Table of Contents

Introduction................................................................................................................................. 4

Mobile phone industry in India............................................................................................. 4

Nokia in India.............................................................................................................................. 5

Nokia distribution structure in India..................................................................................6

Role of Channel Partners......................................................................................................... 8

Margins at each level.............................................................................................................. 10

Distributors Coverage Plan.................................................................................................. 11

Infrastructure required by distributor............................................................................11

Support provided by the company to the distributor.................................................13

Credit/ Payment terms.......................................................................................................... 14

Major Problems Faced by the distributors.....................................................................14

Major Points of conflict.......................................................................................................... 15

Major Problems/ Issues identified....................................................................................16

Recommendations.................................................................................................................. 17

Refrences.................................................................................................................................... 18

People Contacted..................................................................................................................... 19

NOKIA Distribution Network, Delhi NCR

Terms and Abbreviations used

Nokia - Nokia India Pvt. Ltd.

RDSS – Redistribution Stockist Supplier

HCLI – HCL Infosystems

Dealers – Mobile phone retailers


Introduction Integral part of 4P’s f marketing mix is ‘place’. Having a great product is useless till its made

available to potential customers at right places and at right time. Considering a country like India

with not only a large but also economically, climatically and socially diverse landscape to be

covered amplifies the problem manifolds. A distribution network for products rises above

importance levels to become bare necessity for the existence of any company. The success of the

channel design depends upon the reach and efficiency of the network any organization develops

and maintains and ease with which any potential customer is able to find the product. Efficiency

of the distribution cost and type of channel partners form and integral part of this.

Mobile phone industry in IndiaThe mobile phones industry made a slow start in India in 1995. Several private players who had

entered the industry in 1995 exited in the next few years due to the unfriendly telecom policies of

the Indian government, high licensing fees and absence of a proper telecom regulatory body. The

growth in the subscriber base of mobile phones remained sluggish initially, reaching the 1

million milestone in 1998. In 1999, the Government of India announced a new telecom policy.

This policy planned to provide telephones on demand by 2002.

Among other things, the policy allowed unrestricted private entry into almost all mobile service

sectors. The government allowed cellular mobile service providers to share infrastructure with

other operators. It also allowed existing operators to migrate from fixed license fee to one-time

entry fee with revenue sharing. This policy helped many private operators to break even faster.

By 2001, the demand for mobile services was growing well. The private companies concentrated

on providing basic telephone services to consumers. The number of mobile phones crossed five

million by 2001 and doubled to 10 million in 2002. Since then, India has reached almost 35%

teledensity with metros having 100% teledensity and over 450mn mobile connections across

India.


Nokia in IndiaNokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia

2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies

were not conducive to the growth of the mobile phone industry. Nokia also had to face tough

competition from other powerful global players like Motorola, Sony, Siemens and Ericsson.

Nokia as a company has expanded at a very fast pace in India. Over the past decade, Nokia has

captured nearly 60% of India’s $5.6 billion handset market, of which about 25% are rural

consumers. In 2006, Nokia set up a manufacturing facility in India, 2006, which allows it to

manufacture and sell low-cost phones. It also adapted its phones to suit the local conditions. To

further increase its popularity, the company has increased its number of customer care centers

and caters to rural India with vans staffed with sales reps. It has also introduced social

innovations such as access to crop prices, weather forecasts, and English lessons.

However due to staunch competition the market share has decreased slightly in 2006. However it

is expected to grow as it has plans to expand in the rural market. India has around 95,000 outlets

that sell mobile phones. In around 50,000 of them only one brand is available that is Nokia.

Achievements of Nokia:

Nokia Company released first mobile with

Hindi menu in 2000

They have come up with Wi-Fi mobile

which is called Nokia communicator in

2004

In 2006 this company has started huge

mobile manufacturing plant in

Sriperambathur nearby Chennai.

Nokia Company has joined with Malayalam

Manorama to launch first India’s vernacular News.


53.6

11.2

10.8

5.910.9

5.6 2Nokia LgMotorolasamsungsony EricssonHTCOthers

Nokia distribution structure in IndiaWhen it comes to distribution, Nokia's lead is clear. Today, India has some 1,10,000 outlets that

sell mobile phones. Out of these, according to companies own conservative estimates, 50,000

stores have only one brand available – Nokia.

Nokia started distributing its phones through a partnership with HCLI (formerly Hindustan

Computers Ltd.), which had already built an extensive network for its own products. Recently,

Nokia has decided to supplement that with its own distribution efforts. Nokia believed that there

was a tremendous growth opportunity and it was best exploited when the resources utilization of

both companies was optimized. Nokia and HCLI have decided to develop a go-to-market

strategy to jointly address the coverage needs of the urban and widely dispersed rural areas,

while rest are handled individually. Nokia has always been secretive about its operation and

strategies and have not spelt out clearly how the two partners have divided the markets, but some

do clues exist in the way demand is shaping up. In the cities where the market is maturing,

buyers are looking at more sophisticated mobile phones, such as Nokia's E-series phones (which

serve business users) and the N-series (which have multimedia features). In rural India -- which

constitutes 70% of the population -- affordability is an issue. So there is a different range for this

constituency. Different types of retail fronts selling Nokia mobiles are :

Nokia concept stores

A one-stop shop for mobile users has been brought into existence to provide an opportunity for

consumers to “experience the product “before purchasing it. Trained Nokia personnel would

brief customers about various handsets and features. The store would have the entire range of

Nokia devices in all categories including latest range of mobile enhancements and exclusive

Nokia merchandise apart from handsets.

The new Nokia Concept Stores represent a rebranding of the previous Nokia Professional

Centers. Nokia has so far been rolled out 9 Concept Stores in India with only Mumbai and

Bangaluru having 2 concept stores. Other Concept stores in India are located in Gurgaon, Indore,

Jaipur, Hyderabad and Chennai.


These stores would help Nokia strengthen it brand and at the same time save costs that it incurs

in distributing to the dealers. Although it would have to bear the costs of training the employees

but the transportation cost would be greatly reduced. It would also give the company the

advantage of exclusivity. Since it has been opened in only metro and important cities, therefore,

it would not be subject to state sales tax, if the CFA is located in the same city.

Nokia Priority Dealers

Nokia Exclusive Stores namely PRORITY DEALERS are all franchised outlets .The franchisee

must fulfil certain criteria, for example, in the case of an existing store that would be converted

to a priority dealer, there must be a certain number of footfalls, the location of the store should be

prime real estate in that region, and certain other standards.

Nokia provides support to these outlets in the form of help in visual merchandising, furniture etc.

against a certain deposit by the owner which is refundable at the end of the contract if need be.

Multi Brand Dealers

Apart from its Nokia Priority dealers and concept stores, the company distributes its product to

many organized multi-brand mobile stores with nation-wide presence in India and recognized for

their service and price discounts. Few of the major players are

Hotspot

Univercell

The Mobile store

RPG Cellucom

Besides these there are individual mobile retailing stores as well as wide variety of retail stores

like electronics goods dealers, Stationary shops, etc who have started selling mobile phones over

past few years. HCLI has also established over 150 Nokia Care Centers managed by HCLI and

franchisee operations.


Nokia Chennai factory

Nokia Mother Warehouse, Gurgaon

HCL Distributor

Re-distribution Stockist Supplier (RDSS)

Retailers

Role of Channel PartnersNokia

Nokia manufactures its mobile in Chennai manufacturing plant

and then it transfers to nokia’s mother depot which is located in

Gurgaon. They also provide assistance in selection of channel

partners like redistributors, Dealers, Franchisees, etc. Besides

this they provide monetary assistance in Store development for

Nokia Priority dealers, help in promotion of products on mass

scale as well as in store and training of the sales force of

partners at every level.

HCLI

HCLI Info has been handling distribution of Nokia phones for

10 years. The agreement was due for renewal in August, 2006

and was renegotiated beforehand. Again on January28th’ 2009 a new agreement for territory

division was signed between Nokia and HCLI. Nokia business accounts for 52% EBIT of HCLI.

HCLI currently has 30,000 channel partners (dealers), some of which it will transfer to Nokia.

The pilot phase was launched in Mumbai and Bangalore to test the new distribution model. The

absence of any other distribution partner ensures that there will be no price-cutting. In both the

territories, Nokia phones were made available for a uniform price.

HCLI starts distributing Nokia’s product from Gurgaon depot. HCLI takes order from 4

redistributers appointed in Delhi to cover North, South, East and West zones and then it supplies

the product to the dealers with the help of RDSS (Re-Distribution stockiest supplier).


Distribution Channel

Sales Force

Penetrate market deeper

Explore new markets

Assist in new product

Receivable collection

Share & gain market insight

Nokia Care Centres

HCLI also takes care of appointing partners and operation of Nokia Care centres. Currently there

are care centres in more than 180 cities across India.

Re-Distribution stockiest supplier (RDSS)

There are 6 RDSS in Delhi NCR region with territories divided as North, South, East and West

Delhi, Noida and Gurgaon. RDSS are supposed to operate only in their designated territorial

zone. In case of conflict HCLI acts as the arbitrator.

RDSS, assisted by Nokia, also take responsibilities like recruiting sales force, training and

developing. Stocking norms of Nokia- HCLI agreement says that HCLI depot should have 7

days supply, RDSS in city should have 5 days of supply.

Dealers

Nokia Priority dealers, Multi brand and individual dealers in Delhi NCR are all served by RDSS.

Dealers are explained the features of every new launch mobiles, different schemes and offers by

Nokia’s representatives. Re-supplies are always just a phone call away and the delivery is made

within a few hours. Besides, Nokia assists most dealers in the region in the store set-up and

design. The price points sometimes dictate the type of outlet.

Stock norms define that for how many days worth of stock does any level in the supply chain

should have. These norms are defined by Nokia only. Given below are the stock norms:

The expected target to be fulfilled by the particular level is determined by the following formula:

Expected target = (30 / No. of working days) * Stock Norm for that level


Margins at each levelThe margins for the Nokia distribution segment have not been disclosed separately but are

clubbed with the overall contribution of the office automation and telecom segment. Tentative

margins found on the basis of discussions with dealers were :

Nokia and HCLI have never publicly declared their margins. Nokia business is the largest

contributor to HCLI’s revenues and profits. Nokia product distribution was the largest

contributor to HCLI’s sales (about 72% in FY2009). As a percentage of PBIT however, the share


NOKIA

HCL Infosystem

Redistribution Stockist Supplier

Dealers Priority Stores Concept Stores

Margin not declared

18% Margin

10% Margin2% Margin

8% Margin

of Nokia distribution was at 61%. Since 2006, when Nokia took over 50% distribution channel

from HCLI, revenue growth has almost been flat.

When comparing with its competitors, Nokia offers almost half to one-eighth margins on its

phones. Compared to 2% offered to dealers by Nokia, LG and Motorola offer around 8-10% and

Samsung 18%. But still dealers prefer to go with Nokia as it has much more surer sales and have

excellent support from RDSS and the company.

Distributors Coverage PlanHCLI being the first level intermediary between Nokia and dealers, HCLI collects the goods

from mother depot in Gurgaon and supplies to 5 RDSS across Delhi and Noida. Gurgain depot

itself functions as RDSS for the Gurgaon. HCLI agents deliver the ordered mobile sets to RDSS

within 4hrs of receiving orders. Mother depot maintains stock capable of catering to atleast 7

days of demand in its covered territory.

In turn, RDSS ensures the delivery of goods within 4 hrs of the order made, sometimes even

quicker. Night time orders are delivered net day morning. As each RDSS is given a small

geographic territory, making quick deliveries does not prove to be hard. Although territories are

geographically small, the number of retail stores in each zone make them commercially attractive

to operate in. The small delivery time and close-knit relations with RDSS allows dealers to even

order the mobile pieces as and when customer walks in demanding the handset.

Again compared to this, Nokia’s rivals have appointed much more number of distributors in each

region. Samsung has 15 or more distributors to cover Delhi NCR region. But Still Nokia

manages to give services better than its competitors.

Infrastructure required by distributorNokia’s sole distributor currently in India is HCLI. Their deal was first inked over a decade ago

just when Nokia was entering into Indian telecom market which was perceived to be ready to

take a big leap forward. Nokia wanted an established partner with proven record in handling

distribution across India. HCLI had an excellent wide-reaching distribution channel and support


centers. This partnership helped Nokia in having a focused approach towards increasing

penetration to Rural & Semi-urban areas and improvement in market share across the country.

Nokia-HCLI have not declared any of their agreement details on public domain and hence its not

known what infrastructure HCL is supposed to maintain as per the agreement or what

infrastructure they have dedicated or use for servicing Nokia. Few details available in public

domain are:

Service provider for the repair of Nokia Mobile Phones in India

Pan India service network in 21 L3 locations equipped with state of art equipments

Mobile care vans across the country to increase remote coverage

Nokia repair facility

100+ repair benches with 75K handsets/ month repair capacity

L4 repair capability

HCLI maintains the mother warehouse located Gurgaon.


Support provided by the company to the distributorNokia has an extensive support program dedicated to providing key benefits to HCLI and RDSS

agents and qualified mobile phone dealers throughout Delhi. Nokia offers qualified dealers

unprecedented access to Nokia's products and support services to better satisfy customer needs

for Nokia products. It offers the tools and point-of-purchase support dealers need to deliver the

best possible customer solutions to Nokia end users. Nokia also offers dealers extensive

merchandising support such as counter top displays, product brochures, demonstration phones

and a Nokia premier dealer plaque

Point of Sales(POS) system : Nokia provides point of sale systems and software to dealers to

help them manage their selling activity better. It encourages dealers to move away from their

cash registers to IT managed account system. Almost all the Priority dealers have moved from

cash registers to POS systems.

In-shop Branding

Schemes : The concept of mobile recycling was first introduced by Nokia, a campaign was

launched to encourage people to give their damaged Phones to Nokia care, & avail the discount

on buying a new one. Besides, Nokia offers multiple schemes to push sales of lagging mobile

models. These schemes come in form such as added cash bonus of Rs.300-1500/ set for selling a

5 specific lagging set in 4 days.

Retail element: Nokia assists priority dealers by assisting in the payments for the retail element

part of their stores while the dealer is supposed to take care of the expenditure incurred on the

services other than the retail element. The service charge payments for the retail element could

be split into '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 it specifically requires.

Sales Collaterals : Nokia provides promotional collaterals and brochures to the dealers directly

to help in promoting sales. 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. Mostly


these tasks are taken up by the delivery executives who also inform the dealers about their latest

launches and the feature sets of these phones.

Dealer encouragement schemes : Nokia has cash rewards to promote and motivate the dealers.

They offer cash rewards for making predetermined level of sales fortnight which may ranges

from Rs.500 to Rs.5000. For their high performing dealers they offer all expenses paid

local/foreign holiday trips.

Credit/ Payment terms Nokia operates of quick delivery and quick payment terms with RDSS and mobile dealers.

Deliveries are made super-quick, 4-5 hrs, and payments are supposed to be made quickly

too.

Nokia and HCLI have been under long term contract which has been in place for over a decade

now, with terms and conditions having been revised twice in this period. Margin and credit

period agreement between Nokia and HCLI have never been declared publicly. But its

speculated that its revenue sharing model based on total sales in a particular period.

Nokia having a very strong brand and market presence, exhorts tremendous power in market. It

allows a very small credit period to the RDSS which in turn squeeze dealers, giving them equally

small credit period. RDSS are allowed a credit period of 7 days, which in turn give dealers also

7 days credit period only. Although dealers moan about the short credit period, the power Nokia

has in market and demand for Nokia phones makes it imperative that dealers carry Nokia mobile

phones in their stores.

Again on this front, Nokia has tighter norms compared to its rivals. Samsung and LG offer

double the credit period offered by Nokia. Samsung and LG offer 15 days credit period,

compared to Nokia’s 7 days.

Major Problems Faced by the distributorsTerms and condition of the deal between Nokia and HCLI has never been revealed in the public

domain. Hence, the problems faced by HCLI are not known publicly. Since, the deal to divide


distribution territories was signed in 2006, there has been some issues for HCLI. HCLI shares

have suffered on share market. Nokia has also refused to confirm or deny plans on appointing

distributors for the territories under its control after the revised agreement.

On its part RDSS are quite happy with their functioning. They are satisfied with the products,

quantum of sales and promotional support provided by the company.

Even dealers spoke very highly of Nokia. Multiple dealers were contacted and not a single one

had any problem with Nokia’s distribution or service. Some dealers in other states were also

contacted and they also had nothing to report on the problem front.

A few minor issues that possibly could become concern in future were :

Credit period given by Nokia is very low compared to its competitors – just 7 days

compared to 15 days offered by Samsung and LG

Margins offered are very low compared to competitors who could become larger player

over new few years. Nokia offers just 2% margin to dealers compared to around 10%

offered by LG and 18% offered by Samsung

The damage piece policy has been cause of concern for some dealers/ RDSS. Although

minimal damaged pieces have been reported over years, if any physically damaged handset

is found, it sometimes leads to dealer/RDSS having to bear with it.

Major Points of conflict There has been no point of conflict reported by RDSS or the dealers over the years.

Nokia-HCLI have marked the territories very effectively and have been strict in ensuring

that territories are not encroached upon by dealers or RDSS. There has also been no

conflict amongst channel partners at different levels or channel partners at same level.

Payments, delivery of goods ordered and services have also been impeccable.

Relations between Nokia and HCLI are deeply ingrained in their system and if there has

ever been any conflict or disagreement, it has never been reported in any open forum.


Major Problems/ Issues identified With market scenario changing, smart phones are increasing their share of total mobile

phones market. Although Nokia too has presence in this segment, but with multiple recent

offerings launched by Blackberry, Apple and Samsung market is set to become more

competitive for Nokia. Compared to Nokia all these companies are offering better credit

terms and margins and this may lead to dealers and RDSS moving over to these

competitors.

Dealers reported Nokia’s executives never try to pressurize them in keeping their phones

on prominent displays or push sales when customer walks into the store. On the contrary,

LG, Samsung and other rival brand’s sales executives repeatedly exhort dealers to keep

their products in prominent displays. They even ask the dealers to push their handsets when

customer asks for Nokia. Till now Nokia has done strong promotion and relied on the pull

of its products and brand to make the sales. But in future, as the market gets competitive,

Nokia will find this tougher and should start forming strategy to counter such moves of its

competitors.

Service centers of Nokia are managed by HCLI in assistance with Nokia personnel.

Although, defects and problems in handsets have been very low compared to competitors,

the handling of service has not been impeccable. Service centers usually take time and at

some centres have long waiting list. This makes customers to move to cheaper and

convenient local mobile repair shops. As parts used are not genuine and sometimes results

in handset damage, customers end up blaming Nokia as much as they blame Local shop.


Recommendations Review the margins offered to dealers and RDSS periodically taking in consideration the

competitive structure of the market

Review the credit period allowed to dealers and RDSS periodically taking in consideration

the competitive structure of the market

Have a multiple complaint channels as channels tend to get choked due to the bulk of

complaints coming in everyday. Nokia Priority dealers can be used as centres where

complaints can be registered and can be dealt in an organised way

Nokia has to be make its sales executives more pushy keeping in mind the tougher

competition from previously smaller players like LG and Samsung

Nokia needs to provide better purchase centric schemes to the dealers. These schemes can be

given on a sales basis so that they solve dual purpose increasing the sales and acting as an

incentive for the dealers.

The distribution network of Nokia is very wide but there are certain areas where no brands

has reached like sector -3,4, Harola market in Noida , Govind puram in Ghaziabad , Certain

areas on GT road, but in these areas distribution is not very effective and thus Nokia should

work on its distribution in these areas.

Some dealers said that missing piece in Nokia’s product line is absence of stylish mobiles in

range of Rs.3000-5000. This highlights reliance of Nokia on HCLI for market information

gathering. Nokia in itself is disconnected from its dealers and has no mechanism to gather

this insight from them.


Refrences

www.Nokia.co.in

www.hclinfosystems.in

http://toostep.com/debate/nokia-to-have-its-own-retail-distribution-model-will-this-he

http://davidhowse.wordpress.com/2010/08/10/converting-a-wholesale-or-distribution-

business-model-to-a-retail-model-an-alberta-marketing-perspective/

http://press.nokia.com/PR/199601/775828_5.html

http://www.hclinfosystems.com/news45.htm

http://dqchannels.ciol.com/content/reselleralert/106022101.asp

http://www.businessweek.com/globalbiz/content/aug2007/gb20070831_914354.htm

http://www.businessweek.com/magazine/content/09_32/b4142056700653.htm

http://www.thehindubusinessline.com/2008/06/27/stories/2008062751790400.htm


People Contacted

Person Met Mr. Rahul Chattri

Company Name Naveen Mobiles

Role in Channel Dealer

Address J12/1, Khirki Extn, Malviya Nagar, New Delhi

Person Met Mr.Pankaj Mishra

Company Name MobileStore


Address Shop No.2, Upper Ground Floor, Main Market,

Malviya Nagar, New Delhi

Person Met Vineet

Company Name Nokia Concept Store

Role in Channel Dealer/ Distributor

Address Select CityWalk Mall, Saket, New Delhi

Person Met Mr.Dinesh Chand Srivastava

Company Name Chowdhury Agencies


Role in Channel RDSS – South Delhi

Address Jamrudpur, Lajpat Nagar

Person Met Mr.Vaibhav Sharma

Company Name

Role in Channel RDSS

Address A-28 Gurunanak Pura Laxmi Nagar Delhi

Person Met Mr.M.R.Balaji

Company Name

Role in Channel RDSS

Address L,F-2, Mansarovar complex, arera colony Bhopal

M.P.

Person Met Mr.Sayed Zamir Ali

Company Name Vision Mobile zone


Address Shop No.-7, Allied complex, Sultania Road,

Bhopal, M.P


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