INGERSOLL RAND

PRESENTED BY:
Shruti Middha
JN180332
 Ingersoll-Rand

• Leading Firm in Stationary Air Compressor Division (SACD): a business unit of Standard Machinery Group
• Performance and Operations:
• Company level sales, 1985: $2.6 Billion
• Manufacturing: 16 Countries
• Sales offices: 40 Countries selling in total to 120 countries
• Share of the company in the stationary Air Compressor Market: 30%
• Other Players – 10-12% Marketing
• Joy (Centrifugals)
• Sullair (Rotary)
• Atlas Copco (Stationary)
 How should Ingersoll-Rand
distribute Centac-200? Why?
PRODUCT SPECIFICATIONS :
• 200 hp centrifugal compressor
• Spare parts requirement very low (2 % of initial cost per year)
• Operates at very high speeds – 50000 rpm
• Provides “oil-free” air unlike recips and rotaries
• Inadequate repair carried risk of serious damage

Factors to be considered when deciding on the distribution of Centac 200:

• A medium range product falling in 25-300 hp bracket.
• Low Spare Part requirement
• High Technical Support Requirement
• Intensive distributor training needs to be provided.
 Parameters Direct Sales Force
Recips > 250 hp,
Product Type rotaries > 450 hp & all
centrifugals
Sales revenue generated (%) 35%
Cost to company 11%
Highly competent technical
Experience with Centrifugals
selling
Advantages • Well established
service capabilities
• Good addition to the
shrinking line
Disadvantages • Sales force tend to become
‘elephant hunters’
• Partial attention to Centec
200
Independent Distributors Air Centers
Recips < 250 hp & Recips < 250 hp &
rotaries < 450 hp rotaries <450 hp
30% 20%
21% 19%
No prior experience with No prior experience with
centrifugals centrifugals
• Well established • Useful in areas where
network. distributors were not
• Consistent with the successful.
hp portfolio.
• Attention away from • Apprehension in the minds
the smaller of distributors.
compressors.
• Distributor training is
required.
 How should distributors benefit from
Centac-200?How about the Sales Force?

Product they sell: Recips < 250 hp & rotaries < 450 hp
• Increase in revenue and profits of distributor
• Established network :worked in the benefit of the distributors
• Focused attention to Centac-200
• Easy accessibility and serviceability
• Competitor’s Atlas Copco’s product Z series is currently being sold through
distributors
• From the Full Partner Program the distributor could earn commissions for
referring enquiries to the direct sales repand on conversion they could earn a 2%
commission on a lead and 5% in case of active involvement in sales.
Cost Analysis
Cost of Centac- 200 =$225*200= $45000
Installation Cost =12% of $45000
$5400

Spare Parts and Maintenance Cost =2% of $45000

$900

Gross Margin on Compressors =15% of $45000

$6750

Gross Margin on Spare Parts 30% of 900

$270
Distribution Channels
Basis of distinction Direct Sales Force
Nature of the product • All Centrifugals
• Recips 250 hp and above
• Rotaries 450 hp and
above
• Tech. support and
service
Buyer Behaviour Products that requires high
degree of technical expertise
and coordinated sales effort
Cost to Company • 11% of Total Sales
• Sales Representatives
were paid a commission
of 1-3%
Distributors
• Recips below 250 hp
• Rotaries under 450 hp
• Technical and service
support
Large customers that had
relatively sophisticated
buying behaviour.
• 21% of Sales
• Invoiced at 20% off list
price
Air Centres
• Recips below 250 hp
• Rotaries under 450 hp
• Distributed Ingersoll-
Rand products only
Buyer behaviour is less
complex and specifications
less demanding.
Target: Small and medium
machines.
• 19% of Sales
• Invoiced at 20% off list
price
Manufacturer’s
Reps
• Recips 5 hp and below
• DIY Products (do-it-
yourself)
People who use the
compressors for small jobs.
(Mainly small contractors
and plumbers).
• Paid 3% Commission
on Sales