Marketing Strategy : Marketing Mix Development Example Of Car Accessory Maker

Marketing Mix Development
Approach for a Car Security
System

1. To propose a marketing mix for XYZ Security
Systems, a sister company of ABC

Marketing Mix Summary
 Product
 Two need segments: security & convenience
 Need gap: No products tailor-made for the convenience segment
 Gaps to be filled by Model 50 & Model 100
 Performance issues with existing products gives XYZ an edge
 Installation critical to performance. Installer’s training levels/willingness
uncertain

 Price
 Within a given range the buyer price sensitivity is low
 Most of the buyers fall in the price segment:‘Whatevers’
 Establishing functionality provides an opportunity to increase brand loyalty
 Skimming Pricing : Model 300 & other high end variants
 Models build aspiration, become benchmarks of functionality
 Penetration pricing for Model 50, 100. Cannibalize on sales of alarm systems
 Competitive Pricing for Model 200

Marketing Mix Summary
 Promotion
 Consumer Truth: I yearn for something which is truly secure & reliable in this
insecure, unreliable world
 Brand Personality: Brand to be embodied as a personal car-guard
 Borrows from the “Bodyguard” platform that epitomizes reliable security
 ‘Security’ platform has not been appropriated by any other brand
 Platform of security can be extended to home security system etc.
 Phase 1 to communication to build awareness, Phase 2 to build brand image
 PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in
communication

 Distribution
 Skeleton of distributor management control system does not exist.
 Little attempt in rationalizing territories & performance management
 Existing distributors unhappy with short term distributor management
approach
 Network of accessory distributors independent to spare parts. Unlike spare
parts, accessory is a ‘Push’ product.
 Recommended Distribution Option : XYZ Exclusive


Product Pricing Promotion Distribution
Strategy Strategy Strategy

Augmented
Augmented
Need Segments
Need Segments Product
Product



Need Segments
Need Segments

1. Two Segments
2. Current Alignment
3. Need Gaps
4. XYZ Need Alignment

Security Need Segment
 Articulating
“Even if my car is robbed, I want to be sure that it
was not robbed due to my carelessness or lack of
efforts on my part”
“A smart thief can get away with the most secure
systems. But I have to make it tough for him”

 Actually Saying
I want a security system that actually works

Convenience Need Segment
 Articulating
 “I don’t want to manually lock every door. I just
want to do it centrally”
 “My young brother simply loves pressing the
remote buttons.He loves showing off almost as if he
is a James Bond. You should look at the
tesshan(style)”

 Actually Saying
I don’t want a security system. I only want central
locking
Convenience of of central locking, the remote adds an element of style
Convenience of of central locking, the remote adds an element of style

Current Need Alignment
 Alignment to Security Segment
 Existing products are the alarm system & security system. Products target
the security need segment customers
 No alarm/security system targeted at cars with central locks
 “If a guy has central locking, I give him a rebate of 400-500 Rs”(Prakash Motors)
 Consumers belonging to the convenience need segment are being
sold the alarm/security system instead of a central locking system
 “I don’t have a remote central locking system. So to the customers I sell the
alarm system”(Preet Motors)
 “I have heard that Silicon has a central locking system that does not have a
remote. I sell only Piranha”(Classic Motors)
 “I think a remote central locking will sell. Most of my customers want that”
(Classic Motors)

Need Gaps

Customers What she wants What she gets
(Usually) (Usually)

I want a key that can lock Manual Central Alarm System
all my doors Locking
I want a cool remote to Remote Central Alarm System
lock all my doors Locking
I have a central lock.I Alarm System without Alarm System with a
want a security system Actuator discount of Rs 300-
package( worth Rs. 400
1200)
I want a security system. An Alarm System Security System
Not the hi-fi system

No products tailor-made for the convenience segment.
No products tailor-made for the convenience segment.
Customization absent in existing products
Customization absent in existing products

XYZ Core Products
 Manual Central Locking System - Model 50
 Lock/unlock all doors, aligned to status of driver’s door.
 Remote Central Locking System – Model 100.
 Remote control capability to manual central locking
 Car Alarm System – Model 200
 Special Door, trunk and bonnet switches are connected to the 200
control unit.
 Siren sound if the vehicle is tampered with
 Car Security System – Model 300
 Immobilizes the vehicle in addition to the siren sounding an alarm in
case of intrusion.

XYZ Need Alignment

• Convenience Need Segment: Model 50, Model 100

• Security Need Segment:Model 200, Model 300



Augmented
Augmented
Product
Product

1. Core Product
2. Product Delivery
3. After Sales
4. Augmented Product

Always listen to the market
Always listen to the market

Feedback of Existing Products
 Accessory Retailer Feedback on Core Product
 Motor problems
 “The motor seems to conk off.This happens in around 5-10% of cases”(Prakash
Motors)
 “Most of the complaints that I get are motor related”(Preet Motors)
 Remote related problems
 “ I get frequent complaints of remote not working. Sometimes the remote range
is a problem. One has to go very close to the car”(Classic Motors )
 “Often the remote buttons have to be pressed hard. Sometimes the light when
pressing the button fails to light off”(Prakash Motors)
 Quality is a factor
 “I think Silicon products are better because it is an ISO 9002 company”( Prakash
Motors)

Performance/Quality problems with existing products.
Performance/Quality problems with existing products.

Our Core Product Vs. Competition
 Product : Proven Technology & Quality
 Licensed from Directed, the World Leader in Vehicle Security Systems
 Adapted for Indian conditions by ABC (Parent Company of XYZ) Engineering
Team
 Directed designs accepted by GM, Hyundai, Suzuki etc.
 Only product design approved by FCC
 Manufactured by ABC (Parent Company of XYZ) under ISO 9001 AND QS 9000
standards.
 ABC (Parent Company of XYZ) is an approved vendor to many OE Customers

 Competition Product: Uncertain Quality
 Unknown Technology Pirated or Copied.
 Key Features Like Shock Sensors not reliable
 Imported from unknown sources or manufactured in plants with lower QC
Standards.
 Limited OE Experience

Edge: Proven Technology, Quality
Edge: Proven Technology, Quality

Feedback on Installation

 Accessory retailers perceive installation to be very
critical to product performance
 “Ifyou do not install properly, the alarm might not
activate.One of the doors might not be locked”(Preet
Motors)

 Improper installation related complaints
 “Of the three major complaints: Activation, Motor & Locking
problem; activation problems are due to poor installation by
us”(Prakash Motors)

Proper installation of product necessary to ensure performance
Proper installation of product necessary to ensure performance

The Electrician: UTM
 Not a uniform practice that the installer is trained by the security
system company in installation of security system
 Most accessory retailers apprehensive whether the UTM installer
would be amenable to the idea of training
 “He has been in the business for 20 years. I do not know whether he will be
keen to learn about installation all over again”(Classic Motors)
 These guys think that they know all. They have big egos. I don’t think that
they will welcome any further training”(Distributor A)
 Installers themselves are wary of any further training
 “Unless there is something new. I don’t feel the need for training”
 “I have never received a complaint that something went wrong with the
security system that I installed”

Installer's current training levels uncertain.
Installer's current training levels uncertain.
Installer not open to further training
Installer not open to further training

XYZ: Product Delivery

 XYZ needs to be deeply involved
in installation

1. By putting up a comprehensive
training package for installers
2. By incentivizing installers to
undergo training
3. By insisting that accessory
retailers use certified installers
for installation

After Sales Service
 Besides Margin, After Sales Service is the key factor when a retailer
recommends a system
 Accessory retailer is 1st guy to be hassled by the customer
 “ I receive frequent complaints about the motor and the remote. Initially we
were replacing it ourselves. Now AutoCop does it, so we direct the
customers to the company”(Classic Motors)
 “Usually when a customer has a problem, he brings the car to my shop. I call
the Wheels guy to come over & fix it”(Preet Motors)
 “My business is car air conditioning. I don’t want to spend much time on
security systems that I install” ( Hans Air Conditioners)
 Accessory retailer receives flak for poor after sales service
 “Customers complain about after sales services. The AutoCop guys do not
arrive on time/day promised. Sometimes they repair the system, and it
conks off again later” (Classic Motors)

After Sales Service

 Accessory retailer knows that the after sales service of the security
system will have an impact on customer relationships.
 In an insecure world,where the customer is being wooed by the car
dealer, accessory retailer wants to retain his customer desperately.
 “Most of customers today buy directly from car dealers.I don’t want my
customers to face problems with the stuff they buy from me”(Prakash
Motors)

A lifetime warranty & an effective after sales network
will be mission critical in winning a retailer’s loyalty

Key Retailer Insight

Quality of after sales service has an impact on my relationship with a
Quality of after sales service has an impact on my relationship with a
customer. I Iwant to safeguard the relationship. I Ifeel insecure about the
customer. want to safeguard the relationship. feel insecure about the
growing influence of the car dealer.
growing influence of the car dealer.


Augmented Product
 Besides core product,the augmented product should ensure
1. Effective installation
2. Lifetime warranty and effective after sales network

 Effective Installation will build on product reliability and perceived
quality

 Attractive warranty and after sales network will build strong
retailer loyalty and will be a critical factor in the ‘push’ strategy



Summary
 Two need segments: security & convenience
 Need gap: No products tailor-made for the convenience segment
 Gaps to be filled by Model 50 & Model 100
 Performance issues with existing products gives XYZ an edge
 Installation critical to performance. Installer’s training levels/willingness uncertain
 Improved warranty & an effective after sales service :mission critical in winning a
retailer’s loyalty



Price
Price Pricing
Pricing
Segments
Segments Strategy
Strategy



Price
Price
Segments
Segments

1. Price Sensitivity
2. Perceived Value
3. Price Segments
4. Segment Opportunities

Buying Process

Word of
Step 1 Awareness
mouth, Observation

Step 2 Information Search Hardly any

Advice from dealer,
Step 3 Evaluate Alternatives
Threshold of money

Car showroom,
Step 4 Purchase
Car accessory dealer
Performance,
Step 5 Evaluate Acclimatization /Blind Spots

Buying Process:Threshold of Money

Word of
Step 1 Awareness
mouth, Observation Evaluate Alternatives
Evaluate Alternatives
Step 2 Information Search Hardly any  The
 The buyer has aa threshold of
buyer has threshold of
Step 3 Evaluate Alternatives
Advice from dealer,
Threshold of money money to be spent say 5000.
money to be spent say 5000.
Step 4 Purchase
Car showroom, “We did not want to go for aahi-
“We did not want to go for hi-
Car accessory dealer

Step 5 Evaluate
Performance, fi system for Rs 10 000”
fi system for Rs 10 000”
Acclimatization /Blind Spots
 The
 The car/accessory dealer
car/accessory dealer
recommends the model of his
recommends the model of his
favoured brand that comes
favoured brand that comes
within the threshold
within the threshold
 The dealer has the final word
 The dealer has the final word

Two price points in buyer’s mind.
Two price points in buyer’s mind.
A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand
A hi-fi system @ 8-10 thousand.A normal one @ 3-5 thousand

Price Sensitivity
 Price Sensitivity: Consumer’s Point of View
 “When buying a car of 3-4 Lakhs, I am not really worried about extra
expense of 3-5 thousand. I know that I will have to shell out an extra 30-40
thousand on accessories /insurance /registration” (Consumer)
 Price Sensitivity: Retailer’s Point of View
 “ A consumer does not come with a particular model in his mind. I can
recommend the model and the company” (Prakash Motors)
 “A customer may ask for a certain brand. But I can usually sell him the
system that I keep(i.e Piranha)”( Classic Motors)

Within a given range (say 3-5 thousand), the buyer price sensitivity is low.
Within a given range (say 3-5 thousand), the buyer price sensitivity is low.

Perceived Value
 Primary Benefit :User
 A more efficient locking system
 “I am assured that all locking is done once I press the remote button”
 “Even if I am careless, I am still assured that the locking has been been done”
 Perceived Barrier : Non-User
 Functionality is not fully established
 “Security system is for style”
 “I go for functionality….no sosha(show-off)”
 “The only thing it(security system) does is consume battery”
 “I have already taken car insurance. I don’t need a gizmo

Perceived value is not high since the functionality is not established.
Perceived value is not high since the functionality is not established.
Primary benefit is central locking, not security
Primary benefit is central locking, not security

Perceptual Map

High Functionality
Power Steering Car Audio
Car MP3/TV

Security System

Alloy Wheels
Leather Upholstery

Low Style/ High Style/
Convenience Convenience
Car Graphics
Low Functionality

Caught in the middle. Not high on functionality.
Caught in the middle. Not high on functionality.
Not high on style/convenience
Not high on style/convenience

Primary Price Segment

Current
Buyers

Most of the buyers fall in the segment:‘Whatevers’
Most of the buyers fall in the segment:‘Whatevers’

Segment Opportunity 1

Current Future
Buyers Buyers

Establishing functionality provides an opportunity to
Establishing functionality provides an opportunity to
increase brand loyalty by increasing perceived value
increase brand loyalty by increasing perceived value

Segment Opportunity 2

Non
Users
Future
Buyers

Having a low value product like central locking
Having a low value product like central locking
encourages price sensitive non-users to sample the product
encourages price sensitive non-users to sample the product



Pricing
Pricing
Strategy
Strategy

1. Segmentation on Price
2. Model 300
3. Model 50,100
4. Model 200

Segmentation on Price

Model 50,
Model 300
Model 100

Model 200

Pricing Strategy:Model 300

 Skimming pricing strategy:
pricing strategy involving the
use of a high price relative to
Skimming
Skimming competitive offerings
 Skimming strategies used by
marketers of high-end goods
or services
 Without other cues, price
serves as an important
indicator of a product’s quality
to buyers

 High price and performance
increases the perceived value
of the product
Skimming
Skimming  Currently, market for high-end
security system is limited, the
strategy provides opportunity
for Model 300 and above to
become the benchmarks of
quality

Model 300 & other high end variants become benchmarks of functionality.
Model 300 & other high end variants become benchmarks of functionality.

Pricing Strategy :Model 50,
Model 100
 Penetration pricing policy:
pricing strategy involving the
use of a relatively low entry
price as compared with
Penetration
Penetration competitive offerings; based
on the theory that this initial
low price will help secure
market acceptance
 Designed to generate many
trial purchases

Pricing Strategy: Model 50,
Model 100
 Low price provides an
excellent hook to lure price
sensitive non-users into buying
a central locking/remote
Penetration
Penetration locking
 Has the potential to
cannibalize on sale of higher
variants

Model 50, 100 increase penetration.
Model 50, 100 increase penetration.
Cannibalize on sales of alarm systems.
Cannibalize on sales of alarm systems.

 Competitive Pricing Strategy:
pricing strategy that de-
emphasizes price as a competitive
variable by pricing goods at the
general level of competitors
Competitive
Competitive Firms focus their own
marketing efforts on the
product, distribution and
promotion elements of the
marketing mix
 Need to leverage the augmented
product with effective installation
and prompt after sales
 Build differentiation through
higher perceived value by reliable
product performance and
excellent service

Build differentiation (higher perceived value)
Build differentiation (higher perceived value)
by reliable product performance and excellent service
by reliable product performance and excellent service



Summary
 Within a given range the buyer price sensitivity is low
 Most of the buyers fall in the price segment:‘Whatevers’
 Establishing functionality provides an opportunity to increase brand loyalty
 Skimming Pricing : Model 300 & other high end variants
 Models build aspiration, become benchmarks of functionality
 Penetration pricing for Model 50, 100. Cannibalize on sales of alarm systems
 Competitive Pricing for Model 200



Branding
Branding
Strategy
Strategy

1. Connection Triangle: General
2. Key Consumer Insight
3. Product Connection Triangle
4. Promotion Plan

Connection Triangle

Product Benefit
Why I like it

Consumer UHT Brand
Why I value it Why I trust it

Connection Triangle:Fevicol

Product Benefit
Quality adhesive

Consumer UHT
Bonds of family/ Brand
friendship/love usually A bond that will not break
break

User Benefit
 Primary Perceived Benefits: User
 A more efficient locking system
 “I am assured that all locking is done once I press the remote button”
 “Even if I am careless, I am still assured that the locking has been done
 A ‘Done’ thing
 “I have seen it on many cars”
 “like an audio system, got to have it”

The main perceived benefit is a ‘more efficient locking system’
The main perceived benefit is a ‘more efficient locking system’

Non-User Barrier
 Perceived Benefits : Non User
 Style
 Perceived Barrier : Functionality is not fully established
 “Security system is for style”
 “Why spend an extra on an old car. When I buy a new one, I might
consider”
 “I go for functionality….no sosha(show-off)”
 “The only thing it(security system) does is consume battery”
 “I have already taken car insurance. I don’t need a gizmo”

The effectiveness of security systems is not proven
The effectiveness of security systems is not proven

Key Consumer Insight

Articulating:
Articulating:
There is nothing that a thief Actually Saying::II
Actually Saying
There is nothing that a thief
cannot break. However from yearn for something
yearn for something
cannot break. However from
my end IIknow that the theft which is truly secure
which is truly secure
my end know that the theft
has not happened because of & reliable in this
& reliable in this
has not happened because of
my carelessness insecure,unreliable
insecure,unreliable
my carelessness
world
world

Connection Triangle

Product Benefit
Reliable, secure system

Consumer UHT Brand
I yearn for reliability & Personal Car-
security Guard, always by your
side

Personal Car Guard
 Brand to be embodied as a personal car-guard
 Borrows from the “Bodyguard” platform that epitomizes reliable
security
 Is a strong platform that strings the consumer insight and product
benefit together

 ‘Security’ platform has not been appropriated by any other brand
 None of the insurance brands, lock brands own security
 The platform of security can be extended to other security systems
like home security system etc.

The 360 Degree Brand Experience
 A Brand is not just what you say it is, the brand is the totality
of what the consumer experiences
 From quality, to taste, to packaging, to the retail environment,
to line extensions, to ergonomics, design and colour, to sales
promotions, to price, to corporate reputations and public
relations, to the sales force and service experiences, to the
delivery trucks, to word-of-mouth, to telemarketing scripts and
receptionists style, to the way you answer the telephone, to
prejudices and attitudes, to collective and individual memories,
to history.
 Scraps and straws that add up to a company ’s most valuable
asset: a 360* Brand
-- Shelly Lazarus, 1998

The 360 Degree Communication
Experience

Mass Media Packaging

New /
POP
Emerging
media

Consumer

One - to - One Promotions

PR+Events

Communication Task
 Phase 1
 To launch the XYZ Brand and build awareness

 Phase 2
 To build brand personality of a “Personal Car Guard”

Media Strategy
 Role of Various Media
 PR
 To build news around the reliability of security systems
 To exploit the American connection and become a thought leader in
security systems
 POPs
 To create in-store visibility
 To influence the consumer
 Advertising : Press Ads, Outdoor
 At the launch stage to build excitement around the brand
 Spread awareness
 Motivate trade
 Internet & Events
 To create news and information about the product
 To reach out to the young male adult

Mad Ideas!

 Car insurance and security system was co-branded ?

 Mercedes Benz endorsed our security system?

 We reduced the car theft rate in the city we test market in?

 The police commissioner used our system in his/her car?

 We threw a challenge to car thieves to “Dare to Steal the car”



Summary
 Consumer Truth: I yearn for something which is truly secure & reliable in this
insecure, unreliable world
 Brand Personality: Brand to be embodied as a personal car-guard
 Borrows from the “Bodyguard” platform that epitomizes reliable security
 ‘Security’ platform has not been appropriated by any other brand
 Platform of security can be extended to home security system etc.
 Phase 1 to communication to build awareness, Phase 2 to build brand image
 PR, POPs, Press & Outdoor Ads , Internet & Events to play a role in
communication



Existing Network
Existing Network
Audit
Audit

Existing ABC (Parent Company of
XYZ) Distributor MCS
Forecast Plan Control Report Review
Review Segment
Marketing
Mgr Monthly
Segment Segment
Segment Score Card
Department
Manager Sales Target Review
Mgr Weekly
Segment Score Card
Mgr Daily Review
Retail Score Card Retail Mgr
Manager Territory
Manager Monthly
Sales Target Review
Retail Contact Plan Score Card
Review Retail Mgr
Weekly
Retail Mgr Score Card
Direct Sales
Daily Score
input Distributor
Card Review
Quarterly
Review Distributor ROI Analysis
Distributor Monthly
Distributor
Distributor Sales Target
Coverage Distributor Score Card
Target Review Weekly
Distributor Score Card
Daily Score
Card Review

Review DSM Monthly
DSM Target Route plan Score Card
DSM Weekly
DSM Review Score Card
Retailer / DSM Daily Market
Customer Contact Plan Score Card Intelligence
Sales Plan Retail Mgr

Customer / Marketing Retail Mgr
Retail Card Ride with Ride with

Distributor Management Control
System (DMCS) Critiques
 DMCS Audit conducted for West Region Regional Office
 Important Critiques
 Daily/weekly/monthly control and reporting absent both for field
sales force as well for the distributor
 Attainment of targets, variance, course corrections absent. Post-
mortem reports generated rather than proactive action
 No review of performance of distributor and corrective action plans
to improve performance
 No formal feedback loops between the distributor and the field
sales/H.O.
 No system to formally capture market intelligence, analyze data,
formulate responses to competitor/market activities

The skeleton of distributor management control system does not exist.
The skeleton of distributor management control system does not exist.
Distributor management personality driven, not system driven.
Distributor management personality driven, not system driven.

Sales Distribution on Dealer Rank

28.0%

52.5%

19.6%

% sales from top 10 % sale from Rank 10-20 % sale from Rank 21-72

Out of 72 distributors in West Zone, 52.5% sales come from top 10.
Out of 72 distributors in West Zone, 52.5% sales come from top 10.
Little attempt in rationalizing territories & performance management
Little attempt in rationalizing territories & performance management

Distributor Feedback: Relationship
Management
 Feedback from interviews conducted with two distributors
 Distributor A & Distributor B in South West Region and New West
Region respectively

 Short term approach to distributors management

• “Car companies are trying to help their car dealers by selling spare
parts through them, whereas ABC (Parent Company of XYZ) is
planting more distributors in the same territory resulting in price
wars”(Distributor B)
• “I get undercut by ABC (Parent Company of XYZ) distributors of other
areas who are willing to give any terms and conditions in my
territory. Ultimately who loses in the long run?!”( Distributor A)

Existing distributors unhappy with short term distributor management approach
Existing distributors unhappy with short term distributor management approach

Distributor Feedback: Relationship
Management
 No involvement of Senior Company Management
• No national company-distributor meet. No dialogue/feedback on
products
 “I want to go and see their Coimbatore plant. But I keep waiting for
opportunity”( Distributor B)
• “I have other MDs calling up once in a while, to find out supply
position, but not ABC (Parent Company of XYZ) .I have seen MD , only
as a picture”(Distributor B)
• No company official from H.O. visits my stockists/retailers

Distributors regret absence of involvement of senior management
Distributors regret absence of involvement of senior management

Distributor Feedback: Market
Intelligence
 Products/marketing not aligned to realities of replacement market
 Slow Moving
• “Can easily produce a fast moving , high volume clutch cable, instead of
slow moving, low volume speed o-cables”(Distributor B)
 Product Strategy
• “Brakes India released disc brakes in the market as a self sufficient unit.
ABC (Parent Company of XYZ)’s disc brakes was a confusing set of different
units”(Distributor B)
 Price Insensitive
• “For truck segments which is very price sensitive ,need to keep prices
competitive”(Distributor B)
 “Products like cigarette lighters at Rs . 250 on a price list. Can be fitted in
accessory market in Rs. 100” (Distributor B)
 Over Engineered
• “Vehicle’s life is 5-10 years. ABC (Parent Company of XYZ) equipment will
last for 15 years” (Mr. Gopal)

ABC (Parent Company of XYZ) does not capture the
ABC (Parent Company of XYZ) does not capture the
changing needs/realities of market place
changing needs/realities of market place



Our Recommendations
Our Recommendations

1. Accessory Vs. Spare Parts Distribution
2. Options before XYZ
3. Evaluation of Options
4. Recommended Option

Distributing Accessories Vs. Spare
Parts
Accessories Spare Parts

Independent network of accessory Independent network of spare parts
distributors. The accessory distributors do distributors/stockists. Spare part
not distribute spare parts. distributors do not distribute accessories

Target audience is the accessory retailer Target audience is the workshops and
/installer mechanics. Mechanics create a pull for
the product

‘Push’ product.Demand for accessories ‘Pull’ product.
have to be created
Require competitive selling , “incentives” to Selling by order taking
induce retailers to sell our brands
Typical promotion will be an ad in an auto A typical promotion will be mechanic
magazine like Overdrive, with massive POP contact programmes where company
support(banners, posters, product displays MSRs will educate/train/sell to
and demo boards etc.) mechanics

Distribution Options

1. XYZ Exclusive Distribution Network
2. ABC (Parent Company of XYZ)’s Existing + XYZ in some areas
3. ABC (Parent Company of XYZ)’s Existing Distribution

Recommended Option

 Recommended: XYZ Exclusive
 Pros
 High control over distribution process, service , pricing and
channel costs
 High sales , since only an accessory focused network will provide
sales
 Cons
 Low on Flexibility to exit. But XYZ has long term plans .
 To use existing network as a transition option
 The existing network will provide some spillover sales
 Investment : Investment vs. return in an exclusive
accessory network will become very attractive once other
accessory products are pushed in the network.



Summary
 Skeleton of distributor management control system does not exist.
 Little attempt in rationalizing territories & performance management
 Existing distributors unhappy with short term distributor management approach
 Network of accessory distributors independent to spare parts. Unlike spare parts,
accessory is a ‘Push’ product.
 Recommended Distribution Option : XYZ Exclusive
 Transition: Use ABC (Parent Company of XYZ) existing network while building
XYZ Exclusive network

Finally

• When can we say we have acquired a competitive
distribution capability?

Competitive Distribution
Capability
 Top management committed to distribution strategy & planning.
 Senior manager dedicated to distribution planning & management.
 Have a disciplined distributor management control system
 Helps identify market size, distributor volume by brand/market segment
 Helps process what-if scenarios with different distributor portfolios
 Manages performance: tracks, reviews and course corrects
 Manages complex distributor relationships
 Understand the concept of distribution intensity
 Balance distribution mix to cover market segments requiring
different intensity
 Understand the related concepts of coverage, penetration and
market share.
 Know their strategic moves: Maintain, Penetrate, Grow, Terminate.

Get in Touch
Sarvajeet Chandra
• +91 9920803060
• sarvajeet@sapphirez.in
• sarvajeetchandra@gmail.com

Visit Us
•www.mastersungroup.com
•www.facebook.com/strategyexecution

Marketing Strategy : Marketing Mix Development Example Of Car Accessory Maker

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