leveraging distribution channel
DESCRIPTION
Insights on how companies can leverage with channel networking.TRANSCRIPT
Atlas Copco
Leveraging Distribution Channels
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
By: Smit Dave
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 unit
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
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 Rand
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
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 – Distributor's economic viability?
Hesitation towards new entrant compared with 25-30 years old companies in market
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
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
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
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 partners
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
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?
Now ???
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
All materials, contents used are purely for academic discussion purpose & has no intended harm to
any identity specifically
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)
Types of Franchise
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
Promoted Franchise:
Distributors promoted from Basic & Enhanced Franchise
Agency agreement – To provide sales & mktg expertise to dist.
Access to company's marketing arm – To support sales
Agents not required to keep inventory of prime
Quotations & PO's 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 partners
Continued. . . . . . .
All materials, contents used are purely for academic discussion purpose & has no intended harm to any identity specifically
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
All materials, contents used are purely for academic discussion purpose & has no intended harm to
any identity specifically