Rakesh Kumar Dhar
No matter how good your company is or how competitive a product you have, it
has to reach your potential buyer quickly without the addition of any cost to
it.
How would you as a manufacturer, reach to over one billion people, spread
across two and half dozen states? It is a fact that users would grab anything
that’s a little cheaper and readily available than waiting for your product to
arrive. As a manufacturer you have to not only minimize the end-product cost but
also maximize its reach.
A company may have very good products. But to ensure that these products
reach targeted customers/audience across every nook and corner of the country,
the organization should have an efficient and vast channel network.
In the current business scenario where market conditions are getting tougher,
margins are getting thinner day by day. Given these circumstances, it is not
feasible for any company to open offices in all potential business areas. This
would result in high overheads, which would make a heavy dent on company’s
profits.
To overcome these problems, companies should invest in increasing their
market reach by appointing a sturdy channel network. The channel will then act
as the company's representative while also distributing its products and
services.
Channel relationship
A channel partnership is always a mutually beneficial tie-up between a
manufacturer and a seller/vendor/dealer. Channel partners are people who have
local-marketing expertise with a brick and mortar infrastructure. They could
either be individuals, small/big computer dealers (some dealing exclusively in
hardware or software or both), OEM vendors or systems integrators.
These entities are in constant touch with the market as well as with
end-users, with a good customer base. Some of these partners have their own
small network of resellers through whom they sell their products by offering
handsome margins.
A company can utilize their strengths like market reach, goodwill and
infrastructure to promote and sell its products without having to make heavy
investments in real estate and manpower.
Benefits of having a channel
The channel is a godsend to a company that can harness its capabilities. They
can act as the eyes and ears for the company, reporting constantly on the
dynamic market situation. At the same time they can also double as the hands of
the company, helping in the actual delivery of goods.
The channel offers various other benefits to an organization. These are, 1.
Utilization of channel infrastructure at no cost to the company; 2. Providing
support and service through the channel to customers/end-users; 3. Use of
channel network for greater penetration of products in the market; 4. Helping
companies through monthly, quarterly, yearly sales analysis and budget planning;
5. Creating better brand awareness among customers; 6. Competitive product
information/market information and feedback from channel partners; 7. Makes
products available at any given point of time to end-users; and, 8. Helps
companies in identifying need for newer products. The most priceless benefit, of
course, is getting the access to a ready customer base.
All these benefits shows how profitable it is for companies to offer their
products/services through a channel network. This move is imperative for any
company which wants to compete, thrive and stay ahead in the current market
conditions.
Strengthening channels
Merely setting up a channel network is not enough. To have a truly efficient
channel that can deliver, every vendor has to work towards strengthening the
channel. Here are some easy ways to do it:
- Offer high quality products
- Provide good after-sales support to end-users
- Follow good and ethical business practices
- Provide strong support system to channel partners
- Offer attractive margins/discount policies
- Introduce special bonus schemes periodically
In addition to this it is also important to establish an efficient channel
management system. This would include:
a. Good communication network
b. Appointing dedicated persons at various locations who can address
queries/problems of channel partners
c. Maintain an accounting system for the business generated, outstandings
(stock/credit) or any other account-related issue
d. Maintain and encourage mass communication/advertising activities
e. Update partners constantly on the latest trends in technology
Mininimizing costs
To generate more revenues by minimizing costs (today’s buzzword), companies
should recast their business in line with the above changes and redefine their
reach as per the market needs.
They should integrate the entire organizational statistics, covering not only
products but also service, support and logistics (product upgrades and new
versions in case of software companies).
Additionally, organizations should also consider cross-functional supply
chain optimization and execution of distribution rules and regulations as and
when they are set.
Rakesh Kumar Dhar is Country
Manager of Pune-based Vsoft Services.