V/S

Executive Summary

•Sales organisation and territory design

•Skill sets required by the sales staff, recruitment and selection, various training methods and compensation structure.

•Promotional policies and sales force methods.

•Information on distribution channels, trade margins offered to the dealers.

•Channels for rural and institutional sales for both Samsung and Nokia.

•Insights into the service organization and various areas for conflicts providing concrete solutions in each case.

•Impact of retail and internet on distribution and promotional support given is analysed.

Consumer Durable Industry• Consumer durable industry is growing at a

healthy rate recorded at a CAGR of 10% over Financial Year 2003-12 and is expected to have a CAGR of 13% over FY 03-15.

• Consumer durables revenue was USD 7.3 billion in FY 12 and is expected to have USD 12.5 billion in FY 15.

• Growth which was expected in FY 14 was around 20%.

• Consumer durables market is expected to double at 14.7% CAGR to USD 12.5 billion in FY 15 from USD6.3 billion in FY10.

• Demand from rural and semi-urban areas is expected to grow at a CAGR of 25 per cent to USD6.4 billion in FY15 from USD2.1 billion in FY10

Share of Consumer Durable Market in India Trend in Consumer Durable Sector

Sales of Mobile Phones by Category: Volume 2008-2013

Sales of Mobile Phones by Category: % Volume Growth 2008-2013

Forecast Sales of Mobile Phones by Category: Volume 2013-2018

Forecast Sales of Mobile Phones by Category: % Volume Growth 2013-18

Sales of Mobile Phones by Rural vs Urban: % Retail Volume 2008-2013

Smart Phone vs Feature Phone market share in India

Source: http://www.statista.com/statistics/269487/top-5-india-Smartphone-vendors/

Fluctuations in the market shares of Smartphone in and after 2013

Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 2015 2016 2017

26

32.7 32.9

19

35

29

2422 21.48 20.97 20.47

5

5.9

5

12

4

0 0 0 0 0 0

22

18.817.1

13 15

1820

18 17.490599999999916.995616019999916.509183

Samsung Nokia Trend Analysis With Forecast for next 3 Years

Samsung Nokia Micromax

Tablet Industry

Source: http://www.statista.com/statistics/371138/india-tablet-vendors-market-share/

Samsung was the market leader but Quarter 4 of 2014 shows that iBall now has the lead and Nokia and Microsoft are not amongst the major players and hence shown in others.

Major changes in the target market

Major Changes In Consumer Behaviour

• Initially launched as sophisticated product for the high end customers, but the evolution of technology make it available as low cost product and cheaper call rates opened the gateways for these handsets to rural markets of India.

• Companies focused on the competitive feature phones with emphasis on ease of using to cater the rural market in India.

• From feature phones companies are now more focused on the budget smart phones.

• Continuous increase in disposable income; there has been a radical shift in the attitude and aspirations of the consumers.

• Mobile phones are now an essential part of personal and business life. • With a fast growing younger demographic and rapidly expanding economy,

the country’s smartphone numbers are poised to expand at a much faster pace as compared to rest of the world.

SAMSUNG & NOKIA SALES

SAMSUNG - Sales organisation and territory designSamsung divides Sales Setup in 3 trade zones which are General Trade, Organized Trade and Modern Trade

Key Analysis:•13 different Regional zones based on Geographic & Value based•Regional Manager’s Span of Control 5•Area Sales Manager’s Span of Control 4• Area Sales manager has generally 50-60 promoters under him•20-25 promoters report to a Sales executive/ Supervisor

CEO

Consumer Electronics

IT & Mobile communicatio

n

Device Solutions

Corporate Managemen

t

Mobile Communication

Network Business

Digital Imaging

National Head

Regional Sales Manager 13 Regional sales Manager in India

Zonal Sales Manager

Zonal Sales Manager

Zonal Sales Manager

Zonal Sales Manager

Zonal Sales Manager

Area Sales Manager

Area Sales Manager

Area Sales Manager

Area Sales Manager

Span of controlChain of

CommandSales Supervisors

Few Promoters

20-25 Promoters

Head Office

Regional Office

Branch Office

General Trade

SAMSUNG - Sales organisation and territory designKey Analysis:• Separate Regional Sales Manager under whom there are 2 Managers who are called the Key Account Managers • Span of Control reduces to 2 in Organized TradeReliance Trade•They have a separate structure for trading with Reliance Digital and Stores as per the reliance requirement•Reliance has a Separate Regional Sales Manager (RSM).

• They have Customer based division as in the case of Reliance.

There is a separate sales team for Rural or Institutional sales

Regional Sales Manager Separate RSM for

Organized Trade

Key Account Manager

Key Account Manager

Area Sales Manager

Area Sales Manager

Croma, MobileStore, HotSpot Catering Sales Executive

Span of control

Organized Trade

Do they have Separate Rural / Institutional Sales Team

National Head

Regional G M ( one each for N , S ,W & E)

Regional Sales manager (3 to 4) in

every region

Area Sales Manager

Sales Force

NOKIA - Sales organisation and territory design

• Sales force for general trade is geographic and size driven.i. Based on the no. of counters are divided to each salesperson. Where he visits

approximately 25 counters in a day depending on the size of the market. ii. RSM holds a Regional Office and Branch office is allotted to ASM from where he

operates and handles the sales team.iii. No specific division for the rural region at present. No. of counters visits per day

is approximately 10 as compared to 25 in urban regions.Separate sales force for modern trade like Croma, Reliance digital etc. They have separate regional managers and below them they have 2-3 key account managers who control the sales force.

• Sales force division is based on number of accounts rather than geographic division in the general trade.

• Each salesperson handles 5-15 accounts based on the size of the accounts.• Like in general trade, specific monthly targets are also there for these sales

people.Additionally, they also maintain a sales team to handle E-commerce accounts.

Sales Force is different for general and modern trade.

Education: Graduation is must to join the team as a Sales Representative.Body Language: Subtle body language; make the customer comfortable in interaction. Relational: Representative has to be in touch with Distributers and various retailers

and to handle their issues. Assertiveness: Being while making negotiations, Nokia seeks this quality in its sales

representatives.Presentation and Communication Skills: Good communication skills are necessary in

order to interact with customers in the best possible manner.Attention to detail: With the availability of number of mobile phones and tablets in

the market with minor differences in the specifications the representative must be able to pay attention to these details.

Empathy: To understand the needs of the customer better.

NOKIA - Ranking of skill sets required for sales staff by supervisors and sales staff to see whether they match and the Recruitment and selection process?

SAMSUNG - Ranking of skill sets required for sales staff by supervisors and sales staff to see whether they match and the Recruitment and selection process?

Recruitment for a Sales Executive or promoter : tier 2-3 Graduate colleges (BBA/BA) Recruitment For a Area Sales Manager : Tier 1-2 colleges (Post Graduation Degree) 3rd Party interviews for Sales trainee •Desired Skill Set for a Promoter or a Sales Executive:•Education: Graduation Interpersonal skills: “Street Smart Skills” •Relational: to be in touch with Distributors and various retailers and to handle their issues. Judged By: evaluating the responses according to a Fake Situation provided.• Domain Knowledge: consumer in urban area is generally more knowledgeable and has knowledge of brand and its competitor products. •Attention to detail: Must be able to differentiate in the minute specifications differences in various mobiles , tablets.

3 Phase Training Module• Induction

•1 month (1 week at office, 3 weeks with senior sales representative)•assessment and feedback is done

• Product Training•It includes the knowledge of feature phones, smart phones, tablets, replacement policy, repair policy etc.

•On Job Training (2-3 Months)•company executive at store/ responsible for an area is assigned as the mentor .No target/quota given

SAMSUNG - Judging the effectiveness of different induction and training methods for (sales staff at front line and supervisory level)

Refresher Training and Certifications• Refresher training at regular intervals.• All the promoter or sales executive has to give some internal certification exams and have to clear it in 2/3 attempts else they are resent to training.•They have a strict rule of even firing the executives who fail the certification twice no matter how well he performs in the field.

Area Sales Manager• Variable component is a %of the basic pay• Maximum is 150% of basic for 120% target achievement.• Beyond this no raise is given.

Promoter or a sales executive• Commission per piece sold up-to a maximum of Rs 10,000• Incentive is fixed but is based on target achieved

SAMSUNG - Judging the effectiveness of different induction and training methods for (sales staff at front line and supervisory level)

SAMSUNG - Compensation Structure

% of Basic Pay % Target Achievement110% 100%

80-70% 80%50% 60-70%

20-30% Below 50%

% of Incentive Number of Pieces Sold80% 1000 (example)

100% 2000-3000(1:2/1:3 ratio based on area)

120% MAX 5000 (1:5 ratio)Sales representative of the quarter and year are given the

company mobiles or coupons

Area Sales Manager:• The number of promoters and sales supervisor is allocated by company based on Value of Sales (dealer/retailer) and type of Stores (Big or Small).•Sales-force Automation is minimal. •Sales representative are tracked by calls and payment is still based on post dated cheques. They do have a problem of cheque bouncing.

• Evaluation : based on the target achievement. • It is also based on bringing the payment on time from the dealer which is based on relationship• Area Sales Manager also has a Credibility Matrix according to which he marks for the sales executives or promoters and finally have a ranking matrix to rank them.

• Meetings are done on a weekly basis• Promoter has to visit each dealer atleast once every 3 days to built relationship and cater to his problems• While selling the dealer he has to ensure the ratio of 1:5 for Tablet : Smartphone for big dealers(varies regionally• Ratio varies 1:10 for Tablet: Feature phone sales.• 1:5:8 Tablet: Smartphone: Feature phone sales

SAMSUNG - Method of prospecting and reporting with degree of sales force automation?

SAMSUNG - Sales force evaluation methods

SAMSUNG - Additional Info

Varies Region to region

SAMSUNG & NOKIA DISTRIBUTION

SAMSUNG vs NOKIA - Tracing the route back from retailer to manufacturer to determine levels and intensity of distribution at each level.

Company

Distributor

Dealers Sub dealers

Brand shops Warehouses (online sales2-3 %)

Nokia Chennai factory

Nokia Mother Warehouse, Gurgaon

HCL Distributor

Re-distribution Stockist Supplier (RDSS) DELHI NCR

REGION

Retailers

WEST SOUTH

NORTH EAST

EAST

SOUTH

NORTH

WEST

EBO

• Focus on the general trade rather than online sales. • Goods are delivered directly from the company to distributor to dealers and then to sub dealers. •The brand shops are the exclusive Samsung mobile outlets which receive products on the company billing directly.

NOKIASAMSUNG

SAMSUNG VS NOKIA - Trade margins and other discounts for general trade, Modern retail and the Internet.

NOKIA

HCL Infosystem

Redistribution Stockist Supplier

DealersMicrosoft

owned Retailer Stores

Concept Stores

Margin not declared

18% margin

2% margin6% margin 8% margin

SAMSUNG

•Differentiated as per the types of phonesMBOs -3% for the feature phones and 6% for Smartphone. Display schemes, festive offers, and time to time special discounts as well.•EBOs - 2% less margins as that of the normal retail outlets and display discounts, financial schemes. Samsung also provides the salesman to these EBO's•Sub dealers- 2% for feature phones, 4% for the Smartphone. No special offers/schemes.•Modern retail -additional display discounts Cheaper offerings to enhance the sales for malls.

NOKIA

NOKIA- Major changes in the distribution policies and their impact

Distribution network :-- HCL Infosystems•Over 1, 00,000 retail outlets•800 direct distributors•12,400 channel partners across 15,000 towns and 664 districts.

Microsoft Authorised Distributors provide licenses for resale. Merits by purchasing through a Microsoft Authorised Distributor :•Access to dedicated sales representatives•Online product information and availability•Marketing Support•Pre-sales and post-sales training•Direct delivery for the products you want to resell•Credit services• Licensing experts that can help you configure even the most complicated license solutions for your customers.

Microsoft Authorised Distributors•Redington India Ltd.•Ingram Micro India Limited•Compuage Infocom Ltd

SAMSUNG and NOKIA – Policies for canteen store departments

SAMSUNG -Are there any separate channels for rural?

NOKIA -Are there any separate channels for rural?

• To have high market penetration• Maintains a separate channel for the rural market to reach maximum people• Distribution is more focused on the feature phones. • Only general trade is catered by the Samsung mobile in rural and no franchise is given in the rural i.e. no EBO

•Yes, there are separate channels for rural. •HCLI had an excellent wide-reaching distribution channel and support centres.•Partnership helped Nokia to have a focused approach towards increasing penetration to Rural & Semi-urban areas• Improvement in market share across the country.

Canteen stores department do not cater to the mobile segment for Nokia or Samsung.

SAMSUNG VS NOKIA – FRANCHISE MODEL

•The franchisees are provided by the Samsung in retail sales- "Retail Partners". •The land is owned by the franchisee. To become the retail partner of the Samsung and they have to deposit the franchise fee and a security deposit. •The franchise is only available till tier III towns, not below that. Samsung provides 3 types of franchisees Samsung smart cafe, Samsung brand store and Samsung digital plaza.

SAMSUNG NOKIA

Samsung Smart Cafes• Minimum required carpet

area, between 450 – 600 sq.ft.• Single Plate on Ground Floor.• Minimum ceiling height

required, 10.5 ft.• Minimum Frontage required,

14 ft.• Located in a good Retail

market.• Metros and Tier I, II and III

cities can apply.• Following product categories

available for retailing-Mobiles, Tablets, Laptops, Cameras and Accessories.

Samsung Brand Store• Minimum required carpet

area, 1100 sq.ft.• Single Plate on Ground Floor.• Minimum ceiling height

required, 10.5 ft.• Minimum Frontage required,

14 ft.• Only for shops located in A+

markets and malls in Metro cities.

• Following product categories available for retail-Mobiles, Tablets, Laptops, Cameras, and Accessories

Samsung Digital Plaza• Minimum required carpet

area, between 1100 – 2400 sq.ft.

• Preferably Single Plate on Ground Floor

• Not more than two levels with entrance from the ground floor.

• Minimum ceiling height required, 10.5 ft.

• Minimum Frontage required, 14 ft.

• Located in a good retail market.

• Metros and Tier I, II and III cities need apply.

• All product categories available for retailing.

SAMSUNG – FRANCHISE MODEL REQUIREMENTS

MBO

• 6% margin on Smartphone• No Insurance on the products• Finances for the products worth

Rs.50,000• They get some display schemes

from time to time • Free to choose any product they

want

EBO

• 2% less margin as compared to MBOs

• Free Insurance on the products• Finances for the products worth

Rs.3,00,000• Additional discounts subjected to

the display• They get trained salesman with high

product knowledge• Have to keep all the Samsung

Mobiles• Some special schemes only for EBOs

SAMSUNG - MBO V EBO

SAMSUNG – IMPACT OF INTERNET

• Lower Prices• Non authentic product• Fraud cases• Bills not accepted at the service centres for maintenance• Illegal work • Isn’t fazed by the deep online discounts

SAMSUNG - Additional Info

Totally depends on the dealer that: He may have 2 sales people from Samsung to further train his sales person on a regular basis Or He may not ask for the sales people but may ask for a similar amount of promotion/ discount scheme.MotiBagh—MK Electronics ---5% processing---24% interest rate---Rs3000-4000 higher priced. Thus, credit card holders enjoy more benefits as far as prices are concerned.Local stores—E g Vijay Sales—Less sales people required

NOKIA – IMPACT OF MODERN RETAIL

Nokia assists priority dealers by assisting in the payments for the retail element part of their stores Dealer --takes care of the expenditure incurred on the services other than the retail element. The service charge payments for the retail element --'core' and 'additional' elements, with dealers paying pro-rata with for only those services they all have use of, and an additional element for any extras.

SAMSUNG - PROMOTIONAL SUPPORT

• Samsung uses multiple forms of promotions. • Pulls customers---advertising and pushes product as well---sales promotion • Marketing vehicles across the year covering festive season as well as non festive time. • Many offers and discounts to its trade partners.

NOKIA - PROMOTIONAL SUPPORT

Schemes: Mobile recycling --first introduced by Nokia, multiple schemes to push sales ---added cash bonus of Rs.300-1500/ set for selling a 5 specific lagging set in 4 days. Sales Collaterals: They regularly send in posters and pamphlets of latest releases, updated brochures and handset fact-sheets to assist dealers in closing the sales.Training the dealers: Nokia sends in its executives to dealers to train them on the features and selling points of new launches and handset models not performing to their potential. Dealer encouragement schemes: Cash rewards for making predetermined level of sales Rs.500 to Rs.5000---all expenses paid local/foreign holiday trips for high performers.

NOKIA- Areas of horizontal and vertical conflicts and solutions

Conflict areas:•Low Credit period :just 7 days compared to 15 days offered by Samsung and LG • Low Margins•The damage piece policy•No pressure by Nokia’s executives•Poor after Sales Service

Solution:•Review the margins and the credit period•Have a multiple complaint channels•Push sales executives•Provide better purchase centric schemes to the dealers. •Increase the distribution network

Thank You…