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At the very outset we would like to express our heartfelt gratitude to LGEIL and SEIL for providing us the relevant information about the functioning of their distribution network without which this project report would not have been a success.

We would also like to thank to Mr. Sumit Chaudhary, Sr. Sales Executive and also Mr. Piyush Jain, Marketing Manager of LGEIL on Delhi as well as Mr. Prashant Singh ,

marketing Manager of SEIL on Delhi and all those people at LGEIL. & SElL who gave
us the courage & inspiration to work zealously on the project assigned to us & do justice to it. We are extremely thankful to our faculty Prof. Veena Kumar Mam at the Indian Institute of Planning & Management, New Delhi for her invaluable guidance and suggestions during the project. We all would also like to express our gratitude towards our parents from whom we have inherited all the desired virtues & to whom we look up to as living inspirations.
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This project aims to study the distribution channels, sales network and service patterns

of the consumer durable market (Television) through an analytical and comparative

study of two leading companies- LG Electronics India Ltd. (LGEIL) and Samsung India Pvt. Ltd. The project also tries to bring out the shortcomings, if any, in the present system and thus recommends suggestions to improve the same. These suggestions are based on the market research conducted by our group. The project was prepared in accordance to the guidelines provided by our group mentor Prof. Veena Kumar Mam and the company officials we contacted during this

research. This project report also contains the valuable insights provided to us by
the channel Partners. Two company officials from each company and channel members were contacted during this project.
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The projects outlines the consumer goods market in the country. We have also provided

a brief history of both the companies which we have chosen.

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

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CONTENT

SLIDE NO.

METHODOLOGY COMPANY BACKGROUND

6 7-15

INDUSTRY SIZE
DATA ANALYSIS CONCLUSION RECOMMENDATION

16
17-26 27 28

BIBLIOGRAPHY
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5

 Data sources: Primary and secondary data Tools: Personal interview, Questionnaire, internet and detailed checklist etc.

Sample size: 2 Distributors and 10 Retailers.

Field: Delhi & NCR

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 LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG Electronics, South Korea. Established in 1997 in India. Most formidable brands in consumer electronics, home appliances, IT hardware and mobile communications space.

In India for a decade, LG has earned a premium positioning

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brand

Its manufacturing units are in the Grater Noida.

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

Maharashtra that commences operation in Oct 2004.

This is India's first mobile phone manufacturing unit and also Asia's

largest Optical Disc Drive manufacturing plant.

This mainly deals in exports with some of the countries. Covering over 50 acres, the facility manufactures LCD TV, GSM Phones,

Color TV, Air Conditioners. Refrigerators, Microwave Ovens, Color

Monitors.

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 In 1993, LG entered the Indian market through a joint venture with

the Delhi based consumer electronics company Bestavision for

selling color televisions under the brand name Gold Star brand. Both the Indian manufacturing units have been designed with the latest technologies. Eco-friendly plants. LGEIL has achieved a turnover of Rs 20000cr. (approx.) in 2011 in India.

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 Founded in 1938
exporter of dried fish, vegetables, and fruits flour mill and confectionery machines

1950s Economic Stabilization

Korean War - Samsung lost all assets aimed to help rebuild Korean economy; entered the manufacturing industry (sugar, fabrics) became a leader in modern business practices (recruiting from outside)

1960s Expansion of Key Industries

entered electronics and chemical industries 1969 established Samsung Electronics Co.
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 Samsung entered India in December 1995 as a 51:49 joint venture with Reasonable Computer Solutions Pvt Ltd, owned by Venugopal Dhoot of the Videocon group. Samsung buying the total stake of RCSPL in 1998, it became a wholly-owned subsidiary of its South Korean parent company. Initially, Samsung launched is operations in North India, and then slowly expanded its operations.

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No.1
Ranked1st among IT firms in CDLI

31% 37
at CES 2011

REDUCTION

Green house gas emissions cut by 31%

GALAXY S
GALAXY S Leading Android phone in 2010

PRODUCT

Innovation Award winners

SALES
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In IndiaGROUP total sales in 2011 NO. 433 is approx. 21000cr.

13

Home Multimedia

Mobile Multimedia

Personal Multimedia

Core Components

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TERMS

LG
38% Currently Rs. 20000 Cr. And it is estimated it will be grow or touch around Rs. 40000 Cr. By 2014. 50%

SAMSUNG
40% Currently Rs. 22400 CR. And it is estimated it will be grow or touch around Rs. 46000 Cr. By 2014. 52%

MARKET SHARE
TURNOVER

Total industry size of consumer electronic in India is about approx. USD 35 billon and it is estimated that it will be grow to become USD 45 billion in GROWTH 2014 RATE

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Three Level Channel

Company Warehouse
Distributors Dealers Retailers Customers

Company Warehouse

Distributors

COMPANY WAREHOUSE

One Level

COMPANY WAREHOUSE

Two Level Channel

Customers
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BRAND SHOP

DIRECT DEALERS

Sub Dealers

Channel
CUSTOMERS 18

GROUP NO. 433 CUSTOMERS

LG

SAMSUNG

The company dispatches the The C/F agents take care of goods to C/F on consignment companys goods in their basis. warehouse and transporting the goods onward. At the same time, these C/F C/F work on contract basis. agents all work on contract basis.

They get paid as per the amount The ownership of goods are they stock. still owned by the company. Not disclosed. The C/F are paid a commission of about 1.5% with additional 1/18/2014 GROUP NO. 433 19 reimbursements.

LG

SAMSUNG

They select distributors on their financial Same criteria but they also select them on strength, reputation in the particular their performance. market as well as experience of their in that field. The company sends goods to distributor on outright sale basis. the Same

It is the duty of the distributor to send his people into the field to book the orders and also execute them through their own delivery vehicles.

The distributors play a vital role in delivery the goods so they have their own channel structure for distribution to dealer and retailers.

The distributor has to maintain his own Find the margin of 16-18%. sales, delivery and accounts, people for smooth working of his unit and is served by the nearest C/F for all his requirements. Find the margin of 12.5%. 1/18/2014 GROUP NO. 433

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LG
Takes 1 day for CFAs to service reorder Same within their zone.

SAMSUNG

Distributor too caters to the demand in his Here in this activity the time is 30-48 area within 48 hours from the time of hours. receiving the order. If goods have to be procured from the Take 6-7 days . warehouse then it takes 8 days (avg) for the goods to arrive at the C/F or distributor and delivered to the stores. No inventory management system in place Same with the MBOs (Multi brand outlet). LG Shoppe and franchisee showrooms Digital World, Digital Home, and Digital do have a system in place to consolidate Outlets for Samsung products strength their inventory and sales with the their inventory direct from the company. company main office
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LG

SAMSUNG

The retailers order their requirements Same but retailer also order directly to the directly to the concerned distributors. company (minimum or maximum order conditions and also on daily basis). The distributors source the orders from the Same company warehouses, which are connected directly with each of the branches. Company want a minimum order of It is about Rs. 75 lakhs to 1 cr. From Rs.1to1.5cr. from distributors. distributors. The mother warehouse in Noida caters to The manufacturing unit in Noida and the needs of all the regional warehouses. fulfill all the requirements. If any reorder do come in during the month then the regional warehouse that entertains them properly services them. It is the responsibility of the C/F agents to Same supply to the distributors as per their 1/18/2014 GROUP NO. 433 requirements.

22

LG

SAMSUNG

The company goes for annual forecasts on Based on past trends i.e. Y/Y and Q/Q the basis of the previous years sales and basis. also current trends (on the basis of market). These sales forecasts are then Same disaggregated into monthly sales plans. The logistics and the production people Same meet every 15days, and on the basis of sales as well as past inventory, they freeze production for the next 15 days. In case the sales in the previous period Here this condition not takes place have not been up to the mark, and the because company also give the goods inventory levels are high, the production is directly to their retailers. halted and stock of the situation is taken.
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LG
Avg. Inventory Size At Retailers Order Cycle
Rs. 70 Lakh

SAMSUNG
Depending upon in the movement in the retailers.

7-8 days. One week Company set target on the basis of their market research. Company does not give. Company give -------7 days Distributors gives to their For Retailers ---------15to 30 reputed retailers for 15 days. days.(by distributors) And the amount is Rs.10-15 Distributors provide about Rs. Lakh. 5 to 20 Lakh. Distributor provide discounts as 0.5-1%. some 1- 2%

Credit Period

Credit Amount

Credit On Time
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Interest Rate

1.5-2%

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Same

24

LG
Market Research

SAMSUNG
upon sales

Once in 3 months. Same but Depends For customers, channel product launch and members and market survey. forecast. Generally cover qualitative and analytical research. Through gifts, and discounts.

Motivation To Channel Members Training Channel Members

Evaluating Channel Members
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Through monetary and non monetary ways.

Company does not have any In terms of product features, scheme. design of the store, the layout and the lighting. Through sales quota, Through customer delivery cooperation in companys time, feedback provided by promotion activities. dealers and customers and their performance.
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LG
Reverse Logistic
The company accepts returns Same from their retailers as well as company owned stores. LG owned exclusive outlets. Same MBOs (multi brand outlets). Another type of conflict could be a result of institutional sales being sourced by both. Sales target is not achieved by distributors.

SAMSUNG

Channel Conflicts

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 Our study found that, the dealers are somewhat satisfied with the LG Company but some retailers are not satisfied by the company neither in the way of credit facility nor by the distribution system of LG. About the LG company we found that LG having a good position in the market in terms of pricing but lacking badly in terms of its retailer satisfaction. Customer gets to know more by the television and they are influenced to buy new products by the unique products that are new to the market.

Our study also found that there are various factor influencing customer in buying decision and the most influencing factor is brand image and advertisement and other factors play a secondary role in buying decision.
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Both the companies should make advertisement of their products aggressively in the way of hoardings which increase the more visualizes customer. In LG Company should provide credit facility to the dealer in a better way by which they can increase their sale.

In both the companies Dealers should consider the demand of people time to time so that they come to know what people want in a particular period of time.
LG needs to mend and maintain its service network and adopt a good pricing strategy. They should make their channel members more effective to increase their sales.
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www.businesstoday.com www.indiatoday.com www.lg.com/in www.samsung.com/in www.economictimes.com

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