The residential whole-house air conditioning and heating industry provides an example of
a typical set of distribution and competitive relationships. Heating and air conditioning
equipment is sold to local contractors who, in turn, sell installed systems to builders and
homeowners. The first challenge for manufacturers is the size of the customer base: over
10,000 small, under-capitalized, local contractors in the US. Second, there is a major
logistics requirement in the sales and distribution process, since many local contractors
need equipment delivered in one or two days in order to make emergency replacements
during the height of the heating or cooling seasons. Finally, whenever heating or cooling
technology changes, local contractors need to be trained in how to select and then install
the new system, creating a need for the sales channel to convey information and technical
assistance on a regular basis