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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-