Memory Module
Zion steals the DRAM show
This is the first time that CRN has included memory (DRAM) modules in its annual Channel Champions survey, and the results are surprising. Zion, the local memory brand, outscored global brands Kingston and Transcend in memory modules as a result of its strong warranty support, streamlined distribution, aggressive pricing and consistent product quality.
Kingston rated as the second most preferred brand followed by Transcend. Despite having strong brand pull, both Kingston and Transcend failed to make it to the top due to parallel imports and the availability of gray products. This led to pricing disparities and confusion over warranty support, and eventually to a negative impact on the business of authorized channels.
Respondents noted that the market for memory modules in the country remains extremely fragmented, and the influx of gray and parallel imports continues unabated.
Product availability
On this parameter Zion scored ahead of Kingston and Transcend. Being a local brand means that there are hardly any parallel and gray imports. Also, the company operates through select sub-distributors to ensure there is no over-distribution.
A problem Kingston faced during 2009 was the influx of counterfeit products, mostly in the USB memory segment, which many respondents say made them cautious and apprehensive while dealing in PC memory as well.
A few sub-distributors polled said that Transcend’s importers often bring in products at their convenience, thus creating small pockets of non-availability.
Price-performance
DRAM modules saw a major price rise during 2009 with prices going up by almost 80 percent. For instance, the average selling price (ASP) for a 2GB DDR2 module which was Rs 1,100 at the beginning of 2009 went up to Rs 2,100 by the end of the year. Respondents rated Zion higher than its peers on price-performance. Zion is perceived to be a brand that uses branded Hynix memory chips; its average prices are 5-10 percent lower than those of Kingston and Transcend.
While on performance and quality of products Kingston and Transcend both have a very positive image among channels, it is the price disparities owing to gray and parallel imports that affected their price-performance rating.
One of the issues highlighted by respondents is that Transcend needs to ensure the same pricing from all importers, which is currently not the case; the prices of its memory varies as much as 10 percent from various importers.
Partner profitability
Both Kingston and Transcend witnessed parallel imports which impacted the market operating price (MOP), resulting in lower margins. Zion being a local brand was immune to such issues, and thus offered better margins. Also, the company prefers to operate through a select number of sub-distributors which prevents over-distribution and price undercutting. As a result, Zion was rated higher followed by Kingston and Transcend.
Marketing and training
Kingston has the strongest brand pull in the market followed by Transcend and Zion. This is owing to the marketing spends by Kingston on its wide-ranging portfolio. Transcend has a wide portfolio of products, but compared to Kingston it does less customer marketing. Zion lacks brand pull and customer awareness, and is largely a push brand.
Overall, Zion ranked higher on this parameter as many respondents said that the company does at least one event in their city. Zion is also prompt in giving information about new products and pricing. By contrast, both Kingston and Transcend were found wanting as these vendors don’t even circulate reference pricing among resellers which many believe is important in differentiating genuine and authorized products from the fake and gray. However, Kingston last year undertook several initiatives to educate customers and resellers about counterfeits. Transcend needs to improve on this aspect.
Post-sales support
With its 20 direct offices and over-the-counter (OTC) replacement policy, Abacus Peripherals (the makers of Zion) scored over its competitors. Even in smaller cities respondents said that they could avail of the OTC facility. What worked against both Kingston and Transcend is that the influx of parallel and gray products gets mixed and sold along with genuinely imported products, thus leading to warranty issues.
Transcend was ranked third on this parameter because of its policy of providing warranty through its importers. This led to several complications because every time a warranty issue came up the modules had to be taken to the same importer they were bought from. In Q3 2009 Transcend signed up Accel India as its sole national authorized service provider (ASP); however, this only aggravated the problem because the ASP was flooded with all the pent-up repair and replacement requests.
Channel policy and management
With more legs on the field, Zion managed to impress partners with its overall channel engagement and management initiatives. The company outscored both Kingston and Transcend on parameters such as better price protection policy, back-end rebate management, and accessibility to channel managers. Kingston has a strong channel engagement in the western region and in class A cities; in other regions it needs to improve its channel management. Transcend needs to engage more with resellers on a regular basis; it also needs to streamline its distribution in the country.
<< back to the List
|