Market sees increase in incentive schemes

Gunjan Gupta & Shweta Sharma

Observing the past few months, the market reports and then curses the schemes imposed by the principal companies. The schemes that hold the well-dressed and well-presented incentives in all forms tempt the dealers to buy more, resulting in the accumulation of stocks, as an addition to the existing inventory.

DQW News Bureau asked the various principals the following set of questions about the same:

1. Has the slowdown resulted in more schemes from principals?
2. Are the prizes more lucrative in terms of cash rather than kind?
3. How regular are the vendors in paying back their channels?
4. As too many schemes lead to the inventory blockage in warehouses, isn't the purpose of popularizing the product defeated?
5. Does it not result in unhealthy business practices?
6. Don't these schemes form an important part in the money-rotation practice in the channels?

The responses were mixed.

Rajkumar Rishi, Country Manager (Commercial Business), HP India: At HP, we are not doing any schemes, specially for the slowdown purpose, but yes, we surely are aiming at refining the ones we already have. At HP, it has always been our constant endeavor to acknowledge the special contribution to our business done by channels. So it is only through the various schemes under e-points program of ours, where the incentives are in forms to suffice the needs of lifestyle, sports, electronics and travel. It as simple as higher the number of points on purchases, the bigger is the reward.

Anish Srikrishna, Marketing Manager, Samsung India: The slowdown has been taking its toll and we have recognized the fact that the pull in the market has decreased tremendously. We have come out with much more lucrative schemes to create a greater push; e.g. 17 inch monitor had a very lucrative scheme attached to manage a good sale in the market. But we do not want to push our schemes to the channel partners; rather we want them to be more prudent in buying our inventory.

We want them to earn money from margins and not from these schemes. We are advocating our channel partners to advocate restraint in their buying process and concentrate on quality sales.

Alok Bharadwaj, GM (System Products Division), Canon India: We have not been giving any additional schemes to the channel partner, as this kind of activity will only mar the given circumstances. In fact, we are trying to simplify the present schemes given to the resellers and distributors. Rather in such times discounting the MRP makes much sense than to give better schemes to the distributors. We are rather concentrating on secondary activities such as advertising.

Rajiv Bapna, Director, Amkette: Schemes actually play a very big role in Amkette's promotional policies and that is irrespective of the slowdown or boom times. We basically work at three different levels--distributor, dealer and consumer--and for all the three levels we have different schemes. At the dealers and consumers level, we have absolutely no incentive in cash, but only in kind. It may be those 12 pieces for the price of 11, but then that is another form of freebies.

In every quarter there are different schemes for all the three levels. It is only for the distributors that we have higher discounts for higher quantity. But then it is entirely at the discretion of the distributor, whether to pick it up or not, as it is up to them to judge their business according to their standpoint. For other two, we have the pull schemes to push our products in the market.

Anil Gupta, Director, Microtek International: One thing is for sure that slowdown has compelled us to push more schemes, and that channel prefers cash, any day. The schemes promote discounts because if I reduce the price today, it may be difficult for me to get back to the original when the times improve, so discount is always a better option. I agree to the fact that it is not promoting a very good culture in the market but then we have to do it to survive. If we talk of that the money rotation increases in the market, then 75 percent of the whole money is that of the principals'. Then within the set critical time of 21 days, a principal ideally has to distribute the money, circulate it, and then get it back. So that's a tough job anyhow.

NS Bindra, GM (Sales and Marketing)-IT product, LG India: To survive in these downtimes, we are pushing in more and more lucrative schemes. Because, LG fully understands that this is the only way we can push our products in the market and survive. But again, we have not allocated any great budget exclusively for these schemes.

Ranbir Singh, Zonal Business Manager, Wipro ePeripherals: We are taking various other initiatives to keep our channel partners motivated. Rather than having various channel schemes, we believe in concentrating on building the product range and thus add value to the total profit being made. We are focused on building the quality of our channel contribution rather than just achieving certain numbers.