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Training programme for publishers from the Arab world

Module for middle management

Distribution

Kairo, june 28 - 30th 2008

Gabriele Rubner

The structure of the german book market

•1.800 publishing houses

•4.300 bookselling businesses

•9,3 billion euros total turnover in 2006

•78.000 new publications every year

•900.000 titles in stock

•Little growth of the market (+ 1,7% in 2006)

The german book market is a costumers’ market!The german book market is a costumers’ market!

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Introduction

• How long do you work in publishing?• In what kind of publishing house do you

work?• What are your experiences in distribution?• Whats your definition of distribution?

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Definition

Distribution is the organisation of all steps, serving the sales and the sales promotion.

Distribution channels of the German book market

Publishing HouseLicensing Direct Sales

Printer

Distributor

Mail TradeDepartement

StoresStationary Retailers

Internet Bookstore

Wholesalers

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Distributor• He act on the behalf of the publisher• Stock all available books of the publisher• Is responsible for delivery and logistics for

all distribution channels• Accountancy• He insure that the publisher get the

money• By agreement he take the risk for

outstanding depts• He gets 7 - 10% of the publishers

turnover

Wholesalers

• Two big players in Germany: Libri and KNOE

• Stock almost every book available in bigger number

• Bookstore chains order exclusively from the wholesalers

• Guarantee that books will be delivered within 12 hours to any bookstore in the country

• Great customer-service and support for retailers

• Huge bargaining power in relation to publishing houses

Stationary retailers• They have a market share of 54 %

• They are continually losing market shares to the internet book trade

• Big bookstore chains are increasing dramatically

• Huge bargaining power of the big retailers

• Publishing houses competing for shelf places

• Books they don’t have in stock, they can order within 1 day

• They can do research in the catalogues of the wholesalers and the VLB (catalogue of all available books in Germany)

Online Trade

• Fastest growing distribution path

• From 13 million euros turnover in 1997 to 703 million euros in 2006!

• Market share of 7,6 %

• Amazon is the number 1 in Germany

• Great customer service (delivery of books is free of charge, right of return)

• For many publishing houses amazon is the biggest customer (huge bargaining power!)

Departement Stores

• Book-Departements in big warehouses as well as gas stations, giftshops etc.

• Mass market channel for bestsellers, cheap books, childrens’ books

• They sell bigger numbers, but order only specific titels

Mail Trade

• Sales through printed catalogues or website

• Usually focused on a specific topic or a special target group

• Biggest player in Germany is WELTBILD (about six million catalogues every month)

• Interesting partner for publishing houses because of big order, but only a few books make it into the catalogue and not every time

The mail order bookseller WELTBILDWELTBILD

Direct sales

• To consumer and companies via printed catalogues and website

• Works mainly for porfessional or special interest books (medicine, law, business)

• Margins are high, but costs to acquire customer are also very high

Licensing Revenues

• Paperback publishers

• Book clubs

• Film production

• Audio and e-book publishers

• Mail order customer (special editions)

• Foreign rights

What are the pros of the german distribution system?

• Quick and overall

• Great service for retailers and publishers

• Great service for the costumer

• A hugh variety of distribution channels

• The system is very safe

What are the cons of the german distribution system?

• Hugh concentration

• Enormous bargaining power of the wholesalers, the bookstore chains and amazon

• For smaler publisher it is very difficult to get access to the distribution channels and they have to look for guerrilla strategies

• The costs of our system are very high

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The circumstances at the german book market

• Books are a WANT and rarely a NEED

• Margins become less, because the power of the retailers increases

• We´ll see a lot more concentration in the coming years

• Other media compete for the attention and the budget of the customer

In order to survive, publishing houses have In order to survive, publishing houses have to act according to the rules of marketing to act according to the rules of marketing and get access to the distribution system!and get access to the distribution system!

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Groupwork

• What are the distribution channels in egypt?

• Please arrange it in a ranking.

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The job of the person responsible for logistics

• To take on the orders• Delivery of the orders to the distributor• Controlling of the distributor• Management of complaint• Management of the return

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The job of the person responsible for logistics

• Information office for the clients• Preparation of the bookfairs• Preparation of the conferences for the

sales representatives (twice a year)• Fixing of the reprint• Database management

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The job of the key account manager

• He is in contact with the top clients• Controlling of the sales representatives• Sales promotion• Negotiation with the top clients• Controlling of the sales activities• He has to find new distribution channels

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The job of the sales representatives

• They work for more than one publisher• They work on a commission basis (they get

8% of the publishers turnover)• They visit there clients two times a year (in

spring and autum) selling the new books of the coming season

• They visit 150 retailers in there territory

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Head of sales and distribution

• Controlling of all distribution channels• Chief negotiator (wholesalers, bookstore

chains, distributor)• Human resources manager for the sales

departement• Verify new trends in the market• He work together very close with the publisher

and the program managers

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Controlling

• Analysis of the total turnover (monthly and annual)

• Analysis of the turnover in all distribution channels

• Analysis of the development of our distribution channels

• Analysis of the sales figures of every product• Analysis of the turnover of our sales reps• Analysis of the turnover of our top-clients

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Controlling

• Profit contribution of our top-clients• Classification of our clients• Observation of the return ratio• Observation of the stock• Observation of the booking (to fix the press

run)• Observation of the budget• Analysis of the success of our promotion

activities

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The sales and distribution departement is a central unit

• Permanent exchange with the sales reps, the marketing manager, the publishing manager, the public relations

• They get direct feedback from the market

• They observe the market• Exchange of information (client to

publisher/Publisher to client)

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Groupwork

Built a classic distributiondepartment for a publishing house in

egypt.

The Marketing-Mix

The four P’s of Marketing:

ProductProduct

PromotionPromotion

PricePrice

PlacementPlacement

Promotion

CustomerCustomer(pull-marketing):

• Press/Reviews

• Direct Marketing

• Advertising

• Decoration (PoS)

• Leaflets

• Booktours and Events

• Give aways

RetailerRetailer(push-marketing):

• Catalogues

• Sales Representatives

• Decoration (PoS)

• Give aways

• Consulting and training

• Support of their advertising

activities

Promotionmaterial

Promotionmaterial

The terms we supply the Retailers:The terms we supply the Retailers:

• Trade discounts

• Terms of payment and delivery

• Contribution towards advertising expenditure

• Order on a sale or return basis

Price

Customer:Customer:

•Pricing is influenced by three factors: costs, competition, demand.

•Are there any price limits or corridors in the market?

•Keep an eye on the prices of competing publishers

•Choose a high price level (in terms of quality) or a low price strategy (to enforce price advantage for the customer)

Price

Placement

• Where do our costumers buy our books?

• What is our most important distribution channel?

• Do we have access to these channels?

• Are there new channels?

• Perfect timing

• Perfect logistics and fulfillment

• Service, service, service!

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Know your target group very well

MartinMartin• 33 years old• not married• Salary: 3.600

euros/month• 3-room apartment• working in a bank

ThomasThomas• 33 years old• not married• Salary: 3.600

euros/month• 3-room apartment• schoolteacher

Demographic twins, but different values!

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Know your target group very well

Martins apartment Thomas apartment

7 questions have to be answered

1. Who is the customer?

2. Which products does he need?

3. Why does he buy?

4. Who influences the purchaise?

5. How are purchaising decisions made?

6. When are consumers willing to spend money?

7. Where does consumers buy products?

A case I have experienced myself

The planning of the distribution-system of my new founded

publishing house “Art + travel”

A case I have experienced myself

• My target group?

• Where do they buy my CDs?

• Plan the budget

• How to find sales representatives?

• Negotiate the terms of conditions with the distributor

• Adress database with contacts

• Distribution-related details (ISBN, EAN)

A case I have experienced myself

• Catalogues and material for the sales reps (order pads, leaflets)

• Send the information to all my distribution channels

• Promotion material

• Training and information of the sales reps

• Get in touch with the big players and negotiate the terms of conditions

• Website

• Planning the presentation of the Frankfurt Bookfair

• Coordination of the day of publication and your public relation activities

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Group Work

Please work out a distribution strategy for a new egyptian publishing house specialized on

- Religion- Fiction, literature- Children books, cook books- Special professional interest, science, school books

What are the challenges, the problems and what could be possible solutions and new concepts?

Working together with your channels

• Information

• Promotion material

• Invite them

• Care for them and ask them

• Thank you!

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Who to find new distribution channels?

• The channels, selling books yet (do you know all of them and do you have access?)

• Do you have a database with all names, adresses, phone numbers?

• Finding new channels who are not used to sell books (difficult, expensive)

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Who to find new distribution channels?

• Keep in touch with your sales reps

• Talk to your collegues

• Watch TV/read newspapers/radio/internet

• Ask your end-costumers, where they buy books

• Local research

• Cooperation with other publishers (together you are strong!)

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Cooperation between distribution channels

• Collect adresses of end-consumers on the fairs

• Send them informations about your new products

• Inform them, where they can buy your books (retailers, departement stores, Internet)

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Direct sales

• How to get the adresses?

• Collecting business cards on the fair (costomers can win something….)

• Yellow pages

• Internet

• Put a postcard in every book

• Use the adresses of your costumers

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Direct sales

• Visit congresses, exhibitions and collect adresses

• Cooperate with institutions

• Telephone research

• Cooperation with other publishers

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The Bookfairs

• How can you use the fairs for your future activities? (collecting adresses)

• Promotion material

• Presentation of your books at the stand

• Well informed staff at the stand

• Any other activities like lectures or shows

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Promotion for „THE BOOK“

• A book is a present

• A book is chic

• A book is knowledge

• A book is a new world

• A book can help you

• A book is a surprise

• A book is a secret

• …..

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Groupwork

• What could be new startegies in your market to find new channels and costumers? What can your sales departement develope?

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Distribution is easier

when we sell what we love!

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Thank you!

If there are any further questions:

mail@gabrielerubner.de