Eicher motors
Download as PPTX, PDF0 likes2,468 views
Eicher Motors is considering using dealers as intermediaries to sell its heavy, bulky, and technically complex commercial vehicles. Using dealers is appropriate because the market is less dense, requiring intermediaries, and the products are not easily transported in small quantities. However, availability of willing dealers is low and costs are high since dealers are unwilling to invest. The document evaluates different market and product variables, channel characteristics, and dealer parameters to determine the best channel structure for Eicher Motors. It recommends using dealers, with incentives, loans, and linking them to repair shops, to overcome issues with dealer availability and costs.
Eicher motors
- 2. Variable Impact to Eicher Motor Market Geography The dealers should be few in number and should not be overlapping in the area Market Size The market is not very large nor too small, so there is need for intermediary to counter high transaction cost Market Density Market is less densed, so use of intermediaries is required Variable Impact to Eicher Motor Bulk & Weight Product is heavy and bulky. Customers buy in small quantities and need quick delivery Unit Value High Degree of Standardization High Technical versus Non Technical Technical Product. Product requires sales and service people Newness New. Carefully selected group of intermediaries Product Variables Market Variables
- 3. Variable Impact to Eicher Motor Availability Dealers are present but not willing to work Cost Cost of using dealers is high as the dealers are not ready to invest. As a result the company has to bear most of the cost Services New dealers are not willing to invest much on workshop. Also there is high competition from unorganized market in providing service Other Factors: • The legal environment should be taken into consideration like the limit on capacity imposed in the present case • The behavioral variable needs to be taken care of. This depends on whether the channel manager needs high level of control or not and depending on that the intermediary needs to be chosen
- 4. Characteristic Ranking Replacement Rate Medium Gross Margin Medium Adjustment Medium Time of Consumption Medium Searching Time Medium • The LCV ranks Medium on all characteristics, hence its an orange good and requires a medium channel (at least one intermediary) • Thus the most appropriate channel for Eicher Motor would be to sell its product through a dealer.
- 5. Parameter Importance Location of Dealer Close to customer but not too close to one another Financial Health Should have resources to add brands or succeed in new locations Skill of Dealers Dealers in top quartile sell 3 to 4 times more than dealers in bottom quartile Service Provided Service and part sales are essential to the health of dealerships, dealers can recover their 100 percent of fixed cost through that Number of Brands they sell Some dealers sell number of brands. They will be important as product is superior and can be compared
- 6. The company can use negotiators to get dealers. These negotiators can be retired employees of the manufacturer’s dealer operations or financing arms who have worked with them in the past Offering incentives to dealers such as attractive loans, preferential allocation of new products or factory support It can link its dealers with the independent repair shops that are very active in the market. The repair shops realize revenue through labour and dealers through part sales.