Professional Documents
Culture Documents
Nokia Distribution NCR Project
Nokia Distribution NCR Project
Submitted to :
Submitted by :
Mr.Asif Zameer Assisstant Professor, Marketing FORE School of Management, New Delhi
Ashutosh Kumar Jha (91011) Faraz Khan (91033) Nishant Singh (91039) Roshan Sonthalia (91045) Smriti Gupta (91054) Stuti Gupta (91056)
Table of Contents
Introduction .................................................................................................................................. 4 Mobile phone industry in India ............................................................................................. 4 Nokia in India ............................................................................................................................... 5 Nokia distribution structure in India .................................................................................. 6 Role of Channel Partners.......................................................................................................... 8 Margins at each level ............................................................................................................... 10 Distributors Coverage Plan ................................................................................................... 11 Infrastructure required by distributor ............................................................................. 11 Support provided by the company to the distributor .................................................. 13 Credit/ Payment terms ........................................................................................................... 14 Major Problems Faced by the distributors ...................................................................... 14 Major Points of conflict ........................................................................................................... 15 Major Problems/ Issues identified ..................................................................................... 16 Recommendations .................................................................................................................... 17 Refrences ..................................................................................................................................... 18 People Contacted ...................................................................................................................... 19
Page 2
Page 3
Introduction
Integral part of 4Ps f marketing mix is place. Having a great product is useless till its made available to potential customers at right places and at right time. Considering a country like India with not only a large but also economically, climatically and socially diverse landscape to be covered amplifies the problem manifolds. A distribution network for products rises above importance levels to become bare necessity for the existence of any company. The success of the channel design depends upon the reach and efficiency of the network any organization develops and maintains and ease with which any potential customer is able to find the product. Efficiency of the distribution cost and type of channel partners form and integral part of this.
Page 4
Nokia in India
Nokia entered the Indian market in 1994. The first ever GSM call in India was made on a Nokia 2110 mobile phone on its own network in 1995. When Nokia entered India, the telecom policies were not conducive to the growth of the mobile phone industry. Nokia also had to face tough competition from other powerful global players like Motorola, Sony, Siemens and Ericsson. Nokia as a company has expanded at a very fast pace in India. Over the past decade, Nokia has captured nearly 60% of Indias $5.6 billion handset market, of which about 25% are rural consumers. In 2006, Nokia set up a manufacturing facility in India, 2006, which allows it to manufacture and sell low-cost phones. It also adapted its phones to suit the local conditions. To further increase its popularity, the company has increased its number of customer care centers and caters to rural India with vans staffed with sales reps. It has also introduced social innovations such as access to crop prices, weather forecasts, and English lessons. However due to staunch competition the market share has decreased slightly in 2006. However it is expected to grow as it has plans to expand in the rural market. India has around 95,000 outlets that sell mobile phones. In around 50,000 of them only one brand is available that is Nokia. Achievements of Nokia: Nokia Company released first mobile with Hindi menu in 2000 They have come up with Wi-Fi mobile which is called Nokia communicator in 2004 In 2006 this company has started huge mobile manufacturing plant in
5.9 10.8 11.2 53.6 5.6 10.9 2 Nokia Lg Motorola samsung sony Ericsson HTC Others
Page 5
but the transportation cost would be greatly reduced. It would also give the company the advantage of exclusivity. Since it has been opened in only metro and important cities, therefore, it would not be subject to state sales tax, if the CFA is located in the same city. Nokia Priority Dealers Nokia Exclusive Stores namely PRORITY DEALERS are all franchised outlets .The franchisee must fulfil certain criteria, for example, in the case of an existing store that would be converted to a priority dealer, there must be a certain number of footfalls, the location of the store should be prime real estate in that region, and certain other standards. Nokia provides support to these outlets in the form of help in visual merchandising, furniture etc. against a certain deposit by the owner which is refundable at the end of the contract if need be. Multi Brand Dealers Apart from its Nokia Priority dealers and concept stores, the company distributes its product to many organized multi-brand mobile stores with nation-wide presence in India and recognized for their service and price discounts. Few of the major players are Hotspot Univercell The Mobile store RPG Cellucom
Besides these there are individual mobile retailing stores as well as wide variety of retail stores like electronics goods dealers, Stationary shops, etc who have started selling mobile phones over past few years. HCLI has also established over 150 Nokia Care Centers managed by HCLI and franchisee operations.
Page 7
Sales Force
Receivable collection
Page 8
HCLI also takes care of appointing partners and operation of Nokia Care centres. Currently there are care centres in more than 180 cities across India. Re-Distribution stockiest supplier (RDSS) There are 6 RDSS in Delhi NCR region with territories divided as North, South, East and West Delhi, Noida and Gurgaon. RDSS are supposed to operate only in their designated territorial zone. In case of conflict HCLI acts as the arbitrator. RDSS, assisted by Nokia, also take responsibilities like recruiting sales force, training and developing. Stocking norms of Nokia- HCLI agreement says that HCLI depot should have 7 days supply, RDSS in city should have 5 days of supply. Dealers Nokia Priority dealers, Multi brand and individual dealers in Delhi NCR are all served by RDSS. Dealers are explained the features of every new launch mobiles, different schemes and offers by Nokias representatives. Re-supplies are always just a phone call away and the delivery is made within a few hours. Besides, Nokia assists most dealers in the region in the store set-up and design. The price points sometimes dictate the type of outlet. Stock norms define that for how many days worth of stock does any level in the supply chain should have. These norms are defined by Nokia only. Given below are the stock norms: The expected target to be fulfilled by the particular level is determined by the following formula: Expected target = (30 / No. of working days) * Stock Norm for that level
Page 9
18% Margin
Nokia and HCLI have never publicly declared their margins. Nokia business is the largest contributor to HCLIs revenues and profits. Nokia product distribution was the largest contributor to HCLIs sales (about 72% in FY2009). As a percentage of PBIT however, the share of Nokia distribution was at 61%. Since 2006, when Nokia took over 50% distribution channel from HCLI, revenue growth has almost been flat.
NOKIA Distribution Network, Delhi NCR Page 10
When comparing with its competitors, Nokia offers almost half to one-eighth margins on its phones. Compared to 2% offered to dealers by Nokia, LG and Motorola offer around 8-10% and Samsung 18%. But still dealers prefer to go with Nokia as it has much more surer sales and have excellent support from RDSS and the company.
Page 11
Nokia-HCLI have not declared any of their agreement details on public domain and hence its not known what infrastructure HCL is supposed to maintain as per the agreement or what infrastructure they have dedicated or use for servicing Nokia. Few details available in public domain are: Service provider for the repair of Nokia Mobile Phones in India Pan India service network in 21 L3 locations equipped with state of art equipments Mobile care vans across the country to increase remote coverage Nokia repair facility 100+ repair benches with 75K handsets/ month repair capacity L4 repair capability
Page 12
Page 13
these tasks are taken up by the delivery executives who also inform the dealers about their latest launches and the feature sets of these phones. Dealer encouragement schemes : Nokia has cash rewards to promote and motivate the dealers. They offer cash rewards for making predetermined level of sales fortnight which may ranges from Rs.500 to Rs.5000. For their high performing dealers they offer all expenses paid local/foreign holiday trips.
Page 14
distribution territories was signed in 2006, there has been some issues for HCLI. HCLI shares have suffered on share market. Nokia has also refused to confirm or deny plans on appointing distributors for the territories under its control after the revised agreement. On its part RDSS are quite happy with their functioning. They are satisfied with the products, quantum of sales and promotional support provided by the company. Even dealers spoke very highly of Nokia. Multiple dealers were contacted and not a single one had any problem with Nokias distribution or service. Some dealers in other states were also contacted and they also had nothing to report on the problem front. A few minor issues that possibly could become concern in future were : Credit period given by Nokia is very low compared to its competitors just 7 days compared to 15 days offered by Samsung and LG Margins offered are very low compared to competitors who could become larger player over new few years. Nokia offers just 2% margin to dealers compared to around 10% offered by LG and 18% offered by Samsung The damage piece policy has been cause of concern for some dealers/ RDSS. Although minimal damaged pieces have been reported over years, if any physically damaged handset is found, it sometimes leads to dealer/RDSS having to bear with it.
Page 15
Page 16
Recommendations
Review the margins offered to dealers and RDSS periodically taking in consideration the competitive structure of the market Review the credit period allowed to dealers and RDSS periodically taking in consideration the competitive structure of the market Have a multiple complaint channels as channels tend to get choked due to the bulk of complaints coming in everyday. Nokia Priority dealers can be used as centres where complaints can be registered and can be dealt in an organised way Nokia has to be make its sales executives more pushy keeping in mind the tougher competition from previously smaller players like LG and Samsung Nokia needs to provide better purchase centric schemes to the dealers. These schemes can be given on a sales basis so that they solve dual purpose increasing the sales and acting as an incentive for the dealers. The distribution network of Nokia is very wide but there are certain areas where no brands has reached like sector -3,4, Harola market in Noida , Govind puram in Ghaziabad , Certain areas on GT road, but in these areas distribution is not very effective and thus Nokia should work on its distribution in these areas. Some dealers said that missing piece in Nokias product line is absence of stylish mobiles in range of Rs.3000-5000. This highlights reliance of Nokia on HCLI for market information gathering. Nokia in itself is disconnected from its dealers and has no mechanism to gather this insight from them.
Page 17
Refrences
www.Nokia.co.in www.hclinfosystems.in http://toostep.com/debate/nokia-to-have-its-own-retail-distribution-model-will-this-he http://davidhowse.wordpress.com/2010/08/10/converting-a-wholesale-or-distributionbusiness-model-to-a-retail-model-an-alberta-marketing-perspective/ http://press.nokia.com/PR/199601/775828_5.html http://www.hclinfosystems.com/news45.htm http://dqchannels.ciol.com/content/reselleralert/106022101.asp http://www.businessweek.com/globalbiz/content/aug2007/gb20070831_914354.htm http://www.businessweek.com/magazine/content/09_32/b4142056700653.htm http://www.thehindubusinessline.com/2008/06/27/stories/2008062751790400.htm
Page 18
People Contacted
Person Met Company Name Role in Channel Address Mr. Rahul Chattri Naveen Mobiles Dealer J12/1, Khirki Extn, Malviya Nagar, New Delhi
Mr.Pankaj Mishra MobileStore Dealer Shop No.2, Upper Ground Floor, Main Market, Malviya Nagar, New Delhi
Vineet Nokia Concept Store Dealer/ Distributor Select CityWalk Mall, Saket, New Delhi
Page 19
Mr.Vaibhav Sharma
Mr.M.R.Balaji
Mr.Sayed Zamir Ali Vision Mobile zone Dealer Shop No.-7, Allied complex, Sultania Road, Bhopal, M.P
Page 20