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433 1
• At the very outset we would like to express our heartfelt gratitude to LGEIL and SEIL for

providing us the relevant information about the functioning of their distribution network

without which this project report would not have been a success.

• We would also like to thank to Mr. Sumit Chaudhary, Sr. Sales Executive and also Mr.

Piyush Jain, Marketing Manager of LGEIL on Delhi as well as Mr. Prashant Singh ,

marketing Manager of SEIL on Delhi and all those people at ‘LGEIL.’ & ‘SElL’ who gave

us the courage & inspiration to work zealously on the project assigned to us & do justice to it.

• We are extremely thankful to our faculty Prof. Veena Kumar Mam at the Indian Institute of

Planning & Management, New Delhi for her invaluable guidance and suggestions during

the project.

• We all would also like to express our gratitude towards our parents from whom we have

inherited all the desired virtues & to whom we look up to as living inspirations.
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This project aims to study the distribution channels, sales network and service patterns
of the consumer durable market (Television) through an analytical and comparative
study of two leading companies- LG Electronics India Ltd. (LGEIL) and Samsung
India Pvt. Ltd. The project also tries to bring out the shortcomings, if any, in the
present system and thus recommends suggestions to improve the same. These
suggestions are based on the market research conducted by our group.

The project was prepared in accordance to the guidelines provided by our group mentor
Prof. Veena Kumar Mam and the company officials we contacted during this
research. This project report also contains the valuable insights provided to us by
the channel Partners. Two company officials from each company and channel
members were contacted during this project.

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The projects outlines the consumer goods market in the country. We have also provided
a brief history of both the companies which we have chosen.

Further this project explain the distribution pattern of these companies the market
presence and the reasons for their presence in the market.

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 CONTENT SLIDE NO.

METHODOLOGY 6

COMPANY BACKGROUND 7-15

INDUSTRY SIZE 16

DATA ANALYSIS 17-26

CONCLUSION 27

RECOMMENDATION 28

BIBLIOGRAPHY 29
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• Data sources: Primary and secondary data

• Tools: Personal interview, Questionnaire, internet and detailed

checklist etc.

• Sample size: 2 Distributors and 10 Retailers.

• Field: Delhi & NCR

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11/12/2019 GROUP NO. 433 7
• LG Electronics India Pvt. Ltd., is a wholly owned subsidiary
of LG Electronics, South Korea.

• Established in 1997 in India.

• Most formidable brands in consumer electronics, home

appliances, IT hardware and mobile communications space.

• In India for a decade, LG has earned a premium brand

positioning

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• Its manufacturing units are in the Grater Noida.

• In 2004, LGEIL also setup its Greenfield manufacturing unit in Pune,

Maharashtra that commences operation in Oct 2004.
• This is India's first mobile phone manufacturing unit and also Asia's
largest Optical Disc Drive manufacturing plant.
• This mainly deals in exports with some of the countries.
• Covering over 50 acres, the facility manufactures LCD TV, GSM Phones,
Color TV, Air Conditioners. Refrigerators, Microwave Ovens, Color
Monitors.

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• In 1993, LG entered the Indian market through a joint venture with
the Delhi based consumer electronics company Bestavision for
selling color televisions under the brand name Gold Star brand.
• Both the Indian manufacturing units have been designed with the
latest technologies.
• Eco-friendly plants.
• LGEIL has achieved a turnover of Rs 20000cr. (approx.) in 2011 in
India.

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• Founded in 1938
– exporter of dried fish, vegetables, and fruits
– flour mill and confectionery machines
• 1950’s Economic Stabilization
– Korean War - Samsung lost all assets
– aimed to help rebuild Korean economy; entered the
manufacturing industry (sugar, fabrics)
– became a leader in modern business practices (recruiting from
outside)
• 1960’s Expansion of Key Industries
– entered electronics and chemical industries
– 1969 established Samsung Electronics Co.

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• Samsung entered India in December 1995 as a 51:49 joint
venture with Reasonable Computer Solutions Pvt Ltd, owned
by Venugopal Dhoot of the Videocon group.

• Samsung buying the total stake of RCSPL in 1998, it became a

wholly-owned subsidiary of its South Korean parent company.

• Initially, Samsung launched is operations in North India, and

then slowly expanded its operations.

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 No.1 31% REDUCTION

Ranked1st among IT firms Green house gas

in CDLI emissions cut by 31%

GALAXY S 37 PRODUCT

GALAXY S Leading Android Innovation Award winners

phone in 2010 at CES 2011

SALES
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In IndiaGROUP
totalNO.sales
433
in 2011 13
is approx. 21000cr.
 Home Multimedia Mobile Multimedia

Personal Multimedia Core Components

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11/12/2019 GROUP NO. 433 15
 TERMS LG SAMSUNG

MARKET 38% 40%

SHARE
TURNOVER Currently Rs. Currently Rs.
20000 Cr. And 22400 CR. And
Total industry size of it is estimated it is estimated
consumer electronic in it will be grow it will be grow
or touch or touch
India is about approx.
around Rs. around Rs.
USD 35 billon and it is 40000 Cr. By 46000 Cr. By
estimated that it will 2014. 2014.
be grow to become
USD 45 billion in GROWTH 50% 52%
2014 RATE

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11/12/2019 GROUP NO. 433 17
 Three Level Channel
Company
Distributors Dealers Retailers Customers
Warehouse

COMPANY COMPANY
Company WAREHOUSE One WAREHOUSE
Distributors
Warehouse
Level
DIRECT
BRAND SHOP
Two Level Channel DEALERS

Channel
Customers Sub Dealers
11/12/2019 GROUP NO. 433 CUSTOMERS CUSTOMERS18
 LG SAMSUNG
The company dispatches the The C/F agents take care of
goods to C/F on consignment company’s goods in their
basis. warehouse and transporting the
goods onward.
At the same time, these C/F C/F work on contract basis.
agents all work on contract
basis.
They get paid as per the amount The ownership of goods are
they stock. still owned by the company.
Not disclosed. The C/F are paid a commission
of about 1.5% with additional
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reimbursements.
 LG SAMSUNG
They select distributors on their financial Same criteria but they also select them on
strength, reputation in the particular their performance.
market as well as experience of their in
that field.
The company sends goods to the Same
distributor on outright sale basis.

It is the duty of the distributor to send his The distributors play a vital role in
people into the field to book the orders delivery the goods so they have their own
and also execute them through their own channel structure for distribution to dealer
delivery vehicles. and retailers.

The distributor has to maintain his own Find the margin of 16-18%.
sales, delivery and accounts, people for
smooth working of his unit and is served
by the nearest C/F for all his requirements.
Find the margin of 12.5%.
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 LG SAMSUNG
Takes 1 day for CFA’s to service reorder Same
within their zone.

Distributor too caters to the demand in his Here in this activity the time is 30-48
area within 48 hours from the time of hours.
receiving the order.
If goods have to be procured from the Take 6-7 days .
warehouse then it takes 8 days (avg) for
the goods to arrive at the C/F or distributor
and delivered to the stores.
No inventory management system in place Same
with the MBO’s (Multi brand outlet).

‘LG Shoppe’ and franchisee showrooms Digital World, Digital Home, and Digital
do have a system in place to consolidate Outlets for Samsung products strength
their inventory and sales with the their inventory direct from the company.
company main office
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 LG SAMSUNG
The retailers order their requirements Same but retailer also order directly to the
directly to the concerned distributors. company (minimum or maximum order
conditions and also on daily basis).
The distributors source the orders from the Same
company warehouses, which are
connected directly with each of the
branches.
Company want a minimum order of It is about Rs. 75 lakhs to 1 cr. From
Rs.1to1.5cr. from distributors. distributors.
The mother warehouse in Noida caters to The manufacturing unit in Noida and
the needs of all the regional warehouses. fulfill all the requirements.
If any reorder do come in during the
month then the regional warehouse that
entertains them properly services them.

It is the responsibility of the C/F agents to Same

supply to the distributors as per their
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requirements.
 LG SAMSUNG
The company goes for annual forecasts on Based on past trends i.e. Y/Y and Q/Q
the basis of the previous year’s sales and basis.
also current trends (on the basis of
market).

These sales forecasts are then Same

disaggregated into monthly sales plans.
The logistics and the production people Same
meet every 15days, and on the basis of
sales as well as past inventory, they freeze
production for the next 15 days.
In case the sales in the previous period Here this condition not takes place
have not been up to the mark, and the because company also give the goods
inventory levels are high, the production is directly to their retailers.
halted and stock of the situation is taken.
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 LG SAMSUNG
Avg. Inventory Size Rs. 70 Lakh Depending upon in the
movement in the retailers.
At Retailers
Order Cycle 7-8 days. One week
Company set target on the
basis of their market research.

Credit Period Company does not give. Company give -------7 days
Distributors gives to their For Retailers ---------15to 30
reputed retailers for 15 days. days.(by distributors)

Credit Amount And the amount is Rs.10-15 Distributors provide about Rs.
Lakh. 5 to 20 Lakh.

Credit On Time Distributor provide some 1- 2%

discounts as 0.5-1%.
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Interest Rate 1.5-2% Same
 LG SAMSUNG
Market Research Once in 3 months. Same but Depends upon
For customers, channel product launch and sales
members and market survey. forecast.
Generally cover qualitative
and analytical research.
Motivation To Through gifts, and discounts. Through monetary and non
monetary ways.
Channel Members
Training Channel Company does not have any In terms of product features,
scheme. design of the store, the layout
Members and the lighting.
Evaluating Channel Through sales quota, Through customer delivery
cooperation in company’s time, feedback provided by
Members promotion activities. dealers and customers and
their performance.
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 LG SAMSUNG
Reverse Logistic The company accepts returns Same
from their retailers as well as
company owned stores.

Channel Conflicts •LG owned exclusive outlets. Same

•MBOs (multi brand outlets).
•Another type of conflict could
be a result of institutional
sales being sourced by both.
•Sales target is not achieved
by distributors.

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• Our study found that, the dealers are somewhat satisfied with the LG
Company but some retailers are not satisfied by the company neither
in the way of credit facility nor by the distribution system of LG.

• About the LG company we found that LG having a good position in

the market in terms of pricing but lacking badly in terms of its
retailer satisfaction.

• Customer gets to know more by the television and they are

influenced to buy new products by the unique products that are new
to the market.

• Our study also found that there are various factor influencing
customer in buying decision and the most influencing factor is brand
image and advertisement and other factors play a secondary role in
buying decision.
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•Both the companies should make advertisement of their products
aggressively in the way of hoardings which increase the more
visualizes customer.
•In LG Company should provide credit facility to the dealer in a better
way by which they can increase their sale.
•In both the companies Dealers should consider the demand of people
time to time so that they come to know what people want in a particular
period of time.
•LG needs to mend and maintain its service network and adopt a good
pricing strategy.
•They should make their channel members more effective to increase
their sales.

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• www.businesstoday.com
• www.indiatoday.com
• www.lg.com/in
• www.samsung.com/in
• www.economictimes.com

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