Cross-selling is increasingly becoming the mantra
for companies to leverage their existing distribution
strengths. Companies today ride on their distribution
strengths to promote even unrelated products. CavinKare,
a manufacturer of hair care, skin care and personal
care products is a case in point. Taking advantage
of its strong distribution network, the company has
launched pickles and powders under the brand name
`Chinni'. This process helps the manufacturer in increasing
his efficiencies, the customers in getting a better
choice of products and the distributor in getting
his margins.
Similarly,
in the services sector in India, banks have begun
to realize that they are endowed with a well-developed
branch network of over 60,000, which reaches the nook
and corner of the country. This model is impossible
to be replicated easily, and therefore, if utilized
in a proper manner can augment their non-interest
income. Additionally, for any new financial product,
banks can act as the quickest and the most reliable
channel to reach the customers. This thinking has
been reinforced by the fact that there is a severe
competition in the traditional banking business of
taking deposits and lending to the required sections,
which has resulted in the thinning of spreads. Similarly,
there have been the processes of disintermediation
resulting in the corporates improving their financial
systems. Thus, they become less inclined towards borrowing
from banks. In fact, a few corporates now want their
companies to be debt free; zero debt is the in-thing
today. The treasury function and the cash management
services, which offered good yields a few years before,
are also on the decline mode with returns declining
substantially.
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