Leveraging distribution channel
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Leveraging distribution channel

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Insights on how companies can leverage with channel networking.

Insights on how companies can leverage with channel networking.

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  • 1. Atlas Copco Leveraging Distribution Channels By: Smit DaveAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 2. Business View 1.25 billion $ worldwide – 1984 40 % from compressors division Focus on Recip & Rotary technology compressors Market trend moving towards Rotary & Oil free compressors (Dry air) 3 – 6 Months average sales cycle - Involves engg, manager & technical guys @ buying unitAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 3. Business View Worldwide share as equal as Ingersoll Rand – A benchmark competitor But "US" – Atlas is far from target - 4th rank Traditional buying process Strive to be major threat to Ingersoll RandAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 4.  Good in European territory Adaptability issue for US market & its needs – Solved Reciprocating nature of installed machines Distributors earn in regular servicing & maintenance (30-35 %) Less installed base of Atlas Copco product – Distributors economic viability? Hesitation towards new entrant compared with 25-30 years old companies in marketAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 5.  Make loss good by leveraging topline product Oil free rotary screw compressors – High precision THE best design engg in US – Broad range & low cost in competition 15 % margin offered – Compared to 8-10 % by other products Competitors approached directly – Chance for Atlas to transfer benefit to preferred distributors Maintenance contracts ensured good economy of distributors Flexibility – To choose & pick products they wanted to market Soon merged Worthington (Distribution benefit) & acquired Turbonetics.Inc (Centrifugal Mfg)All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 6.  Intensive dist. by 100 dist Intrabrand competition – Ex: Levis Jeans Overlapping in territories – Segregating dist. – Still some dist. Overlapped Exclusive marketing rights to dist. (Brand & Territory) Exceptional cases were treated separately Finally 85 distributors – Manageable network now Regular conferences & meetings with the distributors to ensure:  Services – Surety of spares, stock & supply  Display – Attractive display of products – Display Merchandising  Direct Accounts – Avoid conflict of accounts between sales forces  Training – Training, communication & technical support Market share raised from 2 % to 7 %All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 7.  Distributors categorization in "A" "B" & "C" A (80 % sales) B (10-80 % sales) C (Less) 28 – A, 18 – B & 39 – C C category a major concern C category – To be provided more resources, & focus - technical support by Atlas Training C category sales people & supported them with necessities This phase witnessed good marketing activities too Shows management commitment to develop not distributors, but partnersAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 8. Now ??? C Category came out to be bottleneck Distributor audit conducted A & B were performing good – But not selling all broad product line They had to even sell low margin & small size compressors too GA series lubricated rotary compressor had intense competition This was area where distributors can contribute How to make it possible? How to induce & motivate them to sell such goods?All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 9. All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 10. Types of Franchise Basic Franchise  Maintain inventory (Prime Equip & Spares)  Responsive supply behaviour  Attain goals & qualify for next stage franchise Enhanced Distributor Franchise:  No inventory of Prime Equip  Maintain inventory of Spares to serve quickly  Provision for capable distributor with less credit history with Atlas – Agency agreement (Principal-Agent terms)All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 11. Continued. . . . . . . Promoted Franchise:  Distributors promoted from Basic & Enhanced Franchise  Agency agreement – To provide sales & mktg expertise to dist.  Access to companys marketing arm – To support sales  Agents not required to keep inventory of prime  Quotations & POs to be in name of Atlas-Copco Authorized Service Center Program:  Address to warranty & post-warranty issues & revenues from spares  Focus to convert the distributors as authorized partnersAll materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 12. Lets Discuss Decision on Franchise model right? How easy or difficult for big companies to buy small compressors? Time & economical efforts for spent by small compressor buyers to find Basic Franchise Geographical proximity of Authorized service center? What about customer who wants to buy Small & Big compressors together? How should be the distributors support for 4 level franchise? Where would you fit the distributor currently selling big compressors?All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
  • 13. All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically