Provide a response to Case 9 The TJX Companies, Inc. (p. 437)—a.docx

Provide a response to Case 9: The TJX Companies, Inc. (p.
437)—answer the question at the bottom of text on page 445
(last paragraph). Also, Do not "Design a three year strategic
plan..." as outlined in the final statement.
In lieu of this question, you are to answer the following
questions:
Develop the projected financial statements that fully assess and
evaluate the impact of your proposed strategy. This should
include a full balance sheet, income statement, and EPS/EBIT
analysis.
Therefore, the 2 items to complete questions/statements are the
following:
1. How aggressively should TJX expand globally, and where,
and when, to maximize the value of the company for
shareholders?
2.Develop Projected Financial Statements that fully assess and
evaluate the impact of the proposed strategy. This should
include a projected income statement, balance sheet, and
EPS/EBIT analysis.
You will need to use information contained in Chapters 7 and
8 in order to successfully complete this assignment.
Write a 2 page paper with 2-3 references discussing supply
chain and distribution channels. You may include one or two
small graphics to further explain your position.
In your paper explain how you would set up your supply chain

and the distribution channel of your product.
Additionally answer the following:
· How would you improve logistics that are commonly used
today in order to get your product in the hands of the consumer?
Include a cover sheet and 2-3 references. Please see attached to
use as references Please adhere to the Publication Manual of
the American Psychological Association (APA), 6th ed., 2nd
printing when writing and submitting assignments and papers.
Write
a 2 page paper with 2
-
3 references discussing
supply chain
and
distribution
channels
.
You may include one or two small graphics to further explain
your position.
In your paper explain
how you would set up your supply chain and the distribution
channel
of
your product.

Additionally answer the following:
·
How would you improve logistics that are commonly used today
in order to get your product in the
hands of the consumer?
Include a cover sheet
and 2
-
3 references.
Please see attached to use as references
Please adhere to the Publication Manual of the American
Psychological Association
(APA), 6th ed., 2nd printing when writing and submitting
assignments and pape
rs.
FORESIGHT Fall 20164
Forecasting PersPectives
INTRODUCTION:
THE SUPPLY CHAIN TRIANGLE
Companies are struggling to balance service to customers,

supply chain
costs, and inventory, a balancing act I
depict as the supply chain triangle of Fig-
ure 1.
First, the company needs to deliver service
to customers, the quality of which is af-
fected by the lead time between order and
receipt, the reliability of that lead time,
the breadth of our product portfolio, and
the flexibility of the ordering process.
Second, it tries to deliver that service at
minimal cost. There’s the cost of purchas-
ing, of manufacturing and distribution,
and of after-sales services.
Third, since the financial crisis, companies
are increasingly concerned with their in-
ventory position, which forms the major
element of their working capital.
DIFFERENT STRATEGIES
LEAD TO DIFFERENT TARGETS
In their book The Discipline of Market
Leaders (1997), Treacy and Wiersema ar-
gue that a firm can only be successful if
it pursues a particular long-term strategy.
They classify strategies as Operational
Excellence, Product Leadership, or Cus-
tomer Intimacy. Table 1 summarizes
the features of each.
Figure 2 maps these strategies within

the supply chain triangle.
• The Cost Dimension. The Opera-
tional Excellence player should have
the lowest cost, since that’s its pri-
mary purpose. At the other extreme,
a Product Leader will have the high-
est cost because it requires signifi-
cant investments in R&D as well as
marketing to create awareness. I place
Customer Intimacy in between the
two.
The Impact of Strategy on Supply Chain and Forecasting
BRAM DESMET
PREVIEW In this provocative article, Bram Desmet explores
how a company’s market strategy
affects its supply chain targets and forecasting methodology.
The author introduces the con-
cept of the supply chain triangle to illustrate the balancing act a
company must perform to
achieve the cost, service, and inventory mix that maximizes its
return on capital employed. He
then shows how the company’s strategic choice, be it
operational excellence, product leader-
ship, or customer intimacy, influences the position it seeks on
the supply chain triangle and,
in particular, its inventory targets.
Figure 1. The Supply Chain Triangle
Table 1. Strategy Paths in the Treacy-Wiersema Model

https://foresight.forecasters.org FORESIGHT 5
■ Many companies struggle to balance service to
customers, supply chain cost, and inventory. This
is the essence of supply chain management. The
supply chain triangle enables us to visualize the
trade-offs among these targets.
■ The firm’s strategy, as defined by the Treacy-
Wiersema model—operational excellence, prod-
uct leadership, or customer intimacy—affects the
way it strives to balance its supply chain targets.
Each has a different effect on inventory, cost, and
service.
■ A functionally oriented organization and
misaligned departmental performance measure-
ments can create conflict that impedes the firm’s
ability to achieve these targets. Optimizing the
triangle requires those responsible for each of the
functional areas to work together, aligning their
overall objectives and performance metrics.
■ Firms commonly set inventory targets based on
benchmarking—for example, by studying inven-
tory turns for companies in the same industry.
However, one-dimensional benchmarks and the
associated targets (an inventory target without
targets for service or cost) are dangerous in prac-
tice: benchmarking needs to consider the entire
supply chain triangle of objectives, and the analy-
sis of the benchmarking data needs to evaluate
the company position, factor in the supply chain
strategy, and set targets appropriately.
■ The strategy and the associated supply chain

objectives create challenges in product forecast-
ing: forecasting techniques as well as tactics for
dealing with demand uncertainty will differ based
on whether the company pursues operational
excellence, product leadership, or customer inti-
macy. Improved forecasting is always beneficial,
as it will improve service while reducing both cost
and inventory.
Key Points
• The Inventory Dimension. I expect
the Operational Excellence player to
require the lowest inventory. Simplic-
ity drives efficiency. This firm will try
to eliminate slow-moving products in
its effort to maximize efficiency. I’ve
again placed the Product Leader at the
other extreme. Newer products tend to
be more complex, necessitate delivery
in niche markets, and require special-
ized suppliers of components and raw
materials. Moreover, not all the new
products will achieve full market po-
tential. All these factors contribute to
high inventories with high risk. Again
the Customer Intimacy player settles in
between. To increase its market share
among key customers, it typically must
extend its product and service portfolio,
requiring extra inventory as compared
to the Operational Excellence player.
On the other hand, Customer Intimacy
players don’t have the gross margins of
the Product Leaders, so they need to
carefully control complexity.

• The Service Dimension. Here the Op-
erational Excellence player is the most
basic, although it will not necessarily
deliver bad service. We rank the Prod-
uct Leader highest in Service. It will be
able to drive the highest gross margin.
Working with the newest and the best
goes beyond the functional to become
emotional. Its marketing aims to create
that “special feeling” of being part of
that select club. The Customer Intimacy
player will drive a higher margin from
the intimacy proposition, but not to the
level of the Product Leader.
So each strategy involves trade-offs
among cost, cash (inventory), and ser-
vice. But which trade-offs are acceptable
and which are not? Which have acceptable
financial results and which are problem-
atic? What principles exist to determine
whether a particular strategy will actually
work and what the consequences may be?
In the following sections, I’ll analyze the
impact of the different strategies on the
Supply Chain Triangle. But first, let’s con-
sider
• the kinds of decisions made in the ab-
sence of some statement of strategy;
• how organizational structure and de-
partmental metrics can inappropriately
affect decisions and trade-offs.

DECISION MAKING IN
THE ABSENCE OF STRATEGY
Absent a defined strategy, supply chain
objectives will not be balanced. Consider
the Acme Supply Chain Company, a not
too atypical example of strategy or lack
of it:
The Apex Supply Chain Company believes
in supply chain management. Recently,
the VP of Procurement has signed major
sourcing deals with companies in the Far
East in a bid to lower cost. Its fabrication
unit has noticed that purchasing lead
times have become longer, so it decided
that to maintain the same service level
in assembly operations it must increase
stocks of raw and purchased materials.
And, because of the long lead times for
ocean transport and reduced supply chain
flexibility, sales and marketing have de-
manded increased finished-goods inven-
tory levels. “If we can’t be fast on our feet
anymore, we’ll have to carry more inven-
tory.”
Sales wants to increase market share and
turnover, so pushes to introduce new prod-
ucts. If done well, an expanded product
portfolio will support top-line growth. At

the same time, however, it will increase
the required amount of inventory. But
then, that’s not the sales organization’s
problem, is it?
As inventories grow, the CFO launches
a program to slash stock, and the VP of
Manufacturing orders that safety stocks
be lowered, with the natural and im-
mediate effect of lowering inventory but
also negatively impacting service. As
customers are experiencing service issues,
firefighting measures are put in place that
increase operational costs.
Conclusion: in the absence of strategy,
many initiatives are taken, some to re-
duce cost, others to reduce inventory, still
others to improve service and revenue.
The problem is that they aren’t coordinat-
ed, so conflicts arise. Because they lacked
a common and aligned goal, none of the
individual supply chain targets could be
reached.
TRADITIONAL ORGANIZATION MODELS
AND METRICS CREATE TENSIONS
A typical manufacturing organization is
structured functionally, as depicted in
Figure 3. The VP of Sales thinks about
how to hit the top-line target or how to
improve market
share. The VP of
Purchasing is wor-

ried about how to
reduce spending by
consolidating vol-
umes and increas-
ing leverage. The
VP of Operations
Figure 2. Strategy Mapping within the Supply Chain Triangle
Figure 3. The Organizational Chart in a Manufacturing
Company
is concerned with maximizing efficiency,
since efficiency is the main driver for
the manufacturing cost. The CFO will
be looking after financial targets such as
earnings per share or inventory turns.
And each of them will have performance
measurements for their own department
to measure how they are doing.
From the perspective of the supply chain
triangle (Figure 4), Sales and Market-
ing will primarily pull the service side of
the triangle and Operations primarily
the cost side. In some companies, that’s
where it stops: a battle between Sales and
Operations resulting in huge swings in in-
ventory. The CFO may bring that to a halt
and require less inventory. But that pro-
cess has less to do with company strategy
than it does with “protecting your own

turf.” In fact, there is no guarantee that
any department’s actions will be consis-
tent with company goals and objectives.
Should we be concerned about this kind
of decision making? Won’t there always
be conflicting objectives for sales, op-
erations, and finance? Isn’t that tension a
source of creative energy?
Not necessarily. Some of these wounds are
self-inflicted. There are performance mea-
surements, but they are disconnected.
An organization must define consistent
metrics that support the service, cost,
and inventory objectives. Balance in the
supply chain can’t be achieved if people
are rewarded for behaviors that do not
conform to company objectives.
From an investor’s perspective, the top-
line (gross revenues) is not of concern in
itself. Rather, the concern is profitability.
Where service is a driver only of the top-
line, the combination of the service and
cost efforts drives profitability (e.g. earn-
ings before interest and taxes, or EBIT)
and, in turn, return on capital employed
(ROCE). The ROCE principle is illustrated
in Figure 5.
So balancing the triangle is about maxi-
mizing bang for the buck. It means that
the entire organization—CFO, VP of
Sales, VP of Marketing, VP of Supply
Chain, VP of Procurement, etc.—has a

common mission. They shouldn’t go it
alone. The Product Leader can afford a
higher inventory, as long as the EBIT is
higher. Or vice versa, it’s OK for the Oper-
ational Excellence player to allow a lower
EBIT as long as it requires less inventory.
BENCHMARKING
Supply chain targets often result from
benchmarking. Figure 6 (see following
page) illustrates an inventory benchmark
that compares inventory turns across six
technology companies. We see leaders
and laggards. Managers of Company 1
will probably conclude they should set a
higher target for turns.
But there is usually a comparability prob-
lem, due to differences in markets, prod-
ucts, processes, KPIs, and other factors
(Kolassa, 2008). Accounting for different
Figure 4. The Functional Imbalance in the Supply Chain
Triangle
Figure 5. ROCE as the Bang per Buck
market niches leads to the more refined
comparison of Figure 7. Company 1
really is competing with only two other

companies, Company 2 and Company 3.
Company 2 is certainly the leader in in-
ventory turns, and this may prompt the
other companies to target higher inven-
tory turns.
ORBIT CHARTS
Even when the companies being bench-
marked are comparable, benchmarking in
one dimension such as inventory turns,
while common, is misleading. The supply
chain triangle calls for a balance of ser-
vice, cost, and inventory. Benchmarking
in three dimensions is indicated.
In Excel we can show only two dimen-
sions. However, we can collapse the three
dimensions into two by combining the
service (leading to top-line) and cost into
a profitability metric such as EBIT. (We
could equally have used EBITDA, Gross
Profit, or Net Profit.) In her book Supply
Chain Metrics that Matter, Lora Cecere
(2015) uses what she calls orbit charts to
benchmark in two dimensions.
Orbit charts also assist in evaluating stra-
tegic choices: “What should we improve to
best achieve our strategic goals? Product
cost? Inventory position? Service? If we
are currently positioned as a “low-cost
produce”’ but our strategy is “product
leadership,” what do we need to do tacti-
cally to shift our position?”

For the three companies retained in the
benchmark, the orbit charts in Figure 8
show inventory turns on the horizontal
axis and EBIT as a % of turnover on the
vertical axis. Each dot represents a year.
By connecting the years, we can follow the
performance of a company. Remember
from Figure 5 that EBIT over Inventory is
a ROCE-like measurement.
Analysis of the benchmarking data in
Figure 8 reveals that:
• The performance of Company 1, which
obviously suffered from the financial
crisis, has rebounded better than its two
competitors.
• Company 2 improved its inventory per-
formance from about 7 to 10 turns, but
EBIT has averaged only 1.5%. Apparently
Company 2 has not generated any profit
during the past decade, jeopardizing its
borrowing ability and possibly forcing it
to cut inventory, risking service issues.
Figure 6. Inventory Turns Compared across Six Companies
Figure 7. Inventory Turns Compared across Three Companies in
a
Specific Niche
Figure 8. Inventory Turns versus EBIT% across Three
Companies
in a Specific Niche

• Company 3 has generally better bal-
anced performance but is not resilient:
severely hit by the crisis, it has never
fully recovered to pre-crisis levels of per-
formance.
SETTING BALANCED TARGETS
So how might each of the companies set
appropriate, balanced targets for inven-
tory turns and EBIT? And what would
characterize performance leadership for
each of the three general strategies (prod-
uct leadership, customer intimacy, opera-
tional excellence)?
First, it’s useful to understand the
maximum, minimum, and median per-
formance over time, using the best per-
forming (highest combination of EBIT
and inventory turns) company as the
reference. For this analysis, we’ve added
min, max, and median dashed lines to our
orbit chart.
Take Company 3 as the reference, as it
had delivered the highest combination of
EBIT versus inventory turns during the
last decade. The top-line displays the com-
binations of EBIT and inventory turns
that correspond to the maximum per-
formance of Company 3 (which occurred
in 2004). The bottom dashed line shows

its minimum performance. The middle
shows the median performance.
How does this help us to set targets?
Focusing on Company 1 and its current
performance, and assuming that the com-
pany wishes to pursue aggressive targets
related to maximum performance, the
two best choices appear to be:
• Engineer improvements that cause
performance to move straight up from
current (2013) performance to the max
line, improving EBIT without changing
inventory levels;
• Engineer improvements that cause
performance to shift up and to the right,
reducing EBIT but increasing inventory
turns.
These paths to improvement are depicted
in Figure 10 (dark red lines). Moving
straight up is the path a company pur-
suing product leadership should take.
Because of new-product complexity, it
will carry more inventory than other play-
ers in the market but offset that cost by a
higher EBIT achieved through a premium
product.
Going up and to the right is the path of
a company pursuing customer intimacy.
The route requires elimination of some
older, more complex products in favor

of the broader but simpler product range
that will benefit from improved customer
relationships.
Some companies shift strategies from
product leadership to customer intimacy
after their market has been disrupted
by a technology shift (think analog to
digital). You must either buy into the new
technology or build a product and service
portfolio around the existing customer
base.
Figure 9. Combinations of EBIT and Inventory Turns that
Achieve
Maximum Performance
Figure 10. Orbit Charts of the Three Strategies
A company pursing operational excellence
will move directly to the right. It works
with razor-thin margins but compen-
sates for this by employing less capital.
Sometimes companies leave their cus-
tomer intimacy strategy for operational
excellence. If customers are no longer
honoring the extra service via a premium
price, it’s tempting to cut the service al-
together and go for a cost proposition.
Treacy and Wiersema recommend that
if you go along this path, go all the way:
be relentless on cost and cut any product

that is not generating the required bang
for the buck. In general, however, firms
are neither that courageous nor truthful
when taking such a leap. They don’t like to
say to their customer “We will no longer
deliver product X, Y, and Z.” So actually
making this shift, while appealing, is in
practice difficult to pull off.
As shown in Figure 10, companies already
near the best-practice frontier have to
make choices—either try to increase
EBIT by increasing complexity or re-
duce complexity at the expense of EBIT.
Shifting your position via new targets
may mean shifting your strategy. In con-
trast, laggards typically can improve on
both dimensions (inventory and EBIT) at
the same time, by applying best practices
such as improved forecasting, SiOP, and
multi-echelon inventory optimization, to
name a few.
FORECASTING CHALLENGES
Improvements in forecasting perfor-
mance can shift the best-practice frontier.
Improved forecasting allows the orga-
nization to increase service, even while
reducing inventory and cost, resulting in
simultaneous improvement on inventory
turns and EBIT. Adoption of better fore-
casting practices will allow the laggards to
catch up with the leaders, and the leaders
to gain further competitive advantage.

But how to extract forecast improvement
depends on the strategy chosen. As illus-
trated in Figure 11, a change in strategy
implies a change in the forecasting ap-
proach.
Simplicity drives efficiency: that’s the
motto of the Operational Excellence
Player. A company whose strategy is op-
erational excellence will be willing to cut
slower-moving products and stabilize
demand in order to maximize efficiency.
A stable product portfolio is normally the
easiest to forecast statistically. So statis-
tical forecasting will be helpful for the
product leader.
The product leader will try to build
niches from its newest products.
Consider the technology company
active in high-end projection. It
is currently releasing a first laser
projector for digital cinema appli-
cations. Assume a cost per unit of
$250,000. If there are about 100,000
cinema rooms worldwide and if 20%
of these are expected to switch to la-
ser projection in the next five years,
we’d project sales of about 4,000
per year. If we are the market leader
with a 50% market share, that gives
sales of 2,000 per year. But what if
we overforecast sales by 25%, or 500
projectors per year? Multiplied by
the $250,000 cost per projector, this

means a shortfall in revenue of $125
Figure 11. Impact on Strategy on Forecasting
million! Imagine if the unsold projectors
end up in inventory!
From this example, it should be clear
that the main challenge for the forecaster
will be how to deal with the market un-
certainty surrounding the entry of new
products. Qualitative techniques such as
the Delphi method could be helpful for a
product leader.
The challenge for the customer intimacy
player is how to deal with product portfo-
lio complexity. You can expect customer-
specific products with spiky demands.
Forecasting these will probably require
collaboration and projections based on
sell-out or consumption, instead of sell-in
or orders. For a customer intimacy player,
collaborative planning and forecasting
will be especially helpful.
Finally, a change in strategy will also re-
quire a change in forecasting approach.
Remember our product leader whose
analogue niche got disrupted by digital
technology? Instead of buying in to the
digital technology he decided to switch

to a customer intimacy strategy, driving
more value from existing customers by
offering a less complex but wider range of
products. To ensure the company doesn’t
fall back from a leader to a laggard, it will
need to install collaborative forecasting
with key customers to be able to control
the increased complexity in his product
portfolio.
Then we have the customer intimacy play-
er who was switching to an operational
excellence strategy because his customers
were no longer honoring the extra service
via a premium price. He should lower the
cost of forecasting by getting rid of the
collaborative forecasting process, which
is time consuming, and installing an au-
tomated statistical forecasting process.
CONCLUSIONS
The lack of a clear strategy and the func-
tional focus in traditional organizations
makes us feel like jugglers in a circus. We
have initiatives on service, on cost, and
on inventory, but we are uncertain where
these are going and so we face a juggling
act to keep them in balance. We need
alignment between the three: we can’t
decide on an inventory target without
specifying service and cost targets as well.
Moreover, the combined target for the
three depends on the company strategy.

Companies with different strategies will
have different sets of targets.
Two-dimensional benchmarking via or-
bit charts helps to reveal the difference
between the leaders and the laggards in
each of the possible strategies: product
leadership, customer intimacy, and opera-
tional excellence. Your targets will depend
on your strategy. A change in strategy will
change your targets.
Forecasting is a key enabler of strategies
and supply chain performance. Improved
forecasting will simultaneously improve
service, cost, and inventory. It allows
laggards to catch up with the leaders. It
allows leaders to shift the best-practice
frontier and gain a competitive edge as
they adopt innovative forecasting practic-
es. Different strategies require different
approaches to forecasting, so a change in
strategy requires a change in forecasting
approach. It is clear we should acquire
forecasting tools sufficient to fit the dif-
ferent challenges imposed by corporate
strategy.
REFERENCES
Cecere, L. M. (2015). Supply Chain Metrics that Matter,
Hoboken, N.J.:Wiley.
Kolassa, S. (2008). Can We Obtain Valid Benchmarks
from Published Surveys of Forecast Accuracy?, Fore-
sight, Issue 11 (Fall 2008), 6-14.

Treacy, M. & Wiersema, F. (1997). The Discipline of Mar-
ket Leaders, New York: Basic Books.
Bram Desmet is the Managing Director of
Solventure, a Europe-based company that de-
signs and implements sales, inventory, and oper-
ations-planning processes. Bram earned his PhD
at Ghent University in Belgium and serves as an
Adjunct Professor in Operations and Supply Chain
at the Vlerick Business School. He is now working
on a book about the Supply Chain Triangle.
[email protected]
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ISSN– 2348-0092 Journal for Contemporary Research in
Management January 2016 | 1 DAWN
A Study of Marketing Strategies for Formation of
Effective Distribution Channels by SHGs

Ms. Anjali Mandke Dr. P. G. Deshmukh Mr. Pranav D.
Mandke
DYPIMCA, Akurdi ATCACS, Bhor MITACSC, Alandi (D)
Abstract
The self-help movement is said to represent
an alternative development strategy, one
that involves the process of social economic
empowerment and whose long term
objective is to rebalance the structure of
power in society. It is centered on people
and their environments and argues for the
rectification of imbalance in social,
economic and political power.
This study has been conducted with the
objective of understanding the process of
innovative marketing models in the SHG

sector and to draw lessons from the success
stories to upscale and replicate in a similar
socio-politico-economic scenario in other
parts of the country. The Internet provides
retailers with powerful opportunities to
increase sales, augment market share, and
create new business.
Now-a-days, we observe a dilemma
between two ideologies:
1. Gandhiji’s “Swayampurna Gram” i.e.
Produce and Sell in the same Village /
City, etc. AND
2. Feasibility of a “Swayampurna Gram” –
If the products are sold locally, lack of
knowledge about the optimum price for
their produce and the market where the
produce has the maximum demand
often drives the SHGs to desperation.

They sell their products to commission
agents(middle men) which does not
result in full market potential of their
produce.
So, development of proper Distribution
Channels for marketing of SHG produce,
not only in the village, but also in other
areas where they are in demand, is
inevitable.
This paper considers a theoretical model of
e-marketing the SHG products so that they
can maximise sales and hence, profit.
An attempt is being made to theorize a
comprehensive model to: Take orders
online, Collect from manufacturers &
Deliver at doorstep, Process information in
real time.
Keywords: SHG, distribution channel, e-

commerce.
Introduction
SHGs in India
The SHG approach in India was first
developed through the Self-help Affinity
Groups facilitated by the Mysore
Resettlement and Development Agency
(MYRADA) in 1985, and since then more
than two million self help groups have been
created across the country (NABARD 2005-
2006). In 1986-87, there were about 300
SHGs in MYRADA’s projects, many of
which had emerged from the breakdown of
large cooperatives because of lack of
confidence in the leadership and poor
management. In areas where the

cooperatives had broken down, several
members (usually in groups of 15-20
people) approached MYRADA requesting it
to revive the system. MYRADA staff
realized that they would need training in
organizing meetings, and so efforts were
made to train the members in a systematic
way. From an analysis of these members’
activities, (Fernandez 2006), it emerged that
they were linked by a degree of affinity
based on relations of trust and support.
The real effort to support SHGs in India,
however, came in the late 1990s when the
central government of India introduce a
holistic program, Swarnajayanti Gram

Swarozgar Yojana (SGSY) based on the
group approach for rural development.
In 1991-92 NABARD started promoting
self-help groups on a large scale. And it was
the real take-off point for the ‘SHG
movement’. In 1993, the Reserve Bank of
India also allowed SHGs to open saving
accounts in banks. Facility of availing bank
services was a major boost to the
movement.
The movement of SHG was nourished in the
states of Gujarat, Maharashtra, Andhra
Pradesh, Rajasthan, Tamil Nadu and Kerala.
Now nearly 560 banks like NABARD, Bank
of Maharashtra, State Bank of India,
Cooperative Banks, Regional rural banks,
the Government institutions like
Maharashtra Arthik Vikas Mahamandal

(MAVIM), District Rural Development
Agency (DRDA), Municipal corporations
and more than 3,024 NGOs are collectively
and actively involved in the promotion of
SHG movement.
IT Revolution & Status in India
India is considered one of the prominent IT
hubs in the world. We have the biggest IT
service industry and software services
export according to NASSCOM for the year
2012. At the end of March-2010, the
internet penetration stood at 13.54 million
non-broad band, 6.22 million broad band
and 117.82 million wireless internet access
in India. Given the state of internet and PC
penetration in India, even though it is
lagging behind Japan & Korea, these figures

if not outstanding are not disappointing
either. So with this many netizens, safely
assuming 90% having operational
knowledge of the computer, India’s online
retail landscape was lagging behind other
countries at the end of 2011.
Self Help Groups are producing a wide
variety of products like bakery, (masala),
pickles, chutney confectionery, toys, paper
products, chalk, candle, agarbattis, spices,
greeting cards, painting on fabrics, herbal
products, dairy products, pottery, vessel
making, etc.
Distribution problem is one of the main
areas of concern as SHGs are struggling
hard to handle this. The channel of
distribution is the route through which the
product passes from the hands of

manufacturers to the hands of consumers.
The decisions regarding channels of
distribution influence greatly the availability
of right product in right condition at right
time and right place which, in turn, affect
the success of the marketer and the level of
customer satisfaction. In India, SHGs are
following their traditional practices
regarding the channels of distribution. It
appears that they do not have any
knowledge to make the system of
distribution efficient.
The major problems relating to channels of
distribution are as under:
1. No distribution plan and strategy.
2. Misinformation about genuine
distributors / middlemen.
3. Middlemen demand more commission.

4. No attention paid to transportation,
inventory, warehousing etc.
5. Virtual absence of effective distribution
network in the individual unit.
A focus is placed, using India as a
geographical study area, on SHGs that take
part in the “Bhimthadi & Pavanathadi
Jatras”, annually organized in Pune City.
Relevance of Study
& published information that there no
proper Marketing Strategies adopted by
SHGs to develop Distribution Channels
and no detailed research has been

carried out so far in this area. (Daily
Sakaal, dated 31
st
October, 2008)
is an important & difficult task as the
products are to be sold directly to the
people themselves. The SHGs will
have to emphasize on the quality and
affordable prices to enhance the sales.
Therefore SHGs will have to evolve
appropriate strategies for market
promotion.
[Source: R. Ganapathi and Malar S.
Anbu (2008); “Consumers’ Attitude
and Preferences towards SHG
Products”, Asia-Pacific Business
Review, Vol 4-2].

localized; this means that there is
limitation in terms of geographical
coverage. SHG members generally lack
literacy, technical competence; market
intelligence to even think of an online
distribution system on an individual
level.
liberalization of international trade &
globalization, information technology
(IT) plays a vital role to make a
produce competitive in the worldwide
market, through all its incarnations like
e-mail, multimedia, electronic banking,
internet, world wide web, etc. (Talathi,
2007). Internet is a rapidly growing
communication medium on earth at
present.

products allows the organizations to
generate a customer information
system, which is coupled to its
customer profiles, thus the ability to
focus on potential sales is a powerful
tool, enabling the organization to give
people what they desire rather than
applying a common advertising
campaign that may not reach its target
audience (Nicolas, 2006).
Aims & Objectives
This study has been conducted with the
objective of understanding the process of
existing online marketing models in the
online retail sector and to draw lessons from
the success stories to upscale and replicate

the same in SHG sector. It has been
conducted to provide a better understanding
of marketing by self-help groups (SHGs),
with the hypothesis that online Distribution
Channels in the marketing of SHG products
reduce the transaction cost and improve the
market access and its efficiency.
The main objectives of this paper are to
(i) Develop a theoretical model to e-
market SHG products.
(ii) Create a comprehensive Blue-Print for
a proposed Web / Android application
to sell SHG products.
Flow Of Study
A. Platform & Basic Architecture of
Online Ordering & Distribution
System

With the advent of affordable smart phones
(Rs.3,000–10,000) designed for the Indian
user from indigenous manufacturers such as
Micromax, Karbonn, etc., as well as ever
more low-costing mobile data options, more
people are shifting to smart phones and
mobile Internet. Other factors heavily
contributing to this move, include the fact
that 98.9% of India currently has no access
to broadband connectivity options and
industries like banking, retail, entertainment,
health and education have started to bring in
gripping mobile services. Predictably, the
contribution of Smartphone users of Internet
traffic has overtaken that of PC users and
the gap continues to broaden. The

Smartphone market grew by a whopping
229% last year.
I. In rural areas, where hard line internet
connectivity is difficult, wireless internet
(By Facebook's internet.org or by Google's
efforts in this field) is easily and cheaply
accessible.
II. India's largest online retailer Flipkart has
decided to transform into an app-only
player. Flipkart's premeditated phase-out of
its web presence indicates phenomenal trend
among Indian consumers to make purchases
through the mobile apps thanks to manifold
growth of smart phones and mobile internet.
Considering the above two points,
Smartphone is the primary mode of internet
access to both Seller (SHGs) & Buyers.

Therefore, our planned Model is Android
TM
or iOS
TM
based.
B. E-Commerce Applied to the Model
In order to build an error-free model that
will withstand any and all possible threats it
may face, a detailed study of existing e-
trading websites and applications must be
undertaken so as to review their structure as
well as learn from any past mistakes. One of
the major drawbacks for companies selling
products via the Internet, is to deliver the
goods and thereby meet the customers’
expectations. Buying online requires a
considerable amount of faith from

customers. The potentials for Internet
selling are high, no doubt, but the promises
made by the website have to be realized
during the delivery processes. If the delivery
service falls short, or products lack the
expected price-quality ratio, and the post-
transaction service is not up to the mark,
then customers won't turn around. Many
Internet companies have already gone
bankrupt. A case in point is of a virtual
market that was launched in 2010
(www.virtualmarket.com) but collapsed due
to unreliable payment method. To overcome
these defects new techniques and trends
should be adopted that will involve banks
that will ensure the integrity in buying and
selling transactions of SHG products online.
Therefore, this paper attempts to solve the

above discussed problems by theorizing a
working and robust android application to
market SHGs’ products. The "application"
may integrate the net banking payment
system, a popular platform that is
operational in Indian banks for most e-
payment in India.
Despite these difficulties, benefits of e-
marketing surpass the challenges. The focus
area of this paper is to make a theoretical
model of a web / android application to sell
SHG’s products electronically.
The model includes an organization that
owns the e-commerce web site. The duty of
the agent is to make contact with the
member SHGs and collect their product
descriptions & scale of produce (no. of
articles produced per day or per month) &

store all relevant data on a central data
centre. Upon the collection of all data,
product information is placed on the agent's
website / app about the new products to
their customers. The buyers will have to
contact this website / app in order to
purchase these products & make necessary
payments including transportation. In turn,
the agent returns to the SHG when any order
is received, article is collected from
producer & delivered to the customer.
A network of SHGs should come together to
form federations which may be from grass
root level to national level. The structure of
federations will be from Village, Cluster of
Villages, Taluka, District, State & National.
These federations should work with the
above said intermediary for the upliftment

of SHGs. Also, this should be a deregulated
sector so that private investors can also
participate.
C. Distribution Strategy
Mallen addresses the problem of selecting
distribution channels for companies. For a
retailer, the basic questions are concerned
with the number of levels that are needed in
the distribution channel and how many
facilities (warehouses or stores) per level are
needed. A given product can also have
several channels. Mallen gives guidelines
for companies to assist in this choice, based

on the objective they have. Some major
determinants for this choice are the market
(number of orders), product characteristics
(such as product variety and product
properties), speed of delivery, and others
(including environmental aspects,
availability of resources, and business
conditions). The Internet offers a platform to
sell products worldwide what was not
possible earlier.
The distribution strategy of the online
retailer is the determiner of: the way the
orders are attended to, the number and type
of facilities used in this process, the area
where customers will be delivered, and what
will be the extent of outsourcing of said
methods. We introduce a concept
“distribution strategy,” which can be

divided into three different subparts.
1) Distribution channel : This contains the
type of facility (store or warehouse) from
which the fulfillment is carried out
2) Delivery area: The delivery area is the
area where the Internet company can
deliver, from its facilities.
3) Degree of outsourcing : The product
storage and order fulfillment processes as
well as the transportation can be outsourced
to full time logistics service providers.
1. Distribution Channel
The distribution channel for an online
retailer can take the following:
1) Collecting & distributing from existing
stores;
2) Collecting & distributing from existing

centers (DC), those which supply
conventional stores;
3) Collecting & distributing from DCs that
directly supply the online customers;
4) Mixed structures, using the different
facility types mentioned previously.
2. Delivery Area
E-commerce retailers can decide for the
following different delivery areas:
• deliver goods regionally, in the vicinity of
the supply facility;
• deliver goods on a national scale;
• deliver goods on a global scale.

C. OUTSOURCING STRATEGY
Both the fulfillment and the transportation
process can be outsourced. As argued
earlier, not many firms shipping
internationally will organize the
transportation in-house. However, especially
retailers that deliver from existing facilities
in a relatively small area around the facility
and with own vehicles, will deliver
themselves.
According to McCullough, the fulfillment
outsourcing depends mainly on the number
of daily orders processed from the facility.
Retailers with less than 100 Internet orders

per day or over 10,000 orders per day
should tackle fulfillment in-house. The
number of orders is then either so little that
they can easily be handled at a cheaper rate
than a logistics service provider could do
this, or the volume is too large to be handled
by third parties. Peapod.com and
Amazon.com are examples of companies
that originally operated as a virtual company
outsourcing fulfillment and transportation,
whereas the fulfillment is now carried out
in-house to a large extent. If the daily
volume is between 100 and 10,000 Internet
orders, retailers should outsource the
fulfillment to gain economies of scale they
cannot get on their own. The outsourcers
can share warehouse space and resources
across online merchants. Demand should be

managed in-house and the fulfillers’
inventory and planning systems should be
integrated in the website, to make promises
based off true inventory and service
availability. In reality, however, other
solutions can be noticed, especially when
products are complex. Fresh food online
retailers, for example, have the tendency to
keep all warehouse operations in house.
Proposed Model Design
The proposed system is a secured web
application for agricultural products. This
section describes the design details of the
electronic market place for agricultural
products and also a secure transaction mode.
This application is designed taking into

consideration the following:
• Establishment of payment
transactions that provide confidentiality of
information.
• Authentication of customer's
payment to ensure integrity
In achieving this, the following parties are
involved;
• Customer
• Merchant
• Merchant Bank
• Inter-switch system
Proposed Database Design
The store house for the data that are used for
various processing by the system are
defined in the various tables available in the
database server used for the design. The

Merchant's app has interfaces that are
available through which online customers
can access the information in the server.
This is done through processing of the
various queries sent to the server by the
customers via these interfaces. The tables
and their attributes are listed here.
This keeps the detailed information of
registered customers. It contains the
following fields, User lD, email, password,
first name, surname, gender, date of birth,
phone No, Street Address, city and country,
making user lD as primary key.
This table holds the information of the
merchant's goods on the website. The fields

are Item id, Item Name, Item Price, Item
Category id, Item Images and Item Status.
This contains the categories of products
available online. The fields are category id
and category name.
This keep records of each transaction. The
following fields are present: Order id, User
id, item id, Quality, date, status and price.
Order id is made primary key.
This keeps customers payments details. It

includes the following fields, Payment ID,
Amount, Account No, Account Name, and
Bank Name.
ble
This table consists of fields like, Full Name,
ID, Email, and Password
This table keeps all records that involve
transaction. The fields present are Bank ID,
Bank Name, Account Name, Account No,
Balance and Status.
he Cart Table
This contains the attributes of various goods
selected by the customers. The fields are Id,
session id, Item id, Item Name, Item price,
Item qty, Item image, Date.
Dummy Run : Steps to order an SHG

Product Online
Step I You should have a Smartphone
running Android / iOS & have mobile data
connection
Step II Go to Google Play Store & install
“Akhil Bharatiya Bachat Gat Online
Shopping" app.
Step III Open the app.
Step IV Browse through available products,
search for products & click on description
for selected product.
Step V Verify the details of the product &
enter your area's pincode to make sure that
home delivery is available for your area of
residence.
Step VI Click on Add To Cart to continue
shopping or click on checkout to proceed.

Step VII On checkout screen, verify if all
items added by you are present in the cart &
click on proceed.
Step VIII Enter Name, Contact Details &
address of Home Delivery & click proceed.
Step IX Enter Bank Transaction details viz.
credit card/debit card/net banking, Cash on
Delivery etc.
Step X You will be redirected to your
bank's website for Net Banking or to Card
Website for authentication of Debit / Credit
Card or Confirmation screen if COD.
Step XI On successful transaction, Invoice
will be displayed & order will be confirmed
by sms & email.
Step XII You will be given a tracking
number to track the delivery online.
Step XIII After specified time, parcel will

reach your home. Pay the delivery man if
Cash on Delivery selected at the time of
ordering.
Conclusions
1. Many products of SHGs are well
appreciated by the market. However there is
a missing link between Source of
Production & Consumers. The seasonal
fares like Bhimthadi & Pavanathadi Jatras
held in Pune drew large crowds.
2. There was demand for some
products of which supply could not take
care of. Consumers were eager to have
supply of some products round the year.
However, they were in the dark as to who
was to be contacted.
3. Once this system is up & running,

customers can easily order whatever they
want anytime of the year. Even the SHGs
will be benefitted by this as they will also
have demand to supply to throughout the
year.
4. Establishing Federations & e-
distribution channels will ensure that
products are manufactured according to
certain standards, packaged well & also
stored according to their requirements in
centralized warehouses.
5. This can be an important step
towards Local Brand Creation to compete
with MNC products & delivery services.
Here comes the importance of completing

the link & establishing effective Distribution
Channels for the Marketing of SHG
Products even online ones.
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January (2014),pp,46-52IAEME:
www.iaeme.com/ijm.asap
Copyright of DAWN: Journal for Contemporary Research in
Management is the property of
Sadhu Vaswani Institute of Management Studies for Girls and
its content may not be copied
or emailed to multiple sites or posted to a listserv without the
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