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Building Sustainable Distribution

Building Sustainable Distribution. Attract Capital Channel Control Profitable Dealers Succession Planning New / Emerging Markets. Distribution …has its challenges. Customer Expectations New Used Rental Service Support. Product Support. Global Competitors. Finance Programs.

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Building Sustainable Distribution

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  1. Building Sustainable Distribution Attract Capital Channel Control Profitable Dealers Succession Planning New / Emerging Markets

  2. Distribution…has its challenges Customer Expectations New Used Rental Service Support Product Support Global Competitors Finance Programs Investment Capital Channel Strategy Marketing

  3. OEM…challenges Attracting investment capital to the dealer network • WANTED - Business partners to share financial risks • Sustainable distribution channels • Get product support closer to the customer • Market pricing – especially with new global competitors • Deliverable brand value – attract dealers / customers • Improve profitability of dealers • Competitive Finance Programs – Wholesale / Retail Profitable dealers sustain delivery systems and grow market share!

  4. Dealer …challenges What’s Going Wrong ? Declining Margins High Coverage Costs Aggressive Rental Companies OEM Direct Sales Service Global Competitors Changing Customer Demands Parts 2003 Script International Inc.

  5. Emerging Markets Sales Parts Service Rental • New Machines Only • Good Margins 15-25% • Weak Financing Plans • Product Support not well established • Difficult to source used machines • Sales Margins for used machines are better 18-35% • Margins good 25-40% • Virtually no machine population • Although profitable no real opportunity for years to come. • Margins good 45-55% • Product Support usually lags behind sales development maybe 6 -12 months • Although profitable - service opportunities are weak due to virtually no machine population • Start-up dealers can work on competitive machines, the only problem is sourcing competitive parts and being able to make a reasonable margin • Usually every market has some pent up demand that will handsomely reward the market leader • Concept generally not widely known / accepted • Excellent Gross Profit 45-55% • Typical weak factory Support for fleet financing • Product offering limited to dealership brands Rental Fleets have high impact • Immediate Cash Flow • Overall contribution to dealer profitability • Positioning for future used machine sales • Positioning with emerging contractors for future sales activities • New brand / product introduction – low risk to end users 2003 Script International Inc.

  6. When Dealer’s Fail…HIGH IMPACT Corporate Profits Market Share Customer Satisfaction Product Support Retail Financing Wholesale Financing Warranty Product Quality Brand Awareness Dealer Profitability

  7. Typical Market Development Dealers are usually averse to inventory that is not floor planned. Rental Fleets don’t just happen…it requires taking calculated RISK. Customers are usually accustomed to taking all the financial RISK. The market really opens up when others begin to share their RISKS of owning and operating the equipment. New Machine Sales Rental Purchase TIME Used Machine Sales Long Term Rental Short Term Rental EndUser Dealer FINANCIAL RISK 2001 Script International Inc.

  8. Take The Lead…. Rental is a proven method in penetrating emerging markets …make it part of your corporate strategy! Waiting for the market to mature is actually high risk. Developing a corporate strategy without real experience and guidance is even higher risk. Consider some guidance from real experts who can propose / evaluate a proven market strategy that is sustainable.

  9. About Us Company established in 1996 • Highly entrepreneurial leaders in the equipment industry with average experience 25 + years • International work / completed projects in (30) countries • Clients include major OEM’s and their dealer organizations, privately owned start-up businesses, trade associations. • Project milestone – assisted CAT dealers in South America to open 72 rental locations in 48 months. • Provided assistance to CAT dealers in Europe during due diligence work on acquisitions of CRAMO / Hewden Stewart • Other clients include Bobcat, Terex, ARA, AED, Komatsu

  10. What We Do Unique Solutions – • What separates our consulting services from the others? • Ability to move quickly • Ability to provide experienced ground personnel (implementation) • Background and experience from a business owners perspective • Background and experience from the customers perspective • Extensive industry background not limited to one individuals background, but rather collaborative best practices approach to solutions • Proven track record with network development / dealer training programs • RESULTS! For more information contact: Larry Kaye (904) 838-3242 lkaye@scriptintl.com

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