Sullair: Redefining its Channel of Distribution

Abstract

This case examines the interplay between Sullair, an air compressor manufacturer, and its channel of distribution. Unlike the two market leaders, Sullair has chosen not to compete with its distributors and offers them exclusive territories so as to minimize any intra-brand competition. The tension in the case is to understand the quid pro quo between Sullair and its channel. One would expect that, in exchange for exclusivity, the channel would recognize that it must allow Sullair some degree of input into certain decisions that have traditionally been controlled by the channel. The case traces the decisions that Sullair must consider in its attempt to gain more influence over the actions of its channel partners, who are seen as an extension of the Sullair sales force. Excerpt UVA-M-0772 April 21, 2009 SULLAIR: REDEFINING ITS CHANNEL OF DISTRIBUTION Introduction In February 2007, John Thompson, vice-president and general manager of customer care at Sullair, was drafting his presentation for the Sullair distributors' conference in Florida. Although the conference was an annual event, the agenda for this year's conference had taken the previous six months to prepare. Some of the issues that remained unresolved were Sullair's current go-to-market strategy, its overall growth objectives—in light of its plan not to increase the number of distributor partnerships—and the performance measurement tools required to standardize the end-use customer experience. To be consistent with the Sullair culture, both the agenda for this meeting and the proposed strategy would revolve around the end-use customers' experience. Thompson had commissioned an extensive survey to provide the data upon which the new go-to-market strategy would be built. The survey was intended to gather information from both distributors and customers and reflected both the end-use customers' experiences and distributors' perceptions of their relationship with Sullair. Sullair was very mindful that customers did not differentiate between the company and its independent distributors. In the minds of the end user, the distributors simply were an extension of Sullair—Sullair's face to the marketplace—and were viewed as Sullair's external sales force. Yet due to the autonomous nature of the relationship with its channel, Sullair had difficulty imparting to them a sense of urgency for growth; many distributorships were managed to provide the principal owners adequate sales to support a comfortable lifestyle, with little motivation to grow their business as Sullair might have wished. . . .