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Distribution & channel Management

Indian perspective

Challenges
Commercial 1.25 billion, 3732 towns and 6.27 lacks villages Non-commercial- poor infra, interior village location Odd climate, caste and sub caste, preference of packaging, SKU size Tax structure

Overview
Tata tea Gaon Chalo 2005, Tata tea problem of stagnant market share How did the company solve the problem? Focus territory- UP Coverage of villages was inadequate, channel usedNGOs with the help of Tata trust. Channel development NGO (RD-1) Mobile dealers (RD-2) Rural retailers ( RD-3) Results Market share has gone up from 16.3% to 19.2% (20022007)

Distribution channel?
Levels Manufacturer Wholesaler Retailer Customer Flow Offerings Information Funds Function Store Bulk breaking Serving retailer Display Point of purchase Publicity Customer interaction

Role
Core offering Range and availability Bulk breaking Credit Pre sales support Delivery-logistics Order consolidation Product information collateral Optional services Sourcing of products Back-to-back ordering Simplified supply logistics Repackaging Post sales support Coordinationg the supplies from different suppliers to multiple locations

Business model definition


High volume low margin Low volume and high margin Medium

Types of distribution
Intensive Market share gain Extensive distribution Selected and exclusive Push and pull strategy Question? How cash and carry format of Wal-mart and Metro will affect traditional wholesalers and retailers? Analyze the vanishing Indian TV brands. How LG, Sony and Samsung did different as distribution strategy?

Key of success
Sonal Anand, Country Product Manager (Display), Samsung India

Distribution network
four distributors in India Tech Pacific India Limited, Redington India, Ingram Micro and Savex Computers. Between these four distributors we cover the entire breadth of the country with more than 84 sales offices in over 25 cities. We have more than 4000 channel partners who feature in our database and whom our distributors bill to.

The key reason for our success is the distribution network

Sony India
distribution network comprising of over 10,400 dealers and distributors, 270 exclusive Sony outlets and 23 direct branch locations. Sony India also has a strong service presence across the country with 255 service outlets.

Distribution in digital age


Traditional film distribution channel Producers Distributors Theaters Movie goers

Technology has changed the rule of game. Digital prints and digital distribution Reduced print and delivery cost with a server and a digital projector 1900 theaters adopting this technology from UFO movies India pvt. Ltd., reliance media network( largest cinema chain with 525 screens spread across India, US, Malaysia, Nepal and Netherlands.

Channel formats
Manufacturer based Company store/outlet EX: Athletic goods, Bakery Consignment /locker stockManufacturer ships products to point of consumption, but title does not pass until consumed. Risk of obsolescence and ownership is with manufacturer until used. Concerned with high pricehigh margins and emergency items. Ex: diamond, Fragrances and machine repair parts Retailer based formats FranchiseMcDonalds Dealer directHeavy equipment and auto dealers

Mass merchandise- Wal-Mart, Kmart, Target Specialty store- offer merchandise in one line. Sports goods, office supplies, children merchandise

Formats
Service channels Contact warehousing Public warehousing service for a fee. Cold storage Integration of truck and rail For heavy weight and high volume productscement, fertilizers and coal VARs( value added resellers) software sellers. Home party- Tupperware MLM- Amway Pay per service point of dispensing

Online channels
4 basic function Information provider Engage customer Sell and deliver goods and services

Type of transaction and industry


Distribution Online only Online with physical delivery Online personalized goods Online delivery of services Online sales by brick and mortar stores Industries Software, e-books, music, video Books, CDs, electronic goods Clothing and apparels Bank, insurance, MF and trading Physical stores using online to increase their reach

Physical only

Companies that decide not to sell online.

Mail order business


Receiving and fulfilling orders for merchandise using mails. before Credit card payment option Send payment and goods used to deliver through VPP( value post parcel) Ex: Readers Digest B2C sites www.indiaplaza.in www.rediff.com www.flipcart.com www.ebay.com B2B sites Alibaba.com Indiatimes.com Tradeindia.com

Advantages and disadvantages of online distribution


Multiplies reach Eliminates middlemen Time saver Ease of use Low internet penetration Individual distribution not possible for low value items High cost of new customer acquisition

Conflict with existing channels


2005- a big brand of camera from Japan entered in to Indian market. High price and light weight item did well in Indian market. E-Commerce given a flip to its ambitions and firm decided to launch its website with a secured payment gateway. It also tied up with a internet partner to sell the products online. Revolt by the existing channel members. What should be done?

New age channels


New age Real estate channels 99acrs.com Investor clinic Financial service Bajaj capital Moneycontrol.com Hospitality Makemytrip.com Service, jobs, real estate, vehicles etc.