SUMMER TRAINING

PROJECT REPORT
ON

“DISTRIBUTION EFFECTIVENESS OF
SAMSUNG INDIA”

SUBMITTED TO:

SUBMITTED BY:
 TABLE OF CONTENT

Introduction

 About Industry (Consumer Durables)

 Samsung Group

 Samsung In India

 Strategic Business Areas

 Background

Literature Review

 Distribution

 Distribution Strategy

 Distribution Of Samsung In India

Objective & Methodology

 Research Design

 Methodology

 Sampling

 Limitations

Data Collection & Analysis

 Channel Structure Of Samsung India.

 SWOT Analysis

2
 Conclusion

Recommendations

Bibliography

Appendix

• Questionnaire (Distributor)

• Questionnaire (Retailer)

• Questionnaire (Consumer)

• Thesis Response Sheets

3
 INTRODUCTION
About Industry (Consumer Durables)
The consumer durables market in India is valued at US $ 4.5 billions currently. In

2006, microwave ovens and air conditioners registered a growth of about 25%. Frost-

free refrigerators have registered significant growth as many urban families are

replacing their old refrigerators. Refrigerator sales amounted to 4.2 millions in 2006,

whereas the production of the refrigerators went up by 17% as compared to the

preceding year. Washing machines, which have always seen poor growth, have seen

reasonable growth in 2006. More and more Indians are now buying electrical

appliances due to change in electricity scenario. The penetration level of color

televisions (CTVs) is expected to increase 6 times by 2008.

The Indian Consumer Durables Industry can be segmented into 3 Key Groups

White Goods

• Refrigerators

• Washing Machines

• Air Conditioners

• Speakers and Audio Equipments

Kitchen Appliances/Brown Goods

• Mixers

• Grinders

• Microwave Ovens

• Iron

4
• Electric Fans

• Cooking Range

• Chimneys

Consumer Electronics

• Mobile Phones

• Televisions

• MP3 Players

• DVD Players

• VCD Players

Several key trends are driving growth in the sector

 Income growth and availability of financing

• Disposable income levels are rising and consumer financing has

become easier

 Increased affordability of products

• Advanced technology and increasing competition are narrowing the

price gap and the once expensive appliances are becoming cheaper.

 Increasing share of organised retail

• Urban and rural markets are growing at the annual rates of 7%–10%

and 25%, respectively, with organized retail expected to garnera 10%

share by 2010 from a mere 3% share at present

 Entry of heavyweight retail players is increasing competition

5
 • Competitive evolution of organised retail due to the entry of

heavyweight players like Croma, E Zone and Reliance Digital is

stimulating the demand through exposure to experiences

 Increasing appreciation of the Rupee

• Raw materials constituting almost 75% of the costs are mostly

imported and will now be cheaper

6
Consumer Durables is one of the fastest growing industries in India

Some of the key players in the sector in India include:

 Nokia India

 LG Electronics India Ltd.

 Philips India

 Titan Industries

 Samsung India Electronics

 Whirlpool Appliances

 Siemens

 Sony India

 Videocon Industries

With easy availability of finance, emergence of double-income families, fall in prices

due to increased competition, government support, growth of media, availability of

disposable incomes, improvements in technology, reduction in customs duty, rise in

temperatures, growth in consumer base of rural sector, the consumer durables industry

7
is growing at a fast pace. Given these factors, a good growth is projected in the future,

too.

Samsung Group
Samsung Group is south korea's largest company or chaebol and the world's second

largest conglomerate[3], leading several industries in the world. It is composed of

numerous international businesses, all united under the samsung brand, including

samsung electronics, the world's largest electronics company, samsung heavy

industries, one of the world's largest shipbuilders and samsung engineering &

construction, a major global construction company. These three multinationals form

the core of samsung group and reflect its name - the meaning of the korean word

samsung is "tristar" or "three stars".

The samsung brand is the best known south korean brand in the world and in 2005,

samsung overtook japanese rival sony as the world's leading consumer electronics

brand and became part of the top twenty global brands overall. [5] it is also the leader in

many domestic industries, such as the financial, chemical, retail and entertainment

industries.

Samsung in India
Samsung India is the 100 per cent owned subsidiary of samsung electronics co. Ltd.

Samsung electronics co., ltd. Is a global leader in semiconductor, telecommunication,

digital media and digital convergence technologies with 2007 consolidated sales of

us$103.4 billion. Employing approximately 150,000 people in 134 offices in 62

countries, the company consists of five main business units: digital media business,

lcd business, semiconductor business, telecommunication, business and digital

appliance business. Recognized as one of the fastest growing global brands, samsung

8
electronics is a leading producer of digital tvs, memory chips, mobile phones and tft-

lcds.

Samsung India is the hub for samsung's south west asia regional operations. The south

west asia headquarters, under the leadership of Mr. H b lee, president & ceo, looks

after the samsung business in nepal, sri lanka, bangladesh, maldives and bhutan

besides India. Samsung India which commenced its operations in India in december

1995 enjoys a sales turnover of over us$ 1bn in just a decade of operations in the

country.

Headquartered in new delhi, samsung India has widespread network of sales offices

all over the country. The samsung manufacturing complex housing manufacturing

facilities for colour televisions, colour monitors, refrigerators and washing machines

is located at noida, near delhi. Samsung 'made in India' products like colour

televisions, colour monitors and refrigerators are being exported to middle east, cis

and saarc countries from its noida manufacturing complex. In november 2007,

samsung has commenced the manufacture of colour televisions and lcd televisions at

its state–of-the-art manufacturing facility at sriperumbudur, tamil nadu.

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 The Samsung Group
Registered Office : Aurangabad, Maharastra.

Corporate Office : Mumbai Maharastra

Delhi Office : New Delhi

Major Production Centres

Samsung International Limited : Aurangabad, Maharastra, Gandhi Nagar, Gujarat.

Samsung Appliances Limited : Tal Paithan, Aurangabad

Samsung Narmada Electronics Limited : Bharuch, Gujarat.

Samsung VCR Limited : Bhalgoan, Aurangabad.

Number of Employees : 7000 plus

9 state of art Manufacturing units in India.

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 Strategic business areas
SAMSUNG Electronics will strengthen its already strong core component businesses

such as memory chips and TFT-LCDs, and focus on high valued products such as

system LSI, small & mid-size LCDs, and optical components. Also in the future,

based on even SOC (System On a Chip) and SOP (System On a Panel) that are main

parts of all machinery industries, we will focus on three network business areas.

First of all, our Home Network business will be centred on digital TV and home

server and home gateway businesses. Secondly, Mobile Network business will be

based on wireless handsets. We will expand this business into PDAs and laptops and

set up the next generation telecommunications, IMT-2000 system. Thirdly, in Office

Network business, we will focus on printers, IP Terminal, info mobile as well as

existing display area.

SAMSUNG Electronics has 9 tier 1 products in the global electronics market. In

addition to these tier 1 products, - memory chips, TFT-LCDs, CDMA handsets,

display devices and more. We will include digital TVs, IMT-2000, computer

peripherals, and Home Appliances as our new tier 1 products to strengthen 4 strategic

business areas and setup firm foundation for future growth. Also, we will focus on

core components such as SOC, SOP and so on that are essential for network products

based on core R&D technology and ε-Process.

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 Mission and digital vision
The vision of SAMSUNG Electronics is "Leading the Digital Convergence

Revolution" and our mission to carry out this vision is "Digital-ε Company.

There are two requirements for being "Digital-ε Company", and the first is clearly

about being "Digital" producing not just digital products, but products that inspire

digital integration across our entire company. The second part of being a "ε" is to use

ε- Processes connecting R&D, production, and marketing to customers, partners, and

the market-disciplined approach is the way we bring value to every part of our supply

chain, including products data and customer relationship through Enterprise Resource

Planning (ERP).

SAMSUNG Electronics will network core components such as memory chips,

system-LSI and LCDs as well as A/V, computers, telecommunication devices, home

appliances and other stand-alone products into a total solution of digital convergence

era.

12
 BACKGROUND

Samsung manufacturing facility at sriperumbudur inaugurated by the hon'ble

November 2007 chief minister of tamil nadu, dr kalaignar m karunanidhi and samsung vice

chairman & ceo, mr jong yong yun

May 2007 Samsung india software centre (sisc) made the global hub for software

development for samsung's worldwide requirements for digital media

products
February 2007 Mr h b lee appointed as the president & ceo of samsung south west asia

headquarters.
November 2006 Mou signed with tamil nadu government for setting up a second

manufacturing complex at sriperumbudur, near chennai

June 2006 Samsung commences manufacture of lcd tvs in india
September 2005 Samsung awarded as the best retailer of the year 2005 in the consumer

durables category by the india retail forum.

February 2005 Mr s h oh appointed as president & ceo of samsung india electronics pvt. Ltd.
November 2004 Samsung received the golden peacock special commendation certificate for

corporate social responsibility (private sector) for the year 2004 from mr.

Shivraj patil, union home minister.

February 2004 India made regional headquarters for samsung southwest asia.
November 2003 Inauguration samsung's new, high-tech, advanced refrigerator facility.
August 2003 Commencement of production at refrigerator facility in noida.
June 2003 Software technology park set up at noida
December 2002 Construction commences for 5,000,000 refrigerator plant in noida
December 2001 Samsung india wins the rajiv gandhi national quality commendation

certificate for best quality in the electrical and electronics industry for the year

1999
November 2001 Samsung india begins the domestic production of fully automatic washing

machines at its noida facility.

July 2001 Samsung's seventh colour monitor plant in the world and the first colour

monitor plant in india commence production. Plant capacity: 1.5 million units
June 2001 Colour monitor plant set up
April 2001 Mr. K s kim, md of samsung india between september 1998 - march 2001

13
 Samsung manufacturing facility at sriperumbudur inaugurated by the hon'ble

November 2007 chief minister of tamil nadu, dr kalaignar m karunanidhi and samsung vice

chairman & ceo, mr jong yong yun

returns to korea as sr. Vice president, global display division, samsung

electronics co. Ltd.

Mr. S s lee takes over charge as managing director, samsung india. Mr. Lee

was md of samsungs' subsidiary in vietnam between january 1995 and march

2001.
January 2001 Samsung india announces its corporate initiative for the year 2001 -to be a

digital e-company
December 2000 On december 2, 2000, samsung india completed 5 years of operations in the

country.
November 2000 Vice chairman & ceo, samsung electronics, mr. Jong yong yun visits india

announces fresh investments of us$10 million for setting up a high tech, state-

of-the-art colour monitor plant in india.

September 2000 Samsung india commences exports of 'made in india' colour televisions to

western europe samsung sponsors the indian olympic team to the 2000 sydney

olympics
July 2000 Samsung india produces its one millionth colour television in india - the first

mnc to achieve this milestone in india

May 2000 Launch of samsung electronics india (p) ltd - samsung's 100 per cent

subsidiary for it and telecom products in the country

February 2000 Sets up a hardware r & d centre for colour television at noida.
November 1998 Samsung running festival held at new delhi. Part of samsung's bangkok asian

games programme, it drew participation from around 8000 people from all

walks of life.samsung awarded 'sap star award' by sap ag

September 1998 Mr. K. S. Kim appointed as the new managing director of samsung india.

Took charge from mr. B. M. Park who was md, samsung india between

august 1995-september 1998.

14
 Samsung manufacturing facility at sriperumbudur inaugurated by the hon'ble

November 2007 chief minister of tamil nadu, dr kalaignar m karunanidhi and samsung vice

chairman & ceo, mr jong yong yun

January 1998 All india operations with launch in east
December 1997 Sponsorship of the lighting of the permanent asian games flame ceremony at

the national stadium, new delhi.

November 1997 Sponsorship of indian contingent to 13th asian games in bangkok.
June 1997 Ctv factory inaugurated with initial plant capacity of 400,000 units per annum
June 1996 Foundation stone laid for ctv factory at noida, uttar pradesh.
May 1996 Launch in southhome appliances launch
December 1995 Samsung india electronics (siel) products launched in india.
August 1995 Certificate for commencement of business received by samsung india

Partners Areas of Cooperation

Co-develop technology for handsets and DVB-H

Nokia
standardisation solutions
Establish a joint venture for developing a Linux

Limo platform (SAMSUNG Electronics, Vodafone,

DoCoMo, Motorola and NEC)

Alcatel Cooperate on satellite DVB-H
Jointly invest in 8th-generation LCD line (2200mm
Sony (S-LCD)
x 2500mm motherglass)
Co-develop and market technologies for industrial
IBM
printer solutions
Intel & Microsoft Co-develop UMPCs

Discovery Cooperate on high-definition contents

Co-develop new built-in products combining
Salvarani
household electronics and furniture
Cooperation in solution business and next-
Sun Microsystems
generation business computing systems
Covad Supply access gateways
Supply household electronics to 1,100 Lowe's
Lowe's
stores
VDL Cooperate in commercialisation of terrestrial DMB
Charter Co-develop cable broadcasting receiver and set-top

box for digital TV Full-Duplex service

15
KDDI Supply CDMA2000 1xEV-DO network equipment

in Eastern Japan
Qualcomm
Hewlett-Packard Cooperation in MDDI
Share technology for(Mobile Display Data
ink-jet printers
Bang & Olufsen Partner in home theatre business
Interface) technology
Kent State
Toshiba University
(TSST) Co-develop
Develop displayoptical
and market technologies
storage devices
Sony (S-LCD) Establish joint venture for 7th generation LCD

Disney (1870 x 2200

Supply mm)Beam"
"Movie line set-top box for VOD
IBM
Napster Co-develop nano-logic
Co-develop and marketprocess technologies
SAMSUNG-Napster
Dell Supply multi-functional laser printers
player
Sony Expand and consolidate memory stick business
Matsushita Standardise technology, co-produce and jointly

market DVD recorders

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 Business Division
IT business products
Whether you're a Fortune 500 company or a growing small business, SAMSUNG has

the right printer and monitor products to make your company more productive. You

can find these products, our Q1 ultra mobile PC and more.

Hospitality solutions

SAMSUNG HD televisions provide the perfect upgrade for your valued guests.

LCD panel

From televisions to monitors to mobile phones, SAMSUNG makes LCD panels that

are designed with your business in mind.

Set-top box

SAMSUNG set-top boxes provide the best technology for your customers' needs.

Learn about our complete line of receivers and DVRs from televisions to monitors to

mobile phones, SAMSUNG makes LCD panels that are designed with your business

in mind.

Compressor

SAMSUNG continues to pioneer technological innovation in the reciprocating and

rotary compressor industry.

Fiber optics

SAMSUNG's single-mode optical fiber is the product of choice for existing and future

optical networks. See what we can do for you.

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Pro A/V solutions

SAMSUNG is a leader in large format LCD and plasma displays, providing digital

signage solutions from 32" to 70". You can learn more about how we can help you

spread your message.

Semiconductor

SAMSUNG semiconductor provides the innovations to keep your products at the

forefront of technology. Explore our broad line-up of core components.

Telecommunication system

SAMSUNG is a leader in creating business communications systems. Find solutions

to help your business grow.

CCTV

SAMSUNG electronics has cutting-edge technology for the growing home and

industrial security markets. Learn about our security components and systems.

Storage

SAMSUNG's optical disc drives and hard disc drives provide fast and flexible

solutions for all your storage needs.

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 Brand power

From being a virtually unknown entity in the year 1995, brand samsung today enjoys

an awareness level of over 65% and a positive opinion of over 80% in the country

today (source: bas 2007). The introduction of world first, wow, leading technology

products in the indian market coupled with the company’s efforts to customise

products for the indian consumers, have contributed to the success of the brand in the

indian market.

Technology leadership, product design and innovative marketing have all contributed

to making samsung a household name in the indian market. The company has carried

out over 170 dream home road shows - a four day exhibition of its new products and

technologies - in the metros and smaller markets to create consumer awareness.

To display samsung products in a more lifestyle ambience and to communicate the

product benefits in a more interactive manner, samsung india has set up a widespread

network of samsung digital plazas all over the country.

The samsung brand shop network complements the over 8500 retail points for

samsung products located across the length and breadth of the country. Samsung plans

to continue enhancing its penetration levels in the country to reach out to more and

more indian consumers.

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 Manufacturing:

Samsung’s state of the art, highly automated manufacturing facilities are located at the

company’s sprawling complex at noida and its recently inaugurated sriperumbudur

facility, near chennai. Samsung India’s noida ctv plant enjoys the number 1 position

amongst all samsung subsidiaries in terms of its colour television productivity and has

been ranked as the subsidiary with the ‘best quality system’. The manufacturing

capacities of samsung products manufactured at the noida facility are as follows:

Product Details
Ctv Flat tvs & lcd tvs
Colour monitor Crt & tft lcd monitor
Refrigerator Frost-free and conventional refrigerators
Washing
Fully automatic and semi automatic
machine
Mobile phones Gsm handsets

The highly advanced chennai facility that has been inaugurated in november 2007 will

help the company respond better and faster to the growing demand for its products in

the southern part of the country. The samsung manufacturing facility at

sriperumbudur is the company's second manufacturing complex in the country.

Samsung India is working with and contributing to the development of the domestic

component industry in the country. The company is working with its partners to

improve their product quality and processes. Thus, samsung vendors are sent to

different samsung subsidiaries to meet the samsung overseas vendors in order to

benchmark their own processes. Samsung is also training its vendors on eco-

partnership so that the components manufactured by them are ‘eco friendly’ as per

rohs norms.

20
Samsung products manufactured in India currently enjoy an average localisation level

of over 50%.

Major Strategic Alliances

A management style that is open and mutually beneficial.

SAMSUNG Electronics now enjoys strategic partnerships with many leading

companies outside Korea. We are fostering an atmosphere of openness and mutual

benefit to join hands with other leaders in the world electronics industry and co-

develop products that will enhance the quality of people's lives.

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 Awards & Recognitions

Date Awards & recognitions

May - 1998 Iso 9002 certification obtained.
Jun - 1998 Double productivity award received from sec korea.
Mar - 1999 Triple productivity award received from samsung electronics co., korea.
Sep - 2001 Excellence in consumer electronics award.
Aug - 2002 Rajiv gandhi excellence award.
Manufacturing value innovation – gold level (for ctv & monitor production
Nov - 2004
lines).
Dec - 2004 Samsung quality award – gold level.
Dec - 2004 National quality circle award.
Dec - 2004 Best innovation award (ctv & monitor production lines).
Dec - 2005 National quality circle award.
Jan - 2006 Manufacturing value innovation award (for ctv & monitor production lines).
Oct - 2007 National quality circle award.

22
Sales

23
Annual Turnover $ 55 billion (Global)

Market Share

CTV 15.3%

AC 35%

Mobile 3.5%

Washing Machine 35%

Printers 19.4%

Major Competitors
Samsung ⇒ LG, Sansui, Sony, Philips, Onida, Videocon

Major Product Line

i. GSM

ii. TV

iii. Camcorder

iv. Video & Audio

v. Home theatre

vi. MP3 Players

vii. Digital still cameras

viii. Monitor

ix. Hard Disk Drive

x. CD/DVD Rom

xi. CD/DVD Writer

xii. Laser Printers & Laser based MFP’s

xiii. Fax

24
 xiv. Microwave Owen

xv. Refrigerators

xvi. Air-Conditioner

xvii. Washing Machine

Samsung Television: (key product)

Samsung’s series 6 marks the first appearance of crystal design in the 2008 lcd hdtv

line-up. Inspired by designs from the automotive and fashion industries, samsung’s

new molding process eliminates the need for glue or screws to construct the television

cabinets. The result is an lcd hdtv with a clean, smooth finish infused with a hint of a

translucent color. On the wall or off, these sets give the impression it is floating, with

soft lines that complement any home décor. The company has taken care to harmonies

the new crystal design with samsung’s largest viewing and technological

advancements, such as ultra clear panel and 100hz motion plus technology, providing

the sharpest, smoothest pictures even when images are moving at top speeds.

The ultra clear panel was developed by samsung to further reduce glare in difficult

lighting conditions and enable optimum picture viewing. A new layer of organic

particles in the panel reduces reflection even more than the original super clear panel

to provide remarkably improved clarity and a stunning dynamic contrast ratio of

50,000:1 in the 40, 46, and 52 inches models.

Technological enhancement to the image rendering continues with the company’s

wide color enhancer 2 and dnie pro, which is the new generation of samsung’s digital

natural image engine. Dnie pro eliminates noise while also boosting contrasts and

sharpening edges on fast moving, full hd images. With samsung’s wide colour

25
enhancer 2 , images are saturated with vivid , natural colour due to the expanded

range of colour expression .

The new crystal design also incorporates samsung’s recently developed down-firing

speakers, which replaces older duct-style speakers to produce a more balanced sound

dynamic in a wider frequency range that will thrill movie and game lovers.

Peripherals such as hd dvd and blu ray players are easily connected via four hdmi 1.3

connectors.

The series 6 of lcd televisions have been launched in 32”, 40”, 46” and 52” screen

sizes and is priced in the range between rs.74, 000/- to rs.3, 00,000/-“by introducing

the concept of series marketing, we are trying to put the right tvs in the right living

rooms by giving a better series of choices to our consumers and simplifying how we

market our technologies”, states mr. Zutshi.

samsung today also announced the launch of its new series 5 full hd lcd and plasma

tvs in the indian market. This series includes lcd modes in 32, 37, 40 and 46 inches

and a 50 inch pdp model. All the samsung series 5 lcd tvs come with full hd resolution

(1920* 1080), a fast 5ms response time and a 178o viewing angle.

For the lcd models, samsung has also utilised its patented new clear panel, which

significantly lowers reflection and provides deeper blacks and a high contrast ratio of

30,000:1 in the larger screen models (15,000:1 for the 32/37 inch sets). The pdp

models incorporate the company’s upgraded filter bright, which utilises samsung’s

patented super black panel.

And the series 5 tvs leave nothing to be desired in terms of convenience and

connectivity. All models support 1080p inputs for use with a range of hd peripherals,

including 3 hdmi 1.3 connections (1 side/2 rear), and side-mounted wiselink (usb 2.0),

26
which let users enjoy the contents on their digital cameras and mp3 players with a

direct tv connection.

Tv viewing can be further optimised with one of the three preprogrammed

entertainment modes –sports, movie, and game –which offer automatic enhancements

to the picture and sound. The series 5 lcd tvs are priced in the range between rs

59,000/- to rs 130,000/- . The 720 p series 4 was designed with many of the same

high end components used across samsung’s entire lcd lineup. The series 4 piano

black bezel elegantly frames a super patterned vertical alignment. (spva) lcd panel and

178 degree viewing angles from all four axes. Down firing stereo speakers are

completely hidden in specially designed chambers at the bottom of the display to

increase audio quality.

The lcd series 4, available in 26” 32”, 37” and 40” screen sizes, offers easy

connectivity through 3 hdmi ports (1 side), 6 ms response time and 10,000:1 contrast

ratio. The series 4 is priced in the range between rs.25,000 to rs.85,000/- the 720p

series 3, available in 32” and 40” screen sizes, comes with advanced features like 2

hdmi ports for connectivity with digital devices such as hd camcorders etc. Samsung

series 3 lcd tvs come with a 6ms response time and a contrast ratio of 8000:1.

Samsung series 3 lcd tvs are priced in the range rs.44, 000/- to rs.77, 000/-.

States mr. Zutshi, “ based on the design and technological superiority of our new flat

panel tv range, our efforts in the direction of series marketing and enhancing visibility

across the channel, i am confident we will be able to notch up a 45% market share in

the indian market this year.”

With the launch of the new lcd series , samsung has a range of 16 lcd models in the

price range between 22” to 70” screen size , priced in the range between rs.25,000/- to

27
rs.24,00,000/-. 2008 plasma tv range: series 5 and 4 introduced samsung has

developed the first 3d-ready, plasma hdtv in the market with its series 4 plasma hdtv.

“by integrating 3d technology into the plasma category, we’re offering consumers the

benefits of both a flat-panel set and 3d movie viewing and gaming.” States mr. Zutshi

both the series 4 and series 5 plasma models come packaged in a lustrous, piano-black

exterior. Built-in entertainment modes automatically optimise image and audio quality

to the content being viewed—a must-have for the avid gamer, sports fan or movie

buff. Further enhancing the series’ viewing experience is the filterbright™ anti-glare

technology, which produces deeper blacks and an increased contrast ratio for overall

superior picture .both the series 5(550s) and the series 4 (450p) offer a dynamic

contrast ratio of 1000, 000:1. A variety of multimedia devices can be easily connected

and used through 3 hdmi inputs, one of which conveniently located on the side of the

sets.

The series 4 plasma tv is available in both 42-inches and 50-inches model sizes. With

the launch of the new series 5 and 4 in plasma televisions, samsung has a range of 5

plasma televisions in the indian market in the price range between rs.69,000/- to

rs.450,000/-

Chennai, april 24, 2008 Samsung announced the launch of its new, advanced 2008

series of lcd and plasma televisions in the indian market. The new lcd series that have

been launched in the indian market include; the full hd lcd series 6 & 5 and the hd

ready series 4 and 3. In the case of plasma televisions, the full hd series 5 and the 3d

ready series 4 have been launched in the indian market. States mr.r.zutshi, deputy md,

samsung india, “with the launch of our full hd series 6 and 5, we are looking at

owning the full hd platform in the indian market. We expect the full hd flat panel

television range to constitute over 20% of our flat panel tv volumes in the year.”

28
 DISTRIBUTION
Path or 'pipeline' through which goods and services flow in one direction (from

vendor to the consumer), and the payments generated by them flow in the opposite

direction (from consumer to the vendor). A distribution channel can be as short as

being direct from the vendor to the consumer or may include several inter-connected

(usually independent but mutually dependent) intermediaries such as wholesalers,

distributors, agents, retailers. Each intermediary receives the item at one pricing point

and moves it to the next higher pricing point until it reaches the final buyer.

The Nature of Distribution Channels

Most businesses use third parties or intermediaries to bring their products to market.

They try to forge a "distribution channel" which can be defined as

"All the organisations through which a product must pass between its point of

production and consumption"

Why does a business give the job of selling its products to intermediaries? After all,

using intermediary’s means giving up some control over how products are sold and

who they are sold to.

The answer lies in efficiency of distribution costs. Intermediaries are specialists in

selling. They have the contacts, experience and scale of operation which means that

greater sales can be achieved than if the producing business tried run a sales operation

itself.

29
Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between production

and consumption. Organizations that form any particular distribution channel perform

many key functions: -

• Information collection: Gathering information and

distributing market research and intelligence important

for marketing planning.

• Promotion: Developing and spreading communications about offers.

• Contact: Finding and communicating with prospective buyers.

• Matching: Adjusting the offer to fit a buyer's needs, including grading,

assembling and packaging.

• Negotiation: Reaching agreement on price and other terms of the offer.

• Physical Distribution: Transporting and storing goods

• Financing: Acquiring and using funds to cover the costs of the distribution

channel.

• Risk Taking: Assuming some commercial risks by operating the channel.

30
Numbers of Distribution Channel Levels

Each layer of marketing intermediaries that performs some work in bringing the

product to its final buyer is a "channel level". The figure below shows some examples

of channel levels for consumer marketing channels:

L1 Manufacturer  Customer

L2 Manufacturer  Wholesaler  Customer

L3 Manufacturer  Wholesaler  Jobber  Customer

L4 Manufacturer  Wholesaler  Jobber  Retailer  Customer

Channel L1 is called a "direct-marketing" channel, since it has no intermediary

levels. In this case the manufacturer sells directly to customers. An example of a

direct marketing channel would be a factory outlet store. Many holiday companies

also market direct to consumers, bypassing a traditional retail intermediary - the travel

agent.

The remaining channels are "indirect-marketing channels".

Channel L2 contains one intermediary. In consumer markets, this is typically a

retailer. The consumer electrical goods market in the UK is typical of this

arrangement whereby producers such as Sony, Panasonic, Canon etc. sell their goods

directly to large retailers such as Comet, Dixons and Curry’s which then sell the

goods to the final consumers.

31
Channel L3 contains two intermediary levels - a wholesaler and a retailer. A

wholesaler typically buys and stores large quantities of several producers goods and

then breaks into the bulk deliveries to supply retailers with smaller quantities. For

small retailers with limited order quantities, the use of wholesalers makes economic

sense. This arrangement tends to work best where the retail channel is fragmented -

i.e. not dominated by a small number of large, powerful retailers who have an

incentive to cut out the wholesaler. A good example of this channel arrangement in

the UK is the distribution of drugs.

DISTRIBUTION STRATEGY
Structural changes within industries and increased channel conflict brought about by

the ever-changing facets in our business environment have given rise to a number of

distribution channel questions that companies must address.

• How are the roles of manufacturers, distributors and retailers changing in my

industry, and how will that affect my business?

• What distribution strategy is optimal for my business model?

• Who are the key channel partners with whom I must build or maintain key

relationships?

• How will I manage conflict with channel partners?

Distribution strategy is far more than logistics and transportation. It comprises the

interplay between four major strategic considerations are as follows:

Customer Considerations: The appropriate channel strategy is heavily affected by

customers' knowledge of the products, their price sensitivity in the product category,

32
how they make purchase decisions, their logistics and customer service needs, and

comfort using technology to meet their needs.

Channel Considerations: Key factors include such items as ability to create

differential product demand, coverage of targeted markets, customer service capacity,

physical distribution systems, overall cost control orientation, and ability to use

technology in both demand creation and cost control.

Company Portfolio Considerations: Maturity of product portfolio often dictates

support needed from the channel and therefore is a core driver of channel strategy. For

example, launching newer products that require significant end user education without

the active support of trusted channels with long-term customer relationships can be

very difficult.

Company Operational Considerations: Core operational considerations involve

company philosophy towards demand creation through personal selling, internal

customer service and logistics capabilities, and company approach to the use of

information technology and e-commerce.

Distribution of Samsung in India:

This is a consumer durable product so sale of product remain constant except festival

seasons and cricket seasons because on seasons company launches schemes on

television that attract customer to the showroom, where dealer close the deal. That

means to increase a sales effectiveness of company has to use promotion mix

techniques and fulfill the retailer and distributor demand on time. The distribution

system followed by Samsung is quite effective and there is no deviation from the

33
terms and conditions applicable to channel members. Although company should

devise a system that MRP of the product should not deviate at different outlets based

on members margin.

OBJECTIVE FOR RESEARCH

To gain knowledge about Samsung India and to try and understand the company

and the way it functions, also the response of the people associated with the brand.

RESEARCH DESIGN
In starting variable and parameters are not given to us for research so research

methodology would start with exploratory research by which we would collect

secondary data from the internal and external sources. Internal sources would be

company and external sources would be Internet, magazines, news papers, books, etc.

After collecting secondary data, We will do qualitative research, in that We would

focus to know the strategy and distribution effectiveness of SAMSUNG INDIA. Then

finally We combine all data and treat as a case study to understand the strategy of

company. Then descriptive research would be use to find how SAMSUNG INDIA’S

distribution system is more effective then the other players in the market.

Scope of Research:

The scope of research would be, find out the internal strategies which company use to

make effective distribution to fulfill the supply the logistic. Find out the core values of

the company and analyze why Samsung India’s distribution system is more effective

then the competitors.

34
35
 METHODOLOGY USED FOR SURVEY
The methodology adopted to study the distribution system was interviewing all the

members in the channel so that an insight into the system could be achieved and

looking for information from secondary sources such as Website so that a perfect

picture of the whole system could be developed.

The objective or purpose of this study is -

• To understand the Channel structure of Samsung

• To find out the expectation of Channel members from the company and vice

versa.

• To find out the functions performed by channel members and criteria for

selection of channel members.

• To find out the financial terms applicable to channel members.

• To find out the Performance appraisal system of the company.

• To find out the Logistics involved through which product is made available to

the end customer.

Sampling :
Sample size would be as follows:

• Distributor: 2

• Retailer: 10

• Consumer: 13

36
Limitations:
 As because of season the dealers have no time for such types of questionnaire

so it was very difficult to get information from dealers.

 Due to lack of resources of time sample survey was conducted.

 Due to lack of dealer’s awareness it was difficult to interview them they were

not totally aware of that entire price – schemes and features of a company.

37
 DATA COLLECTION & ANALYSIS

Channel structure of Samsung India. (Television)

Manufacturing

Branch Office

Distributers
Exclusive Showrooms
Dealer

Customer Customer

Analysis: Analysis is done as per guide instruction at Samsung india,It follow one

level and two level distribution channel. In one level exclusive showrooms are

middleman between manufacturer and customer where in two level distributors and

dealers are middlemen between manufacturer and customer.

38
Samsung has 3 types of exclusive showrooms:

• Digital World – One in every city

• Digital World – One in every area

• Digital Plaza – N Number

Company has a branch office in IFCI building at Nehru Place.

Channel members

• Manufacturer

• Distributor

Function of Channel Members:

Manufacturer:
• Ensuring availability of product to channel members
• Selecting distributors
• Responding to complaints
• Training the sales team & Performance Appraisal
• Monitoring logistics & supply chains
Distributor
• Training of sales team to give product knowledge to
retailer
• Maintaining inventory to fulfill orders of retailers
• Responsible for loss of stock
• Provides the sales figure to managers
• Maintain stock of sales claim, bonus scheme and stocks

39
 Expectation of manufacture from the Channel members

Importance of parameters. (1 is does not matter and 5 is highly important)

Expectations Samsung
1. Credit period 3
2. Display area 3
3. Regular order 2
4. Follow-up of customer 4
5. Communication of actual demand 3
6. Communication of complaints 3
7. Maintain all variety of product 1
8. Complete knowledge of product 5

Expectations of channel members from the manufacture

Importance of parameters. (1 is does not matter and 5 is highly important)

Expectation Samsung
1. Credit period 2.72
2. Discount/Margin 2.10
3. Promotional offers 2.33
4. Response to complaints 4.07
5. Timely service 3.98

40
 Performance Appraisal

• Frequency of performance appraisal is done on the quarterly basis.

• The parameter to which the weight age is given – both volume and value

are given equal weight age as both are interlinked.

• Effectiveness according to managers view

• People responsible for the appraisal

o Distribution sales team – retailers/MBO’s

o All India distribution – company sales team

Analysis: Analysis is done as per guidance of external guide with the help of

questionnaire filled up by consumer, retailers and distributors. Samsung is a good

brand which has different variety of products; color television has 15.3% in total

market share. LG, Sony are the major competitors.

Channel members have huge expectation from the manufacturer for responding

complains and timely service so company work a lot on that otherwise its retailer will

switch to other brands.

In return manufacturer expects that multi brand outlets showrooms display Samsung

television in front and they should have knowledge of entire product range of

television and they follow up the customers. They identify customers need and tell it

to company so that company can fulfill customers demand as per their need.

41
Other findings:

 Retailers forward complains to distributor and distributor forward to company

then company solved customer’s problem.

 The difference between exclusive showroom and enterprise showroom is, in

exclusive showroom we can all variety of brand where in enterprise showroom we

get limited variety of brand.

 During ICL tournament, company has launch t-shirts which was not appreciate by

customer because of their bad quality.

 The transportation cost is put up by company.

 Samsung gives offer on television during big cricket tournament and on festivals.

 Samsung exclusive showroom & distributor get same margin where retailer gets

less margin.

 Order delivers to retailer within 1-2 days.

42
 Logistics

Logistic Samsung
1. Order processing time
i. Exclusive 1-2 days
ii. Distributer 1-2 days
iii. MBO 1 day
2. Inventory
i. Exclusive 50-60 SKU/ 70-80 lakhs
ii. Distributer Depend upon the requirement
iii. MBO 12.20KU/1-20 lakhs
3. Mode of Transportation
i. Exclusive Company
ii. Distributer Company
iii. MBO Company/Distributer
4. Area
i. Exclusive 1100-1300 Sq.ft
ii. Distributer Based upon the requirements
iii. MBO 375-400 sq.ft

Cost of transport: Rates differ on volumetric basis for surface & air. Samsung has

collaboration with Safex DHL for distribution.

Monitoring system: In house logistics and supply chain team monitors the system

in daily basis.

Analysis of LOGISTICS:

The order processing time for every channel member is 1-2 days. The average

inventory for MBO is 10-20 piece, while that of exclusive is 40-50 piece and may

have a showroom of 375-400 sq.ft and 1100-1300 sq.ft respectively. MBO maintains

a ration of 1:10 display to total pieces in the showroom. Transportation is done

through trucks, while their transportation cost depends upon volume basis and may

43
have collaboration win different companies and the system is monitors by team

monitors

44
Financial terms

Financial Terms Samsung

1. Credit Period
i. Exclusive 15-30 days
ii. Distributer 21 days
iii. MBO 21 days
2. Discount
i. Exclusive 3-4 % Cash discount for 21 days Credit period
ii. Distributer 3-4 % & Cash back offer
iii. MBO 3-4% Cash discount only on cash payment
3. Margin
i. Exclusive 7-8 %
ii. Distributer 7-8 %
iii. MBO 3-4 %

Analysis of Financial Terms: The credit period, discount, margin given to the

channel members to Samsung India depending upon the turnover and performance of

company, Samsung gives benefits in the form of tours, incentive and free pieces.

45
 SWOT ANALYSIS

Strengths

• The company possesses a good infrastructure and technological base

• ISO –9000 certifications

• Technical tie up with Toshiba Corporation of Japan

• Wide range of products

• Excellent brand awareness and image of high quality

• Excellent brand loyalty for its products

• Market leader in washing machines

• Good service network

• Penetrating distribution network

• Has an up to date data customer relation centre

• Frequent launch of new products/models

• Service level above average in Delhi

• Dealers of Samsung are knowledgeable and well trained in selling.

Weaknesses
• No pepper advertising and promotional support for products

• Delay in replacements of sets

• Poor service in east Delhi region

• Communication gap between dealers and ASC’s distribution.

• Service them ASC’s distribution does not live up to the expectations

of the customers

• Service centres are not owned by the company.

46
Opportunity
• Expansion in the dealer network by including few move EMV counters

in icon dealers list

• To improve customer satisfaction, the service network can be

expanded.

• Reinforcing the brand name and brand loyalty by advertising and sales

promotion activities.

• Window display of products at public places like theatres, restaurants

as a part of sales promotion activities.

• Company owned exclusive showrooms displaying Samsung products.

• To develop a powerful USP in Samsung products in order to create

brand excitement.

• Creating brand excitement in order to break brand loyalty of other

company.

• Customer feedback should be continuously collected after purchase to

teach him to improve service products and their marketing.

Threats
• Multinationals are coming up with great threat. The new entrants have

created a niche for themselves and are grabbing the market share of Samsung.

• Samsung is providing better services to the network than Samsung and

AIWA is not far behind.

• Shifting trends of some of Samsung dealers’ loyalty towards other

company products who are providing higher dealers margin as compared to

Samsung.

47
Users/Consumer Analysis

48
49
Analysis of Users/Consumers To find out the consumer behavior about the product

13 customers were considered for the analysis, only those customers were selected

who are using Samsung.

 We research I found that only 15 % use Samsung brand.

 Most of the people get aware about the brand from the

advertising.

 Out of 13 people, 9 are satisfied with the brand.

 Out of 13, 7 willing to repurchase same brand again.

 Most of the people prefer quality then price and other things.

50
 OUR CONCLUSION

After analyzing the sales and distribution structure of Samsung it has been found out

that the distribution system of Samsung quite same with its competitors. Samsung has

segmented its showrooms in different type and they do have an effective order

processing and monitoring system. Prices of products are affordable but in some

places Samsung is weaker in some areas compared to the whole market.

Customer’s preference revealed the following trend in order of Priority:

1. Quality

2. Price

3. Brand

4. Exchange offers

5. Features

6. Looks

7. After Sales Services

8. Warranty Period

9. Less Maintenance

10. All

The Multi Brand Outlets (MBO’s ) expect more margin and offers because company

is not providing them all offers which are available in the exclusive, so because of that

customer would like to buy from showrooms only and their margin is more so MBO’s

can not make any offer from their side like exclusive showrooms dealers.

51
The consumer behavior about the Samsung is good. People like Samsung because of

quality and it is available at the reasonable price so brand is affordable. Samsung

service centre is not owned by company so sometimes customers face the problem.

Samsung has effective distribution channels. Distributor and retailers are happy with
company and consumers keep right attitude about the brand.

52
 ABSTRACT SUMMARY
The only operation that drives the basic survival of any industry is Distribution, so

every industry has to take care of its distribution system. It should be more effective

than its competitors then only it can cover more market and it can reach where they

are promising through advertising. Distribution is the major aspects of the market. It is

ongoing process of marketing mix. A distributor is middleman between manufacturer

and retailers. For effective distribution, company has to use better promotion

techniques.

Television is a consumer durable product so sale of product remain constant except

festival seasons and cricket seasons because on seasons company launches schemes

on television that attract customer to the showroom, where dealer close the deal. That

means to increase a sales effectiveness of company has to use promotion mix

techniques and fulfill the retailer and distributor demand on time.

The methodology adopted to study the distribution system was interviewing all the

members in the channel so that an insight into the system could be achieved and

looking for information from secondary sources such as Website so that a perfect

picture of the whole system could be developed.

The distribution system followed Samsung is quite effective and there is no deviation

from the terms and conditions applicable to channel members. Although they should

devise a system that MRP of the product should not deviate at different outlets based

on members margin. Although Samsung can improve upon the services like the

complaints resolvement of the retailers, distributors.

53
 RECOMMENDATIONS/ADVICE/PROBLEMS

 Company should give good quality product in the schemes.

 Company can provide more margin and schemes to enterprise showroom.

 Samsung can improve its Promotional Offer as compare to its competitors, which

has better promotional schemes.

 MBO complaints that when the sales person comes to them, they do not have of

complete product knowledge so companies should keep focus on the trainees of

the sales people.

 MBO complaints that the services provided to them by Samsung is not up to the

mark, Samsung can improve its to retailers as there is a potential threat that they

will shift to any other brand.

 Build a better network with multi brand outlets.

 Try to fulfill maximum channel member’s expectations.

 The volume reach is good; therefore extraction from the various counters should

be point of focus.

 To know its demand patterns and its potential, consumer survey can be undertaken

frequently

 Can make their dealers knowledgeable of their products and aware of their

schemes.

 Can aggravate in its advertising and sale promotion activities.

 Some big counters where Samsung is absent should be taken care of and should

aim at being present in as many as possible.

 Regular check’s can be made to Samsung plaza’s etc for proper display of new

products

54
 Brand building can be stressed upon as other brands are gaining more popularity

BIBLIOGRAPHY

Internet website links:

 www.google.com

 www.samsung.com

 www.economicstimes.com

 www.channeltimes.com

55
 APPENDIX

Dealers selected for data collection:

1. Jumbo Electronics(mbo)

2. Samsung digital world

3. Samsung Plaza

4. Sony world

5. Croma electronics (mbo)

6. Reliance electronics (mbo)

7. LG shoppee

8. NEXT (mbo)

*all the outlets were preassigned to us by our guide at samsung

56
 QUESTIONNAIRE (DISTRIBUTOR)

1. What is the Order processing time? (Distributor to Manufacture)

1-2 day’s Weekly _____________

2. What is your Credit period time?

Weekly Fortnightly Monthly _________

3. What is the average Inventory? (Stock keeping units)

_________________

1. How much area you cover?

_________________

2. Where do you keep your stock? (Warehousing)

__________________

3. Which Model (Television) does the retailer prefer?

__________________

4. How much quantity does the retailer take in one go?

___________________

5. How frequently does he order?

Weekly ________________

6. Who pays the transportation expenses?

Manufacturer Distributor Retailer ______________

7. Expectations from Manufacturers :

a. What is the Credit Period?

…………………………………………………………………………

…………………………………………………………………………

57
 …………………………………………………………………………

…………………………………………………………………………

b. What should be the discount on big orders? …..

…………………………………………………………………………

……..

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………

c. How happy are with the promotional offers given by the manufacturer?

Not happy Quite happy Very happy Elated

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

d. How responsive is the management to the requirements & complaints?

Not responsive Quite responsive Very responsive

..................................................................................................................

..................................................................................................................

..................................................................................................................

..................................................................................................................

e. What types of promotional offers are made by the manufacturer?

…………………………………………………………………………

…………………………………………………………………………

58
 …………………………………………………………………………

…………………………………………………………………………

f. Minimum order size?

…………………………………………………………………………

…………………………………………………………………………

8. How is the manufacturer performing according to your expectations?

More than the expectations According to expectations Below expectations

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………..……………………

9. What else would you like to say about the company?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

……………………………………………………………………….……………

59
 QUESTIONNAIRE (RETAILER)
1. What is the Order processing time (Retailer to Distributor)?

1-2 day’s Weekly _____________

2. What is your Credit period time?

Weekly Fortnightly Monthly _________

3. What is the average Inventory? (stock keeping units)

_________________

4. Where do you keep your stock? (Warehousing)

__________________

5. Which brand does the customer prefer? (applicable only for multi-brand

outlets)

__________________

6. Who pays the transportation expenses?

Manufacturer Distributer Retailer ______________
7. Rate your distributor on the following parameters:
Poor Average Good Excellent
Performance
Efficiency
Commitment
Behavior
8. Rate your customer on the following parameters:

Poor Average Good Excellent

Performance

Efficiency

Commitment

Behavior

60
9. Your expectations from Distributor/Manufacture :

a. What is the Credit Period?

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

b. What should be the discount on big orders? …..

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

………………………………………………………………………

c. How happy you are with the promotional offers given by the

distributor/manufacturer? (Any Comment)

Not happy Quite happy Very happy Elated

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

d. What types of promotional offers are made by the

manufacturer?

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

61
 e. Minimum order size? (Any Comment)

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

…………………………………………………………………………

10. How is the distributor/manufacturer performing according to your

expectations?

More than the expectations According to expectations Below expectations

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………..……………………

11. How well they communicate the complaints of customer to you? Rate on a

scale of 0-4 (0- poor, 4- excellent) (Any Comment)

Poor Bad Average Good Excellent

……..…………………………………….

……………………………………………………………………………………

……………………………………………………………..

…………………………………………….………………………….

…………………………………………………………………………

12. What are the issues, problems you face while dealing with the distributor?

62
 ……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

……………………………………………………………………………………

13. What else would you like to say about the distributor/company?

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

………………………………………………………………………………………

63
 QUESTIONNAIRE (CONSUMER)

1. Which television brand do you use?

_________________

2. Are you satisfied with your brand?

_________________

3. Will you repurchase your brand?

_________________

4. What is the reason to buy color television?

_________________

5. How do you get aware of brand?

_________________

6. Whose decision it was to buy brand?

_________________

7. Which factor effects your decision while purchasing color television?

_________________

8. Which media you seen add of this brand?

_________________

9. What attracts you to use your brand?

64
 Price Quality Brand Name

10. For how long have you been using this brand?

1 Year 1-2 Years >2 Years

11. Which was the last brand used by you?

___________________

12. If you changed your brand then why?

___________________

13. Rate each component on the scale of 1-10 for each brand(1 is better than

10)

Poor Average Excellent

Style
Attitude
Price
Product variety
Quality
14. Personal Information:

a. Name: __________________________

b. Address: _________________________

c. Age: ____________________________

d. Education: _______________________

e. Family Occupation: ________________

65
f. Income: __________________________

66