Professional Documents
Culture Documents
Group-4
1. Manoj Kumar
Roll No. X017-14
2. Pramod Kumar
Roll No.X023-14
PGEXP 2014-16
Introduction
Gem Soaps and Detergents Ltd is a 30 year old major player in the industry. Some
of the soap and detergent brands are market leaders in specific geographies. It has
got two detergent brands and six soap brands.
A major channel conflict has to be dealt with at the time when the company is
planning to foray into shampoos with a very good and promising product.
In a particular city, where the company is doing good business, a conflict in the
sales channel has cropped up between two major distributors A and B.
Both of them are valuable distributors for the company for the business volume
they handle for the company. They have almost equal sales revenues every month.
The distributors are hampering each others profitability by their actions and
proper solution from companys side is required now due to the destructive nature
of the conflict.
The ASM, Murli is getting complaints from both the sides. Now he has to take a
concrete step to minimize the conflict and make the launch of the new product
range from the company successful.
Introduction
Contd.
Following are some proposed steps by the company to minimize the conflict:
Most stakeholders in the GSDL were of the view that GSDL should carve out a new sales territory
out of the existing one and adding the new missed out and untapped localities.
This would achieve two objectives; firstly, GSDL would get a better market coverage; secondly, this
would teach A & B a lesson and also would reduce dependence on these two distributors.
GSDL did implement the above mentioned strategy, when it launched it new shampoo. It
appointed a new distributor C exclusively for distribution of shampoo.
This was fiercely opposed by A and B and they wanted to distribute shampoo as well. Their
argument was based on the fact that they were the only two distributors that build the GSDL,
entirely undermining the fact that GSDLs marketing team had put efforts in marketing the products.
GSDL wanted to appoint C as shampoo distributor for entire city but C was not big enough to
handle the operations. Also, C wanted to distribute GSDLs other products as well.
So taking into consideration all the facts, GSDL carved out a new territory for C out of A & Bs
territories along with new market and gave the shampoo distribution rights to A and B along with C.
C also got the right to distribute GSDLs other products. A & B has given their word that they will
not sell in each other territories.
Introduction
Contd.
Perceived Risks:
The
Major Issues
1.Both the distributors, A and B are located in the main mandi area of the town.
The area comes under the beat plan of A. The area being a central market area,
retailers and wholesalers from Bs territory also come there. So A started giving
them extra discounts.
This meant Bs loss of business volumes and hence less overall margin. B
started doing the same by calling As customers and offering additional
discounts.
This resulted in a Horizontal level channel conflict over border issues. This
problem will prevail even after the introduction of C.
2.Both of them started offering less credit to the weaker markets in their own
beat plans and extending more to the other distributors customers. It was
creating problem for both.
This scenario definitely benefitted the retailers and wholesalers but resulted in
depletion of profit margins for A and B. Also it started weakening their long
term market hold due to neglected distribution norms.
First of all, we need to understand that some conflict will always be there. It
cannot be completely eliminated. We have to make sure that the conflict doesnt
become destructive.
Lack of any channel conflict indicates gap in market coverage. We can only work
towards minimizing the conflict.
CASE-1
Possible ways to minimize the channel conflict in the future:
One major way of dealing with the situation can be dividing the product portfolio into
three divisions. It can be
Soaps
GSDL has to see if the newly made divisions for A and B are almost same in terms of
revenue as their old turnover so as to minimize the resistance to change from their
side. They have been loyal distributors of the company.
The geographical expanse of the town has to be covered by all of the three
distributors now.
CASE-1(Contd.)
If the company manages to apply the solution as per case1, it will have
following benefits:
A and B will not have conflicts for acquiring customers. Both can cater to
same set of customers, but for different products altogether.
Both will have sufficient business volumes to operate with, assuming that the
divisions are made in such a way.
They wont have much problem with C. The reason being, C will have to work
from scratch to develop the market for shampoos. If a new area is carved out
for C with the old products, old distributors will feel bad because they have
worked to make these products cash cows for the company.
As Cs only focus product will be shampoos, it will put all its efforts to
establish the same for future. It will help the company in the long run for
shampoo business.
CASE-2
If operating in three product divisions is not found to be feasible, we can take
following steps to minimize the conflict in the future:
These programs can act as Super Ordinate Goals for all the distributors.
CASE-2 (Contd..)
Expenses reimbursements:
The
To monitor
This
This
Moreover,
The company should run relationship building programs with major retailers
and wholesalers to get assured business over a period of time.
This can be done, for example, if there are rewards for taking a certain quantity
of products over a period of say, three months.
This will automatically do one thing for the company, the rewards will be
passed on to the customers only through the distributors who are supposed to
cater them.
If they take it from another distributor, off the record, they will not get the long
term rewards. Moreover, dealers performance will also be judged on the basis
of success of these plans.
For Salesmen
Incentives
Proper
Thank You