M.phil Kanchn Munjal

8/4/2019 M.phil Kanchn Munjal

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Declaration

I, kanchan (ref.no. :08-de-60343), student of M>Phil management, University Centre forDistance Learning, CDLU, Sirsa hereby declare that the project entitled an analytical study of

effectiveness of distribution functions in white goods companies in partial fulfillment of M.Philmanagement degree from Chaudhary devilal university, Sirsa is the original work done by meand the information provided in the study s authentic to the best of my knowledge. This studyreport has not been submitted to any other Institution or University for the award of any otherdegree.

Signature of Student Countersigned Signature of Supervisor

(Kanchan) Dr. Ravi Kr. Gupta

Dated: Professor

Vaish Institute of Management&Technology

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Acknowledgement

During the perseverance of this project I was supported by different people, whose names if notmentioned would be inconsiderate on my part.

Iwould like to thank with affection and appreciation and acknowledge my indebtness to Prof.Ravi Kr.Gupta, principal VIMT Rohtak who initiated me in the preparation of a project onAnalytical Study of Effectiveness of Functions of Distribution in White Goods Companies .

Here I cant forget the person who deserves tons of thanks, who took a lot of pains for me andhelped me in every way. Words are insufficient to express my gratitude to him. I can never thankhim enough to have made my work possible and the person is my dear husband, Mr.PrashantMunjal.

I also want to thank Gul and Madhav my daughter and my son for co-operating me in variousodd situations.

I owe sincere gratitude towards each and everyone who has given a helping hand in thecompletion of this project.

Though due care has been taken in preparation & printing of this report, I regret for anyinconvenience that may be caused to readers on account of any printing mistake etc.

(Kanchan)

CONTENTS


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Sr. No.

Chapters

Pages

1. Introduction

2.

Review of Literature

3. Research Methodology

4.Data Analysis &Interpretation

5.Conclusion &Recommendations

Appendices* References

Questionnaire

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IntroductionWith the dynamic changes in the country in the course of planned development and the increase

in production - agriculture, industrial as well as of consumer goods - that has been consequentupon such planned investment - the need for a deep understanding of marketing functions andpractices had grown.This leads to realization of the importance of a need for the organization ofa proper marketing network.Before coming up to the main subject of the study ,it is realized very necessary to describe aboutmarketing ; marketing mix ;objectives, factors & methods of designing distribution channels ;channel conflicts & ways to resolve these conflicts.

Marketing

It is a process by which

-one identifies the needs and wants of the people.-one determines and creates a product/service to meet the needsand wants. [PRODUCT]-one determines a way of taking the product/service to the marketplace. [PLACE]-one determines the way of communicating the product to themarket place. [PROMOTIONS]-one determines the value for the product.[PRICE].

-one determines the people, who have needs/ wants. [PEOPLE]

and then creating a transaction for exchanging the product fora value.and thus creating a satisfaction to the buyer's needs/wants.

Marketing is based on identifying, anticipating and satisfying customer needs effectively andprofitably. It encompasses market research, pricing, promotion, distribution, customer care, yourbrand image and much more.

Marketing mix

Marketing decisions generally fall into the following four controllable categories, combination ofwhich is called marketing mix;

* Product* Price* Place (distribution)


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* Inventory management* Warehousing* Distribution centers* Order processing* Transportation

* Reverse logistics

Promotion Decisions

In the context of the marketing mix, promotion represents the various aspects of marketingcommunication, that is, the communication of information about the product with the goal ofgenerating a positive customer response. Marketing communication decisions include:

* Promotional strategy (push, pull, etc.)* Advertising* Personal selling & sales force

* Sales promotions* Public relations & publicity* Marketing communications budget

The objective of the study is to find out effectiveness of functions of distribution in white goodscompanies. Therefore, here we will explore the distribution decisions.

Distribution:

A channel of distribution or trade channel is defined as the path or route along which goodsmove from producers or manufacturers to ultimate consumers or industrial users. In other words,it is a distribution network through which producer puts his products in the market and passes itto the actual users. This channel of :- producers, consumers or users and the various middlemenlike wholesalers,selling agents and retailers(dealers) who intervene between the producers andconsumers. Therefore,the channel serves to bridge the gap between the point of production andthe point of consumption thereby creating time, place and possession utilities.

A channel of distribution consists of three types of flows:-

Downward flow of goods from producers to consumers

Upward flow of cash payments for goods from consumersto producers

Flow of marketing information in both downward andupward direction i.e. Flow of information on newproducts, new uses of existing products,etc fromproducers to consumers. And flow of information in the


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form of feedback on thewants,suggestions,complaints,etc from consumers/usersto producers.

An entrepreneur has a number of alternative channelsavailable to him for distributing his products. These

channels vary in the number and types of middlemeninvolved. Some channels are short and directly linkproducers with customers. Whereas other channels arelong and indirectly link the two through one or more

Functions of Intermediaries

Primary role of middlemen is to transform the assortment of products made by producers in theassortments desired by consumers.Producers make narrow assortments in large quantities, consumers want broadassortments insmall quantities, discrepancy in quantity and assortment.

PRODUCER Specialization in production, economies of scale etc., therefore wants to producelarge quantities but narrow product mixes.

efficiently

CUSTOMER Wants a broad assortment (products produced by many manufacturers) of productsmade available conveniently (within easy reach).

Other functions of intermediaries include:

assuming risk--Provide working capital by paying for goods before they are sold.

information Flow

financing

payment and title flow.

negotiation

contacts

promotion

A producer will use an intermediary when it believes that the intermediary can perform the

function(s) more economically and efficiently than it can.

Objectives:

A firms distribution objectives will ultimately be highly relatedsome will enhance each other

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while others will compete. For example, , more exclusive and higher service distribution willgenerally entail less intensity and lesser reach. Cost has to be traded off against speed ofdelivery and intensity (it is much more expensive to have a product available in conveniencestores than in supermarkets, for example).

Narrow vs. wide reach: The extent to which a firm should seek narrow (exclusive) vs. wide(intense) distribution depends on a number of factors. One issue is the consumers likelihood ofswitching and willingness to search. For example, for sewing machines, consumers will expectto travel at least to a department or discount store, and premium brands may have morecredibility if they are carried only in full service specialty stores.

Retailers involved in a more exclusive distribution arrangement are likely to be more loyali.e., they will tend to * Recommend the product to the customer and thus sell large quantities;

* Carry larger inventories and selections;* Provide more services

Thus, for example, Compaq in its early history instituted a policy that all computers must bepurchased through a dealer. On the surface, Compaq passed up the opportunity to sell largenumbers of computers directly to large firms without sharing the profits with dealers. On theother hand, dealers were more likely to recommend Compaq since they knew that consumerswould be buying these from dealers. When customers came in asking for IBMs, the dealers weremore likely to indicate that if they really wanted those, they could have themBut first, letsshow you how you will get much better value with a Compaq.

Importance:

Distribution opportunities: Distribution provides a number of opportunities for the marketer thatmay normally be associated with other elements of the marketing mix. For example, for a cost,the firm can promote its objective by such activities as in-store demonstrations/samples andspecial placement (for which the retailer is often paid). Placement is also an opportunity forpromotione.g., airlines know that they, as prestige accounts, can get very good deals fromsoft drink makers who are eager to have their products offered on the airlines. Similarly, it maybe useful to give away, or sell at low prices, certain premiums (e.g., T-shirts or cups with thecorporate logo.) It may even be possible to have advertisements printed on the retailers bags(e.g., Got milk?)

Other opportunities involve parallel distribution (e.g., having products sold both throughconventional channels and through the Internet or factory outlet stores). Partnerships and jointpromotions may involve distribution (e.g., Burger King sells clearly branded Hershey pies).

Types of Channels of Distribution

Consumer Channels

Channels for Consumer Products.Vertical dimensions, determined by the # in the channel.


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Channel A:

Producer|||

|||v

ConsumerSimplest method, not necessarily the most effective.Technological developments are making the direct channel more common:

TV Homeshopping

CDs

Catalogs, LL Bean etc.

Channel B:

Producer||||v

Retailer||||v

Consumer

Large retailers, , no discrepancy in quantity supplied and demanded. Popular forshoppingproducts, clothing. Automobiles...cost of transportation and inventory is high.

Channel C:

Producer|||

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vWholesaler

|||

vRetailer|||v

Consumer

Smaller retailers, widely distributed products, convenience products.

Channel D:

Producer

|||v

Agent|||v

Wholesaler|

||v

Retailer|||v

Consumer

Mass distribution, IE processed food; also when there are a number of small producers etc. Maybe the most efficient distribution channel for consumer products. Convenience products.
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Business to Business Channels

Channel E:Producer

|||||V

Buyer

Very popular, especially for high cost items that need after sale support. Fewer customersclustered geographically. This is a more common structure than the direct channel in consumermarkets.

Channel F:

Producer|||v

BB distributor|||V

Buyer

Distributor takes title. Used when there are many customers. IE consumable supplies etc.

Channel G:

Producer|||

vAgent|||v

Buyer

When a company does not have a marketing department or sales force, the agent performs those

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tasks.

Channel H:

Producer|||v

Agent||

|

vDistributor

|||v

Buyer

Used as above, with many customers, IE exporting.

Multiple Marketing Channels

Dual Distribution

Use several types of channels simultaneously, IE when you have consumer and business tobusiness markets. Set up 2 or more Marketing channels to attract the same target market ordifferent target markets. Using two or more channels to attract the same target market can lead tochannel conflict.

Corporate VMS

More than one stage of the distribution channel under one ownership, IE supermarket chains that

own processing plants and large retailers that purchase wholesaling and production facilities.

Examples:

Hallmark

Oil Companies
http://www.udel.edu/alex/chapt15.html#conflicthttp://www.udel.edu/alex/chapt15.html#conflict


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Administered VMS

Channel members are independent with a high level of interorganizational management byinformal coordination. Agree to adopt uniform accounting policies etc., and promotionalactivities.One Channel member dominates, has a channel leader.

Examples:

Wal Mart

Pepsi

Coke

GE

P&G

Channel Leader-Effectiveness of channel hinges on channel leadership. Leader must possesschannel power. Power can come in the following forms:

Reward--provide financial benefits

Expert--be the expert compared with other membersReferent--strongly identify with leader

Coercive--punish members

Contractual VMS

Most popular VMS, interorganizational relationships formalized through contracts that spell outeach members rights and obligations. IE McDonald's and KFC. Franchise organizations 1/3 retailsales and 500,000 outlets.

Wholesaler sponsored, IGA stores-independent retailers band together under contractual

leadership of a wholesaler.Supervalue Stores, largest food wholesaler in the US, offers a broad package of services to 2800independent food retailers that voluntarily enter into a buying contract.Retailer sponsored cooperatives which set up, own and operate their own wholesalers.

Factors considered while selecting distribution channel:

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An entrepreneur has to choose a suitable channel of distribution for his product such that thechannel chosen is flexible,effective and consistent with the declared marketing policies andprogrammes of the firm. While selecting a distribution channel, the entrepreneur shouldcompare the costs,sales volume and profits expected from alternative channels of distributionand take into account the following factors:-

Product Consideration:- The type and the nature of products manufactured is one of theimportant elements in choosing the distribution channel. The major product related factoreare:

Products of low unit value and of common generally sold through middlemen.Whereas,expensive consumer goods and industrial products are sold directly by the producerhimself.

Perishable products; products subjected to frequent changes in fashion or style as well as heavyand bulky products follow relatively shorter routes and are generally distributed directly tominimize costs.

Industrial products requiring demonstration, installation and aftersale service are often solddirectly to the consumers.

While the consumer products of technical nature are generally sold through retailers.

An entrepreneur producing a wide range of products may find it economical to set up his ownretail outlets and sell directly to the consumers. On the other hand, firms producing a narrowrange of products may their products distribute through wholesalers and retailers.

A new product needs greater promotional efforts in the initial stages and hence few middlemenmay be required.

Market Consideration:- Another important factor influencing the choice of distribution channelis the nature of the target market. Some of the important features in this respect are:

If the market for the product is meant for industrial users, the channel of distribution will notneed any middlemen because they buy the product in large quantities. . While in the case of thegoods meant for domestic consumers, middlemen may have to be involved.

If the number of prospective customers is small or the market for the product is geographicallylocated in a limited area, direct selling is more suitable. While in case of a large number ofpotential customers, use of middlemen becomes necessary.

If the customers place order for the product in big lots, direct selling is preferred. But,if theproduct is sold in small quantities, middlemen are used to distribute such products.

Other Considerations:- There are several other factors that an entrepreneur must take intoaccount while choosing a distribution channel. Some of these are as follows:-

A new business firm may need to involve one or more middlemen in order to promote itsproducts while well established firm with a good market standing may sell its product directly tothe consumers.

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A small firm which cannot invest in setting up its own distribution network has to depend onmiddlemen for selling its product. On the other hand, a large firm can establish its own retailoutlets.

The distribution costs of each channel is also an important factor because it affects the price ofthe final product. Generally,a less expensive channel is preferred. But sometimes, a channelwhich is more convenient to the customers is preferred even if it is more expensive.

If the demand for the product is high,more number of channels may be used to profitablydistribute the product to maximum number of customers. But, if the demand is low only a fewchannels would be sufficient.

The nature and the type of the middlemen required by the firm and its availability also affectchoice of the distribution channel.

A company prefers a middlemen who can maximise the volume of sales of their product and alsooffers other services like storage, promotion as well aftersale services. When the desired type ofmiddlemen are not available, the manufacturer will have to establish his own distributionnetwork.

All these factors or considerations affecting the choice of a distribution channel are inter-related& interdependent. Hence, an entrepreneur must choose the most efficient and cost effectivechannel of distribution by taking into account all these factors as a whole in the light of theprevailing economic conditions. Such a decision is very important for a business to sustain longterm profitability.

Channel conflicts & ways to resolve the conflicts:

If an enterpreneur think adding new distribution channels will only result in increased sales

volume, then he should think again. The consequence could be a spurt of channel wars.There is a world where an infinite number of distribution channels are chasing a finite number ofcustomers. The emergence of the Internet has added considerable complexity to distributionchannels by offering a variety of e-market places such as B2B auctions (PEFA.com), reverseauctions (Freemarkets.com), B2C operations (Amazon), C2B auctions (Priceline.com), and C2Cformats (Ebay.com).

As a result, the various types of distribution channels available in industries such as airlines,financial services, music industry, publishing, and telecommunication services are exploding.And manufacturers who took pride in the integrity of their distribution channels with specificchannels reaching specific customer segments are suddenly facing a dizzying array of choices.

The addition of new distribution channels brings with it the potential for additional sales volumeat the cost of greater channel conflict. A new channel, regardless of whether it is the Internet, anemerging low cost indirect channel, or a new manufacturer sales force will increase channelconflict.

Channel conflict occurs because now there is another type of distribution channel that isperceived by the existing channels to be chasing after the same customers with the same brand.


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The fear of conflict with existing channels can paralyse a company. But on the other hand muchof what channel members call channel conflict is healthy channel competition. Therefore theobjective of conflict management should not be to eliminate channel conflict but rather manage itso that it does not escalate to destructive levels.

From the manufacturer's perspective, channel conflict becomes destructive when the existingdistribution channels react to channel migration by reducing support or shelf space for themanufacturer.

Channel conflict becomes particularly destructive when parties take actions that hurt themselvesin order to hurt the other party. For example, in 2002, Albert Heijn, the largest Dutchsupermarket chain, boycotted some Unilever brands for sometime in order to retaliate against themanufacturer.

While this was resolved quickly, it was an action that could have potentially hurt both parties. .

As described below, several channel conflict management strategies exist, none of which is apanacea, but the judicious use of them can help avoid destructive conflict. These are part of thearsenal of any multi-channel marketer.

Clear segmentation: The rationale for having multiple types of channels should always be builton a clear end user segmentation strategy. When the convenience store complains to themanufacturer about the prices at which Wal-Mart is selling their products, it has to be explainedthat there is no way that a convenience store can compete with Wal-Mart on prices for the priceseeking customer.

Instead the convenience store has to compete on saving the consumer time vis--vis travel,shopping and transaction processing, all at a reasonable price premium.

They serve two different segments and each should be encouraged to specialise on its targetsegment. Of course, the brand owner should ensure that the number of distribution points thatthey have within a particular type of distribution channel is balanced against the size of thesegment that the channel reaches.

Dedicated products: Many designers who have pushed for sales through outlet stores havemanaged the conflict with their existing retailers by developing special products for these outletstores.

On the Internet, manufacturers can offer those SKUs which retailers are usually not willing tocarry. At the extreme, some manufacturers dedicate different brands to different channels,sometimes referred to as channel brands.

Expanding sales: Having a new 'hit' product helps facilitate channel migration. Goodyearmanaged the migration to the mass merchandisers with only a reasonable amount of conflict bysimultaneously restricting the distribution of its

new Aquatred tyre to the independent dealers.

This allowed the independent dealer to protect their profit-ability and sales volume through thehigher margin, higher value, Aquatred tyre. It is easier to expand channels when revenues are

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growing as existing dealers are less likely to see absolute declines in sales and profits.

Dual compensation and role differentiation: Some manufacturers agree to compensate theexisting channels for sales through the new channel. While it may be perceived as just buying offthe support of the existing channels for the channel migration, it can be useful if the existingdistribution is given a role to perform in support of the new channel.

Yet, it does help lower the negative backlash. Using the existing channel partner can be a usefulcomplement.

Equitable treatment: Some retailers will be upset that the prices at which they purchase fromthe manufacturer are higher than those charged to other retailers or the direct sales force. There isoften the feeling that the manufacturer is favoring other channels at their expense.

While one may never fully be able to overcome these concerns, the best antidote is to treatchannels equitably and in a transparent manner. If the manufacturer's prices differ acrosschannels, it should be based on the functions that the particular channel member performs.

So, yes, Tesco and Wal-Mart receive lower prices, but it is because they engage in practices(buying large quantities, not demanding in-store help and promotions) that lower themanufacturer's cost to serve them.

Final thoughts

The temptation for manufacturers is always to expand the number of distribution points as itusually results in an immediate increase in sales. However, having too many channels chase toofew consumers results in channels dropping the level of support to the brand.

In the long run, this can have a deleterious impact on sales as well as brand image. On the otherhand changing customer preferences modify industry structures. Traditional industry leaders

have frequently neglected the fastest growing new distribution channels.

A delicate balance must be maintained between moving too quickly and unleashing destructivechannel conflict versus clinging too long to declining distribution networks.

Introduction to white goods

With the growing need to expand and find new markets, both internal and external, theimportance of a reliable marketing network and its role can not be neglected. With the

compounded process of economic change and development , increase in litracy , risingaspirations, growing awareness of rural population , changes in the character of urban markets ,greater purchasing power , consumer sophastication , the demand of white goods such aswashing machines , refrigerators , air conditioners , microwaves etc. has tremendously increased.


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White goods :

White goods are the goods that are painted white or enameled white. These products werepreviously manufactured with a white enamel finish but are now colored. White goods sector ischaracterized by emergence of MNCs, exchange offers, discounts, and intense competition. Themarket share of MNCs in White goods segment is 65%. MNCs mainly target the growing middleclass of India. MNCs offer superior technology to the consumers; while the Indian companiescompete on the basis of firm grasp in the local market, their well-acknowledged brands, and theirhold over wide distribution network. However, the penetration level of the consumer durables isstill low in the market. The major factor responsible for low penetration is poor governmentspending on infrastructure.

Products Covered:

White goods include household appliances, such as, Water Heater, Refrigerator, Clothes Dryer,Air Conditioner, Dish Washer, Microwave Oven, Washing Machine etc. In the modern period,

these products are available in a variety of decorator colors.

White goods do not include the entertainment appliances, such as, Televisions, Home cinema,Camcorders, CD, and DVD players. These products are included in the Brown goods category.

Practical skills are needed to maintain White goods and heavy tools are required to repair them,

while Brown goods require high technical knowledge, in service area.

White goods appliances account for 70% of the energy consumed in homes and their greenhousegas emisison levels are usually high.

Major Players :

The major players in the White goods sector are

1. LG Electronics India Ltd.

2. Samsung India

3. Whirlpool and

4. Videocon.

Here, main motive of the study is to consentrate on evaluation of effectiveness ofdistribution channels of these major players.

Consumer Demographics & Buying Patterns of Indian Consumers

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The Indian AC market size is around Rs 30,000 million comprising the household andcommercial segments. The market is currently at a nascent stage and shows tremendous promiseto grow.However, despite the reasonable growth in the last few years, the growth potential has not beenentirely captured. The HVAC market is of Rs.46,800 million and the refrigeration market is

around Rs.9535 million.

Organized Versus Unorganized Sectors

An important factor influencing the Indian market is the increasing strength of the organizedversus the unorganized manufacturing sectors. The unorganized sector represents the countryssmall manufacturers whose annual sales volume totals are less than 10,000,000 Rupees (US$210,000).Small manufacturers are exempt fr om taxes and government reporting requirements. As a result,the unorganized sector is often perceived as operating outside the boundaries of governmentregulation.The organized sector, on the other hand, represents large manufacturers with an annual sales

volume greater than 10,000,000 Rupees. These organizations generally pay taxes and followstandard accounting and reporting practices. The organized sector is moving to encouragetransparency within the unorganized sector. While the unorganized sector held nearly 60% of themarket share in the past, it appears to be losing ground and is expected to shrink by 25% over thenext two to three years as international global brands increase their presence.

Location of the units manufacturing or assembling White Goods

These factories are mainly located in the regions where Government has given exemptions on thetaxes and duties, the main multinationals set up 60% of their factories in these regions only. The

number of the manufacturing plants in India is less as the big established multinationals go, butthere is a huge that is very unorganized, the white goods sector is not in that category though as itis more or less organized.

Some locations are sought keeping logistics in mind, where they can cater to A and B gradecities. The rural market is not at all taken into consideration. It is very difficult to give the statewise production capacity, because one plant caters to almost all the parts of the country.

Penetration

The penetration of household refrigerators in India, the fifth largest consumer durable market interms of penetration, is 13% compared to well over 90% in Malaysia, Australia, Singapore, HongKong and Korea, around 80% in Thailand, close to 40% in Philippines and China and 20% inVietnam and Indonesia. The number of household air conditioners is abysmally low in India withmarket penetration of around 1% compared to 20% in Indonesia, 24% in China, 40% inThailand, and 45% in Malaysia. The central air-conditioning and ducted splits market segmentsare growing at a lower rate, approximately 10%, and are driven by commercial demand from theretail, software, healthcare, hospitality, entertainment, telecom and banking industries. In thereplacement market, buyers look for new and additional features such as frost free, CFC freerefrigerators. This has increased the demand for products offered by multinational corporations.This has led to the demand for frost-free refrigerators to


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grow at a much higher rate than that of conventional refrigerators, especially in the metros andlarge towns. The replacement market is likely to increase to 25-30 percent over the next fewyears. Foreign firms are however now allowed to establish joint ventures, 100% ownedoperations to manufacture ACR products. The Indian industry also continues to seek outtechnology collaborations with other countries including the U.S.

Imports and Exports

The Government of India's import policy allows imports of air conditioning equipment,components, spares and supplies. All manufactur ers, particularly new ventures, importcomponents, including compressors, and assemble the final product in India. The GOI hassimplified import procedures and has been reducing the import duties to encourage imports ofcapital goods and raw materials. Import liberalization is expected to continue as a part of the neweconomic polic ies of the Government of India.

Mechanics of Distribution Channels of Sector

White goods are heavy commodities and need good distribution as these are high end

commodities. Since the plants indulged in manufacturing or assembling is really less, the reachof the company is dictated by the distribution network that it follows. Certain companies whichdo not have their own warehouses and are completely reliant on the CFAs and other dealers.

Products whether they are assembled here or manufactured here are both distributed in the samemanner, the first level is the Carrying and Forwarding Agent for every big city, who suppliesfurther to the sub dealers. The physical storage of goods is must as sub dealer mostly sell to thewalk in customers and for the institutional sales, orders are taken and supply is made directlyfrom the CFA.Modes of transport are mainly two: roadways and railways, most of them are transferred throughroads or railways bogies or a combination of both. The transport is hired; no company can afford

its own transport facilities.

For exports from the country the sea route is mainly followed and there are no intermediariesexcept for the transport needed to take the goods from the factory to the ports. For imports also,once they enter the country through sea route or airways, they are send to companysmanufacturing and assembling plant by the hired transport.

Thus, distribution plays very significant role in the white goods industry in the absence of manyfactories at various locations.

This report contains detailed analysis of the renowned white goods companies

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Company profiles of major players of white goods in India

LG Pvt. Ltd.

Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LGElectronics, South Korea. In India for a decade now, LG is the market leader in consumerdurables and recognised as a leading technology innovator in the information technology andmobile communications business . LG is the acknowledged trendsetter for the consumer durableindustry in India with the fastest ever nationwide reach, latest global technology and productinnovation.

One of the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics,Home Appliances, GSM mobile phones and IT products.

LG Electronics INdia Pvt.Ltd., wholy owned subsidiary of LG Electronics, South Koria wasestablished in january, 1997 after clearance from the Foreign Investment Promotion Board(FIPB).

The trend of beating industry norms started with the fastest ever- nationwide launch by LG in aperiod of 4 and 1/2 months with the commencement of operations in May 1997. LG set up astate-of- the art manufacturing facility at Greater Noida, near Delhi, in 1998, with the investmentof Rs 500Crores. This facility manufactured Colour Televisions , Washing Machines, Airconditioners and Microwave Ovenes. During the year 2001, LG also commenced the homeproduction for its eco - friendly Refrigerators and established its assembly line for its PCMonitors at its Greater Noida manufacturing unit. The beggining of 2003 saw the roll out of thefirst locally manufactured Direct Cool Refrigerator from the plant at Greater Noida.

In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashatra thatcommences operations in October 2004. Covering over 50 acers, the facility manufactures LCDTV, GSM phones, Color Telivisions, Air conditioners, Refrigerators, Microwave Ovens andColor Monitors.

Both the Indian manufacturing units has been designed with the latest technologies at par withinternational standards at South Korea and are one of the most Eco-friendly units amongest allalg manufacturing plants in the world.

LG has been able to craft out in ten years, a premium brand positioning in the Indian market and


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is today the most preferred brand in the segment.

LG took the lion's share of the market with 35% market share in 2006. With a quantity turnover

of 5.5 lakhs and value turnover of Rs.1000 Crs, we aim to achieve a qty and value turnover of

6.5 lakhs plus & Rs. 1300 Crs respectively.

a) NEW LAUNCHES IN 2007:

The New AC range of 2007 is par excellence on design front. The new flat panel splits designed

on the international trends in Air-conditioning addressing the need of the consumer to enhance

his indoor aesthetics. The Deco Panel Series, Color Panel Series & the Crystal Panel Series raise

the bar on design in ACs. Being the first to successfully launch Colored ACs in India, the new

split range has a variety of colors in Champagne Gold, Majestic Silver, Cool Blue, Real Earth &

Lustrous Pink to suit every indoor & mood. LG is also the first one to launch colour series in

Window ACs. The Luxurious Gold & Majestic Silver Windows is bound to raise many

eyebrows.

To address the needs of convenient & comfortable cooling, LG has launched the indigenously

developed Advanced sensor based Intelloeye Technology in 2007. The unique LG IntelloEye

feature gives unmatched cooling performance that no other AC can provide at the touch of a

button. When the IntelloEye Mode is switched on, the inbuilt intelligent sensor automatically

detects the room temp and accordingly adjusts the setting temperature, fan speed & swing

settings of the Air conditioner. The LG saves the hassle of adjusting the temperature setting of

the AC.

For providing convenience to the customer, LG has launched the Dual Display function in Splits

that helps the consumer to view both the Room & Setting temperature displayed on the AC.

LG has also launched a feature called Custom Mode where the consumer has the option to

program desired AC settings like Temp setting, Fan speed & swing.

AC can store upto 3 settings and saves the hassle to changing AC settings every time.

The new Artcool ART truly redefines the statement "Technology meets Art". The radically new

design changes how one look at an AC as just a cooling device. The easily replaceable painting

frame on front of the AC enables one to flaunt his latest painting with an ease that the paintingtakes the limelight, unlike most ACs that seem obtrusive in midst of all the precious paintings on

the wall. Plus the AC is a cooling delight with unmatched technology that one can pass it off as a

piece of art.

To cater to emerging trend of cooling 2 or more rooms simultaneously, LG is also launching the

Odd- Multi Splits to extend Multi Split range. These Multi splits in odd capacities take care of

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cooling needs in apts with larger drawing room & smaller bedrooms.

VIDEOCON

Videocon is an Indian multinational with interests in Consumer Electronics, Home Appliances,Colour Picture Tube Glass, and Oil & Gas. Videocon was founded in 1987 by NandlalMadhavlal Dhoot. At that time it used to manufacture TV and Washing Machine. In 1989-90,Videocon started manufacturing Home Entertainment Systems, Electric Motors & AC. Videoconentered Refrigerators and coolers segment in 1991. In 1995, Videocon started manufacturingGlass shells for CRT and in 1996 it ventured into Kitchen appliances and crude oil segment. In1998, Videocon started manufacturing Compressors & Compressor Motors. In the year 2000,Videocon tookover Philips Color TV Plant. In 2005, Videocon tookover 3 plants of ElectroluxIndia and acquired Thomson CPT. Today, it has evolved into a giant conglomerate with annualrevenues of overU$4.1billion.

Business Interests of Videocon

Consumer Electronics & Home Appliances: Videocon enjoys leadership position in consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators,Microwave ovens and numerous other home appliances. Videocon's refrigerator manufacturingenjoys synergy with its inhouse compressor manufacturing technology in Bangalore.

Display industry and its components: After the acquisition of Thomson in 2005, Videocon has

emerged as one of the largest Colour Picture tube manufacturers in the world. It has plants inMexico, Italy, Poland and China and manufactures a range of high-tech products such as slimCPT, extra slim CPT and High Definition 16:9 format CPT.

Colour Picture Tube Glass: Videocon is one of the largest CPT Glass manufacturers in theworld. It has plants in Poland and India. Videocon's CPT Glass manufacturing complements itsColour Picture tube manufacturing business.

Oil and Gas: Videocon Group has interests in oil & gas exploration, prospecting and intends toget into gas distribution. It produces 7% of all oil in the private sector in India. Videocon's Ravvaoil field has one of the lowest operating costs in the world and it produces 50,000 barrels of oil

per day. Videocon is also actively looking for exploration and production opportunities incountries like Oman, Australia and the Timor Sea near Indonesia.

Major Achievements of Videocon Industries Ltd:

The largest panel production facility in the world under one roof providing very higheconomies of scale


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One of the world's largest and most respected CRT glass manufacturers

Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft

One of the few companies in the world to convert sand to TV

One of the largest and most acknowledged CPT manufacturer in the world

Manufactured India's first rust-free Washing Machine

SAMSUNG ELECTRONICS

Samsung Electronics was founded in 1969 in Daegu, South Korea as Samsung Electric Industries

originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air

conditioners and washers, operating in approximately over 100 countries and One of worlds

largest Electronics and IT companies. In August 2005, Business Week rated Samsung as theNumber 1 consumer electronics brand in the world. By 1981, the company had manufactured

over 10 million black and white TVs. In 1988, it merged with Samsung Semiconductor &

Communications.

Samsung Electronics is a global leader in semiconductors, telecommunications, digital media

and digital convergence technologies with 2004 parent company sales of US$55.2Bn and net

income of US$10.3Bn. Employing approx. 113,000 people in over 90 offices in 48 countries, the

company has of 5 main business units: Digital Appliance Business, Digital Media Business,

LCD Business, Semiconductor Business and Telecommunication Network Business. Recognized

as one of the fastest growing global brands, Samsung Electronics Corporation is the worlds

largest producer of Colour Monitors, Colour TVs, Memory Chips and Thin Film Transistor

Liquid Crystal Display (TFT LCDs).

The company began reporting record profits from the start of the 21st century, especially in

2003, when it displayed 33% growth in brand value in the Interbrand global brand rankings. In

2004, the company was one ranking behind Sony and in 2005 overtook Sony as the top

consumer electronics brand.

In 2006 and 2007, Samsung was rated one of the top global electronics brands in various reports,with the January 2007 Brand Finance report ranking the company number 1 in electronics and

32nd overall and Business Week rating Samsung is ranking 20th of global brands. Business

Week also ranked Samsung as #12 in a ranking of the "Top 100 Most Innovative Companies" in

a special report published April 24, 2006.

Samsung is also the world's largest LCD manufacturer, selling over 6.2 million LCD TVs in

2006. It is also the number three mobile phone manufacturer in the world.

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VISION & MISSION:Samsung Global

Recognizing that the digital revolution is entering a new phase, Samsung Electronics has

transformed its operations by putting digital technology at the core. The company is committed

to being a market-driven solutions provider and leader in digital convergence. With core

competencies in semiconductors and CDMA technologies, Samsung Electronics creates digital

solutions for homes, mobile users and offices that enable seamless communications facilitate

business transactions, access to the internet and offer digital entertainment.

Samsung In India

Samsung India is the hub for Samsungs South West Asia Regional operations. The South West

Asia Regional Headquarters looks after the Samsung business in Nepal, Sri Lanka, Bangladesh,Maldives and Bhutan besides India. Samsung India which commenced its operations in India in

December 1995, today enjoys a sales turnover of over US$ 1Bn in just over a decade of

operations in the country. Headquartered in New Delhi, Samsung India has a network of 19

Branch Offices located all over the country. The Samsung manufacturing complex housing

manufacturing facilities for Colour Televisions, Colour Monitors, Refrigerators and Washing

Machines is located at Noida, near Delhi. Samsung Made in India products like Colour

Televisions, Colour Monitors and Refrigerators are being exported to Middle East, CIS and

SAARC countries from its Noida manufacturing complex Samsung India currently employs over

1600 employees, with around 18% of its employees working in Research & Development.

KEY PRODUCTS' GLOBAL MARKET SHARE:

This table is showing the market share of samsung in different Products of Home Appliances,

Consumer Electronics, Telecommunications and Information Technology in the World Market.

Product Market Share Rank

TV 11.2% 1st

LCD TV 13.2% 1st

Plasma TV 15.2% 3rd

Monitor 21% 1st

Printer 11.6% 2nd

CDMA Mobile Phone 28.2% 1st


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Mobile Phone 12.2% 3rd

Pocket PC 7.4% 5th

Laptop Computer 10% 4th

Mouse & Keyboard 11.7% 3rd

Hard Disk Drive 10.5% 4th

Refrigerator 13.8% 3rd

Air Conditioner 17.2% 2nd

Washing Machine 10.6% 3rd

Microwave Ovens 13.1% 2nd

WHIRLPOOL

Whirlpool, right from its inception in 1911 as first commercial manufacturer of motorized

washers to the current market position of being world's number one manufacturer and marketer

of major home appliances, has always set industry milestones and benchmarks. The parent

company is headquartered at Benton Harbor, Michigan, USA with a global presence in over 170

countries and manufacturing operation in 13 countries with 11 major brand names such as

Whirlpool, Kitchen Aid, Roper, Estate, Bauknecht, Laden and Ignis. The company boasts of

resources and capabilities beyond achievable feat of any other in the industry.Whirlpool initiated

its international expansion in 1958 by entering Brazil. However, it emerged as truly global leaderin the1980's. This encouraging trend brought the company to India in the late 1980s. It forayed

into the market under a joint venture with TVS group and established the first Whirlpool

manufacturing facility in Pondicherry.Soon Whirlpool acquired Kelvinator India Limited in 1995

and marked an entry into Indian refrigerator market as well. The same year also saw acquisition

of major share in TVS joint venture and later in 1996, Kelvinator and TVS acquisitions were

merged to create Indian home appliance leader of the future, Whirlpool India. This expanded the

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company's portfolio in the Indian subcontinent to washing machines, refrigerator, microwave

ovens and air conditioners.Today, Whirlpool is the most recognized brand in home appliances in

India and holds a market share of over 25%. The company owns three state-of-the-art

manufacturing facilities at Faridabad, Pondicherry and Pune. Each of these manufacturing set-

ups features an infrastructure that is witness of Whirlpool's commitment to consumer interests

and advanced technology.

In the year ending in March '06, the annual turnover of the company for its Indian enterprise was

Rs.1,375 Crores. According to IMRB surveys Whirlpool enjoys the status of the single largest

refrigerator and second largest washing machine brand in India.

The company's brand and image speaks of its commitment to the homemaker from every aspectof its functioning. It has derived its functioning principles out of an undaunted partnership withthe homemakers and thus a slogan of You and whirlpool, the world's best homemaker dots its promotional campaigns. The products are engineered to suit the requirements of smart,confident and in-control' homemaker who knows what she wants. The product range is designedin a way that it employs unique technology and offers consumer relevant solutions.

Review of Literature

In today's competitive age and globalized market companies face high degree of pressure tosatisfy the need of the customers at right place and right time. The philosophy of distributionmanagement is again coming in to the limelight as firms always try to find out new ways to

create and deliver value to customers with minimum cost. According to Drucker (1962),distribution is one of the most important frontier for cost saving.

Behavioral research in channels of distribution has brought significant insights into the processesof interfirm influence. The power of channel member A, defined as the "ability (of A) to controlthe decision variables in the marketing strategy of another member of a given channel at adifferent level of distribution, "has been posited to be a function of A's bases of power and B'sdependence on A ( EI-Ansary and Stern,1972 ).

Brown and Frazier ( 1978 ) found that type of influence strategy used by a manufactureraffected dealer's perceptions of manufacturer power, conflict and satisfaction. Severalresearchers have found a significant relationship between the dependence of channel member Bon channel member A and perceptions of power of channel member A.


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The distribution channel development started in early 1980s when the leading companies startedto recognize their distribution sales channels to form new multi channels. Earlier PC companiesused to have single channel. ( Moran, 1990 ).

Increasing E-commerce is another alternative channel to sales channels. According to Frazier(1990 ) the channels in transition were also scarce and the existence of multiple channels hasbeen recognized.

The sales channel structure of Fujitsu, ICL and IBM was based on direct sales channel in 1980s,which were subsequently changed as per product like PC. Compaq sales channel strategy differsfrom IBM and Fujitsu. Compaq used indirect sales channel strategy which is very cost efficient

and helpful in expansion of business. The dealers were expected to carry out a wide range offunctions including sales, technical support, service and demand creation. Compaq shifted tohybrid sales channel strategy in 1990 .e. taking control over customer generation and salespromotion , whereas the channel partners were to handle the sales and distribution functions. Inmid 1990s, Compaq reshaped the sales channel by decreasing the number of channel partners toserve directly and to develop closer relationship with channel members and customers and in late1990s by shifting dual to hybrid sales channel strategy. DELL uses a single channel; the mainfocus was direct sales channel. The direct sales approach consists of direct sales representativesthat serve relationship customers and internet based ,fax and telephone. To meet the demand ofincreasing product market diversity various companies shifted from single to multiple channels.The emerging hybrid sales channel strategy is a mixture of indirect distribution channel andproducer control of marketing functions ( new customer acquisition and promotion ). Theselection of hybrid sales channel has been accompanied by organizational development towardsan advanced organization structure and further standardization of technology.

Keith Jackson and Crosby (1990), suggest that a broker's dependence on a principal has astrong effect on the broker's readiness to respond to a request made by the principal. The greaterthe broker's dependence, the likely the broker was to respond to the principal's request. Thisresponse took the form of implementing the requested change or at least implementing a lessexpensive action to try to correct the perceived problem. thus greater B's dependence on A, thegreater A's scope of power.

As perAnderson and Narus (1990), even firms in successful partnership would readily

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acknowledge that disagreements are inevitable. Rather than allowing these conflicts to run theircourse firms develop mediating mechanism to defuse and settle their differences rapidly. Threesuch mechanisms can be suggested. Firm can train their personnel to be sensitive to inherentchannel relationship trouble spots. Second, a distributer council can be established. Finally, anoffice of distributor ombudsman can be created (Jacobs, 1985). An ombudsman might be a

retired distributor employed by manufacturer, who would have credibility with both parties.Serving as a "friend of the distributor", the ombudsman listens to distributor concerns, drawsupon experience to assist the manufacturer firm in finding equitable solution , and then helpsexplain those solution to distributors.

Model of communication developed by Mohr and Nevin (1990) can provide useful managerialinsight. Managers can use the model to understand how communication facets are linked tochannel conditions. They can use the model to understand how to improve channel outcomes.

O'Farrel (1996) studied the UK market and found that well known producers of finishedcomputers such as IBM, HP, Compaq and Packard Bell have faced so many difficulties instructuring distribution systems to retail outlets. For fast changing computer industry thedistribution system should be according to the need of the manufacturer to end user.

The concept of Value added Reseller (VAR) for decreasing the inventory, increasing theresponsiveness and to limit price erosion has come up in a big way and these are involved indistribution of large parts components and systems, system integration, system configuration,services and huge contract assembly. ( McNaughton & Bell, 2001 )

According to Bob Segal (2005), in increasingly competitive markets, characterized by pricingpressures and the entrance of new competitors from around the globe, have most companiesstruggling to find new avenues for growth while being ever vigilant about cost. "Profitablegrowth" has become the order of the day, if not the most recent buzzword to enter the businesslexicon.


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From a marketing and sales perspective, the drive for "Profitable growth" typically leads toexploring new distribution channels and to company executives asking: "What are the costs ofentering a new channel?" and "How do these costs compare to our existing channel?"Companies that are looking at new distribution channels as avenues for generating "Profitablegrowth" must take the time to understand all of the cost components associated with each

channel, and make sure that they are comparing "apples with apples" in order to create accuratecost comparisons. Aggregate costs and expense-to-revenue (E:R) ratios must also be carefullyevaluated to consider factors beyond cost, such as the complexity and duration of the sellingprocess, and whether the channel is established or in "start-up" mode. Cost models are alsoavailable to help understand the differences between expense ranges for indirect and directchannel programs, and to help determine what expense range is appropriate for your channelstrategy. It can help you assess the cost of implementing a channel strategy and make sure youare deriving maximum efficiency and effectiveness from your sales force and channel partners.

As Robert L. Segal (2005) said many manufacturer seek advice from their resellers byconvening a channel advisory council. Given the increasing pressure from competition,technology and customers these channel councils are more important than ever. However, manymanufacturer don't understand how to structure an advisory session often just get a barrel-load ofgripe.If managed correctly, advisory councils can provide significant benefits.From manufacturer point of view these include:

Building stronger personal relationships that can help overcome short term strains ordisagreements (especially with the key reseller typically on these councils).

Gaining greater insight into reseller's thinking and, by extension into end-user needs.

Avoid expensive mistakes on new products or programs.

Exposing senior management, who may rarely deal with resellers, to channel related issues.

Uncovering competitor's activities and potential responses.

An increasingly complex competitive environment places a premium on strong manufacturer /

channel communication. Channel advisory councils are an excellant forum for this type ofcommunication. However, advisory forums can often degenerate into gripe sessions unless themanufacturer engages in careful planning, culture building and meeting facilitation. With properplanning, council meetings can help to turn a manufacturer's channel program into a long term,strategic asset for the firm.

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Dave and saxena (2005) in their study made some suggestions for both marketing managers anddealers.

Marketing managers must gear up to understand ground realities of computers marketingscenario and should understand the distribution aspect of the product.

Marketers should realize the need to rework on marketing plans and strengthening thedistribution channels of thier product offering.

Marketers who are looking forward for distinct competitive advantage are advised to leveragethe tool of Customer Relationship Management (CRM) with the help of effective dealermanagement.

Companies must take care of dealer's profitability needs and providing adequate incentives to thedealers should popularize the concepts of exclusive dealership.

Marketing managers should focus on product awareness programmes; continous efforts shouldbe made on dealer communication and feedback.

Frequent traning programmes, dealer's meet should be organized by marketing department toupdate dealers about technological advancements and changing marketing managementpractices.

More emphasis should be given on opening new retail outlets and channels for selling productslike PCs with total solution provider approach.

The distribution management practices must be given due emphasis . Inorder to combatcompetitive forces the marketing managers should strive for cost reduction.

According to above study, distribution is ranked at last which indicates that enough attention isnot being paid on distribution element of marketing mix. This is a matter of concern and


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validates the importance of present study. Marketing practitioners should pay more attention tothe aspect for cost saving which is thrust area in today's market.

As we have seen, there are various studies on distribution channel decision, selection procedure,conflicts and their resolution, channel communication and channel power. But on the same thereare significant gaps due to different studies as no comprehensive study has been done ondistribution functions in white goods in Indian context. In this study we will be knowing abouteffectiveness of distribution channels as per manufacturer's, dealer's and customer's point ofview.

Even as most of India Inc has struggled to match its sales growth of last year, consumer durablesmakers have managed to do better.

Most durable makers reported acceleration in sales growth in the September 2009 quarter, evencompared to the September 2008 quarter.

Whirlpool of India has reordered a 34 per cent sales growth in the latest quarter compared to 23per cent last year.

- Business Line Delhi, November 5, 2009

Godrej is targeting a 25-30 per cent growth this financial year.

Other companies are also expecting to close FY10 with sales growth in the range of 25-30 percent compared to last year, due to the overall buoyancy and the festive season sales. LGElectronics is expected an over 25 per cent sales growth in FY10. Moon B Shin, MD, Adds:We expect this festive seasons sales to grow by more than 40 per cent. All products saw goodsales.

The same goes for Whirlpool. Shantanu Das Gupta, Vice President, Corporate Affairs andStrategy, Asia South, estimates the aggregate of September + October sales to be 40 per centabove the same period last year.

Samsung India clocked 40 per cent growth in September-October as compared to the same

period last year.

- Business Standard Delhi, October 22, 2009

The sales of every company grow during last quarter of the year i.e. September to

December due to festive season and companies provide different special offers to the

customers also.

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For example-

Entry level 40-inch LCD TV (top brands) Rs. 65,000 70,000 down 10%, assured free gifts onsome brands and models.

Samsung is giving away a 22-inch LCD television free with the purchase of an LED televisionof 40-inch and above screen sizes.

Godrej is offering microwave for free with certain models of frost-free refrigerators and 5-starrated split air conditioners

Entry level 32-inch LCD TV for value, price fighter brands available at Rs. 23,000 25,000.

Companies such as Sony, Samsung, LG and Voltas are offering interest-free finance schemes,

some even translating into zero down payment and processing fee.

Retail

All retail chains are offering decent discounts on almost all items.

- The Economic Times, Delhi, October 12, 2009

Green has become the key to success for consumer electronics giants such as Samsung, LG,Philips, Godrej and Whirlpool.

The green drive, which started with the introduction of energy-efficient air-conditioners andrefrigerators to judge the market sentiment this summer, is now being extended to otherconsumer electronics goods such as television sets, washing machines and microwave ovens.

- The Telegraph Kolkata, September 22, 2009

White goods companies are now switching to rural markets. As LG has figured more

offices in smaller towns and cities. It has also introduced cheaper products like its

Sampoorna television range. But LG is not only White Goods manufacturer that is striking

deep into rural India. There is also Mirc electronics which late last year launched its

operation Vistaar(meaning expansion). Videocon has just begun a fresh thrust to boost

sales outside the metros.but it is not desigining new products for rural markets.

Korean brands, LG and Samsung, have cornered nearly half of the Rs 10,000 crore Indian homeappliances market for the first time in the later half of this year. While the LG leads the marketwith around 35 per cent of the overall market, Samsung improved its position from around 13 to


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around 16 per cent now.

According to a survey released by the Japan Electrical Manufacturers Association,

Japanese white goods have higher brand recognition and are more popular in India than productsfrom the U.S., Europe and South Korea, an industry group said Monday.

The high- tech image of Japanese products such as automobiles and television sets boosted theirpopularity and recognition in India.

But the name recognition of each individual Japanese company was lower than that of SouthKorean competitors, including LG Electronics and Samsung Electronics, due mainly to the

companies slower pace in getting products from the manufacturing facility to the market.

After the deep study of market of White Goods companies, we have concluded the

following characterstics.

Market characteristics

1The consumer goods market in India is of USD 4.87 Billion.

2Around 45 companies cater to this market. Onida is having a very small share of this

market.

3In the Indian market space, Brand loyalty is giving way to value-for-price contest.

4There is an intense competition on price.

5The companies are Companies focusing on product differentiation, value added offerings

and exchange offers.

The MNCs like LG, Sony, Samsung, Phillips and Videocon command a high market share.

These brands score high on following factors:

Product Line: These companies (LG, Sony, Samsung, Phillips and Videocon) have a wider

product range compared to Onida to target customers from all segment.

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Positioning: Their Image of a multinational company in the minds of consumer helped them to

grab market share instantly. It gave a perception that these companies have better technology.

Videocon on the other hand leveraged its MNC image by it tagline of Indian MNC.

Advertisements: LG has Abhishek Bachhan, Samsung Has Aamir Khan, Videocon had

Amithabh Bachhan and now Sharukh Khan, and All these players have used celebrity to a good

effect to endorse their brands. On the other hand Onida is stuck with its old Devil which isnt

helping.

Visibility: The companies are associated with events and sponsorships. Like LG and Videocon

are associated with cricket. This has resulted in better brand visibility.

Research methodology

Marketing mix consists of 4Ps i.e. Product, Price, Place and Promotion. Due to any change in

conditions, any company can change in product, price and promotion but it is very rare that any

company changes its distribution channel. As a strategic marketing tool, the field of distribution

channels had for many years, taken something of a "back seat" to the other three strategic areas

of the marketing mix: Product, Price and Promotion.

But in recent years this relative neglect of distribution channels has been changing due to:

1. Greater difficulty of gaining a sustainable competitive advantage.

2. Growing power of distributors and retailers in marketing channels.

3. The need to reduce distribution costs.

4. The new stress on growth.

5. The increasing role of technology.

The increasing awareness among customers about product and services might influence

dealer's practices in due course specially in distribution. The focus on holistic solution approach

rather than stand alone product might result in fierce competitiveness among

dealers.Consequently there is a rush to reach to the market place with innovative products.

In order to retain and increase market share in retail segment it is essential that white goods


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companies penetrate in growing markets. In order to have an edge in market, the management of

their distribution channel are essential for companies. A proper and methodical system is

essential for thier growth as effective channel members. The purpose is to ascertain an effective

distribution channel system so that committed and motivated dealers are established. The

performance of channel members will be critically assessed to find out the gaps in existing

system.

F0r the purpose of this study,the sub objectives have been identified as below

To study the present state of channels of distribution in white goods industries.

To analyse the significance of distribution channel decision in overall marketing mix.

To analyse the type and responsibilities of intermediaries.

To analyse the factors in selection procedure of distribution channels influencing the whitegoods companies.

To evaluate the performance of the dealers and distributors from company's point of view.

To study the effectiveness of distribution channel from customer's point of view.

The geographical coverage is restricted to whole Haryana. There are 15 companies in white

goods market in Haryana. There are more than 500 dealers of white goods in Haryana.We have

covered in our study 4 major players of white goods in india, that are- LG electronics; Samsung;

Whirlpool and Videocon.

Here we adopted exploratory cum descriptive approach. This apporach is considerd appropriate

to carry out the project as we tried to evaluate the effectiveness of distribution channels in white

goods companies. A structured questionnair consist of three parts has administered to the

respondants.

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The study consists of three parts :

1. Survey of company's managers and executives to know about the selection parameters and

assessment of the distribution

channels.

2. Survey of dealers and distributers to know thier perception about motivators and barriers of

thier performance.

3. Survey of customers to know about thier perception about the effectiveness of distribution

channels.

The nature ofresearch design is such that probability sampling procedure has been followed.

Non disguised structured questionnaires has been framed to meet the specific requirement of the

study. The design of the questionnaire has kept simple and both open and closed ended questions

has included. A majority of questions are closed ended while few quwstions at the end are open

ended to seek opinions and suggestions from the respondents.

For first part of the questionnaire 15 managers of different levels of the 4 majorcompanies has

been taken for primary data collection. In second part of the questionnaire a sample of around 22

dealers covering all types like urban, semi urban and rural dealers has been drawn. . For the

third part of the questionnaire a sample of 46 customers has been drawn from all parts of

Haryana.

Data collection is a basic step and of vital importance. On which success or failure of the study

depends.

In the data collection method, we have collected both primary and secondary data to meet our

objectives. The primary data was collected by a survey based on the questionnaire consisted of

three parts and exercised upon the managers and executives of the white goods companies,

dealers of these companies and the consumers of the white goods. The secondary data was

collected from various sources like


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---web sites of different white goods companies

--- Articles and books on white goods industry

---Annual reports of the white goods companies etc.

Analysis and interpretation of questionnaire for employees of company

Part- A

1. Which company do you belong to?

Name of company No. of employees

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LG electronics 4

Videocon 4

Samsung 4

Whirlpool 3

0

0.5

1

1.5

2

2.5

3

3.5

4

No. of employees

LG

electronics

Videocon

Samsung

Whirlpool

Interpretation : As we found response from 15 employees of four major companies of White

Goods in India. In which 4 employees were of LG; 4 were of Videocon; 4 were of Samsung and 3

were of Whirlpool .

2. What is level in the company you are working with?


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Level No. Of Employees

Executive level 7

Manager level 4

Senior manager level 4

0

1

2

3

4

5

6

7

No. Of Empolyee s

Executive

level

Manager

level

Senior

manager level

Interpretation: Half of the respondent employees were of executive level. Other half of the

respondent employees were of manager and senior manager levels.

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3. What is the distribution channel used for distribution of your products?

Type of distribution No. of responses

Dealers/Distribution 15

Agents 0

Store retailing 12

MLM 0

Any other 0

0

2

4

6

8

10

12

14

16

No. of res ponses

Dealers/Distri

bution

Agents

Store

retailing

MLM

Interpretation : All employees responded that they distribute their products through dealers

and distributors. And beside this channel 80% are using Store retailing also.


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4. What is the reach of your products ?

Reach No. of responses

In metro cities only 0

In towns only 0

In small towns 0

All of the above 15

0

2

4

6

8

10

12

14

16

No. of response s

In metro

cities only

In towns only

In small

towns

All of the

above

Interpretation : All of the employees responded that their company is having a strong

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distribution network which includes not only metro cities but big towns but small towns also.

5. How do you select dealers/distributors for the products?

Type No. of responses

Exclusively 8

Generally 7

6.5

7

7.5

8

No. of res ponses

Exclusively

Generally

Interpretation : 56% of employees responded that they distribute their products through


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exclusive dealers and rest of 44% of employees responded that their company is having general

dealers also in some areas.

6. Give ranking to the following parameters which you consider while selecting distributor.

Parameter Rank1st 2nd

No. of responses

1. Economical background 4 8

2. Social background

3. Population of the city/town

3 2

4. Awareness of the products

5. Domain of the person

6. Location of the store 8 5

0

1

2

3

4

5

6

7

8

1st

rank

2nd

Rank

Economical

background

Social background

Population of the

city/town

Awareness of the

products

Domain of the

person

Location of the

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Interpretation : The employees responded to three parameters. 56% of employees gave 1st rank tolocation of store. According to them location of store is the major parameter while selecting dealers andafter that they see economical background. 24% took economical background as 1st parameter to selectdealers after that they see other parameters. 20% took population of city as 1st parameter while selecting

dealers in a particular place. 33% responded to location of store as 2nd

parameter and 13% respondedpopulation of city as 2nd parameter in their selection of dealers.

7. How do evaluate the performance of distributors/dealers? (Give ranking)

Parameters

No. of employees

Rank1st 2nd

Revenue generation 5 8

Sales volume 10 5

Brand image building 2

Customer loyalty

0

2

4

6

8

10

12

1stRank

2ndRank

Revenue

generation

Sales volume

Brand image

building

Customer

loyalty


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Interpretation: More than 65% responded that their company takes sales volume asa major parameter for performance evaluation of the dealers. While rest of the employeesresponded that Revenue generation is the major parameter to evaluate the performanceof dealers. And more than 56% took revenue generation as 2nd important parameter for

performance evaluation of their dealers. 33% of others took sales volume and rest of theemployees took brand image building as 2nd important parameter for the same.

8. How frequently do you evaluate the performance of dealers / distributors ?

Options No. of responses

Weekly 3

Monthly 12

Half yearly 0

Yearly 0

0

2

4

6

8

10

12

No. of response s

Weekly

Monthly

Half ye arly

Yearly

Interpretation: About 80% of employees responded that performance of

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dealers and distributors is evaluated on monthly bases by their company. And rest

of the 20% employees responded that their company evaluates the performance

on weekly bases.

9. How the dealers / distributors affect the price of products?

Options No. of responses

Costs high 0

Costs low 0

Remains equal 15


49/80

0

5

10

15

No. of re sponses

Costs high

Costs low

Remains

equal

Interpretation: All the employees responded that Dealers and Distributors do

not affect cost of the product.

10. Weather distribution channel helped in making the product easily available in the market?

Options No of Responses

Yes 15

No 0

49


50/80

0

5

10

15

No of Responses

Yes

No

Interpretation: All the employees responded that their distribution channels have

helped to make the product easily available to customers.

11. How does a distributor help in promotion of a product?

Option No of Responses

Rank


51/80

1st 2nd

Visibility of product 15 0

Conducting Seminars 0 3

Road shows

0

12

0

24

6

8

10

12

14

16

1st

Rank

2nd

Rank

Visiblity of

Product

Conducting

Seminars

Road Shows

Interpretation: All employees agreed that dealers and distributors help in visibility

of product. And 80% employees responded that they also help in promotion of product

by arranging road shows and rest of 20% of employees said that dealers also conduct

seminars to promote the product.

12. Weather distributor plays an important role in product innovation?

51


52/80

Options No of responses

Yes 2

No 13

0

2

4

6

8

10

12

14

No of res ponses

Yes

No

Interpretation: More than 85% of employees responded that dealers and distributors

do not have any role in product innovation.

Analysis and Interpretation of the questionnaire for Dealers andDistributors of the Company.

Part-B

1. Which companys dealership you have?


53/80

Name of company No. of responses

LG electronics 6

Videocon 7

Samsung 6

*Whirlpool 3

0

1

2

3

4

5

6

7

No. of response s

LG

electronics

Videocon

Samsung

* Whirlpool

Interpretation: As per the limitation of time we got response from 22 dealers and

distributors of white goods in our area. In which we included 6 respondents of LG; 7

respondents of Videocon ; 6 respondents of Samsung and 3 respondents of Whirlpool.

2. DO you own monopoly for the products of the company?

53


54/80

0

5

10

15

20

25

No.of res ponses

Yes

No

Interpretation:All persons responded that they are not the single distributor of the

companys products in this city. There are other distributors and dealers also working in a

particular place.

Option No.of responses

Yes 0

No 22


55/80

3. Which category do you belong to?

Category No. of responses

Dealer

15

Distributor

7

0

5

10

15

No. of response s

Dealer

Distributor

Interpretation:There were 15 dealers and 7 distributors among 22 whose response has

been calculated for the study.

55


56/80

4. Do you think dealers/distributors help In marketing mix?

A. Product price

Yes 2

No 20

0

5

10

15

20

Yes

No

Interpretation: 20 persons have responded that distributors help in fixation of price of products.While 2 said that there is not any role of distributors in fixation of price.

B. Innovation of new products

yes 6

No 16

0

5

10

15

20

yes

No


57/80

Interpretation:Out of 22 ; 16 have responded that they help in product innovation while 6 have said

that product innovation is done only by the company s employees

A. Product promotion

Yes 22

No

0

0

5

10

15

20

25

Yes

No

Interpretation:All have responded that product promotion is mainly done by them.

57


58/80

5. Mention any four major responsibility of a dealer/distributor?

Interpretation

As this was an open ended question .We could not express it in graph

because responses were different depending upon employees own capabilities. However, all

have responded that the first and most important responsibility of them is sales. And others are

advertisement, maintaining records for the company people, maintaining good relations with

customers, maintaining brand image by providing after sales services.


59/80

6. According to you what is the selection criteria of a company for a dealer/ distributor?(Give ranking)

Parameter

Rank1st 2nd

No. of responses

1. Economical background 4 15

2. Social background

3. Population of the city/town

2 1

4. Awareness of the products

5. Domain of the person

6. Location of the store 16 6

0

5

10

15

20

1st

rank

2nd

rank

economical

background

social

background

population of

city/town

awareness of

products

domain of the

person

location of

InterpretationOut of 22 respondents 16 have said that location of store is the major criteria

for their selection and then company see the economical background of the person . While 4

respondents have said that economical background is the basic factor for the selection and

59


60/80

according to 2 respondents population of city /town matters first for the selection of the dealers /

distributors.

7. Are you satisfied with marketing policies of the company?

Yes 14

No 8

0

2

4

6

8

10

12

14

Yes

No

Interpretation

14 respondents were satisfied with the marketing policies of the company.

Rests of 8 respondents were not satisfied.


61/80

8. Are you satisfied with sales of your products?

Yes 15

No 7

0

5

10

15

Yes

No

Interpretation:Out of 22 respondents 15 were satisfied with their sales. While 7 respondents

were not satisfied with the sales of products.

61


62/80

9. Are you satisfied with the profits you are gaining presently?

Yes 6

No 16

0

5

10

15

20

Yes

No

Interpretation :Out of 22 respondents 16 respondents were not satisfied with profits and rest of 6

were satisfied with the profits they are gaining.


63/80

Analysis and interpretation of the questionnaire for the customers of thewhite goods.

Part - C

1. Which companys electronic products do you buy?

Name of the company No of respondents

LG electronics

13

Videocon 12

Samsung 14

Whirlpool 7

0

2

4

6

8

10

12

14

No of

respondents

LG

electronics

Videocon

Samsung

Whirlpool

63


64/80

Interpretation: As we can find one or more white goods in each and every modern house.

So the sample frame was very large through which we have selected 46 respondents randomly.

In which 13 respondents were of user of LGs products; 12 respondents were of user of

Videocons products; 14 respondents were of user of Samsungs products and rest of 7

respondents were of user of Whirlpools products.

2. Why you prefer this company to buy electronic goods?

Options No. of respondents

Image of the company 10

Product quality

28

Dealers image 8

0

5

10

15

20

25

30

No. of

respondents

Image of the

company

Product

quality

Dealers

image

Interpretation : Majority of respondents replied that they choose this companys products

due to product image. 10 customers responded due to companys image and very less customers

responded that they have choosen this companys products due to dealers image.


65/80

3. According to you , how distributor helps a customer?

Option No. of respondents

Making awareness for the product 2

Provides knowledge for the product 6

Provides after sales services 0

Easy availability of the product 38

0

5

10

15

2025

30

35

40

No. of

respondents

Making

awareness

for the

product

Provides

knowledge

for the

product

Provides

after sales

services

65


66/80

Interpretation : 38 customers responded that distributor make the product easily available to

the customer. While 6 persons have responded that they also provides knowledge of the products

and 2 persons have said that they also make aware to the customer about

Documents

M.phil Kanchn Munjal