1. GROUP 6 INGERSOLL RAND

2. INGERSOLL-RAND: COMPANY OVERVIEW Leading firm in Stationary Air Compressor Industry. Market share = 30% of $660 million market Multiple Channel Distribution: Direct Sales Force Independent Distributors Company owned distributors – Air Centers Manufacturers’ Representatives By and large there were no territorial overlaps. Even though the product lines for different channels were clearly defined, channels at times competed with each other. Other Players (10-12% Mkt Share) Joy (Centrifugals) Sullair (Rotary) Atlas Copco (Stationary)

3. INGERSOLL’S DISTRIBUTION CHANNELS Sales ForceDistributorsAir CentersManufacturers’ Reps What do they Sell: All Centrifugals Recips 250 hp and above Rotaries 450 hp and above Buying behaviour: Products that requires high degree of technical expertise and coordinated sales effort Cost to Company: 11% of Total Sales Sales Representatives were paid a commission of 1-3% What do they Sell: Recips below 250 hp Rotaries under 450 hp Buying behaviour: Large customers that had relatively sophisticated buying behaviour. Cost to Company: 21% of Sales Invoiced at 20% off list price What do they Sell: Recips below 250 hp Rotaries under 450 hp Buying behaviour: Buyer behaviour is less complex and specifications less demanding. Target: Small and medium machines. Cost to Company: 19% of Sales Invoiced at 20% off list price What do they Sell: Recips 5 hp and below Buying behaviour: People who use the compressors for small jobs. Selling mainly DIY Products. Cost to Company: Paid 3% Commission on Sales

4. CENTAC 200 HP COMPRESSOR COSTS Cost of Centrifugal/Hp $225 Cost of Centac-200 =200*225 =$45000 Installation Cost =2% * 45000 Cost of Centac with Installation =45000+900 =45900 Spare parts and maintenance sales/yr = 2%*45000 =$900 200 Hp centrifugal compressor. Overall market : 44$ million Low Spare Part requirement(2% of costs) High Technical Support Requirement Operates at very high speeds(50,000rpm)

5. EVALUATION OF ALTERNATIVES DISTRIBUTORS Pros: Well established Network. Prior experience with handling similar HP Products. Competitor’s Atlas Copco’s product Z series is currently being sold through distributors. Placing the product along side the competition will be advantageous. Cons: May shift Distributor's focus away from small compressors. Low spare part requirement may reduce the attractiveness of the product. Requires intensive distributor training. Risk of depending on a channel that cannot be completely controlled. DIRECT SALES FORCE Pros: Well established service capabilities No additional training required Can serve as an addition to the shrinking line of direct sales products Better control for IR management Currently only distribution channel selling a centrifugal compressor. Cons: Risk of being ignored by sales force because it is a lower end product. Sales through Sales force shows a declining trend.