With metro markets saturating, distributors have set their sights on the interiors of Maharashtra for better opportunities. Whilst a lot needs to be done here, channel partners have reason to rejoice.
Maharashtra has some of the most versatile IT markets in India. From the highly developed Mumbai to nascent markets like Satara and Sangli.the state has it all. We spoke to distributors and channel partners across the state to understand the commonalities among them and analyzes where the state.s IT market is headed.
The Market
Since Mumbai has a highly developed IT market, boasting advantages that no other city has, this article will focus on emerging markets like Nagpur, Ahmednagar and Jalgaon. Even in Pune, the awareness levels are quite high compared to the other markets in the state. For instance, in Pune price points are not a concern since distributors claim that high end products can be easily sold in this market. But in Pune as well as other key markets in Maharashtra, the home segment continues to be the main stay of the market. Most are reference customers, who according to Prashant Dethe of Nagpurbased Infosoft Systems, help the channel push new schemes in the market.
But thanks to the efforts put in by manufacturers, and distributors like Rashi, Redington, Ingram Micro and others, the awareness in these markets has been on the rise. Jalgaon.s many trading concerns, for instance, have been slowly opening up to the potential of IT. It has been increasingly looking towards IT for improving efficiency and reducing costs. The education sector is another key market. Cities like Pune, Ahmednagar, Nagpur, etc are known for its educational institutes. Distributors have been working towards increasing awareness about IT in these institutes.
The government sector has also been adopting technology rapidly. Huge untapped potential still exists, as, according to Sanjay Choudhari of Jalgaon-based Computer Beam, 25 percent of government offices are still not computerized.
But PC penetration is not the only opportunity for the IT products distribution community in Maharashtra. The sales of non-PC products have also been on the rise. Says Choudhari, .For every PC sold an equal number of UPS and printers are being sold. There are very few buyers who don.t invest in these peripherals..
Margins
Another key differentiator between these emerging markets and the developed markets is the margin channel partners stand to make. Says Balasaheb Damodar Shelke of Ahmednagar, .We get better margins than distributors in Mumbai, as the competition is much lower here.. While Choudhari agrees that the margins are better, he feels that there has been on a downslide. But this is more than compensated by the rise in sales volume. Says he, .Margins have dropped but sales have increased. So though we might not be earning more per PC we are selling more units..
Branded or Assembled
One interesting factor that emerged from the study of these markets was the demand for branded PCs. Distributors feel that the drop in prices is one of the key reasons for this trend. Also, the government and SME sectors opt for branded PCs. But the home segment still shows a preference for the neighborhood assembler, as this provides them the option of customizing the PC configuration.
Strategy
Most of the population in these markets is spread in the villages. This calls for a different marketing strategy from that followed in the developed markets. More often than not the goods are sold on the basis of personal relationships. Shelke feels that since awareness is low in most of these markets it is important to work towards increasing the knowledge about IT and its benefits. Providing interactive educational CDs will, according to Shelke, help increase interest in education while boosting PC sales. Manufacturers and distributors also provide support through training in products, technical support and product awareness programs.
Service
Service plays an important role, as only good service can help build the business. According to Choudhari, partners compete mostly on the basis of price. But he feels that around 25 percent purchase on the basis of the service they perceive they are likely to receive. But Shelke feels that partners have to reduce the rates for price conscious customers. It also has to be made clear that only carry-in warranty will be provided, and that there will be an extra charge for installation.
Issues
The channel complains that there is a dearth of service centers in the city. Most of the centers are located in the bigger cities. Hence, getting replacements might take 15-20 days. But customers are generally not willing to wait that long. Timely payment is another problem faced by most distributors. Says Choudhari, .If resellers don.t pay me on time, even I can.t fulfill my credit obligations.. Currently, local IT associations are working towards improving this situation.
The Future
Increasing awareness has seen the markets in up-country Maharashtra climb rapidly up the growth path. Whilst there are still areas that need to be tapped this shouldn.t stop distributors from introducing new technologies. The launch of new products is bound to create an upward movement in the market, as can be seen in more mature markets.
Education and awareness, especially in the lower levels, continue to remain low. People are still skeptical about the actual use of computers. Most look at it as an entertainment device, which needs to be changed.
Maharashtra has some of the most versatile IT markets in India. From the highly developed Mumbai to nascent markets like Satara and Sangli.the state has it all. We spoke to distributors and channel partners across the state to understand the commonalities among them and analyzes where the state.s IT market is headed.
The Market
Since Mumbai has a highly developed IT market, boasting advantages that no other city has, this article will focus on emerging markets like Nagpur, Ahmednagar and Jalgaon. Even in Pune, the awareness levels are quite high compared to the other markets in the state. For instance, in Pune price points are not a concern since distributors claim that high end products can be easily sold in this market. But in Pune as well as other key markets in Maharashtra, the home segment continues to be the main stay of the market. Most are reference customers, who according to Prashant Dethe of Nagpurbased Infosoft Systems, help the channel push new schemes in the market.
But thanks to the efforts put in by manufacturers, and distributors like Rashi, Redington, Ingram Micro and others, the awareness in these markets has been on the rise. Jalgaon.s many trading concerns, for instance, have been slowly opening up to the potential of IT. It has been increasingly looking towards IT for improving efficiency and reducing costs. The education sector is another key market. Cities like Pune, Ahmednagar, Nagpur, etc are known for its educational institutes. Distributors have been working towards increasing awareness about IT in these institutes.
The government sector has also been adopting technology rapidly. Huge untapped potential still exists, as, according to Sanjay Choudhari of Jalgaon-based Computer Beam, 25 percent of government offices are still not computerized.
But PC penetration is not the only opportunity for the IT products distribution community in Maharashtra. The sales of non-PC products have also been on the rise. Says Choudhari, .For every PC sold an equal number of UPS and printers are being sold. There are very few buyers who don.t invest in these peripherals..
Margins
Another key differentiator between these emerging markets and the developed markets is the margin channel partners stand to make. Says Balasaheb Damodar Shelke of Ahmednagar, .We get better margins than distributors in Mumbai, as the competition is much lower here.. While Choudhari agrees that the margins are better, he feels that there has been on a downslide. But this is more than compensated by the rise in sales volume. Says he, .Margins have dropped but sales have increased. So though we might not be earning more per PC we are selling more units..
Branded or Assembled
One interesting factor that emerged from the study of these markets was the demand for branded PCs. Distributors feel that the drop in prices is one of the key reasons for this trend. Also, the government and SME sectors opt for branded PCs. But the home segment still shows a preference for the neighborhood assembler, as this provides them the option of customizing the PC configuration.
Strategy
Most of the population in these markets is spread in the villages. This calls for a different marketing strategy from that followed in the developed markets. More often than not the goods are sold on the basis of personal relationships. Shelke feels that since awareness is low in most of these markets it is important to work towards increasing the knowledge about IT and its benefits. Providing interactive educational CDs will, according to Shelke, help increase interest in education while boosting PC sales. Manufacturers and distributors also provide support through training in products, technical support and product awareness programs.
Service
Service plays an important role, as only good service can help build the business. According to Choudhari, partners compete mostly on the basis of price. But he feels that around 25 percent purchase on the basis of the service they perceive they are likely to receive. But Shelke feels that partners have to reduce the rates for price conscious customers. It also has to be made clear that only carry-in warranty will be provided, and that there will be an extra charge for installation.
Issues
The channel complains that there is a dearth of service centers in the city. Most of the centers are located in the bigger cities. Hence, getting replacements might take 15-20 days. But customers are generally not willing to wait that long. Timely payment is another problem faced by most distributors. Says Choudhari, .If resellers don.t pay me on time, even I can.t fulfill my credit obligations.. Currently, local IT associations are working towards improving this situation.
The Future
Increasing awareness has seen the markets in up-country Maharashtra climb rapidly up the growth path. Whilst there are still areas that need to be tapped this shouldn.t stop distributors from introducing new technologies. The launch of new products is bound to create an upward movement in the market, as can be seen in more mature markets.
Education and awareness, especially in the lower levels, continue to remain low. People are still skeptical about the actual use of computers. Most look at it as an entertainment device, which needs to be changed.
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