Eicher Motors is considering using dealers as intermediaries to sell its heavy, bulky, and technically complex commercial vehicles. Using dealers is appropriate because the market is less dense, requiring intermediaries, and the products are not easily transported in small quantities. However, availability of willing dealers is low and costs are high since dealers are unwilling to invest. The document evaluates different market and product variables, channel characteristics, and dealer parameters to determine the best channel structure for Eicher Motors. It recommends using dealers, with incentives, loans, and linking them to repair shops, to overcome issues with dealer availability and costs.

1. Eicher Motors

2. Variable Impact to Eicher Motor
Market Geography The dealers should be few in number and should not be overlapping in
the area
Market Size The market is not very large nor too small, so there is need for
intermediary to counter high transaction cost
Market Density Market is less densed, so use of intermediaries is required
Variable Impact to Eicher Motor
Bulk & Weight Product is heavy and bulky. Customers buy in small
quantities and need quick delivery
Unit Value High
Degree of Standardization High
Technical versus Non Technical Technical Product. Product requires sales and service
people
Newness New. Carefully selected group of intermediaries
Product Variables
Market Variables

3. Variable Impact to Eicher Motor
Availability Dealers are present but not willing to work
Cost Cost of using dealers is high as the dealers are not ready to
invest. As a result the company has to bear most of the cost
Services New dealers are not willing to invest much on workshop. Also
there is high competition from unorganized market in providing
service
Other Factors:
• The legal environment should be taken into consideration like the
limit on capacity imposed in the present case
• The behavioral variable needs to be taken care of. This depends on
whether the channel manager needs high level of control or not and
depending on that the intermediary needs to be chosen

4. Characteristic Ranking
Replacement Rate Medium
Gross Margin Medium
Adjustment Medium
Time of Consumption Medium
Searching Time Medium
• The LCV ranks Medium on all characteristics, hence its an orange good
and requires a medium channel (at least one intermediary)
• Thus the most appropriate channel for Eicher Motor would be to sell its
product through a dealer.

5. Parameter Importance
Location of Dealer Close to customer but not too close to one another
Financial Health Should have resources to add brands or succeed in new
locations
Skill of Dealers Dealers in top quartile sell 3 to 4 times more than dealers in
bottom quartile
Service Provided Service and part sales are essential to the health of
dealerships, dealers can recover their 100 percent of fixed
cost through that
Number of Brands they sell Some dealers sell number of brands. They will be important
as product is superior and can be compared

6.  The company can use negotiators to get dealers.
These negotiators can be retired employees of the
manufacturer’s dealer operations or financing arms
who have worked with them in the past
 Offering incentives to dealers such as attractive
loans, preferential allocation of new products or
factory support
 It can link its dealers with the independent repair
shops that are very active in the market. The repair
shops realize revenue through labour and dealers
through part sales.