TVSE re-orients its channel strategy

Will work only through national distis, increase reach to 500
towns



The Rs 228 crore Che-nnai-based periheral manufacturing major, TVS Electronics
Ltd (TVSE) is getting aggressive on the channel front to increase its business
and reach a revenue target of Rs 500 crore by 2006. The company has worked out a
five-pronged strategy of increasing the channel part-ners, reaching more
cities/towns, strengthening the service infrastructure, expand-ing the product
portfolio, and creating more brand awareness and visibility in the market, to
achieve the projected numbers.

According to S Magesh, Head (Channel Marketing &
Distribution), TVSE, "The year 2004 will be a turning point for us, as we
will be moving on to the next stage of development and growth in the company.
TVSE will grow as a more stron-ger company with national reach and acceptance,
by build-ing relationships with channel partners and customers." Over the
last one year, the company has increased its channel contribution to total
revenue from 50 to 75 percent, through aggressive programs.

The company is realigning its channel structure to provide equal
opportunity for the rese-llers and create a level playing field for the channel
partners. TVSE which was mainly operat-ing through its regional distri-butors is
now focusing on national distributors, for better reach and availability across
the country. In October, it appoin-ted Redington as its third national
distributor, which is in addition to Ingram Micro–appointed in 2000–and Tech
Pacific–appointed in 2002. "Now, we want to move all our regional
distributors under them. We have already done in eight markets and soon, all
regional distributors will be re-named as re-distribution part-ners (RDPs) who
will buy prod-ucts only from national distri-butors," pointed out Magesh.
At present, the company has around 130 RDPs across the country and plans to
scale up this number to 250 within the next one year. Similarly, TVSE will
increase its reach from 360 cities/towns to 500 cities/towns in the same period,
mainly in B and C class markets.

And to address the small towns, it is adding many more people
who will be placed in these small towns. The idea is to have one person covering
10 to 12 cities, which will be grou-ped as a territory. This expan-ded reach is
all the more impor-tant for its DMPs. Remarked Magesh, "Dot matrix printers
are projected in a big way in upcountry markets and our reach there would help
us to increase our marketshare to 50 percent by 2004." Currently, TVSE
enjoys 44 percent market-share in this segment, as per the IDC report for AMJ
2003.

While realigning the channel partners, TVSE wants to form
special groups for specific product segments to avoid clash of interest and
unethical competition among the rese-llers. "We will have dedicated RDPs
for specific product lines with clear focus on the prod-ucts. Even with
distributors, we are planning to practice the same which will give clear focus
and more revenue for the company. However, there will be some RDPs–around 25
percent of the total–who will be allowed to sell all products," pointed
out Magesh.

TVSE plans to market UPS systems only through Ingram Micro,
while Redington and Tech Pacific will work on geog-raphical basis for
consumables. Redington will primarily address south and east, while Tech Pacific
will take care of north and western regions.

Out of the major metros, TVSE has traditionally been weak in
Mumbai, a fact admitted by Magesh. But now it has embarked on a major initiative
to address the situation by launching Mission Mumbai. This entails adding three
more people, increasing the number of RDPs from six to 15 within the next three
months and dividing the city into three regions. "With Mission Mumbai, we
have increased our business in the city–we are doubling business every month–and
soon, Mumbai will be the number one revenue generating center for us," he
quipped.

Similarly, the company is strengthening its network in Delhi and
nearby markets. Overall regionwise, TVSE got 45 percent of its business last
year from the southern region.

The company is also streng-thening its product lines by
launching new models of UPS, shortly. TVSE is also betting big on its new
consumables for the DMP segment. "Consumables will be the third largest
revenue generating business for the company and we have laun-ched our Web
initiative here," he added. TVSE is also adding more excitement to the
chan-nel community by announcing various schemes and point programs, apart from
end-user promotions.

Asim Raina & S Gopikrishna

Chennai