by the
Agreement.”
What’s more, the Circos say that
no claim for a breach of contract was
brought before the one-year anniversary
date of the acquisition’s closing, as outlined in the original agreement. The parties had included a one-year “survival
period” post-acquisition, which allowed
DXP opportunity to ensure books, records and inventories were accurate per
pre-closing representations, according
to the Circos’ claim.
In its counterclaim, DXP said that it
did not and could not have reasonably
become aware of alleged inventory discrepancies until Precision’s financial and
M&A
BlackHawk Industrial Distribution, Inc., Tulsa, OK, No. 40 on the list of
top industrial distributors, has acquired Sanders Tool Supply. Sanders
Tool Supply, based in Peoria, IL, expands Blackhawk’s geographical footprint into the central region of the U.S.
Anixter International Inc., Glenview, IL, No. 5 on MDM’s list of the top 25
electrical distributors, has agreed to sell its Aerospace Hardware Division
to entities controlled by Greenbriar Equity Group LLC for $155 million in
cash and up to an additional $30 million if certain milestones are achieved
on or before Dec. 31, 2013.
Bristol, CT-based Barnes Group Inc., has received a binding offer from
Berner SE to acquire its Barnes Distribution Europe business, comprised
of the businesses that operate as Kent, BD France and Toolcom, subject to
customary conditions and approvals.
Chicago, IL-based Grainger, No. 3 on the list of top industrial distributors, announced its intention to acquire Fabory Group, a European distributor of fasteners and related MRO products, for $344 million.
Diversified industrial manufacturer Eaton Corp., Cleveland, OH has
acquired E. Begerow GmbH & Co KG. E. Begerow develops and produces
filter media and filtration systems for food and beverage, chemical, pharmaceutical and industrial applications. The company is headquartered
in Langenlonsheim, Germany, employs 270 people and had 2010 sales of
more than $84 million.
Ingersoll-Rand plc, Swords, Ireland, has agreed to sell a 60 percent stake
in its Hussmann refrigerated display case business to the private equity
firm Clayton Dubilier & Rice, LLC for $370 million in cash.
Honeywell, Morris Township, NJ, has acquired Atlanta, GA-based EMS
Technologies, Inc., for $491 million. EMS is a provider of connectivity
solutions for mobile networking, rugged mobile computers and satellite
communications.
Other Distributor News
Airgas Inc., Radnor, PA, No. 4 on the list of top industrial distributors,
has named Chuck Broadus president of Airgas South. Broadus succeeds
Jay Sullivan, who was recently appointed as South Division vice president
and chief financial officer.
IBT Inc., Merriam, KS, No. 39 on the list of top industrial distributors,
has appointed Mark Byrne as president and CEO. Byrne replaces Stephen
Cloud, who will continue to serve as chairman of the board.
St. Louis, MO-based Graybar reported sales growth of 21.2 percent in
the second quarter. Sales for the first half of the year were $2.6 billion, an
increase of 20 percent from the prior-year period. Profit for the first half of
the year were $35.4 million.
continued on p.4 of this section
www.mdm.com
10
MDM News Digest
Continued from p. 1 of this section
MARKETS
UPDATE
SUPPLEMENT
P. 2
Grainger, Chicago, IL, reported daily sales for
the month of July 2011 were up 10 percent from
July 2010. Results for the month included a 1
percentage point positive contribution from acquisitions and a 2 percentage point contribution
from foreign exchange.
Applied Industrial Technologies, Cleveland,
OH, reported sales in its fiscal 2011 year ended
June 30, 2011, were $2.2 billion, up 16.9 percent
from fiscal 2010. Profit for the year was $96.7
million. Fourth-quarter sales for the industrial
distributor were up 12.8 percent to $589.8 million. Profit for the quarter was $28.5 million.
Beacon Roofing Supply Inc., Peabody, MA, reported sales for the third quarter ended June 30,
2011, were up 14 percent to $540.7 million. Organic sales growth was 11.6 percent. Profit was
$24.1 million. For the first nine months, sales
increased 10.2 percent to $1.24 billion. Organic
sales increased 6.9 percent. Year-to-date profit
was $28 million.
New chief financial officers have been appointed for WinWholesale Inc. and its wholly
owned subsidiary, Noland Company. Roland L.
Gordon was appointed CFO to replace Jack W.
Johnston who became WinWholesale’s president
July 11; and Jeff M. Dice has succeeded Gordon as Noland Company CFO. Dice had been
WinWholesale’s vice president, electronic data
integration.
Economic News
June U.S. manufacturing technology orders
totaled $459.39 million according to the Association for Manufacturing Technology and
the American Machine Tool Distributors’ Association. This total, as reported by companies
participating in the USMTO program, was up
15.3 percent from May and up 91.7 percent
when compared with the total of $239.68 million
reported for June 2010. With a year-to-date total
of $2,453.78 million, 2011 is up 103.9 percent
compared with 2010.
Industrial production advanced 0.9 percent
in July. Manufacturing output increased 0.6
percent in July following gains of 0.2 percent
in both May and June. Capacity utilization for
manufacturing in July was 75.0 percent, a rate
10.6 percentage points above its trough in June
2009 but still 4.0 percentage points below its
long-run average.
Wholesale prices rose 0.2 percent in July,
seasonally adjusted, the U.S. Bureau of Labor
Statistics reported. This advance followed a
0.4-percent decrease in June and a 0.2-percent
rise in May. At the earlier stages of processing,
prices received by manufacturers of intermedi-
Calculation of MDM Inflation Index for June 2011
1136
1135
1145
1081
1149.01
1132
1144
0713.03
1042
108
Abr. Prod.
Cutting Tools
Power Trans.
Fasteners
Valves, etc.
Power Tools
Mat. Handling
Belting
Hand Tools
Misc. Metal
“New” June Index
“New” May Index
BLS
Price
Indices
Jun. ‘11
BLS
BLS
Price
Indices
May ‘11
Price
Indices
Jun. ‘10
%
Sales
Weight
Indices
Jun. ‘11
(1)X(4)
Weighted
534.6
478.8
753.5
489.4
877.2
342.3
539.0
733.9
739.0
469.0
535.2
475.6
750.4
487.2
875.1
342.3
537.8
736.8
739.3
468.1
516.8
455.0
717.0
475.8
873.0
338.3
524.9
636.4
733.2
454.3
19.1
18.9
15.4
9.0
7.6
6.5
6.2
6.1
8.1
3.1
102.12
90.50
116.04
44.04
66.66
22.25
33.42
44.77
59.86
14.54
310.4
309.8
June Inflation Index
594.20
May Inflation Index
592.97
June 2010 Inflation Index 571.12
%
%
Change
Jun. ‘11
May ‘11
Change
Jun. ‘11
Jun. ‘10
-0.11
0.68
0.42
0.44
0.24
0.00
0.21
-0.39
-0.05
0.18
3.45
5.24
5.10
2.84
0.48
1.18
2.68
15.33
0.79
3.23
0.21
4.04
New index reflects 1977=100 base other #: 1967 To convert multiply by .52247
www.mdm.com
ate goods moved up 0.2 percent in July, and the
crude goods index declined 1.2 percent.
Privately-owned housing starts in July were at
a seasonally adjusted annual rate of 604,000, according to the latest release from the U.S. Census
Bureau and the Department of Housing and Urban Development. This is 1.5 percent below the
revised June estimate of 613,000, but 9.8 percent
above the July 2010 rate of 550,000. Single-family
housing starts in July were at a rate of 425,000;
this is 4.9 percent below the revised June figure
of 447,000.
The Power Transmission Distributors Association Business Index indicated the second
quarter of 2011 was the fifth consecutive quarter
for business growth among PTDA members.
With a reading of 70.2, the second quarter results
indicate the power transmission/motion control
industry is still expanding. However, the 70.2
reading is the lowest the index has been since its
inception a year ago, indicating expansion has
slowed.
The U.S. global trade deficit in manufactures
rose by 21 percent to $213 billion in the first half
of 2011, compared with 2010, while the Chinese
surplus soared by 27 percent to $280 billion,
according to U.S. and Chinese Trade Imbalances
in Manufactures Surge, a new Manufacturers Alliance/MAPI report. These trade imbalances are
back to the excessively high pre-recession levels
of 2008.
The Conference Board Leading Economic Index
(LEI) for the U.S. increased 0.5 percent in July,
following a 0.3 percent increase in June and
a 0.7 percent increase in May. The Coincident
Economic Index (CEI) – a measure of current
economic activity – rose 0.3 percent, and the
Lagging Economic Index rose 0.2 percent.
Led by improvements in production-related
indicators, the Chicago Fed National Activity
Index increased to -0.06 in July from -0.38 in
June. The index’s three-month moving average,
CFNAI-MA3, increased to -0.29 in July from
-0.54 in June.
Construction employment increased in 26 states
between July 2010 and July 2011 and during the
past month, according to an analysis by the Associated General Contractors of America of state
employment data released by the Labor Department.
Canadian manufacturing sales fell 1.5 percent
(C$713 million) in June to C$45.3 billion, the
lowest level since November 2010, according to
the latest release from Statistics Canada. Sales
have declined for three consecutive months after
growing steadily since May 2009. Constant dollar manufacturing sales were down 1.6 percent
in June.
Over the past decade, the four largest emerging
market economies – Brazil, Russia, India, and
China (the BRICs) – contributed 36 percent of
the world gross domestic product (GDP) growth
in purchasing power parity (PPP) terms in 2010,
and their share of global output has increased
from 16 percent in 2000 to approximately 25
percent by 2010, according to An Anatomy of
the Growth in BRICs: Past Trends and Future
Prospects, a new report from the Manufacturers
Alliance/MAPI report.
Other Manufacturer News
Emerson, St. Louis, MO, reported sales for the
third quarter ended June 30, 2011, were $6.3 billion, up 16 percent from the prior year quarter.
Organically, sales grew 10 percent, with 6 percent growth in U.S. sales and 13 percent growth
in international sales. Profit grew 17 percent to
$683 million. For the first nine months of the
fiscal year, sales increased 16 percent to $15.2
billion, with profit improving 21 percent to $1.4
billion.
Gibraltar Industries Inc., Buffalo, NY, reported
sales for the second quarter ended June 30, 2011,
were up 18 percent to $208.8 million from the
prior-year period. Profit from continuing operations was $7.2 million. For the six months ended
June 30, sales increased 15 percent to $372.4
million from the prior-year period. Profit from
continuing operations for the first half was $8.7
million.
RBC Bearings Inc., Oxford, CT, reported sales
for the first quarter ended July 2, 2011, were
$93.3 million, up 13.3 percent over the first
quarter of fiscal year 2011. Profit increased 18.2
percent to $10.7 million.
Rexnord, Milwaukee, WI, reported sales increased 17 percent in its fiscal first quarter 2011
to $476 million. Core sales were up 14 percent.
Income from operations was $63 million.
www.mdm.com
11
12
MARKETS
UPDATE
SUPPLEMENT
P. 4
DXP
accounting systems were integrated into DXP’s
systems in late 2009 and early 2010. DXP alleges
that the Circos “actively concealed their fraud”
while conducting “day-to-day operations” for
Precision for several years after the acquisition.
DXP alleges that the Circos knew or should
have known of the alleged inventory misstatements.
But the Circos allege that DXP “intentionally
conducted the business of Precision during the
Earn Out period in a manner designed to reduce
the value of Plaintiff Dennis P. Circo’s Earn Out
rights under the Agreement.” The complaint
also alleges DXP adjusted financial statements to
reduce Precision’s income; for example, it says
that the company took “inappropriate” inventory write-offs.
The complaint alleges that DXP has “attempted to coerce employees of Precision into
making changes in the inventory accounting
methods that are unwarranted” to support its
claims; it also alleges that DXP made misrepre-
sentations to the Securities and Exchange Commission and others with respect to the inventories in an attempt to “wrongfully account for the
inventories on the books.”
DXP denies and addresses these claims in its
counterclaim with examples of alleged inventory misrepresentations. DXP seeks rescission and
return of the entire purchase price paid for the
shares of stock of Precision; recovery of actual
damages; attorneys’ fees, costs and expenses;
and pre-judgment and post-judgment interest.
The Circos seek a declaration that the time
for DXP to assert claims with regard to inventories has passed; that all representations and warranties with respect to inventories were correct
and that there has been a breach of agreement;
and that any claims to the contrary are without
merit.
DXP Enterprises’ and Circos’ claims are both available in pdf at this article online at mdm.com.
MDM News Digest
General Bearing Corp., West Nyack, NY, reported sales for the second quarter ended July 2,
2011, were $39.3 million, down 3 percent from
the same period a year ago. Profit attributable
to the manufacturer of bearings and bearing
components nearly doubled to $3.5 million, from
year-ago profit of $1.8 million. For the first six
months, sales increased 3.4 percent to $75.7 million. Profit was $6.8 million, compared to $2.8
million a year ago.
The Home Depot, Atlanta, GA, home improvement retailer, reported second quarter 2011 sales
of $20.2 billion, a 4.2 percent increase from the
same period a year ago. Comparable store sales
were up 4.3 percent, and sales for U.S. stores up
3.5 percent. Profit was $1.4 billion. For the first
half of the year, sales were up 2.2 percent.
Now Available on DVD
& On-Demand
MODERN
DISTRIBUTION
MANAGEMENT
Founded in 1967
by J. Van Ness Philip
Questions, comments, article proposals, address changes
or subscription service to: Gale Media, Inc., 3100 Arapahoe Avenue,
Ste 500A, Boulder, CO 80303. Tel: 303-443-5060.
Fax: 303-443-5059. Website: http://www.mdm.com
ISSN 0544-6538
To subscribe to Modern Distribution Management, please call
888-742-5060, email [email protected] or http://www.mdm.com.
Subscriptions are available by online delivery and/or first-class mail.
Published twice monthly; $345/yr., $365 U.S. funds other
countries; $169 each additional subscription to a company
($189 other countries).
Copyright © 2011 by Gale Media, Inc. All rights reserved. Modern
Distribution Management® and mdm® are registered trademarks of
Gale Media, Inc. Material may not be reproduced in whole or in part
in any form whatsoever without permission from the publisher. To
request permission to copy, republish, or quote material, please call
303-443-5060.
Managing Change:
Tactics for Distributors
Order Today:
www.mdm.com/change-webcast
or call 888-742-5060
Join distribution management expert Bruce
Merrifield in this 60-minute MDM program as
he boils down the latest research on change
management to practical how-to tactics.
www.mdm.com

How to Analyze Your Marketing Claims Commentary:

Transcription

Similar documents

NU SKIN - Alexander`s

replicadas ENG

Value of MHEDA PDF Brochure

Wallpaper City Guide Hamburg

now Is the tIme to Grow - Vance Distributor Community

DOWNLOAD: "Pharma-Industry"

Session Handout

Mediwatch Newsletter 2012 Q1

September 19-20, 2016

founders awards eng