With sluggish corporate sales Toshiba is enhancing its VAR program and regional super retail strategy
The upheavals of the region have affected business sentiment and buying to a certain extent. Couple that with the lingering recession of 2010 and you come up with a sluggish corporate buying pattern now visible in the second quarter of 2011. ”Our Middle East markets are on fire right now. So for the markets it’s like flat growth”, says Hesham Tantawi, Vice President, Asbis Enterprises.
Even for Toshiba with a wide range of products, the corporate buying pattern for its notebooks has changed. Toshiba operates in three price bands and typically has not been a price conscious brand. The first price band is the entry level, which is a price conscious band and prone to discounts and price wars. The price band starts at $500 upwards. The second price band is the mid range and ends at the $1,500 price point. This is the volume segment and accounts for close to 40% of Toshiba’s regional business.
The last is the high-end segment, which is above the $1,500 price point and which Santosh Varghese, Regional General Manager, Toshiba Middle East admits is not doing so well. “I think something has completely changed in this segment”. For a segment that seldom looked at the pricing and focussed more on the total cost of ownership, it’s moved towards lowest price behaviour.
In order to boost corporate sales at the high-end segment, Toshiba is focussing on value added channel players on the lookout for last minute deals and pricing. The role of a Toshiba VAR manager would be to maintain relationships with these players so they approached Toshiba and not a competitor at the time of final negotiations. Incentives for both SMB and enterprise facing VAR’s have been announced as part of the recent initiative.
Along with the enhanced VAR program, Toshiba also has a rebate incentive scheme called the “profit for performance”. This is a rebate program which recognizes the commitment of retailers and dealers and rewards performers who achieve volume and product mix targets. For promoters, merchandisers, and other shop floor sales staff, Toshiba has a “sell and win” point system which can be converted into “kind or cash rewards”.
Along with its corporate focus, Toshiba is also revamping its regional super retail strategy. It has brought in more direct and indirect players to manage volumes in this consumer facing channel segment. In UAE and Bahrain it continues to use Al Futtaim Electronics as an indirect channel partner to manage super retailers.
In Saudi Arabia it has direct relationship with Jarir Book stores with its 24 outlets across the country, as well as Extra with its 17 outlets across the country. It uses separate distributor partners for the corporate market and reseller channel segments. Since Saudi Arabia accounts for half of its regional sales and is a captive market, the company has created a special channel structure and a local warehouse to manage the growing volumes.
Across Qatar it also uses Jarir Bookstores as a direct channel partner and is beginning to engage with Carrefour. Across Oman it uses Al Bhawan IT division for corporate sales and Al Bhawan Electronics for its retail sales. For both Qatar and Oman, it uses separate distributor partners for the corporate market and reseller channel segments.
With super retailers themselves enhancing their regional focus and increasing the number of outlets, Toshiba has created its strategic retail partner program. “Since they are present in all the countries, it makes sense to talk to one central point”, explains Varghese. Under this program the sales strategy will be negotiated and finalized centrally but implemented locally.
For super retail promotions across the region, the targets are jointly managed by Toshiba, the distributor and the super retail partner. Since its strategic retail program is transparent to the distributor, Varghese rules out any conflict of interest. And wherever the distributor and the super retailer are the same, as in Saudi Arabia, the model is optimally suited.
In order to set targets with its channel partners, Toshiba uses a market sizing approach. Data from IDC and GfK is used to lock the current and projected base size of a market segment. The target share from the overall market as well as the target share per price band is worked out from the base size. Lastly the company reviews its channel players operating per market and per price band.
As per figures from GfK Retail and Technology tracking, Toshiba had a market share of 23% of the notebook volumes shipped from July to December 2010. And for mobile computers it had a share of 18% of the volume shipped for the full year of 2010. Overall Toshiba’s retail volumes grew by 9% in 2010 over the previous year.
On the logistics side, all imports by regional and local channel partners are first shipped to Dubai as the central hub. From here they are forwarded to the regional channel players warehouses. Shipping orders are placed on the basis of three month forecast and inventory is managed at 30-45 order stock. With a robust product and brand, regional growth appears to be next highlight in this year’s calendar.
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VAR Program
Reseller (SMB+SOHO)
Support during sales
Run-rate pricing
Rebate program
Product training every quarter
Demand generation
Periodic channel news
Access to Toshiba manager
Reseller (Large enterprise)
Support during sales
Run-rate pricing
Lower pricing for volume deals
Rebate program
Product training every quarter
Demand generation
Periodic channel news
Demo systems at discount
Advertising support
Participation in seminars
Supported service fee charges
Access to Toshiba manager
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