Case Example

Defining a Distribution Strategy for Commercial Ceilings Business

Client Challenge

The client was a US based MNC and a leader in design and manufacture of commercial ceiling systems in India. It was catering to diverse market segments including office, healthcare, education, retail, transport, hospitality, manufacturing
The client wanted to review its Distribution Strategy to achieve targeted 2X fold growth. At the same time, the distribution channel was facing several challenges:
-Limited channel reach in small-mid contractor segment
-Excessive dependence on company sales team to develop business
-Absence of role demarcation (such as customer segment focus) of various channel members in a geography leading to channel conflicts
-Product placement not differentiated by channel type
-High number of channel members in a given geography

Our Approach

To address existing challenges in distribution structure and develop a distribution strategy, UC STRATEGY used the following structured approach:
-UC team first reviewed existing distribution strategy and channel related data to build hypotheses on gaps, challenges and issues:
-Analyzed internal sales data to characterize channel performance and variations
-Conducted management interviews to characterize the current distribution network
-Assessed current distributor management practices and analysis of channel structure
-Conducted primary research across 10 cities (a mix of tier I and tier II cities) to validate these challenges:
-Issues faced by channel members in each market
-Benchmark and learnings from channel members in the same industry and allied industries
-Determined region wise market potential and how channel members are aligned to exploit this potential
-Identified gaps in current distribution structure – lack of motivation of channel member, channel member capability issues, economics of channel members, conflicts between channel members, lack of focus on various customer segments
-Finally, defined distribution strategy around channel structure, channel management and channel sizing

Our Impact

The study resulted in several clearly articulated result areas for the Client across the elements of the channel playbook:
-Channel Structure
-Clearly articulated channel member roles to ensure no overlap with company sales team and with each other
-Defined responsibility for developing retail channel
-Channel Sizing
-Definition of target channel member economics (revenue generation and profitability) to ensure sustained interest and motivation to work with Armstrong
-Guidelines for number of channel members by tier I vs tier II vs tier III locations
-Rationalization of the number of channel partners to in existing locations
-Improvement in average channel partner productivity to 2.5-3x resulting in Channel Partner
-Expansion of channel reach to new class B and C locations over the next two years
-Channel Operations and Management
-Usage of a ‘named accounts’ policy to allocate key accounts to channel members to avoid conflict
-Clear channel performance management framework (defined annual volume targets, turnover incentives)
-A detailed fitment analysis of the existing channel partners in the market
-Classification of channel members by their performance and strategic importance and definition of service levels in alignment with this classification