Systematic sales channel

redesign
Submitted by:UMANG MEHRA
RAVI ARORA
SAIFUL ISLAM
AKSHAY KAPOOR
ABHISHEK BISHT
REBACCA
SAGAR BAJAJ

ABOUT THE CASE

The purpose of this case study is to conceptualize
and redesign sales approaches with the example of a
German wire company selling in the US market.
The case study shows the significant advantages of
systematic research and optimization of sales
channels.
It came out with the fact that important customers
and important regions are covered by their own sales
force.
The case adds value in sales channel management
and supports companies in systematic sales channel
redesign in business and industrial markets.

ABOUT COMPANY
The WIRE Group is a German private company, representing the
successful globalization strategy of medium-sized companies.
After finishing his engineering studies, Michael Bremke
developed the first industrially produced flexible control cable in
1952.
In the same year he founded a small and innovative company,
Wire KG. Within less than 60 years the company with its
headquarter located in Cologne grew into a conglomerate,
acting in the cable technology industry worldwide.
Today, the Wire Group is one of the leading providers of cables,
conductors and cable technology for very different industries
(e.g. the machine and construction industry, the automotive
industry, electronics and installation techniques, as well as IT).

CHALLENGES
Compared with strongly subdivided,
clearly arranged national home markets,
European companies face completely new
dimensions in terms of economy,
geography, and culture in the USA.
In particular, medium-sized companies
with limited resources are challenged to
build an efficient and effective structure in
order to achieve optimal market
penetration

OPPORTUNITIES
Wire America was able to cope with
those challenges very early in. Since
its entry into the US market in 1970,
continuous sales increases had been
achieved over the years.
Today, Wire America contributes
about 10 percent to the groups
worldwide sales, but turnovers have
been stagnant for several years.

COMPANIES INITIATIVE
In order to counteract this trend, the German board called a
meeting to find new growth potentials for the US market.
With a share of 20 percent, the USA is the largest cable
market worldwide.
The sales team of Wire America is divided into five regions,
each having its own regional sales manager. Due to the
geographical size of the USA and increasing competition in
the market, this concept no longer leads to an efficient
market penetration and sales people regularly do not reach
their sales targets.
The final conclusion was drawn that the current sales
stagnation has its roots in the setup of the US sales division.
The German management has therefore decided on a
strategic realignment for the sales team of Wire America.

LOCAL MANAGEMET VIEW

POINT
The local management want to do the business in
traditional manner.
As per them, there was continually flat turnover, but
failed to present a growth plan for the future.
They also pin pointed to the fact that some
managers attracted attention by a substantial
attitude of protest: the US market was saturated.
The market is saturated, it is quite noticeable in the
decreasing demand and so they were not interested
in spending money on market survey knowing the
fact that it will generate the result which is already
known.

OUTCOME OF THE MEETING

They recognized that the present line
of action led to a dead end that
would lead to stagnant growth. It
would not be possible to improve the
growth position within the American
market with this attitude.
So they decided to take the first step,
a systematic market analysis.

ANALYSIS OF US MARKET
To conduct a detailed market analysis, the board chose
Kristin Smith as Project Manager. The consulting team
was assigned to assist her team.
The following types of analysis was conducted: MACROECONOMIC ANLYSIS:- To obtain a general overview
of the US market, including the most important industries
for the Wire Group.
COMPANYS MARKET POSISTION:- To obtain reliable data
of the wire market, including the very special niche
market of the Wire Group.
CUSTOMER STRUCTURE:- To focus on the analysis of the
sales allocation in the USA and the present customer
structure.

MACROECONOMIC ANALYSIS
The team analyzed the macroeconomic data of
the US economy, which included the potential
and geographical hubs of special industries.
The team also analyzed the sales volumes in
the total manufacturing industry for each
federal state.
They also used a profound analysis of the
individual industries was performed. The most
important industries for the Wire Group for e.g.
machine building, metal industry, etc. were
also identified.

RESULT OF ABOVE ANALYSIS

The most important US industries
according to their potential, region, and
concentration were identified.
The localization and size of the crucial core
industries in the USA and their impact in
the global market became obvious.
First insights for a new market approach
including future market penetration,
expansion, and the restructuring of the
sales force were gained

ANALYSIS OF COMPANYS OWN

MARKET POSITION
The automotive industry, getting reliable data is relatively easy,
compared to the niche industry of the cable market.
The company decided to study on ones own market segment and for
that they used the published data of the US wire market and linked to
their own niche market.
The US wire market is divided into eight segments which are as follows:1. Communication
2. Building construction
3. Electric trans
4. Information processing
5. Industrial purposes
6. Electrical equipments
7. Motor vehicle
8. Others
. Wire America is represented in just five of them.

RESULT OF ABOVE ANALYSIS

Wire America focused only on mature
markets. Wire America was represented
weakly in potential future growth businesses,
identified as communication and information
processing.
In addition, the team realized that the growing
markets were demanding an expanded
product portfolio and therefore new core
competencies should be developed in order to
have sustinable growth in US economy.

ANALYSIS OF CUSTOMER
STRUCTURE
Focus was made on the analysis of the
sales allocation in the USA and the
present customer structure.
First, the customer data was evaluated
according to the following criteria:
Turnover per federal state
Comparison of the companys sales with
the US market potential
Detailed analysis of the key accounts.

CONTINUE...
Sales per federal state:- Helped them to analyse and evaluate an exact
overview of how sales were geographically distributed among the different
states and where the strong and weak regions in terms of sales were
located.
Comparison of sales with US market potential (national and per federal
state):- Helped in picturisation of companys position in the industry. It
revealed that the firm focused more on North-eastern region and ignored
economically strong states such as Texas and California.
Key accounts:- identification of key and important customer accounts were
considered to be an important aspect. Wire defines customers as key
accounts when their annual sales are higher than $US75,000. They only
considered sales as a factor of evaluation and ignoring other factors like
profitability. With an aim to determine what extent Wire Americas
success is dependent on a small number of customer or a single
industry?. It also helped in identification of strategically strong customers
and findings on whether sales in a certain state are due to only a few
customers or whether they are spread over many individual customers.

RESULT OF ABOVE ANALYSIS

It became clear how and where new
key accounts could be approached.
It also gave insight into how an
optimal alignment of the sales
regions could be achieved.

Sales channels design in

USA
With the help of a detailed market and
customer analysis project team was able to
figure out the external factors that
influenced the American market
They identified their sales structure as the
key problem as it was old also quoted as
antique
A sales team was assigned for developing
the sales structure and analyse existing
structures in accordance to us markets

Analysis process of sales

structure

Result
An alignment of territory and sales force is
important to get maximum results hence area wise
sales structure was abandoned so that a better
strategy can be implemented
Companies are segmented via sic ( standard
industrialization codification), this lead to a better
segmentation, where, SIC code is allocated to
every company when it is founded in US economy.
The code is used to collect, aggregate, present,
and analyze data of the US economy.

Customers segments
For Wire America, the customers are segmented in the following
hierarchy:
machinery except electrical;
transportation equipment;
primary metal industry;
metal mining;
rubber and plastic products;
others; and
wholesale trade.
This helped WIRE AMERICA to generate information about
segmentation of its business and the proportional share per
segment in the American market.
A clear overview of the dominant and secondary industries was
produced.

SIC Code analysis and market

trends
Conducting a SIC study and
comparing its results with those of
the previous year should be done at
least once a year. This is how shifts
within sub-industries as well as sales
in new SIC codes can be identified. In
addition, this allows a company to
catch new market trends. It also can
be an indicator for decrease or
stagnation within sub-industries.

Strategic market
penetration
In order to allocate sales resources that are appropriate
to the market, detailed knowledge of the market, its
industries, and economic clusters is a must.
Wire America started using the Harris Database, a
provider of electronic economic data, where companies
are listed according to SIC/NAICS. Additionally the
database gives information on company size, number of
employees, contact data, products, names of managing
employees, etc.
They matched the data with the companys customer list
and subsequently developed a sales and marketing
concept which eventually helped them to focus on key
markets and to pursue them systematically.

Results derived from the

survey
The US market is not saturated. High potentials had not even
been recognized.
The existing sales channels were not suitable for a deep and
focused market penetration.
The relevant market was not evenly distributed among the
five regions. In fact, areas of concentration and particular key
players were identified. These should be approached with an
appropriate team.
Specific needs and potentials of particular industries had not
been pin-pointed.
Several market segments and customers have specific values
for the WIRE Group and therefore should be handled in the
following way: the higher the value, the greater the resources
that need to be employed.

Implications for a new sales channel

design
The new sales channel design was implemented in
order to reach three main goals: 1 Key accounts Identify the most important key
accounts. Establish specialized sales managers by
priorities to accommodate Key Account needs.
2 Economic clusters Take the importance of the
individual regions into account and cover them
according to their importance.
3 Sector-oriented approach Achieve an optimal
match of customers, services, and channels. This, in
addition will provide new markets for Wire America.

Continue...
HIGH

CUSTOMER
VALUE

LOW

Centralized key
account management
to support and
coordinate
independent sales
partners:Individual key accounts in regions
where Wire is not yet represented
will be managed by centralized
key account managers

Selling through
independent sales
partners:-

Decentralized
individual key account
management:Important customers (key
accounts) in important regions
will be serviced by their own key
account managers.
Their goal must be to exhaust the
potentials identified for existing
customers as well as to identify
and acquire attractive potential
growth customers.
Key customers with high sales
contributions.

Selling through Wires

own sales force:-

Wires own sales force will be

increased and appropriately focused in
In areas with low sales potential for
regions with strong prospective
Wire products, the assignment of
potentials. In regions where a
independent sales forces is obvious
presence is already established, the
leadership for sales managers will be
reorganized in order
to gain a higher
LOW
HIGH
motivation and to exhaust potentials
their fullest.
IMPORTANTto REGION

IMPLEMENTATION OF THE NEW

SALES CHANNEL DESIGN
Clear communication
Adjustment of existing resources and
additional recruitment of sales personnel
Sector-oriented market development in
KEY ACCOUNT MANAGEMENT.
From product to market focus
Acquisition of new channel partners
Organizational framework
Secure sustainability of the changes

THANK YOU EVERYONE