Discuss the Company's Channel Management

In spring 2012, the issue of trans-boundary sales arose for China's Weikang
Pharmaceutical Co., Ltd. (Weikang).

Sales of the company's products were allocated to distributors in different

regions, with each distributor enjoying a monopoly within that region.

Issues had been arising with such a rigid demarcation of sales territory. One
question was whether introducing competition between sales agents would lead to
higher sales, or whether regional teams could co-operate and share best practices.

With each party sticking to its own view, the conflict seemed intractable, and
now distributors from different regions were looking for a reasonable solution
Alternatives
Alternative 1 ( for cross Alternative 2( against
boundary sales) cross boundary sales)

 Increasing the existing  Violating the existing

market share. agreement
 Increasing profits and  Resulting in price war
revenues
 Reduced overall profit
 Distributors feel
 Raises internal conflict
motivated
 Minimalistic information
flow
 Discussion Notes  Detailed
execution
Cross – boundary sales will be allowed under following guidelines

1. Meeting of all distributors will called for, which will be headed

by the Regional sales head.
2. A consensus of a market penetration percentage will be taken
say 60%
3. Complete sales penetration in your area first (60% of sales
territory has to be covered)
4. Move ahead to the new area after serving a notice period of
15 days to the distributor of the target area. This will give the
distributor an opportunity to try harder to keep his territory
under him
5. A new distributor will be given 2 years of uninterrupted time
where he will try to convert as much sales as possible
6. If the Regional head is not convinced of his sales drives even
after 2 warnings, he will invite neighboring distributors to
cross the new distributor’s territory
7. Prices of the products cannot be altered at all. Sales efforts
should be focused on approach, pyramid sales, etc.
 Conclusions
 Channel management has become a key critical area of conflict.
 Some Concerns of distributors
1. Bargaining Power could become overstretched if no action is
taken.
2. Serious Punishment might dampen other distributors’
enthusiasm.
3. Imbalances in regional development and thus lead to more
vacancies in various markets.
 Opinions of Distributors
Maximum opinion towards peaceful settlement followed by
economic punishment.
 Opinions of Staff
Maximum opinion towards economic punishment followed by
peaceful settlement.