Eicher Motors

Group 9
Industry Background
Commercial vehicle industry in early 1990s
Heavy commercial vehicles (10 tonne)
Tata motors: 75% ; Ashok Leyland 25%
Light commercial vehicles (6 tonne)
Bajaj Tempo 60% ; M&M 40%
Distribution Network of existing players
Ashok Leyland stronger in south, Tata dominated the rest of the country
Spare parts market of sizeable size
Non-genuine parts sold at lower cost

4 new entrants in between HCV & LCV (2.5-3.5 tonnes)
Vehicles were faster, safer, more comfortable and highly reliable
Huge capital and running cost
Strategy for early movers in new entrants:
Strong brand name
Down payment and booking system
Helped gain premium by creating artificial and long waiting period
Large showroom and workshops

Market Variables
Market geography: Wide area coverage
Market size and density: Difficult to estimate, sluggish sales for the competitors
in same segment
Product Variable
Bulk and weight: need to minimize transport cost by transportation in large lots
Perishability: Not applicable
Unit value: High priced product, lower for spare parts
Newness and Technology: Updated version and better than competitors
Company Variable
Financial capacity: Limited capital for investment
Managerial Expertise: New entrant in LCV, presence in tractor market
Intermediary Variable
Availability: Difficult to acquire dealer with good infrastructure
Cost: Not ready to invest large capital
Service: After sales services and spare parts available with intermediary
Environmental Variable
Economic (purchasing power of a particular geography) , Sociocultural,
Competitive, Technological and Legal (state and central taxes)
Parameters affecting Distribution Channel Design
Attracting suitable Channel Partners
Complete assistance (including financial) in running their business
For example: In setting up showrooms
Higher margins for channel members compared to industry standards
Better Credit Period, Better Payouts
Advertisement & promotions for boosting sales
Training and educating sales force and other channel members
Providing spare parts support