Ingersoll Rand manufactures stationary air compressors ranging from 3/4 to 6,000 hp. They use four distribution channels: direct sales force, independent distributors, IR distributors (Air-centers), and manufacturer's representatives. IR is introducing a new centrifugal compressor, the Centac-200, in the medium 200hp range. This market is currently dominated by Atlas Copco, which uses distributors. Three options for distributing the Centac-200 were considered: direct sales force, individual distributors, or Air-centers. Air-centers were concluded to be the best option as they are specialists who can focus on the niche oil-free compressor market and provide expert service, unlike individual distributors. This

1. Managing Multiple channel
- Ingersoll Rand
BY
SILAMBARASAN P
PGPM FLEX (2017-19)

2. INGERSOLL RAND
§ A leading firm in STATIONARY AIR COMPRESSOR (SACD)
§ They have various range of compressors starting from ¾ to 6,000 hp
16 countries 40 countries 80 countries
Operation Sales office Distribution
30%
Market
share
$660
million

3. PRODUCT TYPES & DISTRIBUTION
§ IR has 3 models of compressors
§ They are maintaining 4 types of distribution
S.no
Distribution model &
Types of compressor
Centrifugal Reciprocating Rotary
Small
(below 25
hp)
Medium
(25 ~ 300
hp)
Large
(above
300 hp)
DoY
(below 5
hp)
Small
(below 25
hp)
Medium
(25 ~ 300
hp)
Large
(above
300 hp)
Small
(below 25
hp)
Medium
(25 ~ 300
hp)
Large
(above
300 hp)
1 Direct sales force o o o o o
2 Independent distributor o o o o
3 IR distributor (Air-center) o o o o
4 MR (Manufacturers Rep) o
§ There is no overlap in each others territories
§ Machine sold for less than $5,000 were not economical for direct sales

4. BUYER BEHAVIOUR
1
- Large compressors
- Quotation has
detailed specifications
- High degree of
technical expertise
& sales effort
- Service requirements
are complex
- Lead time is 6-8weeks
2 3
Direct sales force
Independent
distributor & Air-center MR reps
- Medium & Small
compressors
- Spares/support are
available easily
- Lead time is 1 weeks
- Small compressors
- Used by plumbers,
house maintenance
- Lead time is 1 day
Distributor
30% 35%
20%
Air-center
15%
Sales
1985

5. CURRENT SITUATION
§ Total revenue is $660 million in 1985 (Equipment : $460 million, Spares :
$260 million)
§ Equipment sales value in 1980 : $ 500 million (Units : 600,000)
§ Equipment sales value in 1985 : $ 460 million (Units : 900,000)
§ Sales value is declining but volume increased, it show market is
growing in lower hp range
§ Combined sales to OEM & end-users accounted for 55% of total
revenue
§ Margin details
§ Compressors : 10~15%
§ Spares : 30~35%

6. NEW PRODUCT ~ CENTAC-200
§ Centrifugal compressor ~ Used in Food processing industry, electronic
assembly, pharmaceutical packing
§ 200hp (Medium range)
§ High speed equipment (50,000 rpm)
§ Provides Oil-free (or) dry air
§ The current market is ruled by Atlascopco in this segment with a
market share of 30% and it is sold through distributors
§ Huge growth potential in this segment
S.no Description Quantity Value
1 Current 200 units $ 9 million (2%)
2 Estimated 780 units $ 35 million (8%)

7. DISTRIBUTION MODEL FOR CENTAC
§ There are 3 options to bring the product to market
1. Direct Sales force
2. Individual distributors
3. Air-centers
Points to consider :
§ As the machine is used in process industry (Ex. Food/Pharmaceutical),
breakdown will have adverse effect on the business
§ Also, inadequate repair will risk in serious damage of equipment
§ IR has more confident on it own service team
§ They generally lack confidence on distributors service

8. DISTRIBUTION MODEL FOR CENTAC
S.no Description
Centrifugal
Centac-200
Channel performance
Direct Distributor Air-center
1 Estimated life 10-12 years 12 years 12 years 12 years
2 Cost of compressor / hp $ 225 $ 45,000 $ 45,000 $ 45,000
3 Installation cost 12% ($27) $ 5,400 $ 5,400 $ 5,400
4 Spare & maintenance/year 2% ($4.5) $ 900 $ 900 $ 900
5 Sales cost to the company
Direct-11%
Distributor-21%
Aircenter-19%
$ 4,950 $ 9,450 $ 8,550
§ The cost of Centac is $ 45,000 approximately
§ The current estimated volume : Increase the business by 2% ($9million)
§ The projected volume will boost the business by 8% ($35million)

9. CHANNEL PERFORMANCE
S.no Cost components
Channel performance
Direct Distributor Air-center
1
Experience in centrifugal
compressor handling
Yes No No
2 Range in operation(hp) 300 - 6,000 hp Under 300 hp Under 300 hp
3 Sales Network Well established Moderate Less penetration
4 Service Expertise Training required Training required
5 Spare parts Easy availability
More lead-time,
chances for cheap
substitute parts
Reduced leadtime
due to centralized
order entry,
inventory transfer
6 Network strength 26 Employees 80 distributors 19 Air-centers

10. CONCLUSION
§ It is less attractive for Direct sales force team as they are handing big
accounts. The time spent on taking order is equal for all range of
compressor, if they focus on huge capacity, IR can earn more profits
§ Individual distributor may handle multi products and it may reduce
the focus on IR product. Also they are not expertise in dry-air model
and they need to be trained specially
§ Best option is to distribute through Air-centers. Oil-free compressors are
niche markets and it has to be given only to the specialist. Air-centers
are the alternate of independent distributor (started in 1971)
§ Equivalent competitor, Atlascopco also distributing through same
model and gained 30% market share (Successful model)
§ Also, this model satisfies the IR’s distribution policy