Sales and distribution project


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Eicher Motors Sales and distribution details (a group study for academics and may not really be accurate)

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Sales and distribution project

  1. 1. About Eicher Motors Eicher Motors, was founded in 1982 to manufacture a range of reliable, fuel-efficient commercial vehicles of contemporary technology. The unit manufactures and markets commercial vehicles with Gross Vehicle Weight (GVW) ranging from 5-25 tons. Today, Eicher Motors is one of the leading manufacturer of commercial vehicles in India with a 33% market share in the 7T-11T segment. The success and growth of this unit is a result of various customer- driven strategies. The manufacturing facility is situated in Central India – Pithampur, Madhya Pradesh. Eicher Motors has stepped into the Heavy Commercial Vehicle segment with its state-of-the-art HCV, the "Eicher 20.16", the first commercial vehicle designed and developed indigenously. Eicher Motors functions through a strong three-tier service network consisting of authorised distributors, service centres and company trained private mechanics. The vehicles are sold and serviced through a network of over 576 Authorized Contact Points all over India, supported by service centres and over 4500 company trained private mechanics, who are close at hand on all major highways throughout India to provide initial "first aid" to the vehicles if required. In 1986, Eicher Motors entered into a technical and financial collaboration with Mitsubishi Motor Corporation of Japan to manufacture the Canter range of vehicles. The technical assistance agreement with Mitsubishi ended in March ‘94 after successful transfer of technology and on achieving total indigenisation with only a few parts sourced globally. Eicher Motors has acquired formidable expertise in designing and developing commercial vehicles. It has a world-class R&D centre manned by a team of brilliant engineers and equipped with latest Computer Aided Design (CAD) and Computer Aided Engineering facilities like NASTRAN, FEM analysis packages. Leveraging its in-house expertise, this unit has successfully developed a wide range of commercial vehicles to meet varying customer needs. The product range includes Trucks : Eicher 10.50, Eicher 10.75, Eicher 10.90, Eicher 11.10, Eicher 20.16 & 30.25; Buses: Eicher Skyline, Eicher Cruiser and Eicher School Bus range of buses. Besides the basic models, it offers over 85 models of ready-to-use custom-built vehicles for various specialised applications. Eicher Motors’ products have been well accepted in the market. This is also demonstrated by significant sales of its commercial vehicles in export markets where the company competes with reputed international brands.
  2. 2. SALES MANAGMENT I. Sales Organisation On a broader level Sales Organisation for Eicher is structured (in order of reporting) as following: In Parallel the marketing team has Product managers responsible for different products of the company. In the sales organization some of the key structural points are as following: • Territory Manager and Area managers for different products might be different also. For example Eicher makes 3 kinds of product lines – o Light Trucks o Heavy Trucks & o Buses So territory manager and Area managers will be different for each of these 3 products. But Regional manager will be same and All India sales head will be same. • Besides the above mentioned structure there are support staff also which handle the following work areas o After Sales
  3. 3. o Repairs II. Territory Allocation Following are the steps of how EML defines its territories:
  4. 4. III. Compensation Structure Compensation ranges for various position in EML are as broadly as following:
  5. 5. • Territory Manager – 7-8 lacs per annum. • Area Manager – 12-15 lacs per annum • Regional Manager - 20 -25 lacs per annum • All India Sales Head – 30-40 lacs per annum Then there are bands for salary decisions. For example employees who are senior but not MBA have higher salaries because of their overall experience. Structure • Variable salary is 10% • Rest all is fixed • Basic salary is very less – only 10%. Rest all is a flexi structure where in you can declare the balance salary under various heads to save tax. But note that this flexi salary is fixed only and it is called flexi because it is reimbursed by employees as payment against various heads. • Then there are incentive plans which are variable and linked to performance. IV. Performance Evaluation System Overview • Introduced in 1977 and Reviewed in 1979, 1981,1984, 1986 & 1991 • Executives : o Reviewed by Career Development Groups (CDG) o Under Annual Development Review (ADR) Process o At the beginning of the year target / KRAs (Key Result Areas) are set • Features of Present Appraisal System for Executives : o Customer Orientation  Expectations of internal & external Customers  Review will be based on on the job and off the job development requirement.
  6. 6.  It is measured whether an employee has achieved their annual targets or not. This is a performance based evaluation and it is about 10% of salary. o Emphasis on Potential development  Acceptances of more responsibilities  Individual Potentiality Following 6 Points Rating Factors are used for evaluation of Non-Executives: 1. Sincerity and willing to work 2. Intelligence and Grasping power 3. Knowledge 4. Presentation & Clarity of expression 5. Dynamism, Association, Attendance & Initiative 6. Discipline Based on the above factors an employee’s performance can fall into 3 levels: o Level1: Meeting the KRA o Level2: More than what was defined in the KRA o Level3: Extraordinary performance entitling to promotions, bonuses and pay hikes. (If an employee fails to reach Level1 then the rating is 0 and no hike is given.) Competency Measurement: Every role and position in EML has a set defined level of competency. Here again there are levels defined of how one exhibits competencies in comparison to the expected competency for that position. Those who exhibit higher competencies are given a monthly bonus ranging from 5K to 15K. Assessment Centre: EML started this in 1984 to undertake promoting staff to executive positions V. Training and Development
  7. 7. EML conducts both internal and external training programs for its employees. Following are the various types of training that are available to EML employees: • Behavioral Training - for all level • Functional Training - for all level • Potential Related Training - for all level • Multi-Skill Training - workmen & Jr. staff • Training for Dealers - to deal with customers • Training Schools - Skill development • International Exposure - Sr. Level Executives to establish TQM Following data shows the feedback of EML employees for the trainings they receive: 100 90 90 92 88 Received any 90 Training at Eicher 81 80 76 70 Individual needs 70 58 60 Organisation's 50 50 48 perception as 50 44 Individual need 39 40 Organisational Need 30 23 20 10 0 Workers Jr.Staff Sr. Staff Exec utives VI. Recruitment and Induction
  8. 8. EML does not hire; but VE Commercial Vehicles and Royal Enfield are employers. They offer exciting career opportunities in manufacturing, materials, product development, marketing, legal and taxation, administration, internal audit, IT, personnel, quality control and assurance for entry level and experienced candidates. At Eicher Motors Ltd. Recruitment is done via two methods – 1. Lateral Recruitment where experienced people from the Auto Industry they come. 2. In sales fresher are hired who are Engineer & MBAs. The positions are generally filled by conducting campus recruitment drives across India - in management and engineering colleges. Engineers are hired as graduate engineer trainees. During a nine month long training program, candidates are given on the job training and after successful completion; the candidate is inducted in the company as an employee Induction process is not very elaborate – • Management graduates are hired as management trainees and put through a customised induction program. • During the training phase, which typically lasts for six months, a candidate is put through various business units in order to understand Eicher's various business processes.
  9. 9. CHANNEL MANAGMENT I. Channel Environment & Strategy Channel environment at EML is exclusive owing to the fact that dealerships are also exclusive; meaning that a channel will sell only EML vehicle and that too of a category, for example, a channel will sell only trucks made my EML. So it is a dedicated channel much like cars. As a result there is no conflict of interest because the dealer is selling only vehicles of Eicher. The challenge is to find a dealer who is willing to be a part of such an exclusive channel. Exclusivity is also a barrier considering not many dealers would want to commit to just one company/channel. Secondly it involves a heavy capital investment. II. Channel Structure & Design EML has three types of channel structure: 1. 3-S structure 2. 2-S Channel
  10. 10. The 2-S channel is used if there is a very big territory and adequate no. of vehicles are not sold but vehicles are supplied in those areas then only service and spare is required (The dealer is not authorized to sell). 3. 1-S Channel – These are retailers who sell spares only. While selecting channel members following characteristics are considered by EML: • Years in business • Size of dealer • Growth and profit record • Cooperativeness and reputation • Location Note: These are ideal parameters but EML does not strictly go by these III. Managing the channel members and conflict
  11. 11. Conflict is normal among channels as each member of the channel has a specific goal that is generally unique from the channel member preceding or following it. The goal of the manufacturer is different than the goal of the distributor/retailer. Resources are generally money and each channel member is trying to maximize their efficiency and many times that means reducing costs for the individual channel member even if that means increased cost for other channel members. At EML there are mainly 2-3 types of conflict that happen between channel members. • One is on discount part and is normally taken care by penalties. • Then there are territory infringement leading to conflicts. These are again handled via penalties. • The penalties can be monitory and sometimes warning is enough also. The company strict decisions in case of conflicts like territory infringement. For discount related conflicts it is difficult to be very strict as those are not easy to prove. • Some other management principles used to resolve conflicts are as following: o Diplomacy o Mediation o Arbitration o Managing and motivating channel members o Partner relationship management (PRM) for long-term partnerships o Software available to coordinate members o Check channel performance of:  Sales  Customer delivery  Promotion and training  Customer service IV. Evaluation of Channel Members
  12. 12. EML maintains dealer scorecard. It has different types of head like market share target, sales target etc. Then there are sales dealer audit scores. These scores are sent on a regular basis from by Area offices and are finally compared on national level. Then there are Gallop survey scores. • Gallop is an international organisation which helps companies conduct customer engagement surveys. So such surveys are run and numbers are awarded based on the survey results obtained. These are conducted every year. • Second type of survey is Dealer engagement survey which measures how much are the dealers engaged to EML. All these score lead to a final balance scorecard which is used for final evaluation. All these results are than tallied on all India level and annual rewards are also given out to top performers. Problem with Channel Management: • The biggest problem with EML channel management was at the time of selecting a channel member. EML really lacks lot of big dealers who have good amount of money (and this kind of business does require heavy capital investment and is a long term business from returns point of view). • EML has lot of small dealers, in the sense that they don’t have much money. So in that way the channel selection is pretty weak or poor at EML. They would make anyone a dealer and their criteria’s were not too high for the selection. • Tata being the number one attracts most of the dealers and no one want to be associated with number 2 or 3 player. • To get bigger dealer EML is not a in a position to offer a bigger carrot, i.e., higher incentives and dealer discounts. • So that resulted in everything – Poor channel selection leads to poor sales. Poor sales lead to poor growth and smaller market share. As channel is ultimately the last end which interacts with the customer, so if that is not strong losses are bound to happen.