CHANNEL MANAGEMENT

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SOBHAN

SOMAK

SOMNATH

SOMYA

SOUMYA

SOURAV

347

348

349

350

351

352

IN UNORGANIZED AND MODERN TRADE

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HISTORY

• Founded in 1938- Exporter of dried fish, vegetables and fruits- Flour mill and confectionary machines

• 1950’s economic stabilization- Korean War – Samsung lost all assets- Aimed to rebuild Korean economy; entered the manufacturing industry (sugar,

fabrics)- Became a leader in modern business practices (recruiting from outside)

• 1960’s expansion of key industries- Entered electronics and chemical industries- Established as Samsung Electronics Company in 1969

• USPs• Line Stop Mechanism where anyone can stop the manufacturing in progress to

check or correct defects.• High level of quality control; positioning of brand as a fast moving brand for young

and career oriented professionals.• High degree of performance and style communicated through brand ambassadors

David Beckham, Priyanka Chopra, Emily Pidgeon and James Magnussen.

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FPRODUCT MIX

LED TV

Plasma TV

UHD 4K TV

OLED TV

Semi Automatic

Top Load

Automatic

Front Load

Automatic

Counter Top

Over the Range

• French

Door

• Side By

Side

• Frost Free

• Bottom

Freezer

• Direct

Cool

• Split Air

Conditioner

• Floor Standing

Air

Conditioner

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STORES VISITED IN BHUBANESWARF

We also visited Country Kitchen, where we ripped poor Somnath off.

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DISTRIBUTION CHANNEL

Clearing and

Forwarding Agents

Distributors Retailers

Digital

plazas

Dealers

Multi -

Brand

Retailers

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DISTRIBUTORS RETAILERS, DEALERS, MULTI BRAND RETAILERS

MARKETING COMMUNICATION MIX BY CHANNELS

COMPETITOR ANALYSISF8

LG21%

Samsung21%

Panasonic9%

Videocon14%

Sony22%

Other13%

Flat Panel TV-Market Shares

LG23%

Samsung20%

Panasonic20%

Videocon16%

Sony18%

Other3%

Refrigerators-Market Shares

LG31%

Samsung19%

Panasonic13%

Videocon12%

Sony25%

Washing Machines-Market Shares

LG29%

Samsung27%

Panasonic16%

Videocon11%

Sony17%

Microwaves-Market Shares

Market shares at the national level.

COMPETITOR ANALYSISF8

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

LG Samsung Panasonic LG Samsung Panasonic

20 litres 28 litres

Price Comparison of Microwaves

0

5000

10000

15000

20000

25000

30000

35000

40000

LG Samsung Panasonic LG Samsung Panasonic

26 inches 32 inches

Price Comparision of LCD TV's

0

5000

10000

15000

20000

25000

30000

LG Samsung Whirlpool LG Samsung Whirlpool

Double Door Single Door

Price Comparision of Refrigerators

0

5000

10000

15000

20000

25000

LG Samsung Whirlpool LG Samsung Whirlpool

Semi Automatic Fully Automatic

Price Comparision of Washing Machines

Retail prices at the national level.

SOME KEY FINDINGS IN THE CHANNEL

Demurrage costs Tight control over inventory management. Goods ordered by the dealer or the distributor

must be claimed and stored by them in their inventory. In the event of ordered goods remaining unclaimed, the company has the right to penalise the

distributor or the dealer, as the company has to arrange for extra space through third parties. These costs are to be borne by the dealer or the distributor (in addition to heavy penalties) –

known as demurrage costs.

Trade off between extra goods on display and risk of inventory clearance Based on speculation and consumer trends in buying, dealer may order extra goods. Placement of new goods in strategic places by the dealer (again, based on speculation and

observed consumer habits.) Risk of penalties due to inventory hold-up, against the profit garnered from selling new

goods (say, a newly introduced hot-selling product at that time,) faster based on dealer’s ideas and speculations.

Every square inch of the store has a cost and penalty associated with it.

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ZERO CREDIT policy followed by company when dealing with distributors and dealers.However, the distributor may allow for a credit period of 7 days, depending on the health of the retailer’s balance sheet.

SOME KEY FINDINGS IN THE CHANNEL

OFFERS like goods free with other goods are almost always given by retailers to push sales during festive seasons. Company does rarely gives such offers. Company’s promotions may be through scratch cards, free trips and/or microwave cooking kits etc. Explicit offers are generally made by the retailers.

BIDDING SYSTEM is used by the company to select dealers. Strength of the balance sheet and the reputation of the dealer is looked at before authorizing the dealer.

INCENTIVES to the distribution channel are through certificates of recognition.

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“Har area main sirf ek hi distributor ho sakta hai, aur is area ki distributor main hoon” *

*Slightly adapted from Shah Rukh Khan’s dialogue in Chak De India. *We don’t endorse smoking

MARGINS IN THE CHANNEL*

KEY FIGURES AT SPECTRA ET (DEALER)

• At any point in time, the inventory at SPECTRA ET is valued at 2.5 crores.

• The inventory clearance period is 60 days (approx.)

• The annual sales revenue is 30 crores INR*.

• Annual operating expenditures of 66 lac INR* is recorded.

• Margins offered by the company to the retailer, and the retailer to the consumer is 4 percent and 10 percent, respectively.

*The figures stated above may or may not be inflated, based on the manager’s tolerance level.

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StrengthsNo middle men, so higher margins for company, retailers.

Company has higher control over the retail; better consumer information.

Well experienced retailers with decades of experience

OpportunitiesThe experience and insight of retailers can be used to

sell products better.

Company can utilize the channel for delivering better service.

Better sales as sales people trained directly by company

WeaknessCompany needs to micromanage. Drain on resources.

Risk is borne by company till the product reaches the retailer.

ThreatsOnline stores eliminate the retailers. So better price to

consumers.

Also, retailers can think of using the online channel. *We suggested this to the Spectra ET manager, who looked

bemused at the idea*

SWOT Analysis

SWATTING THE SWOTF8

Visit to the Stores

**Notwithstanding the fact, the pic would be used in a presentation.

The store manager is tired of your questions by now.No comments.

Happy families start at Samsung

AND SAYS, THANK YOU!