What Matters Is Product Quality

Pricing policies of vendors have become important to partners. But product quality still remains on top. Vendors will have to pay more attention on satisfying partners, because the current levels are just about close to‘very good’, but nowhere near ‘excellent’.

Partners, the vital link between vendors and customers, have once again revealed their preferences in deciding the fate of IT hardware/software vendors in the country through the third country-wide Channel Satisfaction Survey - 2001 conducted by the eTechnology Group@IMRB on behalf of

DQCI.

The good news is that channels partners have placed their key vendors on the mid-path with a 3.59 score on a scale of 1 to 5, where 1 is ‘poor’ and 5 is ‘excellent’. This feedback should warm the hearts of vendors because parnters have not blamed them at a time when the market is reeling under the effect of a recession.

Before understanding the satisfaction levels of channel partners with regard to various parameters like product quality, price, warranty, schemes, support, etc, it becomes necessary to find the key vendors that channel partners have chosen to do business with. Key vendors are the ones that topped most channel partners’ list as the preferred vendor.

Systems

According to the survey, HP is the key vendor preferred by channel partners in systems category. The second key vendor in systems is Compaq followed by IBM and HCL in third and fourth positions respectively.

Surprisingly, unlike last year, where assembled systems took a major chunk with almost 35 percent in its fold, this year partners have prefered to do business with brands. Of the 539 respondents, almost 40 percent deal in HP systems, 31 percent in Compaq, 11 percent in IBM, seven percent in HCL and 11 percent others.

Peripherals

In the peripherals category, HP and Samsung turned out to be the most represented brand with 39 percent and 30 percent, respectively. HP with its printers and Samsung with its monitors managed to keep up this lead.

Epson and Wipro with only 12 and 9 percent representation appear to be losing its recall among partners. Besides, a large number of other players have also made it all the more difficult for big vendors to keep up their earlier high shares.

Samsung’s entry into printer market has threatned HP’s hold there. Another player who intends to go aggresive in this segment is Canon, but is yet to make a dent in the pie. Possibly by next year, we would see a major change in the channel partner preferences.

Networking

In networking products, D-Link has maintained its popularity among partners for the second consecutive year. However, what is surprising is the entry of Dax brand in the second position dethroning Intel from the partners’ shelves.

D-Link has maintained its lead with 44 percent and Dax has come with 19 percent representation. Given the fragmented networking products markets, there is a whole host of vendors represented by tiny fractions of channel partners, which clubbed together takes a major chunk of 37 percent.

Consumables

Here again HP takes up the highest representation of 53 percent because of its large printer market share. Epson is represented by 19 percent. In this category, the ink re-filling business also plays a major role. While HP and Epson make the most of consumables market, a big chunk of 28 percent is made up by others.

Power supply

In power supply category, APC topped as the key vendor with

38 percent, followed by TVSE at 14 percent. A large chunk at 48 percent goes to

many other vendors who could be either from the organized or the unorganized

sectors.

Operating systems

In the case of operating systems and other software, the

leader is none other than Microsoft. The second most preferred vendor in the OS

category is Linux and in other software category Oracle.

Last year, Microsoft had lost its position to Tally as the

most preferred vendor in packaged software possibly because of the high rate of

piracy in former’s products. The 2001 survey results are a witness to

Microsoft’s statements that they have managed to curb piracy to a large

extent.

In the OS category, Microsoft has a representation of 69

percent and Linux 10 percent. Entry of Linux vendors like Red Hat, Caldera and

Suse has improved Linux’s share because of its free availablity and also

partners’ willingness to support it.

To maintain a healthy relationship with channels, it is

important for vendors to understand the satisfaction levels of their partners.

Resellers can choose to support one vendor over the other, depending upon how

satisfied and enthusiastic they are about a company’s product, programs,

margins, sales growth and potential, service quality and involvement in helping

them grow their business.

Satisfaction scores were collected on 15 pre-determined

parameters, on a five-point verbal scale, where five was ‘excellent’ and one

was ‘poor’.

At the same time, it is crucial to find out the level of ‘importance’ that partners give to

various parameters while measuring



satisfaction levels. Giving least importance and being highly satisfied with a
particular para-meter would not mean much to the vendors. But vendors could use

this information and divert their efforts from such lower important activity to where it is required.

Similarly, given below is a chart listing the level of

importance and satisfaction in a descending order. Here, various product

categories were clubbed together to arrive at various conclusions.

According to the survey, product quality is the most

important para-meter for the channel in the selection of vendors and products.

And the good news for vendors is that channel partners are the most satisfied

with the product quality giving it a score of 3.94. At the same time, vendors

need to strive towards perfection as the level of satisfaction is just about to

touch ‘very good’, and nowhere near the ‘excellent’ level.

While product quality preference remains very much similar to

last year’s survey, a small change appears in this year’s results. Unlike

last year, where channels had given lower importance to the pricing factor, this

year, this particular parameter has come up to the second position. However, the

satisfaction level is at the fourth place at 3.56.

Partners have ranked customer preference/demand/pull as the

third most important parameter. Though this parameter is not directly expected

from the vendors, partners feel it is the vendors who should create the brand

value and goodwill in order to create the demand/pull.

The criticality of customer preference is built on factors

such as the product quality and support. Most vendors have now realized that a

good quality product and a good support network will build the brand on its own.

While partners prefer doing business with products that have

enough customer demand, the survey has revealed that partners are satisfied with the existing customer

preference/demand/pull with a score of 3.64 points.

By giving fourth position to technology updation in products,

partners have indicated that they consider this parameter as one of high

importance. And, from the satisfaction point of view too, partners have put this

parameter on par with 3.64 points.

Partners have given lower importance to some of the

parameters. But their satisfaction levels for these are marginally higher.

Though this appears to be on the positive side, the satisfaction levels on their

own are on the lower side. This is true especially with openness of top managers

from vendors and innovative channel meets where the score stands at 3.04 points

each and needs to be worked on by vendors.

For some other parameters, there is no much change in the

preference of relative importance when compared to last year’s survey. Also

the level of satisifac-tion for the these parameters is fairly okay compared

with their importance. However, partners have given greater importance to

warranty prgrams putting this parameter at 5th rank importance-wise, compared to commercial terms at 8th rank.

Channel tran-ing support as a critical element in choosing

the product, ranks at 11th position. Which means a good number of channel

partners felt training is not at all critical. If vednors take this as an

indication to reduce on the training overheads, then beware! The satisfaction

chart has a sad story to tell.

What the channel has indicated is that vendors have failed to

impart the required training. The channel has expressed its dissatisfaction over

the training parameter giving it a score of only 2.94, the lowest in the entire

survey.

The survey also indicates that vendors need to put in more

efforts in customer education programs, innovative channel meets, post-sales

service and promotional schemes. The survey shows that there is a lot of scope

for vendors to increase the satisfaction levels of partners in these

parameters.Even last year’s survery, had shown dissatisfaction towards service

and technical support.

A challenge for vendors

The Channel Satisfaction Sur-vey - 2001 provides critical

insights to vendors to contribute to the development of a vibrant channel that will contribute to the growth of IT

business in the country. So, it is up to the vendors to take up the gauntlet and

strive to satisfy their partners based on their valuable feedback.

METHODOLOGY

Nelson Johny in Mumbai