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Distributor Margin Squeeze
A situation where the margins available to distributors are reduced due to increased costs, competition, or pressure from manufacturers.
Implications
A situation where the profitability of distributors is reduced due to increasing costs or reduced pricing power, often leading to tension between manufacturers and distributors, and requiring strategies to maintain margins.
Example
Example: A consumer electronics company faces a distributor margin squeeze when rising raw material costs force it to raise prices, but market competition prevents it from passing those costs fully onto consumers, pressuring distributor margins.
Related Terms
Different from general margin analysis, margin squeeze specifically examines the pressure on profitability within the distribution channel.
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