SALES & DISTRIBUTION CHANNEL---LG.doc

INTRODUCTION

The present day Indian economy is viewed a highly competitive and

market oriented. At this state the success of any organization is totally

depends on customer and his satisfaction only. So, every business

organization should see that the customer “as sovereign of the market”

who decides the fate of it . Hence, it is the responsibil ity of any concern

to meet the requirements of customers from time-to-time with greater

dynamism.

Sales and distribution management constitutes one of the most

important parts of marketing management. “Exchange” is the core,

aspect of marketing, and it is the sales and distribution management

which faci l it ies it . Sales management has been defined as the

management of a f irm personal sel l ing function. The importance of the

sales and distribution function varies across organizations depending

upon its nature and verity of products, target market. Consumer density

and dispersion and the competitive practices among the other things.

Sales and distribution function is organized internally, externally or

jointly.

Finding and communication with prospective buyer.

Bringing together the markets offering and the prospective buyer.

Reaching an agreement on price and other terms of the offer so that

ownership and possession can be transferred.

Of the markets offerings, and his satisfaction generating potential.

Actual transfer of possession i .e. t imely and safe delivery.

Of relevant consumers information and revenue in exchange of goods of

services.

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Selling

The basic task of marketing is to bring the buyers and the sellers

together. Regardless of the desire one has to sell and the other to buy,

no exchange can take place unti l each one knows the desire of the

other. The function of marketing is to ensure that the right product is

made available at the place, in the right t ime and under the right

impression to the consumer.

Distribution of Consumer Market:

Five channels are widely used in marketing tangible products to

ultimate consumers:

Producer consumer: The shortest, simplest distribution channel for

consumer goods involves no middlemen. The producer may sell from

door to door of by mail. For instance, south-western company uses

college students to market its books on a house-to-house basis.

Producer retailer consumer: Many large retailers buy directly

from manufactures and agricultural products. To the chagrin of various

wholesaling middlemen. Walmart has increased its direct dealings with

products.

Producer wholesaler retailer consumer: If there is a

traditional channel for consumer goods, this is it , small retailers and

manufactures buy the thousands find this channel the only economically

feasible choice.

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Producer agent retailer consumer: Instead of using

wholesalers, many producers prefer to use agent middlemen to reach

the retail market, especial ly large scale retailers. For example. Clorox

uses agent middlemen such as Eisenhart & wholesaler that distribute a

wide range of products to retailers. In turn, Dierberg’s offers its

assortment of products to f inal consumers.

NEED FOR THE STUDY

Consumer satisfaction is the most important objective for any

manufacturing concern to successfully market its products. Penna has

from gradually and would want to take a stock of the satisfaction level

of consumers and define areas where possible improvement may be

made. The research work has been therefore selected in this area.

The company which produces products doesn’t give l ife to sustain

in competition without sales of products. So sales are important

function of the manufacturing company to get profits. Through sales

only wealth maximization if possible.

Distributions are also one of the important functions in

marketing. Through distribution only one company can sell its products.

Here the distribution channels contain the dealers. Who are very near

to the customers and act as middlemen between the organizations. So

there is a need to study sales and distribute on strategies.

Distribution system includes distribution channels. Which are sets

of independent organizations involves in the process of making a

product (or) a service available for the consumption. Distribution

network is necessary for smooth flow of goods.

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OBJECTIVES OF THE STUDY

Primary objective:

To assess the role of dealers in LG Electronics Limited.

Secondary objective :

1. To assess the channel performance in LG Electronics Limited.

2. To find dealers opinion on various issues of the present market

situation and furthering (strengthening) channel effectiveness.

3. To offer suggestion in building effective channel strategy to LG

Electronics Limited

SCOPE OF THE STUDY

The study aims to measure satisfaction level of the dealers

regarding LG Electronics Limited. The area within which the study was

conducted regarding the information the primary data is collected in the

form of questionnaire collected from the dealers in Twin Cities. To sum

up the project had with in the scope of the study in the area of

“PEREFORMANCE of SALES and DISTRIBUTION CHANNEL” of LG

Electronics Limited in Twin Cities for a particular t ime.

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METHODOLOGY OF STUDY:

In view of the objectives of the study, an exploratory design

has been adopted. Further the researcher also touched the descriptive

researcher design and causal analysis to relate between different

variables. Exploratory research is one which largely interprets the

available information on the study and it lays emphasis on the analysis

and interpretation of the exiting and available information. This

research is generally useful when we use the information collected from

three sources, viz. , study of secondary sources, discussion with

individuals and analyzing the some specific case.

Sources of Data:

To perform the Research study by Researcher, the sources of data

obtained are:

Primary Data:

This data is obtained by interacting and interviewing the dealers

in Twin Cities.

Secondary Data:

This data is obtained directly from the company in the form of

broachers, charts, diagrams, document and other forms.

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Data Collection Tool:

Questionnaire:

This is one of the data collection tools. It is quite popular

particularly in case big enquires. It is being adopted by private

individuals, research worker, private and public organization and even

government. In this method, a questionnaire is issued to the persons

concerned with a request to answer the questions and return the

questionnaire. A questionnaire consists of number of questions printed

or typed in a definite order or a form or set of forms.

The researcher used the structured questionnaire in which the

questions were:

Open-ended questions

Close-ended questions

Dichotomous questions

Multiple choice questions

Sampling Design

The researcher has done his research study on the dealers of LG

Electronics Limited to know their present satisfaction and expectation

from this brand. The researcher selected the dealers of LG Electronics

Limited at HYDERABAD& SECUNDERABAD for this research study.

Sampling Plan

Sample size: Sample size consists of 50 dealers.

Sampling unit: The Sampling unit includes al l the dealers of LG

Electronics Limited products present in HYDERABAD & SECUNDERABAD.

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Sampling method: For collecting information from dealers, non-

probabil istic simple random sampling method is used.

Tools of analysis:

The data collected trough survey has been carefully and

meaningfully analyzed by using well established statistical tool and

techniques. Important statistical technique is percentage method.

Hypothesis:

Hypothesis is a part of research that enables the researcher to

predict about the future based on the present trend. It is very much

essential in any research activity to develop the policies for a better

working of the system. Based on the above concept, the hypothesis for

the study developed by the researcher at the various stages of analysis.

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Limitations of the study:

The selected sample members are conspicuous and inconspicuous in

nature. So, there is chance to arise some errors in the courts of survey.

The errors may be as fol lows:

Respondents may not disclose the right information, because the

researcher is very stranger to them.

Respondents may give pleasing answers to the researchers even though

it is not correct from the prospective.

The perceptional values l ike status, not-disclosure of the correct

information and diff iculty in expressing their personal feeling to an

unknown researcher can bring wrong opinion poll ton fi l l ing the

questionnaire.

Since, the sample size is small; a perfect mix of the respondents may

not be available for the researcher to conduct the opinion survey.

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Company Profile

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COMPANY PROFILE

HISTORY:-

The trajectory of LG Electronics, its growth and diversif ication, has

always been grounded in the company ethos of making our customers'

l ives ever better and easier-happier, even-through increased

functionality and fun.

Since its founding in 1958, LG Electronics has led the way to an ever-

more advanced digital era. Along the way, our constantly evolving

technological expertise has lent itself to many new products and applied

technologies. Moving forward into the 21st century, LG continues to on

its path to becoming the finest global electronics company, bar none.

BRAND IDENTITY

LG is the brand that is Delightfully Smart. "Life's Good" slogan, and futuristic logo are a

great representation of what we stand for.

Global, Tomorrow, Energy, Humanity and Technology are the pillars that this

corporation is founded on; with the capital letters L and G positioned inside a circle to

center our ideals above all else, humanity. The symbol mark stands for our resolve to

establish a lasting relationship with, and to achieve the highest satisfaction for our

customers.

The letters "L" and "G" in a circle symbolize the world, future, youth, humanity, and

technology. Our philosophy is based on Humanity. Also, it represents LG's efforts to

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keep close relationships with our customers around the world. The symbol mark

consists of two elements: the LG logo in LG Grey and the stylized image of a human

face in the unique LG Red color. Red, the main color, represents our friendliness, and

also gives a strong impression of LG's commitment to deliver the best. Therefore, the

shape or the color of this symbol mark must never be changed.

Our logo is the fundamental visual expression used to identify LG. It expresses the

quality and sophistication that is the hallmark of our products. It is simple, modern and

distinctive. Consistent and proper usage of the logo is absolutely essential. The logo is

symbolic of our steadfast reputation for excellence; therefore, any variation of the

logo diminishes the visual identity of LG Electronics and its products.

VISION OF LG:

Management Based on Esteem for Human Dignity

Human Value each Individual.

Dignity Capital ize on Individual competencies, Respect for personal

aspiration.

Esteem People are of the origin of al l values. By developing people we

improve the organizations clear tasks and fair treatment.

LOOKING AHEAD Our Mil lennium Commitment

On the way to becoming the Best Global Organization we are promising:

DIGITAL TECHNOLOGY LEADERSHIP: The new mil lennium sees the

birth of the Digital Technology at LGEIL-TL2006 (Technology Leadership),

which offers customers easy to use, very affordable, and technologically

ingenious "Champion Products".

GLOBALISATION: 70 % of its total revenues are from overseas. 54

subsidiaries carry out manufacturing, sales and marketing, logistics,

R&D and the customer services in key geographical sites worldwide.

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CREATING VALUE FOR THE PEOPLE: LG extends a warm hand to

contribute to the world community; to touch the hearts of the

customers, fr iends, shareholders, employees, partners and subsidiaries

at home and abroad. We create value help people realize their dreams

of a better l ife.

LG ELECTRONICS 50-YEAR HISTORY

1958 Founded as GoldStar 1959 Produce Korea's f irst consumer

radios 1998 Introduce the 60-inch plasma TV 1999 Forge joint

venture with Phil ips 2003 Enter UK GSM handset market 2005

Develop 3G UMTS DMB handset 2007 Launch HD disc-player and

drive

1958

GoldStar (today’s LG Electronics) established

1959

Korea’s f irst radio produced

1965

Korea’s f irst refrigerator produced

1966

Korea’s f irst black & white TV produced

1968

Korea’s f irst air conditioner produced

1969

Korea’s f irst washing machine produced

1974

GoldStar Communications went public

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1977

Color TV produced

1978

Exports surpassed US$100 mil l ion, a f irst for Korea’s electronics

industry

1980

First EU sales subsidiary in Germany (LGEWG) established

1982

Color TV plant established in the US in Huntsvil le, Alabama

1984

Sales surpassed 1 tri l l ion Won

1986

European-standard VCR plant established in Germany

1989

Sales subsidiary and a joint production subsidiary established in

Thailand

1990

Ireland-based design technology center established

1993

With the establishment of Huizhou subsidiary in China(LGEHZ),

marketing in China took full swing

1995

Company name changed to LG Electronics and US-based Zenith acquired

1997

40-inch Plasma TV and the world’s f irst IC set for DTVs developed India

production subsidiary (LGEIL) established

1998

World’s f irst 60-inch Plasma TV developed

1999

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LG.Phil ips LCD established

2000

LG Information & Communications merged The world’s f irst Internet-

enabled refrigerator launched Global sales of refrigerators reached the

number one position

2001

Asynchronous IMT-2000 equipment commercial ized The world’s f irst

Internetenabled washing machine, air conditioner, and microwave oven

launched LG.Phil ips Displays, a joint venture with Phil ips established

2002

Under the LG Holding Company system, the Company spun off to LG

Electronics (LGE)& LG Electronics Investment (LGEI) The first home

network system commercial ized in the global market

2003

World’s f irst synchronous-asynchronous IMT-2000 mobile phone

developed The world’s f irst 76-inch Plasma TV developed CDMA mobile

handsets took the largest share in the US and world CDMA market

Launched the world’s f irst Super Multi DVD Rewriter

2004

EVSB, the next-generation DTV transmission technology, chosen to be

the US/Canada DTV transmission standard by the US ATSC All- in-one LG

55-inch LCD TV, the world’s f irst and largest among LCD TVs,

commercial ized The world’s largest and first 71-inch Plasma TV

commercial ized The world’s f irst terrestrial DMB phone developed

Developed Wireless Speaker Home Cinema System

2005

The world’s f irst DMB notebook commercial ized The world’s sl immest TV

commercial ized The world’s largest 102-inch Plasma TV developed LG

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and Nortel Networks agreed to establish a joint venture for

telecommunication network equipment Satell ite-based DMB phone

commercial ized The largest share seized in the global CDMA market

2006

Launched the LG Shine, the second handset in the Black Label Series

Globally launched the steam washing machine and interactive TV

refrigerator Developed the world's f irst 100-inch LCD TV Launched the

world's largest Full HD 102-inch Plasma TV (1080p) Developed the

world's f irst dual-format high-definition Disc Player& Drive

2007

Launches the industry's f irst dual-format, high-definition disc player and

drive Launches 120Hz Full HD LCD TV Demonstrated the world-first

MIMO 4G-Enabled technologies with 3G LTE Won contract for GSMA's

3G campaign

2008

Introduces new global brand identity: "Styl ish design and smart

technology, in products that f it our consumer's l ives." Posted No.1 spot

in US frontloading washers in 5 consecutive quarters Unveiled the

world's f irst Bluetooth headset combined mobile phone Unveiled the

world's f irst Blu-ray network storage Developed the world's f irst LTE

mobile modem chip Recorded over 100 mil l ion units of LG air

conditioners in accumulated sales

2009

Became second-largest LCD TV provider worldwide Became third-largest

supplier of mobile handsets market worldwide Became Global Partner

and Technology Partner of Formula One™

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2010

Unveiled the world’s f irst and fastest dual-core smartphone, LG

OPTIMUS 2X Unveiled the world’s f irst ful l LED 3D TV

LG Electronics continues to pursue its 21st century vision of becoming a worldwide

leader in digital—ensuring customer satisfaction through innovative products and

superior service while aiming to rank among the world’s top three electronics,

information, and telecommunications firms by 2010.

On our way, we hold tight to a philosophy of "Great Company, Great People,"

underscoring our belief that only great people can create a great company.

LG strives for greatness in what we've identified as our three core capabilities: Product

Leadership, Market Leadership, and People Leadership—each strength a key part of

realizing our growth strategies for "fast innovation" and "fast growth".

LG Electronics is pursuing the vision of becoming a true global digital leader, attracting

customers worldwide through its innovative products and design. The company’s goal

is to rank among the top 3 consumer electronics and telecommunications companies

in the world by 2010. To achieve this, we have embraced the idea of “Great Company,

Great People,” recognizing that only great people can create a great company.

CORE CAPABILITIES

Product leadership refers to the ability to develop creative, top-quality products, using

specialized new technologies.

Market leadership refers to the ability to achieve top ranking, worldwide, thanks to a

formidable market presence in countries across the globe.

People leadership refers to the market dominance achieved by selecting and nurturing

talented team players able to internalize and execute innovation across the board.

Growth Strategies

Fast innovation calls for securing a competitive edge over the competition by setting—

and meeting—the highest of goals in all realms of innovation, by at least 30%. This

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applies to new-product development and unveiling, innovation in design and

technology—as well as product sales, market share, and corporate value.

Fast growth is the result of implementing strategies designed to swiftly expand market

size and earnings, with and eye toward monetary growth.

Corporate Culture

Though a company can boast stellar management strategies and an outstanding and talented pool of employees, it is still necessary to adopt a corporate culture that can fully unleash the power of these capabilities.

No to “No’s”

At LG, we try to meet every road block with an alternate route—brainstorming and working harder before saying “no.”

‘We’ not ‘I’

LG’s embraces a code of strong teamwork—encouraging pride in achievement as goals are met by many working together as one.

Fun Workplace

LG’s workplace is one where the individual’s creativity and freedom are respected, and work is made fun.

Established In : Jan 1997

Managing Director : Mr. Soon Kwon

Corporate Office : Plot No. 51, Udyog Vihar, Surajpur Kasna Road,

Greater Noida (UP)

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BUSINESS AREAS & MAIN PRODUCTS

Home Entertainment

Plasma Display Panels, LCD TVs, LED LCD TVs, Colour TVs, Audios, Home Theatre System, DVD Recorder/Player, BluRay Players

Home Appliances

Refrigerators, Washing Machines, Microwave Ovens, Vacuum Cleaners, Air Purifiers

AC

Split AC, Window AC, Commercial AC’s

Business Solutions

LCD monitors, CRT monitors, Network Monitors, Graphic Monitor, Optical Storage Devices, LED Projectors, NAS (Network attached Storage) and Digital signage

GSM

Smart Phones, Color Screen GSM Handsets, Camera Phones, Touch Screen Phones, 3G Phones, Multimedia Phones, Dual SIM Phones, CDMA Phones

AWARDS

Award Name Awarded By Year

Most Admired Company in India A&M Magazine 1998

Most Admired MNC A&M Magazine 1999

No.1 Consumer Durable Company A&M Magazine 1999

Best Marketing Company A&M Magazine 1999

Most Ethieal MNC Business World 1999

Techies Award Best Flat Screen Monitor Computer World 2000

3rd Largest Exporter ESC2001 2001

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Best Employer Business Today/ Hewitt

Assts

2001

Best Employer Business Today/ Hewitt

Assts

2002

Enterpreneur of the year Ernst & Young 2002

Gold Rating for Environmental Performance CII 2003

No. 1Awareness Award. Business Today 2003

Super Achivers Award : MD LGEIL CETMA 2003

Green Technology Gold Award Green Tech Foundation 2003

Best Designer Award -Art Cool Air Conditioner Business World & NIT 2003

VAR India User Choice Award : Monitors VAR India 2003

Most Admired Product – Microwave EFY 2004

Award for IT Innovation Business Today 2004

Most Trusted Brand -CD Writers DIGIT/Jasubhai Digital

Media

2004

EFY's Electronics Organisation of the Year Award

for Television

Electronics for You 2005

Consumer Durable Retailer of the Year ICICI Bank 2005

Excellence in Corporate Leadership &

Entreprerenural Spirit

CNBC TV 18 2005

Most preferred Brand- CTV & WM CNBC Consumer Vote

Awards

2005

Maximum Imports & Third Highest Exports CONCOR 2005

EFY Reader's Choice Award For Microwaves EFY 2005

Outstanding Contribution in the field of HR CETMA 2005

Outstanding Contribution in the field of HR MID DAY 2005

Top Company :CDMA Handsets V & D 2005

Top Company : Fixed Phones V & D 2005

Best in Recruiting & Staffing RASBIC 2006

Most Preferred Brand - CTV, WM, Computer & AC CNBC Awaaz Consumer 2006

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Awards

4 P Award : Refrigerator and Air Conditioner 4Ps Power Brand Award 2006

4P Power Brand CNBC Consumer Vote

Awards

2006

Most Trusted Brand - LCD TV, Plasma TV, AC, WM,

Ref, PC

Reader's Digest 2006

Maximum Exports-Consumer Electronics ESC 2006

Maximum Exports CONCOR 2006

First Consumer Awards - CTV, Ref, WM, AC, MWO,

PC

Times Group 2006

Business World Customer Loyalty Survey : Air-

conditioner & Refrigerator

Business World & IMRB 2007

Top Newsmaker – Consumer Durables Business Today & Cirrus 2007

Most Trusted Brand - TV, AC & HA Super Brands 2007

Reader's Digest Trusted Brands: Platinum Awards-

Airconditioner. Gold Awards- LCD TV/Plasma TV,

Ref, Washing Machine,PC


EFY Reader's Choice Award For IT & MWO EFY 2007

India's Most Trusted Brands 2007 Brand Equity 2007

4 Ps Business & Marketing : India's 100 Most

Valuable Awards

Planman Consulting &

ICMR Ranking

2007

Business Leadership Award in Consumer Durable

Sector

NDTV 2007

Most Preferred Brand -CTVs, ACs, Ref.and Washing

Machines

CNBC 2007

Loyalty Awards - Customer and Brand Loyalty in

the Consumer Durables Sector

India Times- Mindscape

with Savile-Row

2008

Avaya Global Connect Customer Responsiveness

Awards

ET Avaya Awards 2008

EFY Reader's Choice Awards 2008 -Microwaves EFY 2008

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Smart Living Awards -TV, AC, Microwave & Washing

Machine

360 degrees, Times of

India

2008

Brand for Excellence 2008 VAR India 2008

Reader's Digest Trusted Brand : Platinum Awards -

AC. Gold Awards - LCD TV /Plasma TV,Ref, PC


Most Preferred Brand- Consumer Electronics and

Home Appliances

CNBC Awaaz Consumer

Awards

2008

Most Admired MNC in India 4P’s Award 2008

OBJECTIVES OF COMPANY

LG Electronics (LG), a major player in the global f lat panel display

market, recently announced business strategies and goals for its display

business at IFA International 2009 in Berl in, Germany.

Competition has intensified since the flat panel TV industry

has ful ly matured,' said Simon Kang, President and CEO of LG Electronics

Digital Display Company, during a press conference at IFA.

we are confident that focused, localized marketing

activit ies emphasizing our products, which embody the perfect

harmony of design and technology, wil l separate us from our

competitors. '

LG has established itself as a premium brand by

systematically focusing on brand marketing activit ies, for its products

which balance styl ish design and smart technology.

The company plans to invest in marketing and wil l take a

segmented, regional approach. LG plans to reinforce partnerships with

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premium distributors and centralize brand marketing activit ies in

developed markets such as North America and Europe.

In contrast to assembly l ine manufacturing, cell assembly

al lows one person to assemble a TV from start to f inish

LG wil l maximize its return on invested capital through

outsourcing, innovative manufacturing technology, and an advanced

supply chain management system.

MANAGEMENT SYSTEM

When LG Electronics removed the Circulating Investment Structure of its affiliated

companies (through the launch of a holding company system), this enabled the holding

company to take full charge of investments. Consequently, LG Electronics has been

able to focus on its own businesses while increasing the overall value of the Company.

This corporate governance structure has laid the groundwork for increasing

managerial transparency. Through a responsible management system comprising of

the CEO of LG Electronics and a Board of Directors, we are taking huge steps in

strengthening our competitiveness at both the domestic and international level, in

order to maximize corporate and shareholder value.

Board of Directors

LG Electronics' Board of Directors maintains independence from its management and

major shareholders. Currently, the Board has a total of seven directors, four of whom

are outside directors. To ensure that external directors are appointed fairly and

independently, the "External Director Recommendation Committee," comprised of

one in-house director and one external director, nominates external directors

following close examination of their qualifications. These outside directors are then

voted on at the next shareholders' meeting.

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Committees

The BOD is supported by three Board Committees. They are the Audit Committee, the

Outside Director Candidate Recommendation Committee and the Management

Committee. The Audit Committee consists of three Outside Directors, and is

responsible for examining corporate financial records and accounting to ensure

compliance with the accounting laws and transparency. The Management Committee

reviews and determines the agendas delegated by the BOD and ordinary management

activities. In 2010, the Management Committee reviewed a total of 52 agendas.

Evaluation and Compensation

Compensation for the BOD members is made within regulations pertaining to BOD

compensation that has been approved at the General Shareholder's Meeting. The

evaluation of management and executives of LGE is held annually. Top management

and executives are evaluated to determine whether they have set and achieved

challenging goals, whether their job objectives composed of quantitative and non-

quantitative factors were achieved, as well as their capability through fair and

objective process, and appropriate compensation corresponding to the outcome of the

evaluation is determined.

Key Executives for LG Electronics India Pvt. Ltd.

Mr. Soon H. Kwon Managing Director and Director Mr. Y. V. Verma Chief Operating Officer Mr. Chandramani M. Singh Product Chief and Head of Consumer Electronics Mr. R. Manikandan Business Group Head of Digital Display & Storage Mr. V. Ramachandran Head of Strategy Compensation as of Fiscal Year 2012.

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ORGANIZATION

Take a look at LG Electronics’ organization information, including our global

operations.

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INDUSTRY PROFILE

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INDUSTRY PROFILE

Electronics is the study of the flow of charge through various materials and devices

such as, semiconductors, resistors, inductors, capacitors, nano-structures, and vacuum

tubes. All applications of electronics involve the transmission of either information or

power. Although considered to be a theoretical branch of physics, the design and

construction of electronic circuits to solve practical problems is an essential technique

in the fields of electronics engineering and computer engineering.

The study of new semiconductor devices and surrounding technology is sometimes

considered a branch of physics. This article focuses on engineering aspects of

electronics. Other important topics include electronic waste and occupational health

impacts of semiconductor manufacturing.

Consumer Durables (Data table headings are shown Year-wise in descending order)

Air Conditioners

Bicycles

Crystal Glass

Domestic Electrical Appliances

Gems and Jewellery

Glass Products

Kitchen Equipment

Liquefied Petroleum Gas Cylinders

Microwave Ovens

Refrigerators

Sewing Machines

Sunglasses

Toys and Games

Washing Machines and Vacuum Cleaners

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Watches and Clock

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Channel conflict

Over-distribution:

Sometime Company over distribute their product. These kinds of problem happen

when company authorizes several distributors in the same area. LG management and

sales department authorize one distributor in each area and not facing any over

saturation. If they need to authorize more than one distributor they set up

showroom according to the demand or either they just expand the current

showroom.

Stocking levels:

The primary responsibility of a showroom to maintain adequate stock of the

company’s product. Each showroom maintain a certain amount of stock which is

possible for them.

Assigned markets:

Distributors want to do business in their comfort or existing zone. When

company open any new showroom in other area other showroom sales

personnel too get the chance to do business there. IF any distributor seeing that

company opening a new showroom in Mohammadpur other showroom

personnel also get the chance to operate that showroom.

Transshipping:

Out of authorized product shipments by distributor is call transshipping. This

kind of activity is harmful for the company, because of strict control and better

managerial performance transshipping don’t happen in LG’s distribution process.

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Competition resources:

Each of direct sales personnel get the training and other sales improving

performance technique what is allocated for them. Company gives training fairly

and treats them equally.

Size of profit margin:

Making money is the primary target for any distributor, but here company

use direct sales force channel .They are not transferring their cost. They invest

their money to build a distribution facility or showroom. Their profit comes through

how they charge for their product.

Pricing issues:

Company who use direct sales force channel ,they are not much worried

about their pricing issues. If they would use indirect sales force channel then

there were some possibilities of pricing issue between them and the indirect

sales force channel ,sometimes company is prevented to charge a price by the

indirect channel force.

Overselling without regard to Availability:

This kind of conflict happens when distributor unethically shift the full

burden of order to the manufacturer. Direct sales force channel of LG do not

perform this kind of work , if they need any product they call the main office to

supply the product and after that if the product is not available to the main

office then they told the customer that it will take time to give them the

product.

New product launches:

When launching any new product company don’t need to pull any

distributor because of the advantage of using direct sales force channel, whatever

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product they are introducing the showroom will get the product. The company

don’t need to perform any pull strategy.

Sales quotas:

LG don’t follow any sales quota system. They don’t force their direct sales

channel that they have to sell this amount or unit of product.

Large account coverage:

Their direct sales force gets the advantage of large account coverage. When

they deal with any large corporate customer they can deal with the corporate

customer or the company can also handle it directly. Company don’t interfere in

the case of large corporate when they directly contact with the direct sales force.

Competitor:

AC-General, Refrigerator-monopolybusiness, Washing machine-Samsung,

Microwave oven-Samsung, TV-Sony

Better alternatives for the company

Indirect channel:

Distribution is a cost transfer business, by using indirect channel the company

can transfer the cost and can save money. Traditionally they are sspending their own

money to set up a showroom which is quiet costly. They can take the help of

indirectchannel.

5.2. Demonstration:

The product they give their showroom is only for sell, but some customer

don’t want to take the showroom product, they want new product, so they can

give some demonstration which will only for demonstration purpose.

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5.3. Increase Warehouse:

Now they have only 9 showroom which is very big ,but the increasing

demand of the product require them to build more warehouse so that they can

more efficiently stock their product.

………………….

Distribution management is "managing the channels or the path that helps to reach a

product of a company to the end user". Usually there is a vacuum or gap between the

manufacturer and the end user or consumer. This vacuum is been reduced with the

help of channel of distribution or by a sales force.

From the operational standpoint, a marketing channel is the path a product or service

takes as it moves form the manufacturer to its end user or consumer.

Direct Channel of Distribution: The manufacturer employed direct sales force that

sells products to the end user. The manufacturer does have the authority in

controlling, directing, how to sell, what to sell, how much to charge. Form the

production point to the reaching point to end user its totally been controlled by the

manufacturer.

Indirect Channel of Distribution:

When a media is used to reach the end user with the transfer of the ownership of the

product is called the indirect channel. Indirect channel of distribution helps a company

to reach the end user more efficiently and effectively as they specializes in the channel

of distribution.

Primary Business Challenge:

The primary business challenge is to set up and mange a complex network of

distributors and resellers that sell your product along with those of many other

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manufacturers. Crafting a business relationship with indirect channel member by

achieving the disproportionate share resource commitment.

Market coverage strategy:

There are different kinds of market coverage strategies that a company follows to

reach the end user. They are as follows:

Intensive Coverage: Covering a market by authorizing several distributors to sell

product in a given geographic area or market segment.

Selective Coverage: Selecting only those distributors that meet certain channel

selection criteria to sell products in a given market.

Exclusive Coverage: Authorizing only one distributor per geographic area or market

segment to sell products.

Market:

Horizontal Market: A company or its product is all things to all people. Example: for the

products those does not have complex feature to understand.

Vertical Market: A company or its product is all things to some people. For instance the

product does require some extent of specialization.

Research and rank customer satisfaction requirements:

A company must assess what the customer or end user requires form the organization

that sells the product of the company or service. Canvassing an adequate number of

buyers to discover how well they know the product, whom they purchase the product

form, which do they prefer to buy the product form, etc. then according to the often

mentioned choices should be ranked first and then according to the task should locked

to perform first.

Which distribution channel to chose:

A company has thoroughly research and determines what channel structure that are

available. Constructing a matrix that illustrates the various structures through which

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reaches the end user more efficiently. Then they need to decide which channel

structure opportunities should b e brought on board. The priority for channel

introduction should specifically orient around channel sales revenue potential, profit

possibilities, and whether or not the company can provide the internal support for the

channel.

Decide upon eagle channel partners:

To make final candidate decision and decide the sequence in which the company will

bring the new member into the company the participation of the other corporate

managers in the company are also important. Because they do have criteria to meet

for the new channel member.

Monitor and evaluate the channel structure:

After selecting new member of the company it is absolutely necessary to monitor and

evaluate the operation of the member, other wise they might leave the company's

sales high and dry. And also for the internal environment is working well.

Marketing channel macro influences:

End users buying behavior: As the end users are the ultimate goal that's why they do

have certain degree of influences over how products finally reach them. That's why the

changes that should be constantly kept in observation are:

Where the customers buying the products.

How they but the company's product.

When they purchase the products.

Who does the buying?

The Economy: The economy does affect the three parts of the total channel equation.

Interest rate: High interest slows the spending, decreasing the

company's sales commensurately.

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Product and material shortage: In poor economic time the suppliers are

reluctant to supply goods or materials for production thus the rate of

production goes down.

Inflation: In inflation time the consumers spends less on buying thus the

sales goes down.

Recession: It puts pressure on cost of sales, thus the corporate has to

cut down the current structure.

Competitors: There is little control over the competitors who are using the current

channel. But to evaluate the competitors three basic questions should be kept into

consideration:

Who are the main competitors?

How strong is their presence in the COD company desires?

Is the company is willing to use the same marketing channel?

Political Factors: the state political arena is another area over which the company have

little or no command. For example, a channel marketing manager at a medical

products company needs to be concerned about federal healthcare legislation that

may require him or her t reorganize channels in order to meet new, more

administratively demanding influencers such as HMOs and PPOs. These influencers

must be included in the company's future channel marketing plans.

Environmental regulations could affect the way a company produces a product and

therefore add to the total cost that is passed through the channel to the end user. In

this case, the manufacturer must conform risk a penalty or disqualification.

Direct competitive analysis:

Need develop a descriptive profile of the company's top three to six direct

competitors. This profile should be continually and faithfully maintained.

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Evaluating each competitor's strengths and weaknesses as they accurately and fairly

compare to the company's own characteristics.

Anticipating each competitor's future strategies and tactics. This is critical for the

company future success or failure and is clearly the most important.

Where to find information about competitors:

Customer

Existing indirect channels(dealers, manufacturers representative, distributors,

and resellers )

Suppliers

Competitors ' employees

Advertising agencies

Other channel managers at noncompetitive companies in the same industry.

What does the Distributor Desires?

Quality product: All the distributor want to represent a quality product of a company.

That's why it's wise to have a quality product on the production line. Because

representing a low quality product can lead to a bad impression to the end user, which

most of the distributor doesn't want to face.

Adequate compensation: If a company cannot or will not meet a distributor's margin

demands, then the distributor will refuse to deal with the company.

Committed manufacturer field sales people: As they are the last line of communication

and management between the manufacturer an d the distributor, an d they are

responsible for implementing the business policies and procedures of a company. They

distributor want a sales person to be a company representative, channel defenders,

trainers, and field sales manger at a time of the service.

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Competent internal support system: Customer service, technical support, training, and

marketing service support are one of the key ingredients of lasting a relationship with

a distributor.

Reputable manufacturer image: All of the distributors want to represent a

manufacturer who is well known in the market. It makes them proud to be part of the

reputed company.

Differentiating the product or service:

A Company can block competitive moves by positioning the product or service in a way

that clearly shows it's advantage over the competition in the eves of the channel and

the end users. They're a number of ways the company can accomplish this objective:

Achieve a higher product quality image in the eyes of the customers.

Offer consistently superior customer or channel member service that exceeds all

marketplace satisfaction requirements.

Forge formal and informal business relationships that build long term loyalty.

Employ the most efficient, state-of-earth business technology to improve

communication flow among all channel members.

Implement policies that make it easy to do business with your company.

What are channel selection criteria:

Channel selection criteria are what the company and the end user wants the company

distributor to perform tasks. First the company needs to judge what is the company's

need and secondly what the customers desire from the distributor.

The criteria is based on three different categories:

Business and Operation Criteria (What are the quality does the company have in

terms of organizational structure and policies).

Sales and Marketing Criteria (What kind of marketing strategy do they follow and

the current sales competency).

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"Coup de Grace" Factors that Indicates a Motivated Candidate (Perception towards

the interested company and their willingness to work with the company).

Enticements to offer:

Antes: Are the policies that are necessary to get into the channel of distribution

business. They are what the company to put into the pot in order to play. They include

basics like meeting the channel's economic demands for profitability, quality, and

physical distribution.

Pluses: Are policies that strengthen the company's position and make an advantageous

difference between the company and the company's main competition. Lucrative

payment terms, and increased warranty period or a higher standard of quality are all

good examples.

a) Adequate or superior discounts/margins: An adequate discount or margins should

be offered to the channel member, because it reflects the profitability of channel

member. Based on the profitability they may want to stay or not. That's why it's

better to leave the provision to adequate discounts or margins.

b) Quality product: Always try to present the best quality product to the channel

member, because non of the member would want to present a bad quality product

in front of the end user, because it's would put a very bad impact on the other

present products of the member.

c) Full product line/mix: Just as customers want one stop shopping from distributors,

the company's distributor look to a full array of products. Before the company

approaches distributors it has to make sure that it offers a complete assortment of

products of it's product line.

d) Consistent and responsive sales and marketing support: if the channel partners do

not receive quick, accurate, consistent, and honest responses to requests for

information, they would simply cease contacting the company. That's why it's

better to meet the situational demands at the point of the demand.

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e) Rapid or timely delivery : Every market place has it's won set of product delivery

standards. Finding out what they are and then decide how the company can meet

or beat the time required to fulfill the channel shipment needs. If a eagle takes 24

hrs to process order and the company takes more than one day then it would

unwise to continue with the same standard.

f) Price protection: Depending on the industry, price protection ca be a major

channel policy consideration . In a fast moving, dynamic market place like cellular

products, pricing fluctuations can be deteriorate as a product approaches a

commodity classification while a great deal of units are available for purchase.

With price protection the distributor is protected when the manufacturer decides,

for competitive reasons to lower its entire pricing schedule.

g) No penalty rotation: No penalty stock rotation motivates channel members to

carry adequate physical inventory levels of the company's product line by allowing

distributors to return slower, nonmoving units. Generally, product returns are

allowed only once or twice during a twelvemonth calendar period - the first two

weeks in December. It's a good idea to limit the amount of non moving stock a

distributor can send back. This limit is normally based on a specified percentage of

purchases during the period of time. These amounts vary but usually top out at 10

percent of total annual purchase.

h) Market knowledgeable manufacturer management: The manufacturer

management should be updated and knowledgeable about the market place and

the changes that are occurring in the present time. This helps to easily

communicate and also to take preparatory actions.

i) Product customization: This special possibility may appeal to large, national

distributors that want to promote and market their tremendous size as a

competitive advantage to their customers. Let such distributors know that the

company are receptive to changing product features to meet a distributor's

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customer requirement to affixing their corporate logo to the company's product to

complement their business plans.

j) An effective and frequent channel communication program: The company' s

distributor wants to know how pertinent information will be conveyed. During the

meeting, show examples of newsletters, testimonials, and other communications

vehicles.

k) Sales training: Manufacturer should constantly pursuing distributors to take their

product sales training.

l) Territorial integrity: As convincingly as possible, inform the potential channel

partner that the company do not intend to over distribute the product line. If an

exclusive market coverage strategy matches the company's channel marketing

plan, tell the distributor that it will be the only authorized representative in its

geographical marketplace. No distributor in his or her right managerial mind wants

to have several other same market, same customer counter parts serving common

geographic markets.

Push and Pull strategies:

There two kinds of promotional activities: (1) those that push products through the

company's channel and (2) those that pull products through the company's channel.

Push: A push strategy is any marketing activity that entices the company's COD to sell

its product rather than those of other manufacturers the channel represents. In other

words, these types of promotions push the product through the channel. Push strategy

examples are:

Travel incentives programs that award an all-expense-paid trip to a domestic or

foreign destination for meeting a quota during a specified period of time.

Merchandise programs that reward salespeople for performance with items such

as televisions, sporting goods, clothing, and gourmet foods.

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Training programs that increase the distributor salespeople's comfort level with

the company's products, thereby making ti easy to sell the products to their

customers and reap compensation accordingly.

Monetary SPIFFS (special promotional incentive factory funds) that draw specific

attention certain models or groups of units in the company's product line.

Special discounts or allowances that draw special attention to company's product

line through a limited time offer.

Local COOP advertising efforts (direct mail, exhibitions, space advertising) that

produce local market quality sales leads that materialize into real purchase.

Pull: A Pull strategy motivates the end user to approach the company's channel of

distribution and "call out" for the product. A customer that asks for a specific product

won't be satisfied with anything else- so the distributor must sell the intended

company's product n order to fulfill its customer's demand. This kind of strategy pulls

the product through the channel. Pull strategy examples are:

Space advertising in leading publications that generates qualified customer

inquiries that produce actual purchases of the company's product.

Public relations releases announcing new products or features, which cause

potential ends users to request further information or a demonstration form the

company's distributor.

Rebate programs offering a limited-time, factory-issued cash rebate to end users

that purchases the company's product.

Exhibitions where end users spend time in company's exhibit booth expressing an

interest in the product line.

Direct mail campaigns targeted at qualified individuals who request further

contact.

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End user seminars conducted by the company's staff and attended by individuals

who have, by their presence and time commitment, expressed a sincere interest in

the product.

Internet exposure via a Web page illustrating the features and benefits of the

company’s product line and that directs visitors to local distributors for further

information.

Radio and television advertising that promotes the products to potential end

useres that then contact the company's COD for additional details and sales

information.

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Data Analysis & Interpretation

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1. LG Brand of TV you have in Your house?

Content Respondents PercentageYes 91 51%No 87 49%

Here as our respondents for LG is 91 which is 51%, who are not using LG is 87 which is 49%.

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2.If No then which TV brand are you using?

Samsung 23 35%Sansui 6 9%Akai 2 3%Videocon 7 11%Philips 9 14%Onida 6 9%Other 12 18%

As per the respondents Samsung take the third position followed by other brands and Phillips, Akai grabs the last position with a just 3% market share.

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3. When did you purchase the LG TV?

1 Month 26 12%

6 Months 73 34%

12 Months 46 21%

More then12 Months 78 36%

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4. From where did you buy this T.V

Supermarket 47 21%

Discount Store 44 20%

Departmental Store 38 17%

Retail Chain 66 30%

Internet 10 5%

Any other 17 8%

Retail chains here proves to be the most preferred choice of end consumers for their purchases, however super markets are not much far behind ,also internet is slowly becoming a significant contributor to the sales.

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6. Overall, to what extent are you satisfied with (RETAILER) when it comes to buying [PRODUCT]?

1-Very good 2 1%

2 11 5%

3 42 19%

4 95 43%

5-Very good 71 32%

As it is very clear from the responses that most of the people are very happy with the buying experience at the retailers.

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7. Innovation: Retailer continuously offers a wide enough choice of new products & innovative ideas that meet your needs

1-Very good 5 2%

2 13 6%

3 34 15%

4 103 46%

5-Very good 68 30%

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8. Reliability: TV sold by the retailer are reliable

1-Very good 2 1%

2 11 5%

3 51 23%

4 77 35%

5-Very good 82 37%

Retailers are proving to be delivering the value proposition promised by the companies, this can be related to the proper training and feedback provided by the companies

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9. Product labelling: Product information provided by the company on the label/packaging is clear, accurate & sufficient.

1-Very good 1 0%

2 12 5%

3 55 25%

4 80 36%

5-Very good 72 33%

The labelling/ product information is very good as per the consumers. This may be an outcome of the market research they do.

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10. Enough choice of Prices: Retailer offers a wide enough choice of TV’s at different prices.1-Very good 2 1%

2 13 6%

3 46 21%

4 98 45%

5-Very good 59 27%

Customers get wide range of price choices to select from at the retailer.

11.Ease of Purchase: It is quick & easy to find the LG TV at the retailer.

1-Very good 0 0%

2 8 4%

3 39 18%

4 76 35%

5-Very good 96 44%

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80% of the respondents find LG easy to locate which means the retail network is very good

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12. Staff: The staff at the retailer is well informed about the product & is helpful to you when you need it.

Approx 70% of the respondents are happy with the staff at the retailers outlet i.e they are well trained & groomed.

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13.Delivery Fulfillment: Products are delivered as per the purchase order.

1-Very good 1 0%

2 8 4%

3 36 16%

4 87 40%

5-Very good 88 40%

80% of the respondents are happy with the delivery pattern

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14. Overrall: Retailer offers quality of service overrall.

1-Very good 1 0%

2 13 6%

3 37 17%

4 93 42%

5-Very good 77 35%

More than 75% of respondents were happy with the overall quality of service the retailers provide.

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15. Advertising from the companyn/retailer does not deceive,mislead or omit relevant information.

1-Totally Agree 73 33%

2 54 25%

3 49 22%

4 33 15%

5-Totally Disagree 11 5%

The advertisement done by LG does not mislead the customer

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16. Defective Good: Retailer/company would agree to replace, repair, reduce the price or give you your money back if the product was defective.


2 70 32%

3 47 21%

4 27 12%


59% of the respondents agreed with the hassle free replacement of goods if the good were defective.

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17. Aggressive Practice: You have felt unduly pressurized to buy the TV at the retailer.


2 25 11%

3 43 20%

4 72 33%


There is slight aggressive practice with respect to the sales at the retailer’s outlet. 62% of the respondents disagreed with the aggressive practice & 38% were not happy with the practice.

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18. Clear contract terms: When a written contract is provided by the retailer, the contract terms are fair.


2 57 26%

3 47 22%

4 22 10%


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19. How many problems have you experienced in the past 12 months with LG TV.

None 157 72%

Once 31 14%

Twice 23 11%

Thrice 2 1%

Multiple 5 2%

72% of the respondents never faced any problems with respect to the TV, which is a very healthy sign for both the company.

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ANNEXURE- 1

Questionnaire

(For Dealer’s/Retailer’s/Franchisee)

Person contacted: …………………………………………………………..

Name of dealer: ……………………………………………………………..

Address: ………………………………………………………………..

Tel. No.: …………………………

1) What are the different brands which you keep in stock?

2) Which brand is most asked by the customers

i) LG ii) SONY iii) Samsung iv) Videocon v) others

3) What is your average sales/month?

4) Which brand do you recommend to the customer and why?

5) Do you get any credit period from the company?

a) YES b) NO

If Yes, What is the credit period you get:

i) Upto 15 days ii) 15-30 days iii) >30 days

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6) What is your average order size?

7) What are the margins that you get from the company?

8) What is the average order cycle time taken by the company?

i) < 5 days ii) 5-10 days iii) > 10 days

9) Where would you rank the services/assistance provided to you by the company/s

Very

Good

Good Satisfactory Poor Very

poor

Delivery Time

Quality Maintenance

Incentives

Promotional activities

Condition of Product

Ease and Flexibility of

placing Order

Transporter’s Behavior

Customers Orientation

Commercial Terms

Services of Sales Persons

10) How will you rate the efficiency of your sales persons

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a) Very Good b) Good c) Satisfactory d) Poor e) Very poor

11) Does company provides you with any assistance by means of promotional

activities?

a) YES b) NO

If Yes,

i) Numbers

ii) Timing

iii) Quantity of promotions.

12) Do you provide appraisals to your sales persons?

a) YES b) NO

If Yes, on what Parameter

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ANNEXURE- 2

1. Which Brand of TV you have in Your house?

Sony

Lg

2. If No then which TV brand are you using?

Samsung

Sansui

Akai

Videocon

Philips

Onida

Other

3. When did you purchase the LG TV?

1 Month

6 Months

12 Months

More than 12 Months

4. From where did you buy this T.V

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Supermarket

Discount Store

Departmental Store

Retail Chain

Internet

Any other

6. Overall, to what extent are you satisfied with (RETAILER) when it comes to buying [PRODUCT]?

1 2 3 4 5

very bad very good

7. Innovation: Retailer continuously offers a wide enough choice of new products & innovative ideas that meet your needs

1 2 3 4 5

very bad very good

8. Reliability: TV sold by the retailer are reliable1 2 3 4 5

very bad very good

9. Product labeling: Product information provided by the company on the label/packaging is clear, accurate & sufficient.

1 2 3 4 5

very bad very good

10. Enough choice of Prices: Retailer offers a wide enough choice of TV’s at different prices.

1 2 3 4 5

very bad very good

11. Ease of Purchase: It is quick & easy to find the LG TV at the retailer.1 2 3 4 5

very bad very good

12. Staff: The staff at the retailer is well informed about the product & is helpful to you when you need it.

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1 2 3 4 5

very bad very good

13. Delivery Fulfillment: Products are delivered as per the purchase order.1 2 3 4 5

very bad very good

14. Overall: Retailer offers quality of service overall1 2 3 4 5

very bad very good

15. Advertising from the company/retailer does not deceive, mislead or omit relevant information

1 2 3 4 5

Totally Agree Totally Disagree

16. Defective Good: Retailer/company would agree to replace, repair, reduce the price or give you your money back if the product was defective.

1 2 3 4 5


17. Aggressive Practice: You have felt unduly pressurized to buy the TV at the retailer.

1 2 3 4 5


18. Clear contract terms: When a written contract is provided by the retailer, the contract terms are fair.

1 2 3 4 5


19. How many problems have you experienced in the past 12 months with LG TV.

None

Once

Twice

Thrice

Multiple

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SALES & DISTRIBUTION CHANNEL---LG.doc

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