7/30/2019 5673_3315_63_2009_75_DCM1 (1)

1/19

Distribution & channel

Management

Indian perspective

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

2/19

Challenges

Commercial

1.25 billion, 3732 towns and 6.27 lacks villages

Non-commercial- poor infra, interior villagelocation

Odd climate, caste and sub caste, preference

of packaging, SKU size Tax structure

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

3/19

Overview

Tata tea Gaon Chalo

2005, Tata tea problem of

stagnant market share

How did the company solvethe problem?

Focus territory- UP

Coverage of villages was

inadequate, channel used-NGOs with the help of Tata

trust.

Channel development

NGO (RD-1)

Mobile dealers (RD-2)

Rural retailers ( RD-3)

Results-

Market share has gone up

from 16.3% to 19.2% (2002-

2007)

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

4/19

Distribution channel?

Levels

Manufacturer

Wholesaler

Retailer

Customer

Flow-

Offerings

Information

Funds

Function

Store

Bulk breaking

Serving retailer

Display

Point of purchase

Publicity

Customer interaction

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

5/19

Role

Core offering

Range and availability

Bulk breaking

Credit

Pre sales support

Delivery-logistics

Order consolidation

Product information

collateral

Optional services

Sourcing of products

Back-to-back ordering

Simplified supply logistics

Repackaging

Post sales support

Coordinationg the supplies

from different suppliers to

multiple locations

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

6/19

Business model definition

High volume low margin

Low volume and high margin

Medium

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

7/19

Types of distribution

Intensive

Market share gain

Extensive distribution

Selected and exclusive

Push and pull strategy

Question?

How cash and carry formatof Wal-mart and Metro willaffect traditionalwholesalers and retailers?

Analyze the vanishing Indian

TV brands. How LG, Sonyand Samsung did differentas distribution strategy?

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

8/19

Key of success

Sonal Anand, Country ProductManager (Display), SamsungIndia

The key reason for our

success is the distribution

network

Distribution network

four distributors in India TechPacific India Limited, Redington

India, Ingram Micro and SavexComputers. Between these fourdistributors we cover the entirebreadth of the country with morethan 84 sales offices in over 25cities. We have more than 4000

channel partners who feature inour database and whom ourdistributors bill to.

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

9/19

Sony India

distribution networkcomprising of over10,400 dealers anddistributors, 270exclusive Sony outletsand 23 direct branchlocations. Sony Indiaalso has a strong service

presence across thecountry with 255service outlets.

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

10/19

Distribution in digital age

Traditional film

distribution channel-

Producers

Distributors

Theaters

Movie goers

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

11/19

Technology has changed therule of game.

Digital prints and digitaldistribution

Reduced print and deliverycost with a server and a digitalprojector

1900 theaters adopting thistechnology from UFO movies

India pvt. Ltd., reliance medianetwork( largest cinema chainwith 525 screens spreadacross India, US, Malaysia,Nepal and Netherlands.

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

12/19

Channel formats

Manufacturer based

Company store/outlet

EX: Athletic goods, Bakery

Consignment /locker stock-

Manufacturer ships productsto point of consumption, buttitle does not pass untilconsumed. Risk ofobsolescence and ownership iswith manufacturer until used.

Concerned with high price-high margins and emergencyitems.

Ex: diamond, Fragrances andmachine repair parts

Retailer based formats-

Franchise-

McDonalds

Dealer direct- Heavy equipment and auto

dealers

Mass merchandise- Wal-Mart,Kmart, Target

Specialty store- offermerchandise in one line.Sports goods, office supplies,children merchandise

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

13/19

Formats

Service channels-

Contact warehousing

Public warehousingservice for a fee. Coldstorage

Integration of truck andrail-

For heavy weight andhigh volume products-cement, fertilizers andcoal

VARs( value addedresellers) software sellers.

Home party- Tupperware

MLM- Amway

Pay per service point ofdispensing

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

14/19

Online channels

4 basic function

Information provider

Engage customer

Sell and deliver goods

and services

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

15/19

Type of transaction and industry

Distribution IndustriesOnline only Software, e-books, music,

video

Online with physical delivery Books, CDs, electronic goods

Online personalized goods Clothing and apparels

Online delivery of services Bank, insurance, MF and

trading

Online sales by brick and

mortar stores

Physical stores using online to

increase their reach

Physical only Companies that decide not to

sell online.

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

16/19

Mail order business

Receiving and fulfillingorders for merchandiseusing mails.

before Credit card

payment option

Send payment and goodsused to deliver throughVPP( value post parcel)

Ex: Readers Digest

B2C sites

www.indiaplaza.in

www.rediff.com

www.flipcart.com www.ebay.com

B2B sites

Alibaba.com Indiatimes.com

Tradeindia.com

http://www.indiaplaza.in/http://www.rediff.com/http://www.flipcart.com/http://www.ebay.com/http://www.ebay.com/http://www.flipcart.com/http://www.rediff.com/http://www.indiaplaza.in/

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

17/19

Advantages and disadvantages of

online distribution

Multiplies reach

Eliminates middlemen

Time saver

Ease of use

Low internet

penetration

Individual distributionnot possible for low

value items

High cost of newcustomer acquisition

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

18/19

Conflict with existing channels

2005- a big brand of camerafrom Japan entered in toIndian market. High priceand light weight item did

well in Indian market. E-Commerce given a flip to

its ambitions and firmdecided to launch itswebsite with a secured

payment gateway. It alsotied up with a internetpartner to sell the productsonline.

Revolt by the existingchannel members.

What should be done?

7/30/2019 5673_3315_63_2009_75_DCM1 (1)

19/19

New age channels

New age Real estatechannels

99acrs.com

Investor clinic Financial service

Bajaj capital

Moneycontrol.com

Hospitality-

Makemytrip.com

Service, jobs, realestate, vehicles etc.