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Comparative study between Samsung and LG on Distribution Channel

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Samsung India

+ Who are your Channel Partners?    Company Appointed Distributors Exclusive Showroom “ Samsung Plaza” MBO “ Multi brand outlets”   Sub Dealers Retailers .

+ Levels of Distribution Company MBO Distributors Exclusive Retail outlets Sub-Dealers Retailers .

+ How do you select your channel partners? Criteria For selecting Network Hold Past performan ce Credibility Capital Location History .

+ Responsibility of the channel partners    To carry the product Warehousing To Meet the sales target    No promotional activity to be done by the channel partners Provide Market Information To push the product .

+ Margins given to channel members MBO Maximum Exclusive Moderate Less Distributors In last year the company has reduced the margins of all the channel partners due to rise in cost .

+ Motivating Channel partners   Outdoor tours For dealers the distributors motivates them by talking them to national tours Bearing the cost of the interiors of the showroom Providing sales executive to the exclusive showroom which reduces their burden of hiring employees Other than this they provide Discounts and schemes    .

+ Conflict  Vertical conflict The distributors wants more of margin. where as the company reduces the cost and expects the channel members to meet their sales target  Horizontal conflict Two dealers in the same territory fight due to unequal margin .

+ Evaluating channel members  Performance  Sales target .

+ LG India .

+ Who are your Channel Partners?    Company Appointed Distributors Exclusive Showroom “ LG Shoppe” LG AC solution plaza     LG IT solution MBO “ Multi brand outlets” Sub Dealers Retailers .

+ Levels of distribution Company MBO LG Shoppe Distributor AC Plaza IT Solution Sub dealers Retailer .

+ Criteria for selecting Channel partners     Past History Network Hold Capital Past performance   Credibility Location LG specifically does not give any distributorship to a person dealing with same range of product that of LG. Most Importantly it does not give distributorship nor dealership to a person dealing with Samsung .

+ Responsibilities of the Channel members       To carry the product Warehousing ( Minimum area of 1000 sq foot) To Meet the sales target No promotional activity to be done by the channel partners Should have their own delivery vehicle ( Rickshaw to Truck) Provide Market Information  To push the product .

+ Margins given to channel members MBO Maximum Distributors Moderate Less Exclusive Generally the distributors are given higher margins but in some products which are only available in LG Shoppe are given 3-4% higher Margins .

+ Motivating Channel partners  Sell-in Here the company provides offer to the distributors or the MBO in terms of discounts or schemes to buy the product.  Sell-out Here the retail outlets provides schemes or discounts to the customers directly where the cost is borne by the company   Outdoor tours For dealers the distributors motivates them by talking them to national tours  Bearing the cost of the interiors of the showroom .

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

+ Evaluating channel members   Performance Sales Target LG has a special software called SOMS “ Sell out Management System” It is directly connected to its billing machine. This helps the company to have strong control with the channel members and it provides a tool to evaluate them . So whenever a product is sold the company has a track of it.

capital etc Different outlets for appliances and electronics Same as Samsung but doesn't provide distributorship to a member carrying same product range as of LG    Responsibilities are of warehousing. Providing Information etc Margin  Same as Samsung but should have specified area for warehousing and delivery van to deliver Margin Distributor Exclusive   MBO Exclusive Distributor MBO .+ Samsung  Comparisons LG  Under one roof it has Home appliances and home electronics Selects channel members in terms of performance. credibility.

+  Samsung Motivation: Schemes. The company does not have any tool to have control over the channel members  LG Motivation: Sell-in. Tours etc It has both Vertical as well as horizontal but vertical is more prominent Evaluate on the basis of sales target. Discounts. Schemes etc Here Horizontal Conflict is more prominent Evaluate same as Samsung but it has a software called SOMS which controls as well as acts as a tool to evaluate the performance of the channel members     . Performance. Sell-out. tours.

Branch Manager for Harayana Division . Distributors of Samsung in Harayana  Mr Lokender Lal. Rajat Taneja.+ References  Mr.

Vice Chairman of Planning + Montek Commission Thank You .in next five years distribution will be the reason behind India’s growth” singh ahluwalia..“ ….

Submitted by: Robin Agarwal A-30 Sourav coomar doss A-40 + Kushal Kishore Gupta A41 Dhawal Lingam A-53 Karanbir Sahni A-52 Rajat Taneja A-55 Shaunak Puri A- .