Distribution channel followed by Samsung in a major Indian city, Bhubaneswar. The presentation has its own kick ass moments, with its funny disclaimers and ludicrous taglines. A few concepts, like the demurrage costs, space-revenue trade offs are introduced. The distribution channel, the second P of marketing, is a crucial factor in the delivery of the created value.

1. F8
CHANNEL MANAGEMENT
SOBHAN
SOMAK
SOMNATH
SOMYA
SOUMYA
SOURAV
347
348
349
350
351
352
IN UNORGANIZED AND MODERN TRADE

2. F8

3. 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.
F8

4. F
PRODUCT 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
F8

5. STORES VISITED IN BHUBANESWAR
F
F8
We also visited Country Kitchen, where we ripped poor Somnath off.

6. DISTRIBUTION CHANNEL
Distributors Retailers
Clearing and
Forwarding Agents
Digital
plazas
Dealers
Multi -
Brand
Retailers
F8

7. F8
MARKETING COMMUNICATION MIX BY CHANNELS
DISTRIBUTORS RETAILERS, DEALERS, MULTI BRAND RETAILERS

8. COMPETITOR ANALYSIS
F8
Flat Panel TV-Market Shares
LG
21%
Samsung
21%
Panasonic
9%
Videocon
14%
Sony
22%
Other
13%
Refrigerators-Market Shares
LG
23%
Samsung
20%
Panasonic
20%
Videocon
16%
Sony
18%
Other
3%
Washing Machines-Market Shares
LG
31%
Samsung
19%
Panasonic
13%
Videocon
12%
Sony
25%
Microwaves-Market Shares
LG
29%
Samsung
27%
Panasonic
16%
Videocon
11%
Sony
17%
Market shares at the national level.

9. F8 COMPETITOR ANALYSIS
25000
20000
15000
10000
5000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
Price Comparision of Washing
Machines
Price Comparison of Microwaves
LG Samsung Panasonic LG Samsung Panasonic
20 litres 28 litres
30000
25000
20000
15000
10000
5000
40000
35000
30000
25000
20000
15000
10000
5000
0
Price Comparision of Refrigerators
Price Comparision of LCD TV's
LG Samsung Panasonic LG Samsung Panasonic
26 inches 32 inches
0
LG Samsung Whirlpool LG Samsung Whirlpool
Double Door Single Door
0
LG Samsung Whirlpool LG Samsung Whirlpool
Semi Automatic Fully Automatic
Retail prices at the national level.

10. 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.
F8

11. SOME KEY FINDINGS IN THE CHANNEL
F8
 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.
 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.
 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.

12. “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

13. 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.
F8

14. SWATTING THE SWOT
Strengths
No 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
Opportunities
The 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
Weakness
Company needs to micromanage. Drain on resources.
Risk is borne by company till the product reaches the retailer.
Threats
Online 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
F8

15. The store manager No comments. is tired of your questions by now.
Visit to the Stores
**Notwithstanding the fact, the pic would be used in a
presentation.
Happy families start at Samsung

16. AND SAYS, THANK YOU!