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Need of the hour: A value-driven business model

Need of the hour: A value-driven business model


The PC market is still evolving in this region despite the global PC market experiencing an overall negative growth. Latest insights from IDC report a 6.2% decline year on year as 2017 came to a close. Understandably, PC peripherals and components are affected by this shrinking market.

Despite these figures, analysts at the market research firm say that the PC market in Middle East and Africa actually achieved healthy growth for the first quarter of Q1 2018. So what do these fluctuating and more or less diminishing market figures mean for the peripherals and components market in the region?

Fouad Charakla, Senior Research Manager, IDC

According to Fouad Charakla, Senior Research Manager, IDC, the recent introduction of 5% VAT in both the UAE and Saudi Arabia had a considerable impact on the market, with some vendors pushing a much higher sell-in for both countries during Q4 2017. Additionally, Charakla says various market players shipped more aggressively into the UAE during the quarter as the implementation of VAT inevitably complicates the country’s position as a re-export hub.

For AOC, one means to generate demand and create a pull factor in the market, is through participation in gaming events at different locations across the region thereby showcasing its range of products.

“We are also targeting universities and Gaming Cafes which ultimately generates the requirements for the channel specialized value partners. The company also features regular loyalty programs and sellout initiatives on continuous basis to help partners focus and grow with AOC,” states Carol Anne Dias, Regional Sales Director – Middle East & Africa at AOC.

The right approach to surface from this situation and generate growth is by moving away from a volume to value-based business model and start clubbing products with services. This means that partners can aim for better margins and move their business beyond the price factor by focusing on offering end to end solutions.

Carol Anne Dias, Regional Sales Director MEA, AOC

Agreeing to this sentiment, Dias adds that the value side of business offers considerably better margins and high profitability as compared to volume business.

Charakla further explains that certain key elements such as credit terms and conditions, after sales services and support can play a key role in setting apart one channel from the other.

Another challenge faced by this segment is the case of fake or counterfeit products. To counter this issue, vendors and channel partners need to work together and keep an eye out for outlets selling such products and report the same to government authorities. In fact, a more effective approach could be educating end-users about the benefits of using genuine products.

Khwaja Saifuddin, Senior Sales Director, Western Digital, Middle East stresses that education has a crucial role to play in safeguarding customers and delivering quality products.

Khwaja Saifuddin, Senior Sales Director, Western Digital, Middle East

“On our part, we offer our partners extensive training and exclusive access to a rich set of marketing tools and continuous support. This way, the partner is made aware of the genuine products, their value and can then deliver based on specific customer needs.”

“In the case of grey or parallel imports, vendors need to implement pricing strategies which deter grey shipments in the first place. In other words, the pricing of products available through official local channels should not be different from the pricing of grey channels. Furthermore, vendors can also regulate the flow of goods through their distribution chain, ensuring that distributors only supply to resellers which sell in the markets they are authorized to sell and discontinuing partnerships with channels which do not abide by such regulations,” explains Charakla.

Here Dias emphasizes that counterfeit products are very minimal in AOC’s line of products. “We ensure each region works within their own boundaries and also create differential packaging to be able to clearly identify region specific stocks. Also, we extend our warranty services with replacement of items immediately for all our loyal partners which can be an issue if grey imports are spotted,” she explains.

Saifuddin further explains that WDC has taken measures to protect its brand and consumers from counterfeit products. We also create awareness about where customers can purchase our products and how to verify genuine WDC products.

For sure, brand loyalty is one way to ensure more margins from the vendors. But the need of the hour is that channel partners move away from a volume driven market to a more sustainable value driven business model, and become specialists in their chosen domain or industry verticals to differentiate themselves in the market. This will enable them to prevent their business from being under constant pressure of competing with other partners on just pricing and help them make better margins.



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