Published on March 12, 2014
Kelsey Manufacturing Com. Case Analysis SDM, NMP Term IV Group 5 Abhijeet Tomar - 03 Argha Ray - 15 Khushal Malik - 28 Vipin Kathuria– 59
Context • Kelsey is a major manufacturer of tyre and tube repair material. • Over the years sales of its numerous product lines have been stagnant. • Management wants to reverse the trend with ambitious targets. • Product promotion down the channel is one of the strategies under consideration. • However, channel members no longer seem to be under Kelsey’s control.
The Genesis of the Problem: • Kelsey still to evolve from a family owned business to a full fledged corporate. • Management doesn't seem to have any clues about what plagues the channel. “Spread the Word” is a common refrain. But How? • Kelsey doesn't seem to change with times at least in technological competitiveness. • Product line augmentation is a sore point with downstream channel members. • Lengthy channel adds to promotion burden. • Old channel partners are no longer loyal to Kelsey.
The Ongoing Decline: • Contrary to management’s belief sales are not stagnant but continuously declining. • Product gradually moving from maturity stage to decline stage in the Product Lifecycle. • Kelsey not doing enough to keep channel members motivated. • Possible changes in channel design is not under consideration.
Questions to Ponder: • Has Kelsey augmented its product line after consultation with channel partners? • Are all the long list of products profitable? Which of these products have marginal sales in the market and can be ejected? • Is product pricing adequate? For long Kelsey seems to enjoy the same gross margin and profits? • Does Kelsey’s product line provide adequate assortment for channel members? • Why are competitors not offering complete line like Kelsey? • Should Kelsey invest more on technology to match competitors' new products like Chem Bend.
The Alternate Channel: • Remove manufacturer’s representatives with own salesforce. • The may be bit costly initially. Manufacturer’s Representatives act almost as External Salesforce for the company. They can be replaced with own salesforce so as to have more control at the initial level of the channel. • Product is Low Involvement, hence advertising will not be of much help. Kelsey Manufacturers Representatives Warehouse Distributors Jobber ServiceStation Customer Kelsey Warehouse Distributors Jobber ServiceStation Customer
Channel Partner Selection: • Tyre and Tube repair materials are only one piece of the assortment puzzle for a automotive parts wholesaler. • Kelsey has a gamut of offerings in this segment. It will not be hard for them to supply a complete assortment to its channel partners for this product category. • Select only those Warehouse Distributors and Jobbers who are willing to exclusively distribute for Kelsey in this product category and not hold competitor’s products. • These Warehouse Distributors and Jobbers will however be allowed to hold any other complementary product line from other manufacturers but not competitors Tyre and Tube repair material. • Kelsey’s own salesforce must monitor distributor sales personnel as well as provide technical help down the channel up to Service Stations on need basis.
Decision: • Prune unnecessary product lines. • Take inputs from channel partners on product assortment. • Distributors who deal exclusively with Kelsey’s product line and independently with other product lines will take it upon themselves to push Kelsey’s product line. • Try to promote Kelsey’s product line to Tyre Manufacturers who are willing to recommend Kelsey’s product line. • Occasionally promote product line directly to large Service Stations. • Rationalize margins for channel partners who are unhappy. • Invest on technology to stay ahead in the race.
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