This article explores various forms and facets of retailing and wholesaling in the computer industry, based primarily

on the prevailing scenario in Chennai. Various types of computer retailing and wholesaling discussed in this article are - online sales, corporate sales, market channel sales, outstation sales, sales to systems integrators, showroom sales, counter sales, exhibition sales and sales through telephone/mobile phone. Computers are sold to a variety of customers at different lev- els in the distribution chain such as individual buyers, corporate buyers, system integrators, retailers and so on. They are also sold through various means such as through the Internet, from retail/wholesale stores, by directly approaching prospective customers at their doorsteps, etc. Some of the common ways and means of selling computers are described briefly in the paragraphs that follow. Online Sales The simplest and the smartest way of modern retailing is online sales. This saves time, money and effort for both the marketer and the customer. When purchasing a branded laptop or a desktop system, a prospective customer can gather a lot of information from relevant websites about alternative products and compare them on specific features, performance specifications, price, warranty, service, special offers, discounts and free gifts, etc., without having to go from store to store. He can then purchase the computer of his choice and make payment through the online payment gateway, using his credit card. The computer is then delivered at his doorstep. Dell Computers is well known for having adopted and perfected this model of direct marketing, which made it one of the leading computer suppliers in the world. Dell also used this method of getting orders from customers to customize and assemble computers according to individual needs. Corporate Sales Some retailers concentrate on catering to the corporate market for computers. Such retailers keep in touch with business users of computers, send competitive quotations as required, follow up and negotiate with the buyers and try to get their due market share. Maintaining good relationships with large and repeat-buyers, and providing good value (in terms of product features and service) for the money are the key factors that determine success in this business. In Chennai, Supreme Computers India Pvt Ltd., is an important dealer for various leading brands of computers, especially Sony, Lenovo and Compaq. Supreme Computers focuses mainly on institutional sales to colleges, software firms, etc. Market Channel Sales Well-established and financially sound distributors do quite well by concentrating on market channel sales, i.e., sales to computer retailers. This is a highly challenging market with cutthroat competition. Retailers communicate their requirements to different distributors of various brands and buy from those whose offer is most beneficial to them. Even a small deviation in price, payment terms, warranty or other important parameters could result in the loss of valuable orders.

monitors. modems. prospective customers can examine and compare the various alternatives available in the air-conditioned comfort of a posh showroom and make a wellinformed choice to suit their specific needs. hard disc drives. Many distributors/wholesalers do substantial business selling components/modules to meet the needs of system integrators. predominantly of computer accessories such as keyboards. much of the communication is handled through the telephone.. HP. This requires intelligent and quick decisions with excellent grasp of the prevailing competitive scenario. System Integrators buy quite regularly. They also sell computers. Laptop Plus in Spencer's Plaza in Chennai is an exclusive outlet for various brands of laptops and accessories. the prices offered are among the lowest. Even prices are negotiated over the telephone and the best deal usually is the winner. Lenovo and Compaq. in crowded market areas and resort to quick across-the-counter sales. mouse. because they can take a decision through the `touch and feel' approach and after seeing the demonstration of the various brands and models on offer. DVD drives. The two distributors are often in competition with each other. Some are single brand outlets. Here. by acting as system integrators. retailers have the option of buying from a local distributor and also from a distributor in a major city. Challenger Computer in Chennai is successful in outstation sales and distributes computer products and accessories throughout Tamil Nadu. Outstation Sales Some wholesalers concentrate on meeting the requirement of retailers in the smaller cities and towns. The prices at such outlets are comparatively less because of the . Here. though in relatively small quantities each time. This forms an important segment of the Indian computer market. etc. often in lanes. pen drives. While corporate customers may purchase large numbers of computers at one go.Computer Planet on Blackers Road (in Chennai) is the main distributor of several brands of computers such as Acer. Showroom Sales A relatively recent trend is that of marketing computers through modern showrooms. HCL. Counter Sales Some retailers have well-stocked small outlets. its success depends on prompt and efficient transportation and delivery. In many tier-2 cities. while some are multi-brand outlets. some of which are also located in shopping malls. etc. speakers. each with their own advantages and disadvantages. and configure computers as per their customers' requirements. More than 150 computer shops on Ritchie Street in Chennai and also in other places are served by this distributor. backed by good packaging and excellent service. Sales to System Integrators System Integrators buy motherboards. computer cabinets. Also. As value addition is done by the system integrators after purchasing individual modules. The customers are also more comfortable and satisfied with their choice.

. inviting interested recipients to make a call to a given telephone/mobile number. and some by the retailers. Computer Planet. Some of these promotional offers are given by the manufacturers and distributors. Such exhibitions/trade fairs provide for demonstration of various models. discounts. prompt delivery and assured after-sales service.e. and also when the normal business is on a low ebb. Systematic promotion and customer retention would require the use of customer relationship management techniques. They also provide an opportunity for achieving wide publicity and awareness for various brands of computers and retail outlets. In Chennai. outstation sales and showroom sales. some computer vendors also resort to marketing through telephone/mobile phone and by directly visiting prospective customers. or for a live demonstration. There is not much opportunity here to leisurely examine and compare. discounts. Even the display is quite cramped and the customer can only transact across the counter and cannot take a walk through the interiors of the shop. Ltd. To compensate for the drawbacks of this format. regularly canvas for their products by visiting prospective institutional customers at their doorsteps for computer sales. Exhibition/Trade Fair Sales Computers are also sold through exclusive computer exhibitions or through trade fairs dealing in a variety of consumer durables. The key aspects to be kept in mind are meeting customer expectations with regard to product features/price. Other Formats Today. During the summer season. Marketing and Promotional Strategies Seasonal offers.. depending on the product. maintenance contracts and rental services. as large number of visitors throng to such fairs. Such exhibitions and trade fairs are often held during holiday and festival seasons. These outlets cater to both retail and wholesale markets. The enquiries thus received are responded to appropriately. such events are held in the names of `Laptop Thiruvizha' (i. CSN Computers has a regular practice of organizing a laptop exhibition in Chennai. facilities and comforts offered. gifts and the like are common promotional strategies adopted for marketing computers. SMS messages are often sent by some computer vendors with special offers. so as to convert as many of them as possible into successful sales. attractive gifts and free home delivery. Laptop Festival) `Computer Corner'. Supreme Computers and Challenger Computer which have market channel sales. Sales representatives from R C Ideal Computers Pvt. some outlets have a small display and demonstration zone. as this is convenient for meeting the requirements of passersby who want to make a quick purchase. also have a counter sales section on the ground floor. which is particularly useful to the student community for purchasing laptops. so as to efficiently conduct and communicate various partnership .

According to insurance industry observers.Saugata Gupta. With even LIC adapting these new channels of distribution. under serviced market. a channel LIC had been using for decades. Life Insurance Marketing in India (B) The Changing Distribution Norms "The key task is to grow the distribution network and tap the huge potential in an underinsured. They also felt that insurance intermediaries and new distribution channels would become the strongest drivers of growth for the insurance sector and that multi-channel distribution would become the norm. India's state owned insurer. Revamping Distribution In early 2002. announced tieups with Corporation Bank. Chief (Marketing). built over decades. They felt that LIC had no option but to explore new channels of distribution to maintain its position as the market leader.and loyalty programs. Reaching anywhere near LIC's vast network. Private insurers began exploring the various distribution channels available instead of concentrating on individual agents. The liberalization of the Indian insurance industry in 2000 led to the entry of private insurance companies with MNC as their partners. was going to be extremely tough for the new players. Life Insurance Corporation (LIC). these companies tied up with established financial services companies and used their distribution network instead of setting up their own network. provide SMS alerts to targeted customers and so on. To minimize cost. Industry observers were not surprised by this move. distribution was expected to emerge as one of the key factors for the success of private insurers in India. Bank of Punjab and Nedungadi Bank for sale of its products through their branches. and providing updated information through pleasant communication are important facets for the successful marketing of computers. the distribution of insurance products/services seemed all set to undergo a radical overhaul. ICICI Prudential Life Insurance. Selling products based on a clear understanding of customers' needs and wants. private insurers decided to rely on aggressive advertising and promotional measures and use hitherto untried distribution channels." . Oriental Bank of Commerce. The aim of the tie-ups was to diversify LIC's distribution channels and increase product penetration. Background Note . Consequently. in 2001.

this was followed by the Indian Insurance Companies Act. the 1928 act was amended and a new act. per capita insurance premium was only $8 in India while it was $4. Later. which was well below the 51% required by the Insurance Bill for controlling the management of the company. These acts allowed the government to collect data regarding life and non-life businesses conducted by both Indian and foreign insurance companies.031. increase in the savings rate and substantial capital formation resulted in tremendous growth in the life insurance industry. Insurance in India. the Indian government set up the Malhotra Committee to suggest reforms in the industry. In 1993. particularly to the lower segments of society. The life insurance business was concentrated in urban areas and was confined to the higher strata of society. Growth in Indian insurance industry was minimal in the 1960s and 1970s because of low savings and the low level of literacy. In other words. the management of these companies was taken over by the Government of India. recommended opening of the insurance sector to private players. only 65 million people were covered by insurance. the insurance market in India was largely untapped. The committee.048 branch offices and army of agents totaling 6. improvement in infrastructure. By the mid-1950s. In developed countries. 1928. LIC launched several group insurance and social security schemes to enhance its reach in the rural areas.800 in Japan. LIC expanded its network all over the country and became one of the largest corporations in India. Various labor unions and political parties in the country opposed the committee's suggestions. In the early 1990s.The life insurance industry in India dates back to 1818. However. LIC had seven zonal offices. LIC was formed in September 1956 through the LIC Act 1956. In addition. the government felt it necessary to reform the industry. the government decided to restrict foreign stake in insurance companies to only 26%. The 'Indian Life Assurance Companies Act' was passed in 1912. the insurance industry lacked sufficient funding and infrastructure. such as growth in the rate of industrialization. which submitted its report in 1994. In 1823.28. India. the Bombay Life Assurance Company started operations in Mumbai. the capital markets. 16 foreign insurers and 75 provident societies were operating in the country. One of the main objectives of forming LIC was to make insurance cover available to a large number of people. and extending insurance cover to larger sections of the population.' insurance penetration in India remained very low. In 1956. R N Jha. improving service standards. Over the years. Over the years. the 'Insurance Act' was passed in 1938. commented in his book. "Insurance coverage has been extended only to about 25% of the insurable population in 40 years". when the Oriental Life Insurance Company set up office in Kolkata. the government took over management control of 106 private general insurance companies and formed the General Insurance Corporation (GIC). Though one of LIC's basic objectives was to 'provide insurance cover to all Indians. As a result. In 1999. provide better coverage to the citizens and to increase the flow of long-term financial resources to finance the growth of infrastructure. In 1972. changes in the economy in the 1980s. 100 divisional offices. . LIC's former Executive Director. 154 Indian insurers. According to reports. 2. There were a host of other arguments against these reforms. per capita insurance premium1 was much higher than in India. with a capital of Rs 50 million. They felt that the entry of private players would lead to job cuts by the nationalized players to make them more competitive.

South Africa's 2. Development Officers received bonuses from the business generated by their agents. A majority of these were collaborations between an Indian company and a leading MNC insurance/financial services company (Refer Table I). Prior to liberalization of the Indian insurance industry. Consequently. they did not make the effort to educate customers about the insurance products being offered. in addition to their salary. According to industry observers. It depended entirely on individual agents. Prior to liberalization. LIC ended up paying bonuses and commissions twice for every new policy and subsequent renewal of premiums ± to both agents and Development Officers. LIC's agents were not well qualified for their work. $823 in Hong Kong and $144 in Malaysia. to make their presence felt and expand their reach. in terms of gross insurance premium. These officers employed and trained a number of agents. largely because LIC selected the wrong kind of people in the first place. and 5% in the US. wherein technical expertise and service excellence would be the key success factors. Despite this. the insurance market changed dramatically. In the same year (1999).8 million agents all over the country. Development Officers earned huge amounts as commissions. no minimum qualification was laid down for people who wanted to become insurance agents. Attracted by the huge. As a result. experimented with new distribution channels. the attrition rate among the agents was very high. the fact remained that more than 75% of the Indian insurable population was untapped. In the world market.7%. $887 in Singapore. untapped insurance market in India. Analysts commented that the private insurers seemed all set to make the industry market-driven.3% and Canada's ± 1. . By 2002. with the entry of new players.3%. the European Union's 25%. To distribute insurance products. one of the main reasons for the low insurance penetration was the poor distribution and marketing strategies adopted by LIC. with 0.9% in India. they cared more for their commissions than the needs of the customer. while the ratio of insurance premium to the Gross Domestic Product (GDP)2 was 9% in UK and Japan. it was only 1.$1000 in Republic of Korea. many private players entered the market after the Insurance Bill was passed in late 2000. However. Japan's share was 31%. It was reported that after only a few years of recruitment of agents. And in 2001. India's share was only 0. which it had trained over the years to distribute its products. However. LIC seemed to have had no strategically devised distribution strategies in place. Agents generally acted like brokers. LIC had an enviable reach. LIC made no efforts to use other distribution channels (Refer Exhibit I for various distribution channels for selling life insurance). though it had the second highest population in the world. due to its monopoly status. The private companies. LIC employed a large number of marketing people as 'Development Officers'. LIC's bid to implement strict incentive schemes and 'career agent' type of distribution failed due to the powerful Union of Development Officers.

a fierce battle commenced in the Indian insurance industry for garnering market share. 21 branches of SBI were distributing SBI-Cardiff's group policies. lack of sales culture within the bank. SBI stood to gain a lot by utilizing the bancassurance channel. had a strong service delivery mechanism. the new distribution channels would not be able to completely replace individual agents. which included agents. it also helped banks increase their Return on Assets (ROA ± annual earnings divided by total assets).000 branches. It was ported that by the end of 2001. Standard Chartered was to act as the corporate agent for the company.. Allianz Bajaj Life Insurance (Allianz Bajaj) planned to build a multi-channel distribution network. Companies such as HDFC Standard Life. it signed a Memorandum of Understanding (MOU) with Standard Chartered Bank for an exclusive bancassurance distribution agreement. He said. it was also pointed out that the partnership between insurers and banks could run into problems. k's existing customers would be very easy for the insurance companies as the banks already had a well-established relationship with their customers.Distribution Initiatives of the New Players Post-liberalization. most of the players believed that individual agents would continue to play a major role in the Indian insurance industry. failure in integrating marketing plans of both bank and insurance company. insufficient product promotions. However. This was because. According to analysts. CEO. Max New York Life. limited database expertise of the bank and inadequate incentives to the bank personnel involved in sales of insurance products. Many analysts believed that bancassurance would play a very important role in India because banks were familiar with the target customers' needs. Bajaj Auto network and other direct marketing initiatives. for distributing their products. even with a constant asset base. According to reports. ICICI Bank and SBI respectively. The most common problems that partners could face were inefficient manpower management. qualified personnel and an organized tracking system for reporting on agents' time and the results of bank referrals. complete integration of insurance and bank products and services. Standard Chartered Finance (a subsidiary of Standard Chartered Bank) was also expected to products. good quality administration. it not only helped insurance companies increase market penetration and premium turnover. (Refer Table III for various bancassurance agreements). According to Anuroop Singh. right from individual agents and corporate agents to bancassurance. Despite the growing thrust on bancassurance. corporate agents and strategic alliances with banks. and the partnership was expected to leverage the bank's 60 branches across the country. "Over 90% of the life . bancassurance contributed to enhanced ROA through fee income. HDFC.. ICICI Prudential Life. New insurance companies used all available channels of distribution. lack of branch personnel's involvement. In late 2001. and SBI Life insurance anch network of their parent companies. Distribution Initiatives of the New Players Contd. ork of over 9. Bancassurance soon emerged as one of the most lucrative insurance distribution channels.

Max New York. IRDA planned to finalize regulations by September 2002 and issue licenses to four categories of brokers . Debashis Sarkar. Mr. Birla Sun Life announced the appointment of Village Extension Workers (VEWs) who would help create awareness about insurance in villages. reinsurance broker. Max New York paid attention to the agent selection process so as to recruit the best talent available. In addition. instead of the mandatory 100 hours stipulated by IRDA. marketing. To increase its coverage in rural areas. Generally. said. Each VEW was put in charge of a cluster of 10-15 villages. LIC ran an advertisement campaign that featured one of its most successful agents to highlight its belief in the individual agent system. HDFC Standard Life decided to rely on individual consultants and corporate agents for distributing its products. It had already tied up with HDFC and some other banks to distribute its products. career seminars and final interview. The company therefore invested 20 manmonths in developing training programs for consultants. these VEWs were from social improvement projects promoted by the Aditya Birla Group of companies. According to company sources. The company adopted the career agent system instead of LIC's general agent system." Max New York worked towards making the quality of its agents its main differentiating factor. the Government of India opened up yet another avenue for distributing insurance products in August 2002: brokers (Refer Exhibit II). direct life insurance broker. and developing selling skills and the right attitude. "Internal employees are all opinion shapers and indirect brand-builders and brand promise needs to be replicated down the chain at every customer touch point. Agents were trained in the various products the company offered and the insurance needs of the customers so that they were in a position to offer them sound advise. Many other major private insurers were laying emphasis on the recruitment and development of quality agents to enhance their brand image in the market and attract customers. individual consultants were expected to play a key role in the sales process. The selection process comprised four stages ± screening. HDFC Standard Life held talks with NGOs that were involved with HDFC's housing schemes in rural areas." The company also made training an ongoing schemes the world over are sold through individual agents. Agents will be the primary channel of distribution in India and so we have invested substantially in training our life insurance agent advisers here. Commenting on the need for training agents. The training covered 152-hours. and ensured that the training program addressed the needs of agents through development of skills and knowledge through a program spreading over 500 hours over two years. but only through a tie-up with an Indian partner and a 26% cap on general insurance broker. Meanwhile. HDFC Standard Life tied up with corporate agents all over country. . The program involved modules on understanding the consumer psyche and the financial market. The company also trained its consultants through institutions approved by IRDA. senior vice president. and insurance consultant (Refer Exhibit III). psychometric tests. Foreign brokerage firms were also allowed. composite broker.

According to analysts. in the not-too-distant future. focusing on both corporate and retail clients (reportedly through a strategic partnership with the Hong Kong based Jardine Matheson group). As marketing. 2002 Exhibit III: Categories of Brokers . private insurers were trying to leverage every possible medium. HSBC Bank announced its intention to set up an insurance brokerage firm in India. The above belief was strengthened by the emergence of another new channel ± the Internet. Private insurers hoped to effectively leverage the strengths of the new distribution channels. Because of increasing competition in a crowded market. Internet kiosks and supermarkets would be selling insurance. even departmental stores. The Tatas also planned to enter the insurance brokerage business. distribution and technical superiority were expected to be the decisive factors for success in the Indian insurance sector in the future. and this figure was expected to grow as Internet penetration increased. Exhibits Exhibit I: Distribution Channels in Life Insurance Exhibit II: Insurance Regulatory and Development Authority (Insurance Brokers and Insurance Consultants) Regulations. With the growing popularity of new distribution channels in the Indian insurance market. around 12% of the insurance products were sold through the Internet. ATMs.What Lies AheadAfter the decision to allow brokerage firms was announced. in 2001. many Indian and foreign firms expressed their interest in entering the Indian insurance market. the new players seemed to have a good chance. According to reports.

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