EICHER MOTORS

Eicher Motors Channel DesignSubmitted by: SDM Group - 527NMP06 Anupam Mishra27NMP19 Manush Maken27NMP31 Swati Gupta27NMP51 Komal Tagra

Commercial Vehicle Industry Before 1990sTata MotorsAshok LeylandBajaj TempoM & MSegmentUpper End of Payload (10-20 T) M&HDLower End of Payload (1.5-2 T) LCVIndustry Volume60000 Vehicles20000 VehiclesMarket Share75%25%60%40%Technology & UsageOlder TechnologyLess Safety & ComfortLess emission controlInter-city operationNot Very RuggedMainly Used for intra city & short distance in a stateNetworkVast Network, Easy Service & availability of service partsKey PointsNo change in market structure for long timeFORD tried to enter in CV market in 80sDespite contemporary technology, could not make its markMajor reasons:Poor availability of after sales serviceVery high price of sparesLess presence in southern part but well penetrated in rest of IndiaStronger in Southern states less in Northern part of IndiaSparesLarge MarketMany Brands of sparesNon Genuine brands Easy availability, lower price & acceptable quality

New Entrants (In 90s 4 new entrants of LCVs tied up with Japanese firms)These were rugged, highly reliable, faster, safer & much more comfortable but expensive in Capital cost & Operating cost on per tonne payload per KMThe sales of other 3 Indo-Japanese vehicles was very sluggishIt was difficult for Eicher to get potential dealership parties interested to make heavy investments

What are the various parameters on which Eicher Motors needs to take a decision to design its distribution channelBehavioral Variable

Aspinwalls Characteristics of Goods Theory color classification SchemeCharacteristicsRed GoodsOrange GoodsYellow GoodsRemarksReplacementsHighMediumLowBusiness related decisionGross MarginLowMediumHighMedium MarginsAdjustmentLowMediumHighStd. Product Medium AdjTime of ConsumptionLowMediumHigh10-15 yearsSearching TimeLowMediumHighRelationship between Product Characteristics & Length of ChannelProduct CategoryRedOrangeYellowChannelsLongMediumShort

What would be the most appropriate channel structure for Eicher Motors? Why?A Three Level Channel Structure (Medium Structure)

In a CVCV is used for commercial purpose, so the replacement rate (at which goods purchase & consumed) is lessThe gross margins are lessProperitery design little adjustment only possibleGenerally used for 10-15 yearsBased on the above points, as per Aspinwalls approach, a medium channel is suitable for Eicher

What are the possible ways by which Eicher Motors could overcome the problems of attracting suitable channel members?Since the market was sluggish & it was difficult to get potential dealership parties interested to make heavy investments, Eicher can overcome these issues by.Assistance to dealers by providing sales force & service trainingsDealers would be provided with vehicles without initial payment & promised buy-back in case of not sellingTimely delivery of vehiclesFinancing to dealers to create infrastructureSupporting dealers in advertising & promotionUsing the tractors dealers to sell the LCV vehicles also

What should be the major evaluation parameters which should be used by Eicher Motors for selection of channel members?Credit & Financing ConditionSales Strength Quality & quantity of sales people employed, technical competence of sales peopleProduct Lines Competitive products (avoid), compatible products(prefer), complementary products(favorable), quality of other productsReputation in their communityMarket Coverage geographical area coveredSales performance pervious data is looked uponManagement SuccessionManagement Ability Poor management of channel partner make him out of raceAttitude Aggressiveness, enthusiasm and initiatives of prospective channel partnerSize assumed that large intermediaries are more successful

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