+Comparative study between Samsung and LG on Distribution Channel

+

Samsung India

+Who are your Channel Partners?

Company Appointed Distributors

Exclusive Showroom “ Samsung Plaza”

MBO “ Multi brand outlets”

Sub Dealers

Retailers

+ Levels of Distribution

Company

Exclusive Retail outlets

DistributorsMBO

Sub-Dealers

Retailers

+ How do you select your channel partners?

Criteria For selecting

Capital

History

Past performa

nce

Network Hold

Location

Credibility

+Responsibility of the channel partners

To carry the product

Warehousing

To Meet the sales target

No promotional activity to be done by the channel partners

Provide Market Information

To push the product

+Margins given to channel members

Maximum

Moderate

Less

In last year the company has reduced the margins of all the channel partners due to rise in cost

MBO

Exclusive

Distributors

+Motivating Channel partners

Outdoor tours

For dealers the distributors motivates them by talking them to national tours

Bearing the cost of the interiors of the showroom

Providing sales executive to the exclusive showroom which reduces their burden of hiring employees

Other than this they provide Discounts and schemes

+Conflict

Vertical conflict

The distributors wants more of margin, where as the company reduces the cost and expects the channel members to meet their sales target

Horizontal conflict

Two dealers in the same territory fight due to unequal margin

+Evaluating channel members

Performance

Sales target

+

LG India

+Who are your Channel Partners?

Company Appointed Distributors

Exclusive Showroom “ LG Shoppe”

LG AC solution plaza

LG IT solution

MBO “ Multi brand outlets”

Sub Dealers

Retailers

+Levels of distribution

Compan

y

LGShoppe

DistributorMBO

ACPlaza

ITSolution

Retailer

Sub dealers

+Criteria for selecting Channel partners

Past History

Network Hold

Capital

Past performance

Credibility

Location

LG specifically does not give any distributorship to a person dealing with same range of product that of LG. Most Importantly it does not give distributorship nor dealership to a person dealing with Samsung

+Responsibilities of the Channel members To carry the product

Warehousing ( Minimum area of 1000 sq foot)

To Meet the sales target

No promotional activity to be done by the channel partners

Should have their own delivery vehicle ( Rickshaw to Truck)

Provide Market Information

To push the product

+Margins given to channel members

Maximum

Moderate

Less

Generally the distributors are given higher margins but in some products which are only available in LG Shoppe are given 3-4% higher Margins

MBO

Distributors

Exclusive

+Motivating Channel partners

Sell-in

Here the company provides offer to the distributors or the MBO in terms of discounts or schemes to buy the product.

Sell-out

Here the retail outlets provides schemes or discounts to the customers directly where the cost is borne by the company

Outdoor tours

For dealers the distributors motivates them by talking them to national tours

Bearing the cost of the interiors of the showroom

+ConflictHorizontal conflict

In LG horizontal conflict is more prominent. It happens between two dealers in same territory. Every dealers are assigned a standard MOP “ Market operating Price” and they are given a specified margin. In order to increase customer loyalty some dealers break the MOP and charge less from the customer. It gives rise to conflict

Vertical Conflict

Under this there is goal mismatch between the company and the distributors.

+Evaluating channel members Performance

Sales Target

LG has a special software called SOMS “ Sell out Management System” It is directly connected to its billing machine. So whenever a product is sold the company has a track of it.

This helps the company to have strong control with the channel members and it provides a tool to evaluate them

+ Comparisons

Samsung

Under one roof it has Home appliances and home electronics

Selects channel members in terms of performance, credibility, capital etc

Responsibilities are of warehousing, Providing Information etc

Margin

MBO Exclusive Distributor

LG

Different outlets for appliances and electronics

Same as Samsung but doesn't provide distributorship to a member carrying same product range as of LG

Same as Samsung but should have specified area for warehousing and delivery van to deliver

Margin

MBO Distributor Exclusive

+Samsung

Motivation: Schemes, Discounts, Tours etc

It has both Vertical as well as horizontal but vertical is more prominent

Evaluate on the basis of sales target, Performance. The company does not have any tool to have control over the channel members

LG

Motivation: Sell-in, Sell-out, tours, Schemes etc

Here Horizontal Conflict is more prominent

Evaluate same as Samsung but it has a software called SOMS which controls as well as acts as a tool to evaluate the performance of the channel members

+References

Mr. Rajat Taneja, Distributors of Samsung in Harayana

Mr Lokender Lal, Branch Manager for Harayana Division

+

Thank You

“ …..in next five years distribution will be the reason behind India’s growth”

Montek singh ahluwalia, Vice Chairman of Planning Commission

+

Submitted by:Robin Agarwal A-30

Sourav coomar doss A-40

Kushal Kishore Gupta A41

Dhawal Lingam A-53

Karanbir Sahni A-52

Rajat Taneja A-55

Shaunak Puri A-