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GINO SA:DISTRIBUTION CHANNEL MANAGEMENT
What Are Burners ?
Burners are electromechanicallycontrolled appliances that providecontrolled flame for combustionapplications such as boilers and
furnaces.
PARTS OF BURNERS
BODY
Electric circuit, FanDumper, Valve,
Pump and Control Box
HEAD
Heat Proof CarbonSteel Tubes With
Nozzles
MARKETS FOR BURNERS
World Market For Burners(in thousands of units)
BACKGROUND
GINO SA
It is a burner manufacturingCompany headquartered in
Paris, France founded in1931
GINO’SCOMPETETIVE EDGES
IN-HOUSE PRODUCTION CAPABILITY
WELL ESTABLISHED CHANNEL NETWORK
INTERNATIONAL EXPOSURE
BURNER MARKET SEGMENTATION
DOMESTIC BOILERS AND HEATERS
INDUSTRIALBOILERS
Gino Worldwide Production(in thousands of units)
Burner Market In China
PERIOD BEFORE 1990(As coal was a major source of energy, coal-combustion
boilers were used which did not have burners. )
PERIOD BETWEEN 1990-1995(Oil combustion boilers started
replacing coal combustion boilers)
PERIOD BETWEEN 1995-1998(Increase in Diversification and
Competition in Chinese burner market)
POST-1999
• The commercial range became the mainstream market.
• Growth in demand for industrial burners at 20 percent per year
CUSTOMER BUYING PROCESS
Gino’s Distribution Network In China
ORGANIZATIONAL STRUCTURE
GINO’S DISTRIBUTORS
WAYIP TRADING CO.(GUANGZHOU,SOUTH CHINA)
FUNG’S CO.(SHANGHAI)
Jinghua Mechanical Engineering Co.(BEIJING)
DISTRIBUTORS’ FUNCTIONS
CREDIT
STOCK
SALES AND SERVICE
LEVELS OF PRICING
TRANSFER PRICE(Price in dollars that Gino quoted to the
Distributors.)
BASE PRICE(Total acquisition cost to the distributorsfor full ownership and ready to sell stock of the burner )
PUBLIC PRICE(160% of the base price for all models in local currency.)
CONTRACT PRICE(Actual transaction price reached by a distributor
in transaction with a customer.)
EMERGING ISSUES
CHANGE IN
In order to deliver on its commitmenton corporate strategy in 1998, GINO CHINA was assigned the following goals for the next three years:
Problems Due ToFollowing Distributor Behavior
DEMAND FOR BETTER TERMS
STOLEN SALES
RELUCTANCE TO STOCK INDUSTRIAL BURNERS
CURRENT PROBLEM
FEIMA was a leading boiler factory in north china.It approached Gino for OEM(Original Equipment Manufacturer) treatment for more discount on burners. In return, it promised Gino of buying 50% and 100% of its commercial (and industrial) and domestic burners respectively from Gino .
Zhou liked Feima’s idea of OEM treatment because:
Jinghua opposed because:
Zhou had to consider the Following aspects before arriving at the decision:
Zhou took out the distribution channelbetween Gino and its distributorsand made it clear that Gino hadthe right to develop OEM business in a distributor’s territory without its consent.
CREATED BY SHUBHAM GANGILIIT(BHU), VARANASI DURING ANINTERNSHIP BY PROF. SAMEER
MATHUR, IIM LUCKNOW
DISCLAIMER
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