Channels or partners play a vital role in the promotion and sales of a particular product. The electronics channel today is playing an integral role in supplying the right products to consumers, thereby enhancing the brand of a particular company. Promotions or incentives are crucial for the enhancement of motivation levels of channel partners and distributors. Manufacturers ensure that they are perpetually offering incentive programmes which ensure that channels are interested in selling their products to the consumers. Although the electronics channel is quite different from information technology (IT) channels, the former plays a pivotal role in ensuring that a company is maintaining steady growth in a given geographic location.
By: Atanu Kumar Das
Thursday, march 19, 2009: IT vs electronics channels
In IT, the channel function is quite different from the one in the electronics channel. There are a couple of reasons for the same. In IT, the customers are end-users, so most of the IT companies excel with 100 per cent channel sales and hence, dependence on the channel is exceptionally high. Whereas in the electronics channel, where products include electronic components, products, machinery, etc, the customers are not end-users, but original equipment manufacturers (OEMs), indigenous manufacturers or purchase managers of a company. Often, manufacturers of equipment have a 50 per cent direct sales strategy and rely on channels for 50 per cent, so dependency on the channel is relatively low compared to the IT sphere. One can also observe more promotional schemes in the IT fraternity than in the electronics channel.
We, at Electronics Bazaar, came up with the idea of speaking to tier I partners (normally the distributors), as well as manufacturers on how they motivate their tier II and tier III channels, in order for business to keep growing at a healthy pace. We contacted several electronic component distributors, who were forthcoming and enthusiastic to participate in this initiative of ours. Let us have a look at the various kinds of initiatives distributors are taking for the sake of tier II and III players.
Promotional schemes
According to Mitesh Mody, CEO, Bhavana Electronics, “In order to acknowledge the efforts of the distribution team, we provide lots of sales promotion articles such as technical catalogues, Cds and samples. Furthermore, print and electronic media advertisements of prominent players of respective fields are sponsored by our organisation. Since we are in the industrial electronic components business, we cannot offer various schemes like the consumer goods companies. Usually promotional schemes are worked out differently with each distributor, depending on their area of work and performance. Since all the schemes are mutually agreed upon, the most popular scheme would be the current one.”
Dinesh Singh Samyal, CEO, LWI Electronics Inc, says, “We allow our franchisees to use our name, infrastructure, resources, equipment and credit facilities to promote and acknowledge team work. LWI has invested in the latest technical equipment and quality manpower that helps in producing results, year after year. Our experienced technical team is well-versed in providing turnkey solutions in electronics to our customers. Annual review meetings and award functions are the most motivating aspects for our franchisees/channels. Great discounts and credit facilities are the best promotional schemes for tier III distribution partners.”
Chetan Ajmera, CEO, Componix India, says, “We try our best to provide discounts to promote bulk sales as that motivates the channel partners to push our brands into the market. With margins getting skewed, every channel partner looks up to his distributor for help in generating more business.”
Distribution strategy
It is imperative for every electronic component distributor to have a pan-India focus and this seems to be the key to achieving growth at a faster rate. “The distribution strategy of our products varies as per the geographical conditions of the concerned areas. Since India is a large country one cannot subsist without the support of good channel partners in various remote and underdeveloped areas, where at present demand is less but the future is promising. At the same time, due to cut-throat global competition and the pressure to provide services like research and development support and technical support, which are at par with international standards, to customers, we prefer to supply directly to many industries,” says Modi.
“Our strategy makes us different from our competition. LWI stocks a huge inventory of line items that makes us the number one stocking distributor in India. LWI has more than 55,000 highly allocated, obsolete MIL/industrial line items in stock, along with over a dozen franchisees all over the globe and has got a state-of-art 24×7 updated stock search facility. The adoption of an innovative and practical approach to independent distribution enables LWI to deliver quality and consistency. It is the only company from India to have acquired the first ISCP certification (from TBF-Canada), ERAI membership (US), STRC (Hong Kong) and ESC (India). LWI has been recently ranked as one of world’s “Top 10” rated members by TBF Canada & ICS (USA),”shares Samyal.
Direct marketing is equally important when it comes to electronic component distribution. “As distributors, we channelise our marketing through our sales representatives directly to the core industry. Our sales representatives can address the industry for all their technical queries and help promote our products more efficiently. We know that channel partners are required and therefore, have appointed dealer networks (tier III partners) to support retail segments for popular products, which can be sold due to their competitive edge only. We make sure that we train our partners so that they can satisfy all customer requirements,” mentions Ajmera.
Channel partners will always remain pivotal to any business, be it IT or electronics. Although we have seen that many manufacturers prefer to opt for direct marketing when it comes to electronic components, due to the inability to reach every nook and corner of the nation, they invariably end up appointing channel partners. Presently, most companies have 50 per cent direct and 50 per cent channel-generated sales. Distributors agree that it is essential to come up with innovative offers and schemes to motivate tier II and tier III channel partners. We hope that as the Indian hardware manufacturing industry matures, channel activities continue to increase and manufacturers are further motivated to enhance the role of channel partners within their business module.
With inputs from Saurabh Sharma
Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine
