India’s Largest Airconditioning Company

Channel Management Strategy

How Vertebrand helped the company’s various channels become more coordinated and the company more profitable

Client Profile: India’s largest central air conditioning companies looks after the cooling needs of large scale corporate and commercial customers. At the time of Vertebrand’s engagement with the company, it had an annual turnover of Rs 2556 Cr, a network of 29 offices, 5 modern manufacturing facilities, 700 dealers and around 2600 employees.

The business challenge

For over 50 years the company had pursued a direct sales strategy through 4 divisions, namely PAD (Packaged Air conditioning Systems Division), RAD

(Room Air Conditioners Division), RPD (Refrigeration Products Division) and CSD (Cold Storages Division). Each Division had their own independent chain of dealers.

The company realized that the independent dealer program for each division was resulting in channels that lacked direction and smaller divisions getting short-changed by multi-line dealers. The Company approached Vertebrand to assist with revitalizing its channel strategy. Vertebrand’s mandate was to develop a Channel Operating Model, Norms for classification of Channel Members, the client’s Value Proposition to the Channel, Channel’s Value Proposition to the customer and ultimately a robust Channel strategy.

What We Did

First we undertook a deep-dive into the existing approach to Business Development in the EMP Division of the company, and the processes adopted. This resulted in a detailed mapping of the EMP market using our proprietary tool V Scan ™. The mapping covered key stakeholder groups like existing customers, potential customers, competitors and industry experts.

What We Found Out

Our 360° study of existing distributors, customers and the company revealed that the competitive scenario and our client’s position in each business varied widely. So did the internal policies and manner of handling channels in each division. Consequently the market in each division was at a different phase of evolution.

We found that apart from the channel, each business required a different mindset and internal competencies to succeed.

Our Solution

To overcome this disparity in the evolution phases explained by the ‘Life Cycle’ concept, we recommended a separate Channel Strategy for each phase in the life cycle. It was recommended that the organization develop a Channel Architecture of Core Dealers and Extended Dealers.

Instead of continuing with the same exclusive Channel Structure for projects and products businesses, our client could benefit greatly from instituting a multi- brand channel for products, in line with market movement.

Vertebrand also realised that the multiple Channel issues that surfaced were mere symptoms of our client’s approach to Channel Management.

Going beyond the scope of our assignment, we recommended strategic changes for the brand internally. It was important that our client start treating dealers like partners, adopting a business approach that went beyond just achievement of business targets.

Given the independence of each division and their different rates of growth, independent profitability would help each division achieve efficiency, optimising operations as a whole.

The Results :

what we triggered was a complete paradigm shift in our client’s understanding and thereafter treatment of its divisions and their dealers, which was key to managing channels efficiently.

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