GROUP 5 SECTI ON C

MAYANK TAPARI A AKSHAY

BHANDARI
SHASHANK SHUKLA SHI VAM
ATRI
ABHI NAY ABHI LASH
Case Brief
Made medium and
heavy commercial
vehicles
75% market share in the
segment
Made medium and
heavy commercial
vehicles
10 tonne rated payload
25% market share in the
segment
Made light commercial
vehicles
Sold 12000 vehicles per
annum
Made light commercial
vehicles
Sold 8000 vehicles per
annum
Combined sales of 60000 vehicles per annum
Technologically outdated products
10 tonne rated payload
Extensive network of dealers for service and spare
parts
Vehicles rated for a payload of 1.5 tonnes
Not rugged
Used for intra city or short distance use
The 4 Entrants
DCM Toyota
Asked dealers to invest heavily in infrastructure like showroom and
workshop
Tied up with well established dealers
Allwyn Nissan
Tied-up with established players with good facilities and market
understanding
Most of them were dealers of Ashok Leyland
Swaraj Mazda
Found difficult to attract dealers with deep pockets due to lukewarm
response
Compromised and tied up with dealers with limited investment potential
Decision parameters for Channel
Design
Market Variables
Market Size
Market Geography
Market Behavior

Product Variables
Degree of Standardization
Product Prestige
Unit Value
Technicality

Intermediary Variables
Availability
Services
Cost

Company Variables
Size
Financial Capacity
Managerial Expertise

Channel Structure
The company can choose between
Selective Extensive
Restricted number of channels in a
geographical area to sell products
Exclusive rights to only a
limited number of dealers to distribute their
products in geographical area
Good working relationship with selected
channel members and expectation of better
than average selling effort
The dealer gains stronger distributor selling
support and more control
over price, promotion, credit and services
Selective distribution gives good market
coverage with more control and less cost to
the producer
This strategy helps in improving the products
image and allows for higher markups
Why extensive channel structure
Non-availability of good dealers
Sluggish sales of other competitors products using conventional
distribution channel
Better after sales service
20% of a typical purchase decision is linked to a perceived level of service in
a market
No conflict of interest for the dealer
Overcome Problems of Attracting
Suitable Channel Members
1. Promotion
1. Provide strong advertising and promotional support to channel members
2. Provide a wide array of promotional allowances than competitors
2. Protect channel members sales
1. Through highly extensive distribution
2. Offer exclusive dealing arrangements
3. Provide Management Assistance
1. Training Programs
2. Sales Force
3. Financial Analysis and Planning
4. Friendly Relationship
5. Product
1. Better specifications than competitor products
Evaluation Parameters for Channel
Members
1. Credit and financial condition: whether it is capable of investing in
infrastructure
2. Sales Strength: Sales capacity of prospective intermediaries
3. Product Lines: Whether it carried competitors products, quality of products,
complementary products
4. Reputation: a poor reputation of channel member can have implications for
the brand
5. Market Coverage: The geographical territory that the manufacturer would
like to reach
6. Sales performance: Past sales history
7. Management Ability: difficult to judge because of the intangibles involved