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Eicher Motors Channel Design
Group 3, SDM Section B
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1. Parameters-Distribution Channel Design Decision
Market Variables1. Market Geography- Large
2. Market Size-10% to 40% ofcommercial vehicle market
(similarcountries)
3. Market Density- Low
4. Market Behavior
a) Where Vehicle (Dealers)
b) How- Advance Booking
Product Variables1. Bulk and Weight- Heavy( 3.5 tonnerated
payload
2. Perishability- Low
3. Unit Value- High
4. Degree of Standardization- High
5. Technical Assistance required
Intermediary Variables
1. Availability- Low
2. Cost- High
3. Services required( After sales,
spare parts replacement )
Company Variables
1. Size-License for 12000 Vehicles per
annum2. Financial Capacity- Funding issues,cash flow problems
(slump in tractorsindustry)
3. Managerial Expertise
4. Objective and Strategies
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2. Channel Structure for Eicher Motors
Characteristics Color Classification
Replacement Rate Medium
Gross Margin Medium
Adjustment Low
Time of consumption MediumSearching time Medium
According toAspinwallsCharacteristic of Goods Theory, we can
concludethat LCVs fall under ORANGE GOODS category. Hence, medium
lengthchannel with one intermediary (Dealer) is required
EicherMotors
Dealers Customers
Distribution Channel for LCV
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3. Attracting Suitable Channel Members
Target Dealers- Dealing in MCV and HCV
Product Portfolio Enhancement
Preferential allocation of new products
Attractive financing opportunities
Integrated Marketing Campaign to engage with customers
Provide performance linked incentive schemes
Better margin
Invest with dealers in creating point of sale infrastructure
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4. Selection of Channel Members
Channel
Member
Credit and
Financial
Condition
Sales
Strength
ProductLines
Reputation
Market
Coverage
Sales
Performance
Management
Ability
Attitude
ManagementSuccession
Size
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4. Selection of Channel Members
Credit and
Financial Condition
Evaluate financial
position
Stable financial
condition preferred
Sales Strength
Sales capacity of
intermediaries
Number of sales
people and quality
Reputation
Strategic Decision
Store Image
Adversely or
Immensely affect
brand
Market Coverage
Best territorial
coverage
Minimum overlapping
Size
Larger organization
and sales volume,
larger sales of
manufacturer
products ->
Assumption
Large intermediaries
considered moreprofitable, better
established, more
sales people etc.
Sales Performance
Can target market
share be achieved ?
Detailed sales
performance data of
intermediaries
studied
Management
Succession
Continuity of
management
important
Potential channel
failure if no
succession criterion in
place
Management
Ability
Quality of
management
Difficult to evaluate
owing to intangibles
Good sales force an
indicator
Attitude
Managerial Judgment
Aggressiveness,
Enthusiasm and
Initiative commonly
observed
Product Line
Competitive Products
-> not preferred
Compatible Product -
> typically preferred
Complementary
Products -> preferred
as offer greater
product mix
Quality of lines ->
product line equal or
better than own
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Thank You!
