Ginos

Gino SA: Distribution Channel Strategy – Sanket SaoExecutive SummaryGino SA manufactures burners and sells in market via distributor’s channel. Three distributors areresponsible for selling 95% of Gino’s burners in China and hence acquired a major bargainingpower. The distributors have been assigned regions and have to sell only in their specified regions.Feima, a leading boiler, offered Gino for direct sales to get additional discounts of atleast 10% andin return would give purchase 100% of domestic burners, and 50% of commercial and Industrialburners from Gino. Gino is really excited about this offer as it meets its long term objective of OEMaccounts and Industrial segment penetration. Currently, Feima meets its burner requirement throughJinghua, leading distributor of Gino, and hence Jinghua is opposed to this offer. Losing one out ofthree distributers means direct hit on sales and hence Gino has to take this decision very carefully. IfZhou, Marketing manager of Gino SA, decided to accept Feima’s OEM business and deliverburners directly to Feima, Gino is very likely to lose one of its main distributors in China, andultimately harm future sales. It could also have a negative impact on other 2 distributers. If Zhoudoesn’t accept Feima’s offer, Gino will lose the potential opportunity to create an OEM business inChina and potential sales, primarily in Industrial segment. Moreover, it will have to succumb todemands of distributers again, hurting sales in all segments including lucrative Industrial segment.To solve this problem, we found several alternatives and evaluated them not only to resolve thecurrent issue but to address other concerns such as distributor’s bargain power, Industrial segmentpenetration, and acquiring OEM accounts. Alternative 2, which suggest signing OEM contract withFeima in industrial segment and offering discounts on other segment via Jinghua, is the bestalternative and it also meets Gino’s long term goals. 3

4. Gino SA: Distribution...