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    DeepClean is launching a new magic mop product and evaluating two distribution channel options: appointing distributors to sell through multi-brand appliance stores, or selling through direct sales agents (DSAs) who employ sales executives. The distributor model would reach 1250 outlets and sell an estimated 10,000 units per month with a 15% channel margin. The DSA model would engage 100 DSAs with 10 sales executives each, selling an estimated 10,000 units per month with DSA commissions of ₹2500 per sale. Key factors to consider are reach, costs, inventory levels, and required advertising for each channel. The recommendation is likely to use the DSA model due to its direct customer contact and lower advertising costs

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    DeepClean is launching a new magic mop product and evaluating two distribution channel options: appointing distributors to sell through multi-brand appliance stores, or selling through direct sales agents (DSAs) who employ sales executives. The distributor model would reach 1250 outlets and sell an estimated 10,000 units per month with a 15% channel margin. The DSA model would engage 100 DSAs with 10 sales executives each, selling an estimated 10,000 units per month with DSA commissions of ₹2500 per sale. Key factors to consider are reach, costs, inventory levels, and required advertising for each channel. The recommendation is likely to use the DSA model due to its direct customer contact and lower advertising costs

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    32 views1 page

    SM-14 DeepClean Magic Mop

    Uploaded by

    tirth vira
    DeepClean is launching a new magic mop product and evaluating two distribution channel options: appointing distributors to sell through multi-brand appliance stores, or selling through direct sales agents (DSAs) who employ sales executives. The distributor model would reach 1250 outlets and sell an estimated 10,000 units per month with a 15% channel margin. The DSA model would engage 100 DSAs with 10 sales executives each, selling an estimated 10,000 units per month with DSA commissions of ₹2500 per sale. Key factors to consider are reach, costs, inventory levels, and required advertising for each channel. The recommendation is likely to use the DSA model due to its direct customer contact and lower advertising costs

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    © All Rights Reserved
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    of 1

    SM-14

    DeepClean Magic Mop (Go to Market Strategy)

    Background: DeepClean is a magic mop that cleans any surface and also kills bacteria with its
    unique hot air functionality. Not for nothing was it called Magic Mop. You got to see it to believe
    it. The product operates on battery. It was light and easy to navigate. Sturdy and safe to be
    entrusted to the servant-maid. The product was priced at Rs.12000 and the estimated market
    potential for the product category was 30000 units per month.
    DeepClean wanted to achieve 30% + market share in this new product category with steam
    innovation and had to contend with 4 competitors who like deep clean were also had strong
    market reach/presence in household appliances
    Channel Evaluation
    The company was evaluating 2 channel routes
    a) Distributor: Appointing distributor to reach and Sell thru multi-brand appliances stores.
    Expected channel margin 15 % (5 % for distributor and 10% for Retailer). The company expected
    to reach 1250 outlets from a universe of 2000 outlets in the selected geography and with an
    average off take of 8 units per outlet to achieve sales of 10000 per month.

    b) DSA: Selling thru Direct Sales Agents who employed Sales executives to sell the product.
    Expected commission to the DSA was Rs.2500 per sales. It was expected that the monthly sales
    productivity of the SE would be 8 units on an average.
    DSAs Operating Cost: SEs salary at Rs.9000 as salary and a commission of Rs.500 per unit. Other
    operating cost of the DSA (most of which was fixed) was Rs.50000.
    On an Average each DSA had 10 Sales executives on their rolls. If this channel is adopted the
    company expected to engage 100 DSAs (total 1000 SE) to achieve 10000 Sales units per month.
    The sales projection with both the models was on the assumption that the product will find good
    acceptance and could well be at 50% of the projected level, if acceptance was not immediate
    Inventory
    Distribution: Unpaid Inventory at channel was estimated at 1.5 months average monthly sales
    DSA: Inventory at channel was estimated at 7 day’s average monthly sales
    Advertising
    To simplify analysis of the advertising cost let us look at 2 models:
    a) DSA model will require Minimum advertising of Rs.10 lakhs per month to create credibility
    b) Distribution model will require minimum advertising of Rs.50 lakhs per month to generate
    interest and pull.
    Questions
    1) On what parameters should DeepClean evaluate the 2 channels and how do they compare?
    2) What is your recommendation--- highlight the decisive key factors?
    3) If the demand potential is revised to 1 lakh units per month how would your recommendation
    change?

    Case Prepared by Prof. Surya Mahadevan for class discussion

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