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Comparative study between Samsung and LG on Distribution Channel
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
Conflict
Horizontal conflict In LG horizontal conflict is more prominent. It happens between two dealers in same territory. 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 gives rise to conflict Vertical Conflict Under this there is goal mismatch between the company and the distributors.
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. So whenever a product is sold the company has a track of it. This helps the company to have strong control with the channel members and it provides a tool to evaluate them
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Samsung
Comparisons
LG
Under one roof it has Home appliances and home electronics Selects channel members in terms of performance, credibility, 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
Motivation: Schemes, Discounts, Tours etc It has both Vertical as well as horizontal but vertical is more prominent Evaluate on the basis of sales target, Performance. The company does not have any tool to have control over the channel members
LG
Motivation: Sell-in, Sell-out, tours, 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
References
Mr. Rajat Taneja, Distributors of Samsung in Harayana
Mr
Lokender Lal, Branch Manager for Harayana Division
..in next five years distribution will be the reason behind Indias growth singh ahluwalia, Vice Chairman of Planning + Montek Commission
Thank You
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-
