Credit wars destroy consumer industry
Posted: Wed Dec 04, 2024 9:30 am
Learn what credit wars are in distribution companies, how they originate, how they affect the industry and what strategies you should apply.
The pressure to sell on distribution and mass consumption companies is causing them to be dragged towards the two most destructive scenarios for the financial health of companies.
Price war.
Credit war.
The credit war is not new, but it has never been as intense as it is now.
Many consumer goods and distribution companies base their competitive strategy on offering their customers more amounts and payment times, without analyzing the financial consequences and, even worse, without having real guarantees of payment.
There are many brand managers and sellers who pressure their companies to extend payment times and continue delivering products to customers who do not pay or have a considerable debt with the company.
The motto is, let's sell the product (to meet the sales budget) and then see how we get paid. They even pay commissions to the sellers without having received any payment. A complete apology for the disaster.
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What are credit wars?
What are Credit Wars in Consumer Goods?
Simply put, a credit war in the consumer market refers to the strategy of providing customers with better payment terms, with the intention of attracting new customers from competitors and retaining current ones, so that they do not go to other companies.
It is also used as a strategy to increase list of south sudan consumer email purchases from current customers and thus avoid or reduce purchases from other competitors, because they do not have more budget or space to store the products.
Normally, credit strategies in the mass consumer market have two fundamental components:
1. Credit time.
It is the time that the company gives the customer to pay for the products delivered.
The idea is that the client can sell the products in that period, make a profit in return and return the full value of the loan to the company.
2. Credit amount.
It refers to the monetary value of the products that the company is delivering to the client and that must be returned in full when the credit period expires.
Although it should also include other variables such as credit interest, payment guarantees or immediate collection, many consumer goods companies turn a blind eye and avoid applying these conditions, which generates serious consequences for financial stability.
How do Credit Wars start in the consumer industry?
Like price wars, they are triggered by a lack of a true competitive strategy, the pressure to increase sales and the power of customers.
It is enough for one of the competitors to start gaining market share as a result of a relaxation in its credit conditions for the others to imitate the same strategy, even when they are not prepared or in a position to do so.
Many companies seem to be more focused on their competition than on their own strategy.
This causes them to react to any variation in price and credit time to try to match them, without analyzing the consequences and financial costs.
On the other hand, the pressure on sellers, brand or product managers and sales managers to increase sales pushes them to demand that the company make its credit conditions more flexible.
Finally, it seems that distribution and mass consumption companies have lost control over their customers.
The bargaining power of customers has increased precisely because of the weakness in the marketing strategy, the desperation to sell and the existence of a large number of suppliers.
The pressure to sell on distribution and mass consumption companies is causing them to be dragged towards the two most destructive scenarios for the financial health of companies.
Price war.
Credit war.
The credit war is not new, but it has never been as intense as it is now.
Many consumer goods and distribution companies base their competitive strategy on offering their customers more amounts and payment times, without analyzing the financial consequences and, even worse, without having real guarantees of payment.
There are many brand managers and sellers who pressure their companies to extend payment times and continue delivering products to customers who do not pay or have a considerable debt with the company.
The motto is, let's sell the product (to meet the sales budget) and then see how we get paid. They even pay commissions to the sellers without having received any payment. A complete apology for the disaster.
54uu7u787i8i8
What are credit wars?
What are Credit Wars in Consumer Goods?
Simply put, a credit war in the consumer market refers to the strategy of providing customers with better payment terms, with the intention of attracting new customers from competitors and retaining current ones, so that they do not go to other companies.
It is also used as a strategy to increase list of south sudan consumer email purchases from current customers and thus avoid or reduce purchases from other competitors, because they do not have more budget or space to store the products.
Normally, credit strategies in the mass consumer market have two fundamental components:
1. Credit time.
It is the time that the company gives the customer to pay for the products delivered.
The idea is that the client can sell the products in that period, make a profit in return and return the full value of the loan to the company.
2. Credit amount.
It refers to the monetary value of the products that the company is delivering to the client and that must be returned in full when the credit period expires.
Although it should also include other variables such as credit interest, payment guarantees or immediate collection, many consumer goods companies turn a blind eye and avoid applying these conditions, which generates serious consequences for financial stability.
How do Credit Wars start in the consumer industry?
Like price wars, they are triggered by a lack of a true competitive strategy, the pressure to increase sales and the power of customers.
It is enough for one of the competitors to start gaining market share as a result of a relaxation in its credit conditions for the others to imitate the same strategy, even when they are not prepared or in a position to do so.
Many companies seem to be more focused on their competition than on their own strategy.
This causes them to react to any variation in price and credit time to try to match them, without analyzing the consequences and financial costs.
On the other hand, the pressure on sellers, brand or product managers and sales managers to increase sales pushes them to demand that the company make its credit conditions more flexible.
Finally, it seems that distribution and mass consumption companies have lost control over their customers.
The bargaining power of customers has increased precisely because of the weakness in the marketing strategy, the desperation to sell and the existence of a large number of suppliers.