Paras Nasution: Developing a Distribution Strategy

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BUSINESS success does not depend solely on a superior product, aggressive promotion or low price, but also on a clever distribution strategy. This means not only what you sell, but how you sell it.

Paras Nasution, vice president of channel and distribution at Axis, believes in this principle, which he uses to market Axis on the domestic market. Axis is the GSM brand in Indonesia launched by PT Natrindo Telepon Seluler. “We can be superior in any business through an innovative and effective distribution strategy. I want distribution to turn into a sustainable competitive advantage for my company and its products,” said Paras.

Axis is a relatively new player in GSM services in Indonesia. To boost brand awareness, the company recently conducted an aggressive promotional campaign through advertising and events. Strategic distribution is also included in its concerted efforts to win over customers. “The real challenge in this area is to create a system that can make distributors and retailers perform to the maximum in distributing Axis to end users,” he said.

Due to his 15 year’s experience in distributor at Coca-Cola, Paras is highly knowledgeable about how to establish a new distribution network and how to cooperate with distributors. He practically lives his daily life in the distribution world, which is not new to him. Therefore, when he was recruited by PT Natrindo Telepon Seluler in July 2008, he was entrusted with handling Axis’ distribution management.

“In my view, today GSM mobile phones are simply products that are used on a daily basis by numerous people. It is like a daily need. The consumption rate is also very high, therefore the distribution network should be expansive to cover every area to grab every possible customer at all levels,” explained Paras.

To support its strategic distribution networking, Axis cooperates with national and regional distributors that have retail outlets in all major cities in the country. Currently, Axis has a distribution network that covers more than 140,000 retailers and outlets. Another plus point is the company’s sales force, which markets the products directly to customers. The 300-strong sales force makes daily rounds in their sales activities so that it is convenient for potential customers to source the product. “We have also established our own Axis stores in malls and cellular sales centers as well as other strategic locations. Next to maximum distribution coverage, the stores are intended to enhance awareness of the Axis brand,” said Paras, whose hobby is bowling.

Effective distribution, he said, should not only move products to distributors or retailers, but should also be expanded from time to time. Stiff competition among cellular operators has made Axis aggressive in its distributing products to meet market demand and actively promote sales. The success of Axis’ distribution system is proven by the sales figure as well as the number of customers that meet the target set by the company.

By the end of 2008, he said, Axis, which has been in operation for only one year, already has 3.5 million customers. This figure does not include the “churned” cards or cards that have become invalid. The company’s target for 2009 is to almost double its sales to more than six million customers by the end of the year. “We expect more customers in the near future. This is what I mean by the strength of distribution as a sustainable competitive advantage. The company then reaps profits through an innovative and effective distribution strategy,” added Paras.

He admitted that it is not that easy to achieve as it needs a solid plan and execution, because distribution does not deal with the company’s own employees but with distributors and their employees. After establishing a relationship with a distributor, based on distribution coverage, supporting facilities and a distributor’s bona fide reputation, the most vital aspect is to motivate the distributor.

“This aspect is most vital and urgent, creating the optimum motivation for the distributor, that is. Hence, a harmonious relationship between the company’s management and the distributor is expected for the availability of our products so that it is easy for customers to buy them. This convenience for customers will turn into loyalty to our brand, which will ultimately create profits for our company,” he said.

Motivating a distributor can be done through a win-win relationship, extending a contract once a target is achieved and finally giving the distributor trust. The trust element is highly important to motivate distributors. “However, we also have to evaluate distributors’ monthly performance, which is also reported to them,” said Paras.

When the management plans to expand an area or open up a new market, it has to prepare a distributor at the early stages so that the distributor can make the necessary preparations. Asking for inputs from distributors has never been taboo to him as generally distributors are highly aware of the situation in their areas.

Another important aspect is technology. So, besides distributing products through its stores, distributors and retailers, Axis also makes its products available through phone banking so that customers can conveniently recharge their mobile accounts. “Customers don’t have to physically visit our stores or retailers for electronic recharging, but they can do it via phone banking. This technology is also possible for our products,” he said. He added that the company’s sales force not only sells the products but also educates the market, meaning customers, further.

The sales force has been given knowledge on marketing and products and is required to have sales ethics as well as dedication to their work. In their daily sales activities they are also required to wear the official Axis uniform for branding purposes. “They have to guard their credibility in the eyes of our customers, because they reflect the company’s positive image and reputation,” emphasized Paras.

As a result, amid the current tough competition some companies underestimate the role of strategic distribution, while success can be achieved through innovative and effective distribution. Undoubtedly, distribution is the key to the company’s sustainability. “In distribution, it is less important what we sell but how we sell it. The longevity of a company very much depends on its distribution strategy. The method we use to sell our products creates an experience that is different from our competitors. This element, the experience, that is, can grab more customers and at the end of the day turn into profits for the company,” said Paras. (Burhanuddin Abe)

The Jakarta Post, June 10, 2009