Marketing Management -1

Ingersoll Rand (A)

Submitted by-

Advait Medhekar (23M103)

Hardik Gupta (23M109)

Pranav Acharya (23M122)

Rekha Kumari Singh (23M127)

Surbhi Patidar (23M140)

Under the guidance of-

Prof. Prashanth Yatgiri

How can James Clabough make a decision of whether CENTAC
200 should be marketed through their own sales force, or should it
be handed over to the distribution network?
1. Introduction

The case study digs into the complicated and vital universe of distribution
channels inside Ingersoll Rand, a differentiated industrial partnership.
The case examines in detail Ingersoll Rand's distribution channels for air
compressors and the difficulties that come with using multiple channels.

Ingersoll Rand, a worldwide recognized modern organization, works in

different areas, including manufacturing and development. The case study
basically centres around the organization's air compressor division, which
offers a scope of air compressors utilized in different industries.

2. Problem Statement

Ingersoll Rand is faced with the essential choice of deciding the most
fitting appropriation channel for its Centac-200 blower, which has novel
qualities and applications. The organization needs to choose whether to
allocate this item to its immediate sales force, independent distributors, or
Air centres. This choice conveys huge impacts on the organization's
circulation, associations with merchants, and business sector intensity.

The primary challenge is to make a well-informed decision that

maximizes market coverage, customer satisfaction, and profitability while
considering the complexities of the product, customer behaviours, and
competitive landscape.

3. Types of Distribution Channels

The organization uses different distribution channels to market and sell its
different items. These dissemination channels, alongside their designs and
the kinds of items they sell, can be summed up as follows:
1. Direct Sales Force:
Structure: Ingersoll-Rand maintains a direct sales force consisting of sales
representatives who are responsible for selling the company's products
directly to customers.
Products Sold: The direct sales force handles a range of products,
including reciprocating compressors above 200 horsepower,all rotary
compressors above 300 horsepower, and centrifugal compressors.

2. Independent Distributors:

Structure: Independent distributors are separate businesses that partner

with Ingersoll-Rand to sell its products. These distributors have their own
sales teams and customer networks.

Products Sold: Independent distributors primarily handle reciprocating

compressors below 200 horsepower, rotary compressors below 450
horsepower, and some other product categories based on their distributor
type classification.

3. Company-Owned Air Centers:

Structure: Ingersoll-Rand works its organization-owned air centres, which

act as circulation and distribution centres or service hubs. These centres
have their own supervisory teams and sales staff.

Product Sold: Air centres focus on selling and servicing reciprocating

compressors below 250 horsepower, rotary compressors below 450
horsepower, and some related products. They also provide maintenance
and support services.

4. Manufacturers' Reps

Structure: Manufacturers' Reps are selected by Ingersoll-Rand to sell

straightforwardly to retail chains and stores.

Products Sold: They essentially handle small compressors with less than
5 horsepower, catering to retail chains and similar customers
4. About Centac-200:

 The Centac-200 is a 200-horsepower centrifugal air compressor

manufactured by Ingersoll-Rand.
 It produces oil-free compressed air, ideal for industries requiring
clean air like food processing and electronics manufacturing.
 The case study revolves around the decision of which sales channel
to use for the Centac-200.
 Ingersoll-Rand considers options such as air centres, distributors,
or other channels.
 Atlas Copco is in direct competition with a market share of 30%

5. Sales cost analysis:

In order to identify the distribution channels, we are performing a cost
analysis of each distribution system:

6. Pros and Cons of each Distribution channel

6.1 Pros of Direct Sales Distribution:
 Technical Expertise: Direct sales channel ensures that highly
trained sales representatives with technical knowledge can
effectively communicate the benefits and features of the
Centac-200, which is a technically complex and specialized
product.
  Customer Engagement: Through direct sales, Ingersoll Rand
can engage in personalized interactions with potential buyers,
addressing their unique needs and concerns, and potentially
securing higher-value deals.

 Control: Direct sales allow Ingersoll Rand to maintain strict

control over its brand image.

6.2 Cons of Direct Sales Distribution:

 Elephant Hunters: Direct Sales reps are used to selling higher-

power machines and would prefer selling expensive
compressors.

6.3 Pros of Independent Distributors

 Matches hp assignments
 Good for loyal distributors
 Supports local distribution

6.4 Cons of Independent Distributors

 Intensive training required
 Low spare part requirements may discourage

6.5 Pros of Air Centres

 Air Centers are controlled by the organization
 Do not clash with independent distributors in the region

6.6 Cons of Air Centres

 Expensive cost of distribution
 Lower area coverage

7. Recommendation and Conclusion:

We would recommend I-R use a direct sales force to sell Centac -200.
The reasons supporting the recommendation are:
 Technical Expertise and Support: Direct sales teams are
normally equipped with specialized information and skills about
the organization's product. The Centac-200 works at high rates and
may need specific specialized help. By allotting it to the direct
 sales channel, Clabough can guarantee that clients get important
specialized help, diminishing the risk of technical issues and
associated damage.
 Control Over Deals and Service: Direct sales consider more
command over the whole sales and administration process.
Clabough might favour this methodology, particularly for an item
like the Centac-200, where the quality of service and support is
crucial. With direct sales, I-R can keep an high level of consistency
in customer interactions and ensure that its standards for service
are met.
 Alignment with Company Expertise: If Ingersoll-Rand has major
areas of strength for and expertise in selling and servicing similar
high-end industrial equipment, it makes sense to utilize the direct
sales force for the Centac-200. The company's sales reps may as of
now have associations with key clients in this segment.
 Focusing on Key Accounts: The direct sales team frequently excel
at managing key accounts. For a high-esteem item like the Centac-
200, Clabough might need to target large clients who require
customized solutions. A direct sales rep can focus on nurturing
associations with these records and meeting their one-of-a-kind
requirements.
 Preserving Benefit Margins: The Centac-200 may have higher
net profit margins because of its technical complexity and
specialized application in industries like food processing,
electronics, and pharmaceuticals. By selling it through the direct
channel, I-R can catch a bigger portion of the profit without
offering it to independent distributors. It is also known that the cost
of operation of salesforce is 11% of sales which is lower as
compared to other distribution channels.
 Market Competition: Clabough might consider market dynamics
and competition. If competitors like Atlas-Copco are successfully
selling similar products through distributors, I-R could differentiate
itself by offering the Centac-200 directly, emphasizing superior
service and support. Also for targeting Govt. accounts Direct sales
has 2 industry managers.
 Avoid conflict with Distributors: Distributors could have
concerns or constraints in managing a product like the Centac-200.
Keeping it inside the direct sales channel can prevent clashes,
 especially if distributors lack the technical expertise or the
willingness to invest in training for this specific product.
Additionally giving a small amount of extra commission and setting sales
target for Centac-200 sales will promote the salesforce to equally focus
on the product.