Description
Aircel is an Indian mobile network operator headquartered in Chennai, which offers voice and data services ranging from postpaid and prepaid plans, 2G and 3G services, broadband wireless access (BWA), Long Term Evolution (LTE) to value-added services (VAS).
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
1
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
THE STUDY ON NEW MARKET DEVELOPMENT&
DISTRIBUTION CHANNEL MANAGEMENT FOR
AIRCEL LIMITED, MANGALORE
S. Saravanan
Assistant Professor, Justice K S Hegde Institute of Management, Nitte, India
Email: [email protected]
ABSTRACT
The telecom sector in India was a government monopoly until the year 1994 when
liberalization was gradually unrolled. For the first time, cellular services were launched in
India in Kolkata in the year 1995. Since 1995, India has walked miles together and today
has reached a complete different level all together. India has a flourishing market in GSM
mobile service, while the number of subscribers is on rapid and dramatic increase. Today,
India is the largest market in the world adding up a dramatic number of about 20 million
mobile subscriber lines every month in an average. One of the prominent player who has
established and created a name for itself in a short span of 12 years is Aircel Ltd. Now it is
India’s fifth largest GSM mobile service provider & seventh largest mobile service provider
(both GSM and CDMA) with a subscriber base of over 51.83 million, as of January 31,
2011. It has a market share of 6.72% among the GSM operators in the country. Despite of
possessing many advantages and cutting edge offers, the company seriously suffered from
distribution problem. This problem took birth as a result of lack of efficient and effective
channel partners. The main objective of the study is to make a detailed study on the New
market development through channel partner selection for the company. The study highlights
and suggests solutions to solve the problem of distribution faced by the company at various
places like Puttur, Modbidri, Suratkal, Bantwal and Udupi. The distributors at these five
places formed the respondent group. The study was conducted for a period of 8 weeks,
where, 100 distributors were interviewed using the questionnaire method. Secondary sources
of data were also used to obtain data that was required for the completion of the study. It
was found in the study that 67% of the respondents had five to ten years of experiences and
majority of them were the channel partners for various FMCG products and industrial
supplies. The study also revealed that it is not only investment that will generate revenue
leading to the success of business but it also required timely involvement and continuous
dedication for tasting success in this field. Distributors expressed their requirement and need
for Company’s help and support in-order to enable to overcome their weakness and
empower their strengths that will create a win-win situation for both the distributors and the
company. On the other hand the company expects the distributors to maintain minimum
required stock to serve the market demand which will ultimately contribute for the growth of
the market.
Keywords: Distribution Channel, Customization, Customer Retention, Productivity, Loan
Offers
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
2
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
INTRODUCTION
In today’s globalised and borderless market, quality, productivity and satisfaction of
customers pose a challenge for the survival and growth of all firms. These growth and
survival demands are further deepened by the need to attract and retain loyal customers.
Thus, the customer is the main focus for any successful business. Business success depends
on a firm’s understanding and meeting customers’ needs and demands. One important
service in an economy is telecommunication. The telecommunication industry’s role in an
economy cannot be underemphasized.
Market development is a strategy of finding and entering new markets with current product
or service range. The new market could be a new region, a new country or a new segment of
the market. The marketing mix is an important part of the marketing strategy and consists of
the marketing 'tools' which are implemented. But marketing strategy is more than the
marketing mix. The marketing strategy sets marketing goals, defines target markets and
describes how to go about in positioning the business to achieve advantage over competitors.
The distribution function is vital to the economic well-being of society because it provides
the goods and services desired by the consumer. The marketer contributes to the product's
value by getting it to the right place at the time the consumer wants to buy it and by
providing the mechanism for transferring ownership. Firms that do not perform the
distribution function effectively usually fail. Distribution channels are the paths that goods
and title to them follow from producer to consumer. They are the means by which all
organizations distribute the goods and services they are producing and marketing. The
second major component of distribution strategy is the actual movement of goods and
services from the producer to the user. Distribution channels are composed of marketing
intermediaries, the persons or firms that operate between the producer and the consumer or
industrial user. The two main categories of marketing intermediaries are wholesalers and
retailers. Wholesaling intermediaries are people and firms that sell primarily to retailers and
other wholesalers or industrial users. They do not sell significant amounts to ultimate
consumers. Retailers, by contrast, are persons or firms that sell goods and services to
individuals for their own use rather than for resale. Retailers are the marketing intermediaries
that consumers are most familiar.
Aircel - SWOT Analysis
Strengths Weaknesses
Fifth largest GSM mobile service
provider with subscriber base over
27mn
Pocket Internet(USP)
Profitability is an issue.
Lack of advertising.
Low brand visibility
Opportunities Threats
Fast expanding cellular market.
Latest and low cost technology
Untapped rural market
Value added services
Competitors low price
offering
Saturation point in basic
telephonic service
Mobile Number Portability
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
3
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Selection Criterion for Channel Partner Selection in Telecommunications
OBJECTIVES
The main objective of the study is to make a detailed study on the New Market Development
through Channel Partner Selection for Aircel Limited, Mangalore.
Sub objectives are as follows:
Applying the selection criteria to determine the suitability of prospective channel
members
Securing the prospective channel members as actual channel members (appointment)
SCOPE OF THE STUDY
The study titled ‘New Market Development through Channel partner selection’ was
conducted in the month of November, 2011 for a period of 55 days. The scope of the study
was confined to Puttur, Bantwal, Mangalore, Surathkal and Udupi.
RESEARCH METHODOLOGY
Convenience sampling is a non-probability sampling technique where subjects are selected
because of their convenient accessibility and proximity. The subjects are selected just
because they are easiest to recruit for the study Study is been carried out at Puttur, Bantwal,
Mangalore, Surathkal and Udupi for the period of 55 days with sample size of 100
respondents.
Data Collection
The report contains both primary and secondary data.
Criteria Very important Important Reason
Background of the
person
?
Field experience, nature
of work and insights of
the market
Investment
capacity
? Financial soundness
Reputation in the
market
?
Among peers customers
and suppliers results in
market success
Business & Mgt
strength
?
Business & people factor
is a task
Knowledge of
market
?
Plays a major role as
involvement is prime
Ability to develop
new markets
?
Skill is important as
business grows along the
area expansion
Locations(territory
coverage)
?
Reach & availability is
motto of distribution
Infrastructure
availability
?
In order to facilitate the
business and market
relevant activities
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
4
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Primary Data: Primary data are those data which are collected afresh for the first time and
thus they are original in character. Primary data are the first hand information collected
through various methods such as observation, interviewing, questionnaire, etc. The primary
data are collected mainly through questionnaire and interviewing the retailers and
distributors personally.
Secondary Data: Secondary data are those data which had been collected by someone else
and which have been passed through the statistical analysis at least once. For the purpose of
the study, website of Aircel Limited and other reliable sources on internet, journals, other
documents, newspapers and articles and previously conducted surveys.
Sampling Methodology
A sample size of 100 prospective distributors is taken for the purpose of this study.
Convenient Random Sampling technique was used for the study. Where subjects are selected
because of their convenient accessibility and proximity. Study was carried out at Puttur,
Bantwal, Mangalore, Surathkal and Udupi for the period of 55 days.
Data Analysis
The statistical tools such as SPSS and MS-Excel were used to analyse the data. SPSS was
used for descriptive methods such as frequency. MS-Excel was used to draw inferences from
the graph that gives the outcome of the study.
LIMITATIONS
The information is collected in the form of questionnaire method only; some of the
respondents were unwilling to share the information. It was assumed that the
information given by the respondents are true and not biased.
Distributors were unwilling to disclose their financial details in particular due to
various reasons.
The study cannot be used for future applications as ROI is subject to changes and
also the business nature.
Another limitation is the sampling technique. Convenience random sampling was used in the
study. The findings could be more generalised if simple random sampling method was used.
FINDINGS
Aircel being one of the most prominent players in the market is looking forward to
strengthen its operations nationwide. It faces competition from various service
providers and thus Aircel has to strengthen its distribution networks to ensure that its
products are readily available in every outlet.
Aircel has been in the market since past 3years. The distribution network that it
currently holds has not been very effective in delivering the services offered by the
company. Hence the company is looking for channel partners with sound investors
and a commitment to involve themselves to take the business to higher level.
From the survey conducted it can be seen that 67 % of the respondents have an
experience of 5-10years in the field of distribution in their respective areas of
operation. 22% have 5-10years of experience. These distributors with well
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
5
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
established and promising network can enable the company to improve its
distribution efficiency.
It was found in the survey that the distributers were the channel partners for various
FMCG products and industrial supplies. Telecom sector which has high rate of
growth in recent times provides various opportunities for distributors to make it a
successful business. Hence Aircel has a wide opportunity to attract these distributors
and widen their area of operation in new market.
A maximum of 42 respondents said that they generated a turnover of around 10-
20lakhs. 32 respondents said that their turnover reached over 20-30lakhs. This shows
that the distributors are capable of carrying out the business successfully with
reasonable profits.
58 respondents said that they had around 2-5 employees working with them
currently in providing services to the retailers. 25 respondents said that they had 5-8
employees. Aircel can concentrate on setting up business with those distributors who
have enough man power to promote the product in the new market.
ROI indicates the return on investment that is net profit over net investment in an
year of operation. 37 respondents said that they have ROI of 5-10% in the span of 5-
10years of operation. This indicates that most of the business is operating with good
operating profits.
32 respondents said that theirs was a family owned business, 68 respondents said
that theirs was a total new business venture. They have established a whole new
enterprise and ventured into the business field creating new opportunities for
themselves. Aircel which is a new entrant in the market here needs such
entrepreneurial channel partners who can make their business grow along with their
business.
63 respondents were ready to start a partnership with the service providers. Aircel
needs to approach this interested section of the respondents as they have readily
shown interest in partnering with it. 37 respondents told that they were not interested
in the partnership.
52% of the respondents who are prospective distributors are having the necessary
infrastructure to start the new venture of distribution in Aircel and 10% among the
interested clients were not having infrastructure required to startup the business.
Among the interested clients 32 respondents said that they are ready to invest around
1-2lakhs as startup capital to aid the new business they are venturing into. 14
respondents said that they would invest 2-3lakhs.There were 5 respondents who
were ready and showed eagerness to invest 3lakh and more in the new partnership.
Out of the 62 respondents who were eager to invest, 39 respondents said that they
would be investing from their personal account that is from their personal accounts
21 respondents said that they would take the support of the bank to help them
reinvest in growing their business
When asked the distributors about the estimated monthly expense that they would
incur from the new partnership 44 respondents said that they estimate the expense to
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
6
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
be around 20-30 thousand and 12 respondents opined that the expense would reach
upto 30000 & more.
52 respondents opined that they would take around 6months to 1year to start earning
profits. 8 people said that they estimate the time period to be 1-2years.
48 respondents opined that average salary of employees in their areas is within the
range of 4-5 thousand and 13 respondents said that average salary is 5-6 thousand
41 respondents said that they would be ready within 2 weeks to enter into the new
partnership and start their business activity in their respective territories of operation.
SUGGESTIONS
Create win-win: Company has to extend a helping and supportive hand to the
distributors. This will enable the distributors to undertake their work in an effective
manner. Thus the distributer is empowered to perform better, which will ultimately
reap benefits for the company. This will create a win-win situation for both the
distributors as well as the company.
Right fitment: The selection of the channel partner for selling a new product should
be done clearly based on whether he/she fits in with the new product market. The
channel partner should have the necessary industry experience as well as clear
understanding of how the industry is going to grow in the future.
Right attitude: To sell a new product is not easy. Unless the channel partner comes
with the right attitude to nurture and support the product, the product will not see big
success in the market place. Most channel partners expect instant success and hence
do not carry a positive attitude after the first attempt to sell fails. Most new products
do not get acceptance with customers/retailers in the first attempt itself.
Right expansion: When we are choosing the channel partners with right fitment, it is
critical we evaluate whether it is a right expansion for them. Horizontal expansion
i.e. expansion into different product category for the channel partner will be stressful
and hence not successful in the long run.
Right investment & returns: New products require sustained investment in terms of
credit to the market, investment in stocks etc. Hence the channel partner selected
should have the necessary money power to withstand the short term pressures of
working capital. He should have the confidence in the new product and support it
through continuous flow of stocks to the market place with suitable credit, to make it
a winning product. At the same time it is the responsibility of the company to work
out right returns so that the interest level of the channel partner is sustained for a
long time.
Right partnership: The partnership between a company and a channel partner should
be that of equals and not of un-equals. By being equal, it does not mean in size or
turnover, which is not possible. The company should be strong in its field with
necessary experience and the channel partner should be strong in his field. When the
tie up happens between two un-equals, it generally leads to dominance of one over
the other and in the long run leads to strain in relationships and poor support for the
new product.
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
7
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Right alignment with the company goals: Both the company and the channel partner
should be well aligned about the goal for the new product. When there is synergy
and alignment on the goals for the product, the product gets all the support from both
the company and the channel partner and emerges as the winner.
CONCLUSION
Companies sign up third party resellers and distributors without giving proper rigorous
attention to the process that's required in order to define the selection criteria, find adequate
channel partners, and actually go through a process of due diligence in order to screen them,
select them, and bring them onboard. A well developed channel selection process, a reseller
selection process, looks a lot like a very rigorous process for hiring and acquiring members
of senior management team or key employees in sales and marketing. The effective use of
channel partners assists market participants in the reduction of costs associated with sales,
customer service and support. Although channel partner selection is critical to channel
performance, it is commonly treated as an afterthought. As a result, channel partner selection
is commonly under-resourced, under supported and delegated to front line area managers or
a specialist channel development group.
The company should ensure that all the criteria are present in the channel. The selection
procedure identifies areas which need development, the added advantage being that the
company need not commit itself financially for the development of the channel member on
this count. The company can ensure the development of these criteria by specifying them in
the appointment letter. Marketers need to improvise the distribution channels that they
follow to reach the vast area intensively. This arrangement works out as win-win situation
for both the partners as members earn additional income from the growing business through
greater reach and availability of the service in the market. Poor recruitment results can last a
very long time and ultimately lead to commercial costs and, worst of all, can tie up scarce
resources and de-motivate an entire distribution channel. Channel partner recruitment must
be treated with the respect that is due as an integral marketing key success factor. All
channel organization should aim to secure an unfair share of the available talent pool, thus
forcing competition to settle for second best channel partners. Having the best channel
partners ensures that long-term performance is maximized within the constraints of a
particular channel system. Both short-term performance improvement and long-term
competitive advantage is achievable through selecting and keeping an industry's best channel
partners.
REFERENCES
1.http://www.i-f.com/NV/Nv5.htm
2.http://www.channelpartnergroup.com/Newsletter0106.pdf
3.http://www.relayware.com/2011/07/25/prm-best-practice-partner-selection/
4.http://www.businessballs.com/marketdevelopmentservice.htm
5.http://en.wikipedia.org/wiki/Market_development
6.http://en.wikipedia.org/wiki/Market_penetration
7. Allen, Daryl.2001. Maximize Your Territory Coverage, Increased Sales and Higher
Profitability Will Follow’, selling, 42(6):3.
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
8
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
8. Pingali Venugopal. Sales and Distribution Management-An Indian Perspective,
Response, New Delhi 2008, PP.193-200.
9.http://va-interactive.com/inbusiness/editorial/bizdev/ibt/new_mark.html
10.http://www.channelpartnergroup.com/Newsletter0106.pdf
11.http://www.salesbenchmarkindex.com/bid/59994/Channel-Management-Strategy-
Selection-Critieria-Matters.
doc_468084973.pdf
Aircel is an Indian mobile network operator headquartered in Chennai, which offers voice and data services ranging from postpaid and prepaid plans, 2G and 3G services, broadband wireless access (BWA), Long Term Evolution (LTE) to value-added services (VAS).
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
1
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
THE STUDY ON NEW MARKET DEVELOPMENT&
DISTRIBUTION CHANNEL MANAGEMENT FOR
AIRCEL LIMITED, MANGALORE
S. Saravanan
Assistant Professor, Justice K S Hegde Institute of Management, Nitte, India
Email: [email protected]
ABSTRACT
The telecom sector in India was a government monopoly until the year 1994 when
liberalization was gradually unrolled. For the first time, cellular services were launched in
India in Kolkata in the year 1995. Since 1995, India has walked miles together and today
has reached a complete different level all together. India has a flourishing market in GSM
mobile service, while the number of subscribers is on rapid and dramatic increase. Today,
India is the largest market in the world adding up a dramatic number of about 20 million
mobile subscriber lines every month in an average. One of the prominent player who has
established and created a name for itself in a short span of 12 years is Aircel Ltd. Now it is
India’s fifth largest GSM mobile service provider & seventh largest mobile service provider
(both GSM and CDMA) with a subscriber base of over 51.83 million, as of January 31,
2011. It has a market share of 6.72% among the GSM operators in the country. Despite of
possessing many advantages and cutting edge offers, the company seriously suffered from
distribution problem. This problem took birth as a result of lack of efficient and effective
channel partners. The main objective of the study is to make a detailed study on the New
market development through channel partner selection for the company. The study highlights
and suggests solutions to solve the problem of distribution faced by the company at various
places like Puttur, Modbidri, Suratkal, Bantwal and Udupi. The distributors at these five
places formed the respondent group. The study was conducted for a period of 8 weeks,
where, 100 distributors were interviewed using the questionnaire method. Secondary sources
of data were also used to obtain data that was required for the completion of the study. It
was found in the study that 67% of the respondents had five to ten years of experiences and
majority of them were the channel partners for various FMCG products and industrial
supplies. The study also revealed that it is not only investment that will generate revenue
leading to the success of business but it also required timely involvement and continuous
dedication for tasting success in this field. Distributors expressed their requirement and need
for Company’s help and support in-order to enable to overcome their weakness and
empower their strengths that will create a win-win situation for both the distributors and the
company. On the other hand the company expects the distributors to maintain minimum
required stock to serve the market demand which will ultimately contribute for the growth of
the market.
Keywords: Distribution Channel, Customization, Customer Retention, Productivity, Loan
Offers
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
2
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
INTRODUCTION
In today’s globalised and borderless market, quality, productivity and satisfaction of
customers pose a challenge for the survival and growth of all firms. These growth and
survival demands are further deepened by the need to attract and retain loyal customers.
Thus, the customer is the main focus for any successful business. Business success depends
on a firm’s understanding and meeting customers’ needs and demands. One important
service in an economy is telecommunication. The telecommunication industry’s role in an
economy cannot be underemphasized.
Market development is a strategy of finding and entering new markets with current product
or service range. The new market could be a new region, a new country or a new segment of
the market. The marketing mix is an important part of the marketing strategy and consists of
the marketing 'tools' which are implemented. But marketing strategy is more than the
marketing mix. The marketing strategy sets marketing goals, defines target markets and
describes how to go about in positioning the business to achieve advantage over competitors.
The distribution function is vital to the economic well-being of society because it provides
the goods and services desired by the consumer. The marketer contributes to the product's
value by getting it to the right place at the time the consumer wants to buy it and by
providing the mechanism for transferring ownership. Firms that do not perform the
distribution function effectively usually fail. Distribution channels are the paths that goods
and title to them follow from producer to consumer. They are the means by which all
organizations distribute the goods and services they are producing and marketing. The
second major component of distribution strategy is the actual movement of goods and
services from the producer to the user. Distribution channels are composed of marketing
intermediaries, the persons or firms that operate between the producer and the consumer or
industrial user. The two main categories of marketing intermediaries are wholesalers and
retailers. Wholesaling intermediaries are people and firms that sell primarily to retailers and
other wholesalers or industrial users. They do not sell significant amounts to ultimate
consumers. Retailers, by contrast, are persons or firms that sell goods and services to
individuals for their own use rather than for resale. Retailers are the marketing intermediaries
that consumers are most familiar.
Aircel - SWOT Analysis
Strengths Weaknesses
Fifth largest GSM mobile service
provider with subscriber base over
27mn
Pocket Internet(USP)
Profitability is an issue.
Lack of advertising.
Low brand visibility
Opportunities Threats
Fast expanding cellular market.
Latest and low cost technology
Untapped rural market
Value added services
Competitors low price
offering
Saturation point in basic
telephonic service
Mobile Number Portability
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
3
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Selection Criterion for Channel Partner Selection in Telecommunications
OBJECTIVES
The main objective of the study is to make a detailed study on the New Market Development
through Channel Partner Selection for Aircel Limited, Mangalore.
Sub objectives are as follows:
Applying the selection criteria to determine the suitability of prospective channel
members
Securing the prospective channel members as actual channel members (appointment)
SCOPE OF THE STUDY
The study titled ‘New Market Development through Channel partner selection’ was
conducted in the month of November, 2011 for a period of 55 days. The scope of the study
was confined to Puttur, Bantwal, Mangalore, Surathkal and Udupi.
RESEARCH METHODOLOGY
Convenience sampling is a non-probability sampling technique where subjects are selected
because of their convenient accessibility and proximity. The subjects are selected just
because they are easiest to recruit for the study Study is been carried out at Puttur, Bantwal,
Mangalore, Surathkal and Udupi for the period of 55 days with sample size of 100
respondents.
Data Collection
The report contains both primary and secondary data.
Criteria Very important Important Reason
Background of the
person
?
Field experience, nature
of work and insights of
the market
Investment
capacity
? Financial soundness
Reputation in the
market
?
Among peers customers
and suppliers results in
market success
Business & Mgt
strength
?
Business & people factor
is a task
Knowledge of
market
?
Plays a major role as
involvement is prime
Ability to develop
new markets
?
Skill is important as
business grows along the
area expansion
Locations(territory
coverage)
?
Reach & availability is
motto of distribution
Infrastructure
availability
?
In order to facilitate the
business and market
relevant activities
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
4
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Primary Data: Primary data are those data which are collected afresh for the first time and
thus they are original in character. Primary data are the first hand information collected
through various methods such as observation, interviewing, questionnaire, etc. The primary
data are collected mainly through questionnaire and interviewing the retailers and
distributors personally.
Secondary Data: Secondary data are those data which had been collected by someone else
and which have been passed through the statistical analysis at least once. For the purpose of
the study, website of Aircel Limited and other reliable sources on internet, journals, other
documents, newspapers and articles and previously conducted surveys.
Sampling Methodology
A sample size of 100 prospective distributors is taken for the purpose of this study.
Convenient Random Sampling technique was used for the study. Where subjects are selected
because of their convenient accessibility and proximity. Study was carried out at Puttur,
Bantwal, Mangalore, Surathkal and Udupi for the period of 55 days.
Data Analysis
The statistical tools such as SPSS and MS-Excel were used to analyse the data. SPSS was
used for descriptive methods such as frequency. MS-Excel was used to draw inferences from
the graph that gives the outcome of the study.
LIMITATIONS
The information is collected in the form of questionnaire method only; some of the
respondents were unwilling to share the information. It was assumed that the
information given by the respondents are true and not biased.
Distributors were unwilling to disclose their financial details in particular due to
various reasons.
The study cannot be used for future applications as ROI is subject to changes and
also the business nature.
Another limitation is the sampling technique. Convenience random sampling was used in the
study. The findings could be more generalised if simple random sampling method was used.
FINDINGS
Aircel being one of the most prominent players in the market is looking forward to
strengthen its operations nationwide. It faces competition from various service
providers and thus Aircel has to strengthen its distribution networks to ensure that its
products are readily available in every outlet.
Aircel has been in the market since past 3years. The distribution network that it
currently holds has not been very effective in delivering the services offered by the
company. Hence the company is looking for channel partners with sound investors
and a commitment to involve themselves to take the business to higher level.
From the survey conducted it can be seen that 67 % of the respondents have an
experience of 5-10years in the field of distribution in their respective areas of
operation. 22% have 5-10years of experience. These distributors with well
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
5
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
established and promising network can enable the company to improve its
distribution efficiency.
It was found in the survey that the distributers were the channel partners for various
FMCG products and industrial supplies. Telecom sector which has high rate of
growth in recent times provides various opportunities for distributors to make it a
successful business. Hence Aircel has a wide opportunity to attract these distributors
and widen their area of operation in new market.
A maximum of 42 respondents said that they generated a turnover of around 10-
20lakhs. 32 respondents said that their turnover reached over 20-30lakhs. This shows
that the distributors are capable of carrying out the business successfully with
reasonable profits.
58 respondents said that they had around 2-5 employees working with them
currently in providing services to the retailers. 25 respondents said that they had 5-8
employees. Aircel can concentrate on setting up business with those distributors who
have enough man power to promote the product in the new market.
ROI indicates the return on investment that is net profit over net investment in an
year of operation. 37 respondents said that they have ROI of 5-10% in the span of 5-
10years of operation. This indicates that most of the business is operating with good
operating profits.
32 respondents said that theirs was a family owned business, 68 respondents said
that theirs was a total new business venture. They have established a whole new
enterprise and ventured into the business field creating new opportunities for
themselves. Aircel which is a new entrant in the market here needs such
entrepreneurial channel partners who can make their business grow along with their
business.
63 respondents were ready to start a partnership with the service providers. Aircel
needs to approach this interested section of the respondents as they have readily
shown interest in partnering with it. 37 respondents told that they were not interested
in the partnership.
52% of the respondents who are prospective distributors are having the necessary
infrastructure to start the new venture of distribution in Aircel and 10% among the
interested clients were not having infrastructure required to startup the business.
Among the interested clients 32 respondents said that they are ready to invest around
1-2lakhs as startup capital to aid the new business they are venturing into. 14
respondents said that they would invest 2-3lakhs.There were 5 respondents who
were ready and showed eagerness to invest 3lakh and more in the new partnership.
Out of the 62 respondents who were eager to invest, 39 respondents said that they
would be investing from their personal account that is from their personal accounts
21 respondents said that they would take the support of the bank to help them
reinvest in growing their business
When asked the distributors about the estimated monthly expense that they would
incur from the new partnership 44 respondents said that they estimate the expense to
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
6
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
be around 20-30 thousand and 12 respondents opined that the expense would reach
upto 30000 & more.
52 respondents opined that they would take around 6months to 1year to start earning
profits. 8 people said that they estimate the time period to be 1-2years.
48 respondents opined that average salary of employees in their areas is within the
range of 4-5 thousand and 13 respondents said that average salary is 5-6 thousand
41 respondents said that they would be ready within 2 weeks to enter into the new
partnership and start their business activity in their respective territories of operation.
SUGGESTIONS
Create win-win: Company has to extend a helping and supportive hand to the
distributors. This will enable the distributors to undertake their work in an effective
manner. Thus the distributer is empowered to perform better, which will ultimately
reap benefits for the company. This will create a win-win situation for both the
distributors as well as the company.
Right fitment: The selection of the channel partner for selling a new product should
be done clearly based on whether he/she fits in with the new product market. The
channel partner should have the necessary industry experience as well as clear
understanding of how the industry is going to grow in the future.
Right attitude: To sell a new product is not easy. Unless the channel partner comes
with the right attitude to nurture and support the product, the product will not see big
success in the market place. Most channel partners expect instant success and hence
do not carry a positive attitude after the first attempt to sell fails. Most new products
do not get acceptance with customers/retailers in the first attempt itself.
Right expansion: When we are choosing the channel partners with right fitment, it is
critical we evaluate whether it is a right expansion for them. Horizontal expansion
i.e. expansion into different product category for the channel partner will be stressful
and hence not successful in the long run.
Right investment & returns: New products require sustained investment in terms of
credit to the market, investment in stocks etc. Hence the channel partner selected
should have the necessary money power to withstand the short term pressures of
working capital. He should have the confidence in the new product and support it
through continuous flow of stocks to the market place with suitable credit, to make it
a winning product. At the same time it is the responsibility of the company to work
out right returns so that the interest level of the channel partner is sustained for a
long time.
Right partnership: The partnership between a company and a channel partner should
be that of equals and not of un-equals. By being equal, it does not mean in size or
turnover, which is not possible. The company should be strong in its field with
necessary experience and the channel partner should be strong in his field. When the
tie up happens between two un-equals, it generally leads to dominance of one over
the other and in the long run leads to strain in relationships and poor support for the
new product.
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
7
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
Right alignment with the company goals: Both the company and the channel partner
should be well aligned about the goal for the new product. When there is synergy
and alignment on the goals for the product, the product gets all the support from both
the company and the channel partner and emerges as the winner.
CONCLUSION
Companies sign up third party resellers and distributors without giving proper rigorous
attention to the process that's required in order to define the selection criteria, find adequate
channel partners, and actually go through a process of due diligence in order to screen them,
select them, and bring them onboard. A well developed channel selection process, a reseller
selection process, looks a lot like a very rigorous process for hiring and acquiring members
of senior management team or key employees in sales and marketing. The effective use of
channel partners assists market participants in the reduction of costs associated with sales,
customer service and support. Although channel partner selection is critical to channel
performance, it is commonly treated as an afterthought. As a result, channel partner selection
is commonly under-resourced, under supported and delegated to front line area managers or
a specialist channel development group.
The company should ensure that all the criteria are present in the channel. The selection
procedure identifies areas which need development, the added advantage being that the
company need not commit itself financially for the development of the channel member on
this count. The company can ensure the development of these criteria by specifying them in
the appointment letter. Marketers need to improvise the distribution channels that they
follow to reach the vast area intensively. This arrangement works out as win-win situation
for both the partners as members earn additional income from the growing business through
greater reach and availability of the service in the market. Poor recruitment results can last a
very long time and ultimately lead to commercial costs and, worst of all, can tie up scarce
resources and de-motivate an entire distribution channel. Channel partner recruitment must
be treated with the respect that is due as an integral marketing key success factor. All
channel organization should aim to secure an unfair share of the available talent pool, thus
forcing competition to settle for second best channel partners. Having the best channel
partners ensures that long-term performance is maximized within the constraints of a
particular channel system. Both short-term performance improvement and long-term
competitive advantage is achievable through selecting and keeping an industry's best channel
partners.
REFERENCES
1.http://www.i-f.com/NV/Nv5.htm
2.http://www.channelpartnergroup.com/Newsletter0106.pdf
3.http://www.relayware.com/2011/07/25/prm-best-practice-partner-selection/
4.http://www.businessballs.com/marketdevelopmentservice.htm
5.http://en.wikipedia.org/wiki/Market_development
6.http://en.wikipedia.org/wiki/Market_penetration
7. Allen, Daryl.2001. Maximize Your Territory Coverage, Increased Sales and Higher
Profitability Will Follow’, selling, 42(6):3.
Abhinav
International Monthly Refereed Journal of Research In Management & Technology
8
ISSN – 2320-0073 Volume II, April’13
www.abhinavjournal.com
8. Pingali Venugopal. Sales and Distribution Management-An Indian Perspective,
Response, New Delhi 2008, PP.193-200.
9.http://va-interactive.com/inbusiness/editorial/bizdev/ibt/new_mark.html
10.http://www.channelpartnergroup.com/Newsletter0106.pdf
11.http://www.salesbenchmarkindex.com/bid/59994/Channel-Management-Strategy-
Selection-Critieria-Matters.
doc_468084973.pdf