Channel Sales Management
In today’s highly competitive business world, there are numerous factors that could make or break the market. But what exactly happens in the process of making a product available in the market? Channel Management has a big role to play in such situations. Now let us know more about Channel Management and what role it plays
What is Channel Management?
It is a process used by companies to direct and manage various intermediaries to deliver products and services directly to the end-users. The parties involved in the process are called Channel Partners. The Channel Management process implies reaching a broad range of customers through different marketing and sales channels. Channel management is a technique of identifying the best and most efficient channel partners. It involves different routes to make your products available in the market and to put various efforts, obtaining maximum results from these channels
For example, if you are selling a Packaged Food Product, then you might consider both online as well as offline channels that can sell your products in the market on your behalf. Thus, selling your products in a well-established store might get you more sales as compared to online channels
How Critical is the Role of a Channel Sales Personnel?
The success of a business largely depends on the intermediaries who represent the product of the manufacturer in the market. A Channel Manager is required to establish a healthy relationship with these intermediaries and give them financial well as non-financial benefits. This way, the intermediaries can actively promote the products of the manufacturer.
As a Channel Manager/Channel Sales Manager, needs to perform the following Duties (Process).
1. Identification of sources
The first step in the Channel Management process is the identification of references. When you are new in the market, you are required to do intensive research to identify sources through different methods. For instance, you can approach trade associations and take part in trade exhibitions or can enquire in the market to find out the reputation of distributors and their customers.
On the other hand, a well-established manufacturer is approached by different distributors themselves. Make sure that you do a proper background check of the distributors prior to signing a contract with them. The points to verify are the views of customers about the distributor, their sales force, and their enthusiasm to sell products
2. Preparing a selection criterion
The next step in the process of Channel Management is the preparation of selection criteria. A selection criterion is essential for effective Channel Management. There are many factors that a manufacturer must examine before selecting channel intermediaries.
For example, a well-established distributor might have a good reputation among the customers, but he might be selling products of several competitors and might be less enthusiastic about selling the products. On the other hand, a smaller distributor might be less popular and have a lower sales force, yet he can be more enthusiastic in his approach to selling.
3. Selection of intermediaries
Choosing the right channel intermediaries is essential for the success of the business. There are several intermediaries available in the market. Small-scaled and new intermediaries might be inexperienced, however, they can sell your products with enthusiasm. They might have better selling skills and resources. In addition to this, these sellers will sell your products at a lower margin and with fewer incentives.
4. Providing required training to intermediaries to sell
Once you have selected your Channel Management partners, the next step is to provide them the necessary training so that they can sell your products effectively and efficiently. Through training, you can provide essential information about your products and your organization. This way, your channel partners can use that information to sell the products effectively.
Make sure that you cover essential areas such as Financial Management, Marketing, Sales, Personnel Management, and Stock Control, etc. Smaller distributors will appreciate training in these areas as they might not have well-established processes to manage these areas.
5. Motivating intermediaries whenever required
The next step in the process of Channel Management is to drive your Channel Partners to perform better and better. Motivation could be in a financial or non-financial form. For example, some distributors will get motivation when you provide them with an increased margin on the sales of the products, whereas some distributors might like to have territorial rights for some areas.
Don’t make a mistake to avoid this step as the achievement of your business relies mainly on the performance of your Channel Partners.
6. Assessment of intermediaries
It is essential to assess the performance of all intermediaries. The output of the evaluation process will help you in deciding which Channel Partner should be retained and which Channel Partner should be dropped. There are various criteria for the assessment of a Channel Partner such as selling skills, competencies, customer’s response, quality of service provided to customers, the quantity of stock purchased, the position of display in-store, and so on.
What are the major responsibilities of this Profile?
- Hit Monthly Sales Quota for Territory
- Continuously Train Sales Team on Company Offerings
- Manage Relationships with Channel Partners
- Monitor Sales and Operational Results based on KPIs
- Representing Company at Industry Trade Shows
What is the current Industry scenario?
There are various Industries that use the process of Channel Management, for example - FMCG, FMCD, Paint, Automobile, Cement, Edutech & many more. Let’s understand some of the Industry’s current scenarios:
FMCG: - Fast-Moving Consumer Goods (FMCG) is India’s fourth-largest sector, with household and personal care accounting for 50% of FMCG sales in India. Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India.
- Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50% of the total rural spending
- The retail market in India had been estimated to reach US$ 1.1 trillion by 2020 from US$ 840 billion in 2017, with modern trade expected to grow at 20-25% per annum, it is likely to boost the revenue of FMCG companies
- Revenue of the FMCG sector reached Rs.3.4 lakh crore (US$ 52.75 billion) in FY18 and was estimated to reach US$ 103.7 billion in 2020, the FMCG market had been expected to grow at 9-10% in 2020
- The rise in rural consumption will drive the growth of the FMCG market; it contributes around 36% to the overall FMCG spending, in the third quarter of FY20 in rural India, FMCG witnessed a double-digit growth recovery of 10.6% due to various Government initiatives (such as packaged staples and hygiene categories); high agricultural produce, reverse migration, and a lower unemployment rate
Consumer Durables: - Indian Consumer Durables market is broadly segregated into urban and rural markets and is attracting marketers from across the world. The sector comprises a huge middle class, a relatively large affluent class, and a small economically disadvantaged class. Global corporations view India as one of the key markets from where future growth is likely to emerge. The growth in India’s consumer market would be primarily driven by a favorable population composition and increasing disposable income
- Appliances and the consumer electronics industry are expected to double to reach Rs. 1.48 lakh crore (US$ 21.18 billion) by 2025
- Electronics hardware production in the country increased from Rs. 4.43 trillion (US$ 72.38 billion) in FY19 to Rs. 5.47 trillion (US$ 89.38 billion) in FY20
- In FY20, TV penetration in India stood at 69%, driven by the DTH market, the total count of DTH subscribers in the country stood at 70.58 million in the country in 2020
- As of FY20, the electronics, domestic appliances, and air conditioner markets in India were estimated to be around Rs. 5,976 crores (US$ 0.86 billion), Rs. 17,873 crores (US$ 1.80 billion) and Rs. 12,568 crores (US$ 2.56 billion), respectively
- Smartphone shipments in India increased 8% Y-O-Y to reach 152.5 million units in 2019, thereby making it the fastest-growing among the top 20 smartphone markets in the world
- According to India Cellular & Electronics Association (ICEA), India has the potential to achieve a value of US$ 100 billion in the manufacturing of laptops and tablets by 2025
CEMENT: - India is the second-largest producer of Cement in the world. India has a lot of potential for development in the Infrastructure and Construction sector and the Cement sector is expected to largely benefit from it. Some of the recent initiatives, such as the development of 98 Smart cities, are expected to provide a major boost to the sector. Aided by suitable Government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor that aids the growth of this sector is the ready availability of raw materials for making cement, such as limestone and coal.
- Cement production reached 329 million tonnes (MT) in FY20 and is projected to reach 381 MT by FY22, however, the consumption stood at 327 MT in FY20 and will reach 379 MT by FY22, the Cement production capacity had been estimated to touch 550 MT by 2020
- As India has a high quantity and quality of limestone deposits throughout the country, the Cement industry promises huge potential for growth
- According to CLSA (institutional brokerage and investment group), the Indian Cement sector is witnessing an improved demand - key players reported by the company are ACC, Dalmia, and Ultratech Cement
- In the second quarter of FY21, Indian Cement companies reported a sharp rebound in earnings, and demand for the industry increased, driven by the rural recovery
- With the rural markets normalizing, the demand outlook remained strong, for FY21, CLSA expected a 14% Y-O-Y increase in EBITDA in the cement market for its coverage stocks
HEALTHCARE: - Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The Indian Healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well private players.
- The Healthcare market can increase three-fold to Rs. 8.6 trillion (US$ 133.44 billion) by 2022
- Indian Medical tourism market is growing at 18% Y-O-Y and is expected to reach US$ 9 billion by 2020
- There is significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising, the Government’s expenditure on the Healthcare sector had grown to 1.6% of the GDP in FY20BE from 1.3% in FY16
- Health insurance is gaining momentum in India, gross direct premium income underwritten by Health insurance grew 17.16% Y-O-Y to Rs. 51,637.84 crores (US$ 7.39 billion) in FY20
Channel Sales Training at PIBM
PIBM provides specialized training on Channel Management pertaining to some of the major sectors in the industry. PIBM’s training helps the students to explore the estimation of the consumer demand in the market, the purpose of the company strategy, and its link to the company's distribution strategy. They also learn how to design a Channel, develop & maintain relationships with Channel Partners, resolve channel conflicts and develop channel strategies & revenue growth plans. PIBM faculties with rich corporate experience help the students to learn the concepts through a practical approach and apply them in the real corporate world.
PIBM students are trained in Channel Sales through experiential learning driven by
- Mr. Abhay Pathak (26 years of Channel Sales experience at various Companies like HUL/Reckitt Benckiser/CIPLA Health at various senior positions)
- Mr. G. Pravin Kumar (7 Years of experience in Pharma & Hospitality Industry & 13 Years of Academic experience)
Training on Beat Planning, Sales Forecasting, ROI calculations, Vehicle Matrix, and many more that enhances the students’ knowledge and skills for decision making and readying the students for the channel sales profile. Training in Personal Selling bestows the students with the skills like connecting the right customers and influencing them towards a favorable decision-making journey including the planning of the customer call, right presentation techniques, objection handling, and sales closing.
Where were PIBM students placed in the past few years?
PIBM has maintained a stunning 100% placement success ratio over the past 10 years. PIBM students have been placed in Companies like Marico, Dabur, ITC, Reckitt Benckiser, Berger Paints, Havells, LG, Haier, Voltas, Bosch, Lodha Group, NoBroker, Just Dial, RBL Bank, Axis Bank, TATA AIG, IFFCO Tokyo, Airtel, BYJU’s, Haier, LG, Hattich, and so on. These are some of the 500 + companies who visit the PIBM campus from across all the sectors.