AMITY UNIVERSITY, NOIDA

AMITY BUSINESS SCHOOL

Marketing Channel Management

PSDA

Study on Distribution Channel of Samsung Phones

Submitted to: Submitted By:

Dr. Swati Bhatnagar

Anisha Goyal 120B06
Aashi Prakash Goel 120B07
Shyam Bansal 120B28
Shreyansh Gupta 120B29
Nitish Gakhar 120B36
Aayushi Sharma 120B46
Jasmine Mehta 120B50
Ishnoor Sethi 120B59

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 INDEX

S.no. Topic Page no.

1 Abstract 3
2 Introduction 4
 About distribution channel
 Role of distribution channel
 Types of distribution channel
3 Literature Review 7
4 Research Methodology 10
5 Distribution Channel of Samsung Phones 12
6 Interview Questions 18
7 Conclusion 21
8 References 21

ABSTRACT

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In this research project we have discussed about Distribution channel, its role and what types
of distribution channel are used for buying and selling products on the market. We choose
Samsung Phones to complete our study on distribution channel. This study is conducted
through a questionnaire which we asked directly with Mr. Nishant Godara (Sales head at
Radhika Retails Pvt. Ltd). We prepared several questions to execute in order to gain
knowledge about their marketing channel and sales structure.

INTRODUCTION

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A distribution channel, in simple terms, is the flow that a good or service follows from
production or manufacturing to the final consumer/buyer. Distribution channels vary but
typically include a producer, a wholesaler, a retailer, and the end buyer/consumer. A
distribution channel can also provide a sense of how money flows back from the buyers to the
producer or original point of sale.

For manufacturers, it is very important to create a mix of distribution channels that allow for
ease of availability for the consumer, i.e., a good marketing mix. Based on the diversity and
scope of a manufacturing business or any other business that can be found in the distribution
process, the respective business needs to settle on a channel or channels that allow for good
sales generation and ease of access for consumers.

A distribution channel is a network of firms or intermediaries that a product or service passes

through before reaching the final customer or end user. Wholesalers, merchants, distributors,
and even the internet are all possible distribution avenues.

The downstream process includes distribution channels, which answer the issue, "How do we
get our product to the consumer?" The upstream process, often known as the supply chain,
addresses the question, "Who are our suppliers?"

A distribution channel is a path via which all goods and services must pass before reaching
their target consumer. In the other direction, it illustrates the payment path from the end user
to the original vendor. The number of intermediaries required distributing a product or
service determines the length of distribution channels.

Goods and services are sometimes delivered to customers through a combination of short and
long channels. Increasing the number of ways a customer can locate a product can boost
sales. However, it can also result in a complicated system that makes distribution
management challenging at times. Longer distribution channels might also entail lower profit
margins for each intermediary that provides a service to a manufacturer.

Role of Distribution Channels in Business

The target for any business is to bring their product or service to the market and make it
available for consumers by creating a distribution path or channel. The link between

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producers and the end consumer is normally intermediaries, such as wholesalers, retailers, or
brokers. The intermediaries can be natural persons or businesses. Distribution channels affect
the prices of goods and their positioning in their respective markets.

Distributions, ideally, should be set up in a way that limits the number of stops for the
product or service before it reaches the end consumer. A distribution channel must be
efficient and effective. It means that transportation and other logistical requirements need to
be used at maximum capacity and at the lowest rates possible.

Types of Distribution Channels – Direct and Indirect Channels of Distribution

A manufacturer may plan to sell his/her products either directly or indirectly to the
customers. In case of indirect distribution a manufacturer has again an option to use a short
channel consisting of few intermediaries or involve a large number of middlemen to sell
his/her goods. Therefore, there are various forms of channel networks having different
number and types of middleman.

Various Types of Channels of Distribution:

A. Direct Channel (Zero Level):
 It is the shortest and simplest channel of direct distribution of goods from
manufacturer to customers.
 It is called as zero level channel of distribution as it does not involve any
intermediary.
 It facilitates direct relationship between the manufacturer and the customer.
 Examples – e-business (selling through internet); Direct Mail Order Houses; Chain
Stores (Colourplus, Nike, Bata etc.); Direct selling (Amway; Oriflame etc.)
B. Indirect Channel:
 When a manufacturer employs one or more intermediaries to sell and distribute their
product to the customers it is called as indirect selling. In this, goods move from the
point of production to the point of consumption through a distribution network.

The various forms of indirect distribution networks are:

(a) One Level Channel:

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This channel of distribution involves one intermediary to transfer goods from the
manufacturer to the customer. In this, the title and risk transfers from manufacturers to
retailers who in turn sell goods to customers. This distribution channel enables manufacturers
to retain control and approach large number of potential customers.
Examples – Automobile manufacturers sell their cars through authorised dealers.
(b) Two Level Channel:
This channel of distribution involves two intermediaries to transfer goods from the
manufacturer to the customer. In this wholesalers and retailer act as a connecting link
between manufacturers and consumers. This network enables manufacturer to cover a large
market area. It is a most adopted distribution channel for consumer products.
(c) Three Level Channel:
This channel of distribution involves manufacturers using the services of agents or brokers to
connect with wholesalers and retailers. Manufacturers appoint agents in major areas who in
turn connect them to wholesalers and retailers. It is suitable for manufacturers of limited
product line with customers spread over a wide geographical area.

LITERATURE REVIEW

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1. Marketing channel decisions are among the most important decisions that
management faces today. Indeed, if one looks at the major strategy of the marketing
mix (product, price, promotion and distribution), the greatest potential for achieving a
competitive advantage now lies in distribution (Obaji, 2011).

2. Distribution, as one of four elements of marketing complex, is an inseparable part of

marketing decisions which involves all the decisions about distribution of products to
the end user. The issues of distribution were analyzed by a number of marketing
specialists (Berman, 1999; Kim, 1996; Delton, 1997; Frazier, 1999; Kotler, 2003;
Rosenbloom, 1999; Stern, 2006; etc.), paying a big attention to the elaboration of the
procedures of marketing channel design (Gudonaviciene&Alijosiene, 2008).

3. Distribution still offers a new frontier for competing successfully, especially if the
emphasis is placed on the design and management of superior marketing channel
systems to provide excellent customer services. Yet designing optimal marketing
channel systems to boost sales, formulating innovative distribution strategies and
managing channels system effectively is no simple task. (Obaji, 2011)
4. A channel of distribution can be defined as the collection of organization units, either
internal or external to the manufacturer, which performs the functions involved in
product marketing. These functions are persuasive and include buying, selling,
transporting, storing, grading, financing, market risk bearing and providing marketing
information. A channel member is an individual organization unit institution or
agency that performs one or more of the marketing functions and by doing so has an
active role in the channel of distribution (Lambert, 1978)
5. Physical distribution has been acknowledged as being an important component of
channel management (cf. Frazier, Spekman & O’Neal, 1988; Coughlan Anderson,
Stern & El-ansary, 2006). However, relatively little attention has been paid to
physical distribution function in channels research within the marketing literature.
The general topic has received more emphasis in other literatures, such as in
operations management, logistics, transportation, purchasing and information
technology, with a general focus on how product orders can be efficiently and
effectively processed, and then delivered to channel members and end-customers.

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 Among the main areas of interest have been inventory management, the number
placement, and design of warehouses or distribution centers, the use of technology to
aide in processing orders, delivery options to customers, and customer payment
methods(cf. Innis and laLonde, 1994; Emerson and Grimm, 1996; Giannakis and
Groom, 2004; Giunipero, Hooker, Joseph-Matthews, Yoo and Brudvig, 2008).
6. Channels of distribution can be viewed as social systems comprising a set of
interdependent organizations, which perform all the activities (functions), utilized to
move a product and its title from production to consumption (Stern & Neskett, 1969;
Stern, 1971). Because of this interdependency there arises a need for some form of co-
operation between channel members and co-ordination of activities. This co-operation
and co-ordination is necessary in order to ensure predictability and dependability
between members which will allow individual organizations to plan effectively. Also,
conflict arises in channels, because members sometimes have incompatible goals,
differing ideas as to the functions each should perform, and differing perceptions of
reality. This conflict needs to be controlled so that it does not disrupt channel
functioning (Wilkinson, 1996).
7. Though the field of marketing, in general, has adopted a strategic perspective, one
particular area, distribution channels, has been relatively slow to embrace this
perspective. Besides research on the manipulation of power and influence attempts,
little attention has been given to the study of channel strategies. The importance of
marketing channel strategy decisions is highlighted by 1) their inherent long-term
consequences and 2) the constraints and opportunities that they represent (Dwyer &
Welsh, 1985). The development of relationships in a marketing channel often takes a
great deal of time and effort. Therefore, any decisions made concerning these
relations take on added strategic importance. Given this, the incorporation of strategic
management theory is very relevant to the study of distribution channels (Brent,
2007).
8. The use of multiple channels of distribution is now becoming the rule rather than the
exception, given the fragmentation of markets, advancements in technology, and
heightened interbrand competition, among other things. While multiple channels
potentially increase the firm’s penetration level and raise entry barriers, interbrand
competition and intrachannel conflict may become major problems, leading to
lowered levels  of support in the firm’s direct and indirect channels. Such possibilities
remain largely unexplored. While John and Weitz (1988) and Klein et al. (1990)

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 examined the use of multiple channels to a degree, only Dutta et al. (1995) have
focused an empirical study on the construct. Their major finding is that augmenting an
indirect channel with a direct channel improves the manufacturer’s ability to manage
the indirect channel (Frazier, 1999).
9. The lack of attention to physical distribution in channels research in marketing is
unfortunate. Physical distribution functions will impact both channel organization and
the manner in which channel relationships are coordinated over time. More clarity is
necessary on the role of physical distribution functions within the general domain of
channel management (Frazier, 2009).
10. More recent research in channel structure examines both macro and micro issues. The
majority of the current research on channel structure focuses on one of two broad
operationalizations of structure: transactional form or bureaucratic form. Though it
could be argued that the degree of relationalism also reflects the structure of the
relationship, transactional form and bureaucratic form are the most widely
accepted (Brent, 2007).

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 RESEARCH METHODOLOGY

Research Methodology is the systematic, theoretical analysis of the methods applied to a field
of study. It comprises the theoretical analysis of the body of methods and principles
associated with the branch of knowledge.

The process used to collect information and data for the purpose of making business
decisions. The methodology may include publications, research, interviews, surveys, and
other research techniques, and could include both present and historical information.

3.1 RESEARCH OBJECTIVE

This project is based on study of distribution channel of Mobile phone offered by Samsung,
we did this to understand the distribution channel adopted by Samsung to distribute its
products.

3.2 SOURCES OF DATA

There are two types of sources of data i.e. Primary and Secondary.

Primary Sources of Data:

Primary sources are the first hand evidence left behind by observers all the time of events.
Primary sources originate in the time period that historians are studying. They vary a great
deal. They may include personal memoirs, government documents, oral histories,
questionnaires, self observation, etc. In primary sources of data, we have administered and
interviewed the company persons and collected the company data for the case study.

Secondary Sources of Data

Secondary sources of data refer to data that was collected by someone other than the user.
Common sources of this include censuses, information collected by government officials,
data collected for other research work, etc. In secondary sources of data, we have taken data
from books, internet, published articles, journals and research papers.

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Source of Data Used in this Research Project

The study is based on the primary data which was collected through a questionnaire made on
Google form which was floated among the employees and then their responses were recorded
and analysed with the help of bar graph and pie charts.

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 DISTRIBUTION CHANNEL OF SAMSUNG PHONES:

Marketing channel

A product marketing channel refers to a specific avenue used by your seller in order to avail
the finished products and services for purchase – for example a product or service can be sold
via a store, a salesperson or online. Marketing channel can also be referred to as distribution
channel. The organizations and individuals who buy, promote And avail the product for
purchase or a part of the marketing channel. In the today’s business world, the decisions
regarding marketing channels have become extremely important as they determine the
customer accessibility and the prices of product.

Samsung marketing Channel

Samsung uses direct and indirect marketing channels. A direct channel is where only two
parties are involved that is producer and customer. A direct channel is the shortest marketing
channel. For the indirect pathway, the intermediaries are one or more. Samsung uses both
direct and indirect market channels. The company sells directly to the customer; it sells to
retailers, which later sell to the customers or sales to a whole seller that sells to the retailers
and finally the product reaches to the customers. The below channel explains the distribution
channel of Samsung.

Direct channel of Samsung is used in the Online Channel of distribution

Samsung Consumer
Manufacturers Markets

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Internet users increased rapidly post 2010, and with more smartphones, there were even more
users. That is when the rise of the e-commerce sites took place, and people started using their
sites to order things online. Flipkart, Amazon, Snapdeal, and many other websites offered
considerable discounts to acquire customers and increase the user base.

The online platforms were an advantage for the companies, too, because of the reach they
create and reducing the cost of operating any outlet. The sales of mobile handsets saw a spike
with a boom in e-commerce. The company saw a new distribution channel contributing to
more sales. And so the company established a strategy where Samsung had to set up a brand
store on the e-tailer’s websites where only the vendor-authorized sellers could sell the
products at the prices mandated by the company.

Indirect channel is used by the company in Offline distribution channel

Samsung
Agent/Broker Wholeseller
Manufacturers

Distributor Retailer Customer

Samsung is not just bound with B2C market, it also deals with B2B and Caters the business
markets in order to capture larger segment of the market share.

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 Samsung
Agent/Broker
Manufacturers

Business or
Industrial
Government
Distributors
Users

It is not necessary for Samsung to use intermediaries to deliver its products and services. The
middlemen can be cut out of deals if the company is not comfortable working with them; this
is a process which is referred to as disintermediation.

Samsung international marketing channel

International marketing channels refers to independent organisations that participate in

various business activities to avail products and services for the market across the globe. The
international channels vary widely depending on the organisational participants, such as
agents, distributors and subsidiaries. The critical determinants of international marketing
channel include international middlemen drivers allied to manufacturers and different end-
users. Samsung uses international market channels in order to reduce the complex delivery
process of its products. The global marketing channel is dynamic and depends on the
organisation ready to take up the role of distribution. The company has its service providers
in nearly all the countries to ensure effective channel operations.

Samsung marketing channel partners: channel members or partners refers to firms that
Samsung partners with actively sell its goods and services via its marketing channels.
Channel partners are equally crucial to the company as marketing channels. Samsung has
about 13,000 marketing channel partners globally. The company has a channel nearly in all

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countries in the world. Amazon and Citrix Synergy are the example of popular channel
partners used by the company.

How Samsung uses marketing channels to deliver customer value

Customer value is the extent to which a customer is satisfied with the goods and services
provided by a company. Samsung uses its marketing channels to enhance customer
satisfaction, to attract new customers and maintain the existing ones. Samsung uses its
marketing channels to improve customer values through different ways.

Marketing communication dissemination and brand promotion: the company uses its
marketing communications to inform the wholesalers, retailers and distributors about
important information regarding its products and why it is beneficial to buy its products.
Alternatively, Samsung promotes its product brand to customers to attract wholesalers,
retailers and distributors to sell the product. This kind of strategy is referred to as a push
strategy this approach only focuses on selling the company’s products and not the user’s
needs.

Push strategy of Samsung

Push strategy states that an organisation put its efforts or pushes a product with the help of
advertisements and other strategies such as sales. Samsung adopt this strategy by contributing
money more on classic advertising. This is very clear from the advertisements like old
mediums includes print a new medium which include online networking. In other words,
push strategy takes the product in front of the buyers in form of advertisements. This strategy
is applied by the company so that people can be aware about the existence of new products or
upcoming products in the market.

Pull Strategy of Samsung

Another popular strategy used by Samsung is Pull strategy. Pull strategy is used by Samsung
which means that through social networking, organisation make efforts to keep a relationship
with the buyers. Samsung also use accounts on social networking sites to make latest
declarations and announcements about the products so that customers can be up-to-date with

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the information and strong relationship can be maintained with them. It also helps in getting
feedback from the customers

In addition to this company also cooperate with the retailers and orders to provide them
assistance to sell Samsung galaxy products particularly to strategy known as sales promotion.
These both strategies help to create demand for the product in the market and are significant
for the Samsung company.

Sorting and re-grouping the products: the role of distributors and wholesalers is to break the
bulk goods into smaller units that can easily be purchased by the businesses. In the process of
breaking the product quantities, wholesalers and distributors sought under the group the
product, thus adding customer value in the process.

Sorting and managing inventory: in the case where channel partners have no product, and the
customer is ready to buy the product, a considerable loss experienced. Besides the reduced
sales, the channel members also risk losing the customer in the future. Most customers like
reliability more than anything else. Therefore, when Samsung products regularly run out of
the market, it’s likely to lose customers. Therefore, the company stores its products through
retailers and wholesalers, thus enhancing the constant supply of the product. Without storage
by the retailers the company may find it expensive to have all the products stored within its
business premises.

Sharing marketing information: Samsung channel partners have information regarding its
product demand, inventory levels, trend and competition level: this information is very
crucial, particularly if the channel partners remain honest with one another. The data will
enable a firm within the marketing channel to conduct its activities more appropriately and
overcome the competition challenges. When an issue that might affect product sales is shared
by one of the channel partners, rest of the partners will receive the information and take
appropriate action to have the matter addressed.

Strategies Adopted by Samsung in order to become a leader in the market

 A bidding system was used in dealer selection, but only those dealers who had a strong
balance sheet and good reputation were authorized.
 The company followed a zero-credit policy with the dealers and distributors. At times
the distributor may follow a 7-day credit period based on the strength of the balance
sheet.

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 The company rarely gave any offers except for the scratch cards and trips. The offers
were provided by the retailers to boost sales during festive seasons, which in turn
helped Samsung.
 Samsung wisely invested in the development of mobile technology, which led to the
transition of handsets from the CDMA to high featured galaxy phones. While Apple
came up with touch screen innovation, its high price and availability in the Indian
market did not give it a market share.
 Samsung, in 2010 adopted the android technology and launched the Galaxy S handset,
which gave rise to the smartphone revolution in the country. Samsung could read the
requirements of the Indian audience and released new models of phones in quick
succession to reach a broader range of consumers. It had a phone to cater to anyone in
any market segment. Due to its variety of models in different price ranges, which
provides high quality and abundant features makes it a market leader in the Indian
mobile and smartphone market.
 Samsung used one-level and two-level channels to get as close as possible to the
customers. As compared to the addition of 17 sales offices in 2009, it came up with
380 new outlets primarily in tier 2 and tier 3 cities, which made a total of 700 outlets
by 2013.
 Samsung also understood the pulse of the Indian customers who are price-sensitive and
service focused. Samsung gave an excellent after-sales service through its service
centre’s as well, which provided a perfect word of mouth.

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 Interview Questions

Q1 What level of channel does Samsung consider for the distribution?

Ans 1: Samsung uses different marketing channels in order to cater Higher market share.

Direct channel of Samsung is used in the online channel of distribution. Direct channel refers
to a channel where only two parties are involved that is producer and customer Samsung uses
various online platforms such as Amazon, Flipkart, Snapdeal and various other websites
which offer considerable discounts in order to acquire customer base. Samsung also has its
own official shopping site known as Samsung shop which is a direct distribution channel for
the online users.

Indirect channel is used by the company in off-line distribution channel. Samsung also caters
the business market segments. Samsung uses multilevel channel distribution depending on
geographical areas and customer demands.

Q2 What segment of customers are to be targeted?

Ans 2: Samsung targets customers across the world. Its customers range from individual
using day-to-day devices to business using industrial equipment’s. Samsung ‘s target age
group is between20 and 50. However it does not stop at the age bracket; it can lower or
higher depending on customers’ ability to purchase its mobiles. For the teenagers aged
between 15 and 30, the company typically targets this group of customers to sell the smart
phones specially the latest brand in the market.
Q3. What are the strategies used by the company to manage multiple
channels?

Ans 3. The strategies used by the company to manage multiple channels are:

 In order to select the dealers a binding system was used, but only those dealers who
have a strong balance sheet and good reputation were authorised to sell Samsung
mobiles
 The company followed a zero credit policy with distributors and dealers. At times the
distributor may follow a seven day credit period based on the strength of its balance
sheet.

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  The company rarely give offers except for trips and scratch cards the offers are
provided by the retailers in order to boost sales during festive seasons. In the festive
season the company provides offers to the retailers in the form of half priced goods
specially to the dealers to attract them to sell Samsung mobile phones and accessories.
 Samsung used one level and to level channels to get as close as possible to its
customer base, it came up with 380 new outlets primarily in tier 2 and tier 3 city is
holding more than 700 outlets across India.
 Other online stores the company established a strategy where Samsung had to set up a
brand store on the E retainers website where only the vendor authorised sellers could
sell the products at the prices which were mandated by the company.
 Samsung, in 2010 adopted the android technology and launched the Galaxy S handset,
which gave rise to the smartphone revolution in the country. Samsung could read the
requirements of the Indian audience and released new models of phones in quick
succession to reach a broader range of consumers. It had a phone to cater to anyone in
any market segment. Due to its variety of models in different price ranges, which
provides high quality and abundant features makes it a market leader in the Indian
mobile and smartphone market.
 Samsung also understood the pulse of the Indian customers who are price-sensitive and
service focused. Samsung gave an excellent after-sales service through its service
centre’s as well, which provided a perfect word of mouth.

Q4 How many marketing channels are you using?

Ans 4: The company uses various marketing channels such as online, off-line distribution
channel which includes direct and indirect channel and business marketing channel apart
from this Samsung uses push and pull strategy in order to cater huge customer base.

Q5: Are there any B2B or B2C customers?

Ans 5: yes there are both B2B and B2C customers that the company caters Samsung provides
its products and mobile phones for business use as well as to the customers.

Q6 Which type of discrepancy is the most important you want to solve

because of which you are using distribution partners?

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Ans 6: Samsung wishes to cater each and every market segment whether middle class or elite
class. And the customer satisfaction is the basic priority that the company looks for, it is the
convenience that the company wishes to provide to its customers due to which it uses
distribution partners.

Q7 What is the pattern of distribution followed?

Ans 7: Samsung mobiles uses selective distribution pattern as only few selected outlets such
as electronic stores are permitted to sell the company’s products.

Q8 What is your criteria and the steps followed in order to select your
channel partners?

Ans 8: The truth is that Samsung is much more than just a phone and electronics company.
Samsung is a major Korean corporation that operates in practically every industry, including
shipbuilding, aviation, heavy machinery, retail, fashion, finance, chemicals, food, electronics,
and more. In addition, they operate a non-profit medical arm named Samsung Medical
Center, which is one of Asia's largest cancer facilities.The company uses different channels
of distribution such as Direct Sale, Sale through Retailer, Wholesaler, Agent.

Q9 Define different ways to find your prospective channel members?

Ans 11: The company uses a bidding system in the dealer selection process but only those
dealers who have a strong balance sheet and good reputation were authorised to be the
channel partners as it is important for the company to give its dealership to only those dealers
who can maximise its sales and Can bring out good in the company. The company also
followed a zero credit policy with the dealers and distributors. At times the distributors my
follow a seven day credit period based on the strength of its balance sheet.

The company rarely give any offers except trips and scratch cards but in the festive season in
order to motivate the distributors the company provides few mobiles in accessories at half
price specially to the dealers for their personal use. The offers were provided by the retailers
to boost sales during festive season.

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 Conclusion

 The study is conducted to learn about the distribution channel used by Samsung
mobile phone.
 Samsung uses both direct and indirect market channels. The company sells directly to
the customer; it sells to retailers, which later sell to the customers or sales to a whole
seller that sells to the retailers and finally the product reaches to the customers.
 Samsung is not just bound with B2C market, it also deals with B2B and Caters the
business markets in order to capture larger segment of the market share.
 Samsung promotes its product brand to customers to attract wholesalers, retailers and
distributors to sell the product. This kind of strategy is referred to as a push strategy
this approach only focuses on selling the company’s products and not the user’s
needs.
 We have done this research through a questionnaire which we asked directly with Mr.
Nishant Godara (Sales head at Radhika Retails Pvt. Ltd).
 We prepared several questions that we asked in order to gain knowledge about their
marketing channel and sales structure. And got very good response from them .

References

https://www.bombessays.com/samsung-marketing-channels-2/
https://medium.com/@pasilapraveen/changes-in-the-distribution-channels-of-
samsung-mobiles-in-india-5c08a1667bf6
http://kiranjeet1234.blogspot.com/2017/03/push-and-pull-strategies-of-
samsung.html

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