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What can also be seen from this analysis is that the value chain of the heavy equipment industry in general and construction, farm machinery and heavy truck manufacturing specifically rely on distribution channels to sell to contractors (Byrne, Lubowe, Blitz, 2007).
Distribution Channel Recommendations
The sales cycles in our region are particularly long and often require several different sources of financing for any contractor or agency to acquire heavy equipment for projects. As a result the role of distribution channels has become especially significant given the need for shared risk in the financing of the equipment and shared ownership as well in the form of lease-back arrangements. To create a more differentiated distribution strategy it is crticvally important to give empowerment in the form of advanced credit terms of heavy equipment to distributors and dealers. This approach of the manufacturer in effect becoming the financing partner with the reseller to more quickly underwrite the loan has proven to be one of the more effective strategies in managing channels in heavy equipment industries (Brown, Lusch, Nicholson, 1995). In essence manufacturers must consider their role in the broader distribution strategies of the industry to also partially own the...
In the context of strategic planning on the part of heavy equipment manufacturers the need for creating shared channel programs that alleviate the risk of bad financing obtained entirely by the customer is worth partnering with resellers and distribution channel partners to assist in underwriting the purchase (Shah, 1989). This shared risk approach to managing purchases in distribution channels for heavy equipment products can overcome having customers get their own financing, often at much higher rates and in questionable financial institutions, but also lead to greater brand loyalty as manufacturers seek to be more of a complete solution provided to these companies.
References
Brown, James R, Lusch, Robert F, Nicholson, Carolyn Y. (1995). Power and relationship commitment: Their impact on marketing channel member performance. Journal of Retailing, 71(4), 363
Data Monitor (2009) Construction & Farm Machinery & Heavy Trucks Industry Profile: Global. (2009, March). Construction & Farm Machinery & Heavy Trucks Industry Profile: Global DataMonitor, London, UK.
Shah, R.K.D. (1989). Strategic Planning for Power Equipment Manufacture. Long-Range Planning, 22(5), 98
David Walters, Mark Rainbird. (2007). Cooperative innovation: a value chain approach. Journal of Enterprise Information Management, 20(5), 595-607.
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