Declaration

I, kanchan (ref.no. :08-de-60343), student of M>Phil management, University Centre for Distance Learning, CDLU, Sirsa hereby declare that the project entitled an analytical study of effectiveness of distribution functions in white goods companies in partial fulfillment of M.Phil management degree from Chaudhary devilal university, Sirsa is the original work done by me and the information provided in the study s authentic to the best of my knowledge. This study report has not been submitted to any other Institution or University for the award of any other degree.

Signature of Student (Kanchan) Dated:

Countersigned Signature of Supervisor Dr. Ravi Kr. Gupta Professor Vaish Institute of Management&Technology

Acknowledgement
During the perseverance of this project I was supported by different people, whose names if not mentioned would be inconsiderate on my part. Iwould like to thank with affection and appreciation and acknowledge my indebtness to Prof. Ravi Kr.Gupta, principal VIMT Rohtak who initiated me in the preparation of a project on Analytical Study of Effectiveness of Functions of Distribution in White Goods Companies . Here I cant forget the person who deserves tons of thanks, who took a lot of pains for me and helped me in every way. Words are insufficient to express my gratitude to him. I can never thank him enough to have made my work possible and the person is my dear husband, Mr.Prashant Munjal. I also want to thank Gul and Madhav my daughter and my son for co-operating me in various odd situations. I owe sincere gratitude towards each and everyone who has given a helping hand in the completion of this project. Though due care has been taken in preparation & printing of this report, I regret for any inconvenience that may be caused to readers on account of any printing mistake etc. (Kanchan)

CONTENTS

Sr. No.

Chapters

Pages

1.

Introduction

2.

Review of Literature

3.

Research Methodology Data Analysis & Interpretation Conclusion & Recommendations

4. 5.

Appendices * References Questionnaire

Introduction
With the dynamic changes in the country in the course of planned development and the increase in production - agriculture, industrial as well as of consumer goods - that has been consequent upon such planned investment - the need for a deep understanding of marketing functions and practices had grown.This leads to realization of the importance of a need for the organization of a proper marketing network. Before coming up to the main subject of the study ,it is realized very necessary to describe about marketing ; marketing mix ;objectives, factors & methods of designing distribution channels ; channel conflicts & ways to resolve these conflicts. Marketing It is a process by which -one identifies the needs and wants of the people. -one determines and creates a product/service to meet the needs and wants. [PRODUCT] -one determines a way of taking the product/service to the market place. [PLACE] -one determines the way of communicating the product to the market place. [PROMOTIONS] -one determines the value for the product.[PRICE]. -one determines the people, who have needs/ wants. [PEOPLE] and then creating a transaction for exchanging the product for a value. and thus creating a satisfaction to the buyer's needs/wants.

Marketing is based on identifying, anticipating and satisfying customer needs effectively and profitably. It encompasses market research, pricing, promotion, distribution, customer care, your brand image and much more. Marketing mix Marketing decisions generally fall into the following four controllable categories, combination of which is called marketing mix; * Product * Price * Place (distribution)

* Promotion These four P's are the parameters that the marketing manager can control, subject to the internal and external constraints of the marketing environment. The goal is to make decisions that center the four P's on the customers in the target market in order to create perceived value and generate a positive response.

Product Decisions The term "product" refers to tangible, physical products as well as services. Here are some examples of the product decisions to be made: * Brand name * Functionality * Styling * Quality * Safety * Packaging * Repairs and Support * Warranty * Accessories and services Price Decisions Some examples of pricing decisions to be made include: * Pricing strategy (skim, penetration, etc.) * Suggested retail price * Volume discounts and wholesale pricing * Cash and early payment discounts * Seasonal pricing * Bundling * Price flexibility * Price discrimination Distribution (Place) Decisions Distribution is about getting the products to the customer. Some examples of distribution decisions include: * Distribution channels * Market coverage (inclusive, selective, or exclusive distribution) * Specific channel members 5

* Inventory management * Warehousing * Distribution centers * Order processing * Transportation * Reverse logistics Promotion Decisions In the context of the marketing mix, promotion represents the various aspects of marketing communication, that is, the communication of information about the product with the goal of generating a positive customer response. Marketing communication decisions include: * Promotional strategy (push, pull, etc.) * Advertising * Personal selling & sales force * Sales promotions * Public relations & publicity * Marketing communications budget The objective of the study is to find out effectiveness of functions of distribution in white goods companies. Therefore, here we will explore the distribution decisions.

Distribution: A channel of distribution or trade channel is defined as the path or route along which goods move from producers or manufacturers to ultimate consumers or industrial users. In other words, it is a distribution network through which producer puts his products in the market and passes it to the actual users. This channel of :- producers, consumers or users and the various middlemen like wholesalers,selling agents and retailers(dealers) who intervene between the producers and consumers. Therefore,the channel serves to bridge the gap between the point of production and the point of consumption thereby creating time, place and possession utilities. A channel of distribution consists of three types of flows:Downward flow of goods from producers to consumers Upward flow of cash payments for goods from consumers to producers Flow of marketing information in both downward and upward direction i.e. Flow of information on new products, new uses of existing products,etc from producers to consumers. And flow of information in the

form of feedback on the wants,suggestions,complaints,etc from consumers/users to producers. An entrepreneur has a number of alternative channels available to him for distributing his products. These channels vary in the number and types of middlemen involved. Some channels are short and directly link producers with customers. Whereas other channels are long and indirectly link the two through one or more Functions of Intermediaries Primary role of middlemen is to transform the assortment of products made by producers in the assortments desired by consumers. Producers make narrow assortments in large quantities, consumers want broad assortments in small quantities, discrepancy in quantity and assortment. PRODUCER Specialization in production, economies of scale etc., therefore wants to produce large quantities but narrow product mixes. efficiently CUSTOMER Wants a broad assortment (products produced by many manufacturers) of products made available conveniently (within easy reach).

Other functions of intermediaries include: assuming risk--Provide working capital by paying for goods before they are sold. information Flow financing payment and title flow. negotiation contacts promotion A producer will use an intermediary when it believes that the intermediary can perform the function(s) more economically and efficiently than it can. Objectives: A firms distribution objectives will ultimately be highly relatedsome will enhance each other 7

while others will compete. For example, , more exclusive and higher service distribution will generally entail less intensity and lesser reach. Cost has to be traded off against speed of delivery and intensity (it is much more expensive to have a product available in convenience stores than in supermarkets, for example). Narrow vs. wide reach: The extent to which a firm should seek narrow (exclusive) vs. wide (intense) distribution depends on a number of factors. One issue is the consumers likelihood of switching and willingness to search. For example, for sewing machines, consumers will expect to travel at least to a department or discount store, and premium brands may have more credibility if they are carried only in full service specialty stores. Retailers involved in a more exclusive distribution arrangement are likely to be more loyal i.e., they will tend to * Recommend the product to the customer and thus sell large quantities; * Carry larger inventories and selections; * Provide more services Thus, for example, Compaq in its early history instituted a policy that all computers must be purchased through a dealer. On the surface, Compaq passed up the opportunity to sell large numbers of computers directly to large firms without sharing the profits with dealers. On the other hand, dealers were more likely to recommend Compaq since they knew that consumers would be buying these from dealers. When customers came in asking for IBMs, the dealers were more likely to indicate that if they really wanted those, they could have themBut first, lets show you how you will get much better value with a Compaq. Importance: Distribution opportunities: Distribution provides a number of opportunities for the marketer that may normally be associated with other elements of the marketing mix. For example, for a cost, the firm can promote its objective by such activities as in-store demonstrations/samples and special placement (for which the retailer is often paid). Placement is also an opportunity for promotione.g., airlines know that they, as prestige accounts, can get very good deals from soft drink makers who are eager to have their products offered on the airlines. Similarly, it may be useful to give away, or sell at low prices, certain premiums (e.g., T-shirts or cups with the corporate logo.) It may even be possible to have advertisements printed on the retailers bags (e.g., Got milk?) Other opportunities involve parallel distribution (e.g., having products sold both through conventional channels and through the Internet or factory outlet stores). Partnerships and joint promotions may involve distribution (e.g., Burger King sells clearly branded Hershey pies). Types of Channels of Distribution Consumer Channels Channels for Consumer Products. Vertical dimensions, determined by the # in the channel.

Channel A: Producer | | | | | | v Consumer Simplest method, not necessarily the most effective. Technological developments are making the direct channel more common: TV Homeshopping CDs Catalogs, LL Bean etc.

Channel B: Producer | | | | v Retailer | | | | v Consumer Large retailers, , no discrepancy in quantity supplied and demanded. Popular for shopping products, clothing. Automobiles...cost of transportation and inventory is high.

Channel C: Producer | | | 9

v Wholesaler | | | v Retailer | | | v Consumer Smaller retailers, widely distributed products, convenience products. Channel D: Producer | | | v Agent | | | v Wholesaler | | | v Retailer | | | v Consumer Mass distribution, IE processed food; also when there are a number of small producers etc. May be the most efficient distribution channel for consumer products. Convenience products.

Business to Business Channels Channel E: Producer | | | | | V Buyer Very popular, especially for high cost items that need after sale support. Fewer customers clustered geographically. This is a more common structure than the direct channel in consumer markets. Channel F: Producer | | | v BB distributor | | | V Buyer Distributor takes title. Used when there are many customers. IE consumable supplies etc. Channel G: Producer | | | v Agent | | | v Buyer When a company does not have a marketing department or sales force, the agent performs those 11

tasks.

Channel H: Producer | | | v Agent | | | v Distributor | | | v Buyer Used as above, with many customers, IE exporting. Multiple Marketing Channels Dual Distribution Use several types of channels simultaneously, IE when you have consumer and business to business markets. Set up 2 or more Marketing channels to attract the same target market or different target markets. Using two or more channels to attract the same target market can lead to channel conflict. Corporate VMS More than one stage of the distribution channel under one ownership, IE supermarket chains that own processing plants and large retailers that purchase wholesaling and production facilities. Examples: Hallmark Oil Companies

Administered VMS Channel members are independent with a high level of interorganizational management by informal coordination. Agree to adopt uniform accounting policies etc., and promotional activities. One Channel member dominates, has a channel leader.

Examples: Wal Mart Pepsi Coke GE P&G Channel Leader-Effectiveness of channel hinges on channel leadership. Leader must possess channel power. Power can come in the following forms: Reward--provide financial benefits Expert--be the expert compared with other members Referent--strongly identify with leader Coercive--punish members Contractual VMS Most popular VMS, interorganizational relationships formalized through contracts that spell out each members rights and obligations. IE McDonald's and KFC. Franchise organizations 1/3 retail sales and 500,000 outlets. Wholesaler sponsored, IGA stores-independent retailers band together under contractual leadership of a wholesaler. Supervalue Stores, largest food wholesaler in the US, offers a broad package of services to 2800 independent food retailers that voluntarily enter into a buying contract. Retailer sponsored cooperatives which set up, own and operate their own wholesalers. Factors considered while selecting distribution channel:

13

An entrepreneur has to choose a suitable channel of distribution for his product such that the channel chosen is flexible,effective and consistent with the declared marketing policies and programmes of the firm. While selecting a distribution channel, the entrepreneur should compare the costs,sales volume and profits expected from alternative channels of distribution and take into account the following factors:Product Consideration:- The type and the nature of products manufactured is one of the important elements in choosing the distribution channel. The major product related factore are: Products of low unit value and of common generally sold through middlemen. Whereas,expensive consumer goods and industrial products are sold directly by the producer himself. Perishable products; products subjected to frequent changes in fashion or style as well as heavy and bulky products follow relatively shorter routes and are generally distributed directly to minimize costs. Industrial products requiring demonstration, installation and aftersale service are often sold directly to the consumers. While the consumer products of technical nature are generally sold through retailers. An entrepreneur producing a wide range of products may find it economical to set up his own retail outlets and sell directly to the consumers. On the other hand, firms producing a narrow range of products may their products distribute through wholesalers and retailers. A new product needs greater promotional efforts in the initial stages and hence few middlemen may be required. Market Consideration:- Another important factor influencing the choice of distribution channel is the nature of the target market. Some of the important features in this respect are: If the market for the product is meant for industrial users, the channel of distribution will not need any middlemen because they buy the product in large quantities. . While in the case of the goods meant for domestic consumers, middlemen may have to be involved. If the number of prospective customers is small or the market for the product is geographically located in a limited area, direct selling is more suitable. While in case of a large number of potential customers, use of middlemen becomes necessary. If the customers place order for the product in big lots, direct selling is preferred. But,if the product is sold in small quantities, middlemen are used to distribute such products. Other Considerations:- There are several other factors that an entrepreneur must take into account while choosing a distribution channel. Some of these are as follows:A new business firm may need to involve one or more middlemen in order to promote its products while well established firm with a good market standing may sell its product directly to the consumers. 15

A small firm which cannot invest in setting up its own distribution network has to depend on middlemen for selling its product. On the other hand, a large firm can establish its own retail outlets. The distribution costs of each channel is also an important factor because it affects the price of the final product. Generally,a less expensive channel is preferred. But sometimes, a channel which is more convenient to the customers is preferred even if it is more expensive. If the demand for the product is high,more number of channels may be used to profitably distribute the product to maximum number of customers. But, if the demand is low only a few channels would be sufficient. The nature and the type of the middlemen required by the firm and its availability also affect choice of the distribution channel. A company prefers a middlemen who can maximise the volume of sales of their product and also offers other services like storage, promotion as well aftersale services. When the desired type of middlemen are not available, the manufacturer will have to establish his own distribution network. All these factors or considerations affecting the choice of a distribution channel are inter-related & interdependent. Hence, an entrepreneur must choose the most efficient and cost effective channel of distribution by taking into account all these factors as a whole in the light of the prevailing economic conditions. Such a decision is very important for a business to sustain long term profitability. Channel conflicts & ways to resolve the conflicts: If an enterpreneur think adding new distribution channels will only result in increased sales volume, then he should think again. The consequence could be a spurt of channel wars. There is a world where an infinite number of distribution channels are chasing a finite number of customers. The emergence of the Internet has added considerable complexity to distribution channels by offering a variety of e-market places such as B2B auctions (PEFA.com), reverse auctions (Freemarkets.com), B2C operations (Amazon), C2B auctions (Priceline.com), and C2C formats (Ebay.com). As a result, the various types of distribution channels available in industries such as airlines, financial services, music industry, publishing, and telecommunication services are exploding. And manufacturers who took pride in the integrity of their distribution channels with specific channels reaching specific customer segments are suddenly facing a dizzying array of choices. The addition of new distribution channels brings with it the potential for additional sales volume at the cost of greater channel conflict. A new channel, regardless of whether it is the Internet, an emerging low cost indirect channel, or a new manufacturer sales force will increase channel conflict. Channel conflict occurs because now there is another type of distribution channel that is perceived by the existing channels to be chasing after the same customers with the same brand.

The fear of conflict with existing channels can paralyse a company. But on the other hand much of what channel members call channel conflict is healthy channel competition. Therefore the objective of conflict management should not be to eliminate channel conflict but rather manage it so that it does not escalate to destructive levels. From the manufacturer's perspective, channel conflict becomes destructive when the existing distribution channels react to channel migration by reducing support or shelf space for the manufacturer. Channel conflict becomes particularly destructive when parties take actions that hurt themselves in order to hurt the other party. For example, in 2002, Albert Heijn, the largest Dutch supermarket chain, boycotted some Unilever brands for sometime in order to retaliate against the manufacturer. While this was resolved quickly, it was an action that could have potentially hurt both parties. . As described below, several channel conflict management strategies exist, none of which is a panacea, but the judicious use of them can help avoid destructive conflict. These are part of the arsenal of any multi-channel marketer. Clear segmentation: The rationale for having multiple types of channels should always be built on a clear end user segmentation strategy. When the convenience store complains to the manufacturer about the prices at which Wal-Mart is selling their products, it has to be explained that there is no way that a convenience store can compete with Wal-Mart on prices for the price seeking customer. Instead the convenience store has to compete on saving the consumer time vis--vis travel, shopping and transaction processing, all at a reasonable price premium. They serve two different segments and each should be encouraged to specialise on its target segment. Of course, the brand owner should ensure that the number of distribution points that they have within a particular type of distribution channel is balanced against the size of the segment that the channel reaches. Dedicated products: Many designers who have pushed for sales through outlet stores have managed the conflict with their existing retailers by developing special products for these outlet stores. On the Internet, manufacturers can offer those SKUs which retailers are usually not willing to carry. At the extreme, some manufacturers dedicate different brands to different channels, sometimes referred to as channel brands. Expanding sales: Having a new 'hit' product helps facilitate channel migration. Goodyear managed the migration to the mass merchandisers with only a reasonable amount of conflict by simultaneously restricting the distribution of its new Aquatred tyre to the independent dealers. This allowed the independent dealer to protect their profit-ability and sales volume through the higher margin, higher value, Aquatred tyre. It is easier to expand channels when revenues are 17

growing as existing dealers are less likely to see absolute declines in sales and profits. Dual compensation and role differentiation: Some manufacturers agree to compensate the existing channels for sales through the new channel. While it may be perceived as just buying off the support of the existing channels for the channel migration, it can be useful if the existing distribution is given a role to perform in support of the new channel. Yet, it does help lower the negative backlash. Using the existing channel partner can be a useful complement. Equitable treatment: Some retailers will be upset that the prices at which they purchase from the manufacturer are higher than those charged to other retailers or the direct sales force. There is often the feeling that the manufacturer is favoring other channels at their expense. While one may never fully be able to overcome these concerns, the best antidote is to treat channels equitably and in a transparent manner. If the manufacturer's prices differ across channels, it should be based on the functions that the particular channel member performs. So, yes, Tesco and Wal-Mart receive lower prices, but it is because they engage in practices (buying large quantities, not demanding in-store help and promotions) that lower the manufacturer's cost to serve them. Final thoughts The temptation for manufacturers is always to expand the number of distribution points as it usually results in an immediate increase in sales. However, having too many channels chase too few consumers results in channels dropping the level of support to the brand. In the long run, this can have a deleterious impact on sales as well as brand image. On the other hand changing customer preferences modify industry structures. Traditional industry leaders have frequently neglected the fastest growing new distribution channels. A delicate balance must be maintained between moving too quickly and unleashing destructive channel conflict versus clinging too long to declining distribution networks.

Introduction to white goods

With the growing need to expand and find new markets, both internal and external, the importance of a reliable marketing network and its role can not be neglected. With the compounded process of economic change and development , increase in litracy , rising aspirations, growing awareness of rural population , changes in the character of urban markets , greater purchasing power , consumer sophastication , the demand of white goods such as washing machines , refrigerators , air conditioners , microwaves etc. has tremendously increased.

White goods : White goods are the goods that are painted white or enameled white. These products were previously manufactured with a white enamel finish but are now colored. White goods sector is characterized by emergence of MNCs, exchange offers, discounts, and intense competition. The market share of MNCs in White goods segment is 65%. MNCs mainly target the growing middle class of India. MNCs offer superior technology to the consumers; while the Indian companies compete on the basis of firm grasp in the local market, their well-acknowledged brands, and their hold over wide distribution network. However, the penetration level of the consumer durables is still low in the market. The major factor responsible for low penetration is poor government spending on infrastructure. Products Covered: White goods include household appliances, such as, Water Heater, Refrigerator, Clothes Dryer, Air Conditioner, Dish Washer, Microwave Oven, Washing Machine etc. In the modern period, these products are available in a variety of decorator colors. White goods do not include the entertainment appliances, such as, Televisions, Home cinema, Camcorders, CD, and DVD players. These products are included in the Brown goods category. Practical skills are needed to maintain White goods and heavy tools are required to repair them, while Brown goods require high technical knowledge, in service area. White goods appliances account for 70% of the energy consumed in homes and their greenhouse gas emisison levels are usually high. Major Players : The major players in the White goods sector are 1. LG Electronics India Ltd. 2. Samsung India 3. Whirlpool 4. Videocon. and

Here, main motive of the study is to consentrate on evaluation of effectiveness of distribution channels of these major players.

Consumer Demographics & Buying Patterns of Indian Consumers

19

The Indian AC market size is around Rs 30,000 million comprising the household and commercial segments. The market is currently at a nascent stage and shows tremendous promise to grow. However, despite the reasonable growth in the last few years, the growth potential has not been entirely captured. The HVAC market is of Rs.46,800 million and the refrigeration market is around Rs.9535 million. Organized Versus Unorganized Sectors An important factor influencing the Indian market is the increasing strength of the organized versus the unorganized manufacturing sectors. The unorganized sector represents the countrys small manufacturers whose annual sales volume totals are less than 10,000,000 Rupees (US $210,000). Small manufacturers are exempt fr om taxes and government reporting requirements. As a result, the unorganized sector is often perceived as operating outside the boundaries of government regulation. The organized sector, on the other hand, represents large manufacturers with an annual sales volume greater than 10,000,000 Rupees. These organizations generally pay taxes and follow standard accounting and reporting practices. The organized sector is moving to encourage transparency within the unorganized sector. While the unorganized sector held nearly 60% of the market share in the past, it appears to be losing ground and is expected to shrink by 25% over the next two to three years as international global brands increase their presence. Location of the units manufacturing or assembling White Goods These factories are mainly located in the regions where Government has given exemptions on the taxes and duties, the main multinationals set up 60% of their factories in these regions only. The number of the manufacturing plants in India is less as the big established multinationals go, but there is a huge that is very unorganized, the white goods sector is not in that category though as it is more or less organized. Some locations are sought keeping logistics in mind, where they can cater to A and B grade cities. The rural market is not at all taken into consideration. It is very difficult to give the state wise production capacity, because one plant caters to almost all the parts of the country. Penetration The penetration of household refrigerators in India, the fifth largest consumer durable market in terms of penetration, is 13% compared to well over 90% in Malaysia, Australia, Singapore, Hong Kong and Korea, around 80% in Thailand, close to 40% in Philippines and China and 20% in Vietnam and Indonesia. The number of household air conditioners is abysmally low in India with market penetration of around 1% compared to 20% in Indonesia, 24% in China, 40% in Thailand, and 45% in Malaysia. The central air-conditioning and ducted splits market segments are growing at a lower rate, approximately 10%, and are driven by commercial demand from the retail, software, healthcare, hospitality, entertainment, telecom and banking industries. In the replacement market, buyers look for new and additional features such as frost free, CFC free refrigerators. This has increased the demand for products offered by multinational corporations. This has led to the demand for frost-free refrigerators to

grow at a much higher rate than that of conventional refrigerators, especially in the metros and large towns. The replacement market is likely to increase to 25-30 percent over the next few years. Foreign firms are however now allowed to establish joint ventures, 100% owned operations to manufacture ACR products. The Indian industry also continues to seek out technology collaborations with other countries including the U.S. Imports and Exports The Government of India's import policy allows imports of air conditioning equipment, components, spares and supplies. All manufactur ers, particularly new ventures, import components, including compressors, and assemble the final product in India. The GOI has simplified import procedures and has been reducing the import duties to encourage imports of capital goods and raw materials. Import liberalization is expected to continue as a part of the new economic polic ies of the Government of India. Mechanics of Distribution Channels of Sector White goods are heavy commodities and need good distribution as these are high end commodities. Since the plants indulged in manufacturing or assembling is really less, the reach of the company is dictated by the distribution network that it follows. Certain companies which do not have their own warehouses and are completely reliant on the CFAs and other dealers. Products whether they are assembled here or manufactured here are both distributed in the same manner, the first level is the Carrying and Forwarding Agent for every big city, who supplies further to the sub dealers. The physical storage of goods is must as sub dealer mostly sell to the walk in customers and for the institutional sales, orders are taken and supply is made directly from the CFA. Modes of transport are mainly two: roadways and railways, most of them are transferred through roads or railways bogies or a combination of both. The transport is hired; no company can afford its own transport facilities. For exports from the country the sea route is mainly followed and there are no intermediaries except for the transport needed to take the goods from the factory to the ports. For imports also, once they enter the country through sea route or airways, they are send to companys manufacturing and assembling plant by the hired transport. Thus, distribution plays very significant role in the white goods industry in the absence of many factories at various locations. This report contains detailed analysis of the renowned white goods companies

21

Company profiles of major players of white goods in India

LG Pvt. Ltd. Established in 1997, LG Electronics India Pvt. Ltd., is a wholly owned subsidiary of LG Electronics, South Korea. In India for a decade now, LG is the market leader in consumer durables and recognised as a leading technology innovator in the information technology and mobile communications business . LG is the acknowledged trendsetter for the consumer durable industry in India with the fastest ever nationwide reach, latest global technology and product innovation. One of the most formidable brands, LGEIL has an impressive portfolio of Consumer Electronics, Home Appliances, GSM mobile phones and IT products. LG Electronics INdia Pvt.Ltd., wholy owned subsidiary of LG Electronics, South Koria was established in january, 1997 after clearance from the Foreign Investment Promotion Board (FIPB). The trend of beating industry norms started with the fastest ever- nationwide launch by LG in a period of 4 and 1/2 months with the commencement of operations in May 1997. LG set up a state-of- the art manufacturing facility at Greater Noida, near Delhi, in 1998, with the investment of Rs 500Crores. This facility manufactured Colour Televisions , Washing Machines, Air conditioners and Microwave Ovenes. During the year 2001, LG also commenced the home production for its eco - friendly Refrigerators and established its assembly line for its PC Monitors at its Greater Noida manufacturing unit. The beggining of 2003 saw the roll out of the first locally manufactured Direct Cool Refrigerator from the plant at Greater Noida. In 2004, LGEIL also up its second Greenfield manufacturing unit in Pune, Maharashatra that commences operations in October 2004. Covering over 50 acers, the facility manufactures LCD TV, GSM phones, Color Telivisions, Air conditioners, Refrigerators, Microwave Ovens and Color Monitors. Both the Indian manufacturing units has been designed with the latest technologies at par with international standards at South Korea and are one of the most Eco-friendly units amongest all alg manufacturing plants in the world. LG has been able to craft out in ten years, a premium brand positioning in the Indian market and

is today the most preferred brand in the segment. LG took the lion's share of the market with 35% market share in 2006. With a quantity turnover of 5.5 lakhs and value turnover of Rs.1000 Crs, we aim to achieve a qty and value turnover of 6.5 lakhs plus & Rs. 1300 Crs respectively. a) NEW LAUNCHES IN 2007: The New AC range of 2007 is par excellence on design front. The new flat panel splits designed on the international trends in Air-conditioning addressing the need of the consumer to enhance his indoor aesthetics. The Deco Panel Series, Color Panel Series & the Crystal Panel Series raise the bar on design in ACs. Being the first to successfully launch Colored ACs in India, the new split range has a variety of colors in Champagne Gold, Majestic Silver, Cool Blue, Real Earth & Lustrous Pink to suit every indoor & mood. LG is also the first one to launch colour series in Window ACs. The Luxurious Gold & Majestic Silver Windows is bound to raise many eyebrows. To address the needs of convenient & comfortable cooling, LG has launched the indigenously developed Advanced sensor based Intelloeye Technology in 2007. The unique LG IntelloEye feature gives unmatched cooling performance that no other AC can provide at the touch of a button. When the IntelloEye Mode is switched on, the inbuilt intelligent sensor automatically detects the room temp and accordingly adjusts the setting temperature, fan speed & swing settings of the Air conditioner. The LG saves the hassle of adjusting the temperature setting of the AC. For providing convenience to the customer, LG has launched the Dual Display function in Splits that helps the consumer to view both the Room & Setting temperature displayed on the AC. LG has also launched a feature called Custom Mode where the consumer has the option to program desired AC settings like Temp setting, Fan speed & swing. AC can store upto 3 settings and saves the hassle to changing AC settings every time. The new Artcool ART truly redefines the statement "Technology meets Art". The radically new design changes how one look at an AC as just a cooling device. The easily replaceable painting frame on front of the AC enables one to flaunt his latest painting with an ease that the painting takes the limelight, unlike most ACs that seem obtrusive in midst of all the precious paintings on the wall. Plus the AC is a cooling delight with unmatched technology that one can pass it off as a piece of art. To cater to emerging trend of cooling 2 or more rooms simultaneously, LG is also launching the Odd- Multi Splits to extend Multi Split range. These Multi splits in odd capacities take care of 23

cooling needs in apts with larger drawing room & smaller bedrooms.

VIDEOCON Videocon is an Indian multinational with interests in Consumer Electronics, Home Appliances, Colour Picture Tube Glass, and Oil & Gas. Videocon was founded in 1987 by Nandlal Madhavlal Dhoot. At that time it used to manufacture TV and Washing Machine. In 1989-90, Videocon started manufacturing Home Entertainment Systems, Electric Motors & AC. Videocon entered Refrigerators and coolers segment in 1991. In 1995, Videocon started manufacturing Glass shells for CRT and in 1996 it ventured into Kitchen appliances and crude oil segment. In 1998, Videocon started manufacturing Compressors & Compressor Motors. In the year 2000, Videocon tookover Philips Color TV Plant. In 2005, Videocon tookover 3 plants of Electrolux India and acquired Thomson CPT. Today, it has evolved into a giant conglomerate with annual revenues of overU$4.1billion.

Business

Interests

of

Videocon

Consumer Electronics & Home Appliances: Videocon enjoys leadership position in consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators, Microwave ovens and numerous other home appliances. Videocon's refrigerator manufacturing enjoys synergy with its inhouse compressor manufacturing technology in Bangalore. Display industry and its components: After the acquisition of Thomson in 2005, Videocon has emerged as one of the largest Colour Picture tube manufacturers in the world. It has plants in Mexico, Italy, Poland and China and manufactures a range of high-tech products such as slim CPT, extra slim CPT and High Definition 16:9 format CPT. Colour Picture Tube Glass: Videocon is one of the largest CPT Glass manufacturers in the world. It has plants in Poland and India. Videocon's CPT Glass manufacturing complements its Colour Picture tube manufacturing business. Oil and Gas: Videocon Group has interests in oil & gas exploration, prospecting and intends to get into gas distribution. It produces 7% of all oil in the private sector in India. Videocon's Ravva oil field has one of the lowest operating costs in the world and it produces 50,000 barrels of oil per day. Videocon is also actively looking for exploration and production opportunities in countries like Oman, Australia and the Timor Sea near Indonesia.

Major Achievements of Videocon Industries Ltd: The largest panel production facility in the world under one roof providing very high economies of scale

One of the world's largest and most respected CRT glass manufacturers Firing the largest furnace of its kind in the world with a tank size of 3300 sq ft One of the few companies in the world to convert sand to TV One of the largest and most acknowledged CPT manufacturer in the world Manufactured India's first rust-free Washing Machine

SAMSUNG ELECTRONICS Samsung Electronics was founded in 1969 in Daegu, South Korea as Samsung Electric Industries originally manufacturing electronic appliances such as TVs, calculators, refrigerators, air conditioners and washers, operating in approximately over 100 countries and One of worlds largest Electronics and IT companies. In August 2005, Business Week rated Samsung as the Number 1 consumer electronics brand in the world. By 1981, the company had manufactured over 10 million black and white TVs. In 1988, it merged with Samsung Semiconductor & Communications. Samsung Electronics is a global leader in semiconductors, telecommunications, digital media and digital convergence technologies with 2004 parent company sales of US$55.2Bn and net income of US$10.3Bn. Employing approx. 113,000 people in over 90 offices in 48 countries, the company has of 5 main business units: Digital Appliance Business, Digital Media Business, LCD Business, Semiconductor Business and Telecommunication Network Business. Recognized as one of the fastest growing global brands, Samsung Electronics Corporation is the worlds largest producer of Colour Monitors, Colour TVs, Memory Chips and Thin Film Transistor Liquid Crystal Display (TFT LCDs). The company began reporting record profits from the start of the 21st century, especially in 2003, when it displayed 33% growth in brand value in the Interbrand global brand rankings. In 2004, the company was one ranking behind Sony and in 2005 overtook Sony as the top consumer electronics brand. In 2006 and 2007, Samsung was rated one of the top global electronics brands in various reports, with the January 2007 Brand Finance report ranking the company number 1 in electronics and 32nd overall and Business Week rating Samsung is ranking 20th of global brands. Business Week also ranked Samsung as #12 in a ranking of the "Top 100 Most Innovative Companies" in a special report published April 24, 2006. Samsung is also the world's largest LCD manufacturer, selling over 6.2 million LCD TVs in 2006. It is also the number three mobile phone manufacturer in the world. 25

VISION & MISSION: Samsung Global Recognizing that the digital revolution is entering a new phase, Samsung Electronics has transformed its operations by putting digital technology at the core. The company is committed to being a market-driven solutions provider and leader in digital convergence. With core competencies in semiconductors and CDMA technologies, Samsung Electronics creates digital solutions for homes, mobile users and offices that enable seamless communications facilitate business transactions, access to the internet and offer digital entertainment.

Samsung In India Samsung India is the hub for Samsungs South West Asia Regional operations. The South West Asia Regional Headquarters 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, today enjoys a sales turnover of over US$ 1Bn in just over a decade of operations in the country. Headquartered in New Delhi, Samsung India has a network of 19 Branch Offices located 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 Samsung India currently employs over 1600 employees, with around 18% of its employees working in Research & Development.

KEY PRODUCTS' GLOBAL MARKET SHARE: This table is showing the market share of samsung in different Products of Home Appliances, Consumer Electronics, Telecommunications and Information Technology in the World Market. Product Market Share Rank TV LCD TV Plasma TV Monitor Printer CDMA Mobile Phone 11.2% 13.2% 15.2% 21% 11.6% 28.2% 1st 1st 3rd 1st 2nd 1st

Mobile Phone Pocket PC Laptop Computer Mouse & Keyboard Hard Disk Drive Refrigerator Air Conditioner Washing Machine Microwave Ovens

12.2% 7.4% 10% 11.7% 10.5% 13.8% 17.2% 10.6% 13.1%

3rd 5th 4th 3rd 4th 3rd 2nd 3rd 2nd

WHIRLPOOL Whirlpool, right from its inception in 1911 as first commercial manufacturer of motorized washers to the current market position of being world's number one manufacturer and marketer of major home appliances, has always set industry milestones and benchmarks. The parent company is headquartered at Benton Harbor, Michigan, USA with a global presence in over 170 countries and manufacturing operation in 13 countries with 11 major brand names such as Whirlpool, Kitchen Aid, Roper, Estate, Bauknecht, Laden and Ignis. The company boasts of resources and capabilities beyond achievable feat of any other in the industry.Whirlpool initiated its international expansion in 1958 by entering Brazil. However, it emerged as truly global leader in the1980's. This encouraging trend brought the company to India in the late 1980s. It forayed into the market under a joint venture with TVS group and established the first Whirlpool manufacturing facility in Pondicherry.Soon Whirlpool acquired Kelvinator India Limited in 1995 and marked an entry into Indian refrigerator market as well. The same year also saw acquisition of major share in TVS joint venture and later in 1996, Kelvinator and TVS acquisitions were merged to create Indian home appliance leader of the future, Whirlpool India. This expanded the 27

company's portfolio in the Indian subcontinent to washing machines, refrigerator, microwave ovens and air conditioners.Today, Whirlpool is the most recognized brand in home appliances in India and holds a market share of over 25%. The company owns three state-of-the-art manufacturing facilities at Faridabad, Pondicherry and Pune. Each of these manufacturing setups features an infrastructure that is witness of Whirlpool's commitment to consumer interests and advanced technology. In the year ending in March '06, the annual turnover of the company for its Indian enterprise was Rs.1,375 Crores. According to IMRB surveys Whirlpool enjoys the status of the single largest refrigerator and second largest washing machine brand in India. The company's brand and image speaks of its commitment to the homemaker from every aspect of its functioning. It has derived its functioning principles out of an undaunted partnership with the homemakers and thus a slogan of You and whirlpool, the world's best homemaker dots its promotional campaigns. The products are engineered to suit the requirements of smart, confident and in-control' homemaker who knows what she wants. The product range is designed in a way that it employs unique technology and offers consumer relevant solutions.

Review of Literature
In today's competitive age and globalized market companies face high degree of pressure to satisfy the need of the customers at right place and right time. The philosophy of distribution management is again coming in to the limelight as firms always try to find out new ways to create and deliver value to customers with minimum cost. According to Drucker (1962), distribution is one of the most important frontier for cost saving.

Behavioral research in channels of distribution has brought significant insights into the processes of interfirm influence. The power of channel member A, defined as the "ability (of A) to control the decision variables in the marketing strategy of another member of a given channel at a different level of distribution, "has been posited to be a function of A's bases of power and B's dependence on A ( EI-Ansary and Stern,1972 ).

Brown and Frazier ( 1978 ) found that type of influence strategy used by a manufacturer affected dealer's perceptions of manufacturer power, conflict and satisfaction. Several researchers have found a significant relationship between the dependence of channel member B on channel member A and perceptions of power of channel member A.

The distribution channel development started in early 1980s when the leading companies started to recognize their distribution sales channels to form new multi channels. Earlier PC companies used to have single channel. ( Moran, 1990 ).

Increasing E-commerce is another alternative channel to sales channels. According to Frazier (1990 ) the channels in transition were also scarce and the existence of multiple channels has been recognized.

The sales channel structure of Fujitsu, ICL and IBM was based on direct sales channel in 1980s, which were subsequently changed as per product like PC. Compaq sales channel strategy differs from IBM and Fujitsu. Compaq used indirect sales channel strategy which is very cost efficient and helpful in expansion of business. The dealers were expected to carry out a wide range of functions including sales, technical support, service and demand creation. Compaq shifted to hybrid sales channel strategy in 1990 .e. taking control over customer generation and sales promotion , whereas the channel partners were to handle the sales and distribution functions. In mid 1990s, Compaq reshaped the sales channel by decreasing the number of channel partners to serve directly and to develop closer relationship with channel members and customers and in late 1990s by shifting dual to hybrid sales channel strategy. DELL uses a single channel; the main focus was direct sales channel. The direct sales approach consists of direct sales representatives that serve relationship customers and internet based ,fax and telephone. To meet the demand of increasing product market diversity various companies shifted from single to multiple channels. The emerging hybrid sales channel strategy is a mixture of indirect distribution channel and producer control of marketing functions ( new customer acquisition and promotion ). The selection of hybrid sales channel has been accompanied by organizational development towards an advanced organization structure and further standardization of technology.

Keith Jackson and Crosby (1990), suggest that a broker's dependence on a principal has a strong effect on the broker's readiness to respond to a request made by the principal. The greater the broker's dependence, the likely the broker was to respond to the principal's request. This response took the form of implementing the requested change or at least implementing a less expensive action to try to correct the perceived problem. thus greater B's dependence on A, the greater A's scope of power.

As per Anderson and Narus (1990), even firms in successful partnership would readily 29

acknowledge that disagreements are inevitable. Rather than allowing these conflicts to run their course firms develop mediating mechanism to defuse and settle their differences rapidly. Three such mechanisms can be suggested. Firm can train their personnel to be sensitive to inherent channel relationship trouble spots. Second, a distributer council can be established. Finally, an office of distributor ombudsman can be created (Jacobs, 1985). An ombudsman might be a retired distributor employed by manufacturer, who would have credibility with both parties. Serving as a "friend of the distributor", the ombudsman listens to distributor concerns, draws upon experience to assist the manufacturer firm in finding equitable solution , and then helps explain those solution to distributors.

Model of communication developed by Mohr and Nevin (1990) can provide useful managerial insight. Managers can use the model to understand how communication facets are linked to channel conditions. They can use the model to understand how to improve channel outcomes.

O'Farrel (1996) studied the UK market and found that well known producers of finished computers such as IBM, HP, Compaq and Packard Bell have faced so many difficulties in structuring distribution systems to retail outlets. For fast changing computer industry the distribution system should be according to the need of the manufacturer to end user.

The concept of Value added Reseller (VAR) for decreasing the inventory, increasing the responsiveness and to limit price erosion has come up in a big way and these are involved in distribution of large parts components and systems, system integration, system configuration, services and huge contract assembly. ( McNaughton & Bell, 2001 )

According to Bob Segal (2005), in increasingly competitive markets, characterized by pricing pressures and the entrance of new competitors from around the globe, have most companies struggling to find new avenues for growth while being ever vigilant about cost. "Profitable growth" has become the order of the day, if not the most recent buzzword to enter the business lexicon.

From a marketing and sales perspective, the drive for "Profitable growth" typically leads to exploring new distribution channels and to company executives asking: "What are the costs of entering a new channel?" and "How do these costs compare to our existing channel?" Companies that are looking at new distribution channels as avenues for generating "Profitable growth" must take the time to understand all of the cost components associated with each channel, and make sure that they are comparing "apples with apples" in order to create accurate cost comparisons. Aggregate costs and expense-to-revenue (E:R) ratios must also be carefully evaluated to consider factors beyond cost, such as the complexity and duration of the selling process, and whether the channel is established or in "start-up" mode. Cost models are also available to help understand the differences between expense ranges for indirect and direct channel programs, and to help determine what expense range is appropriate for your channel strategy. It can help you assess the cost of implementing a channel strategy and make sure you are deriving maximum efficiency and effectiveness from your sales force and channel partners.

As Robert L. Segal (2005) said many manufacturer seek advice from their resellers by convening a channel advisory council. Given the increasing pressure from competition, technology and customers these channel councils are more important than ever. However, many manufacturer don't understand how to structure an advisory session often just get a barrel-load of gripe. If managed correctly, advisory councils can provide significant benefits. From manufacturer point of view these include: Building stronger personal relationships that can help overcome short term strains or disagreements (especially with the key reseller typically on these councils). Gaining greater insight into reseller's thinking and, by extension into end-user needs. Avoid expensive mistakes on new products or programs. Exposing senior management, who may rarely deal with resellers, to channel related issues. Uncovering competitor's activities and potential responses.

An increasingly complex competitive environment places a premium on strong manufacturer / channel communication. Channel advisory councils are an excellant forum for this type of communication. However, advisory forums can often degenerate into gripe sessions unless the manufacturer engages in careful planning, culture building and meeting facilitation. With proper planning, council meetings can help to turn a manufacturer's channel program into a long term, strategic asset for the firm.

31

Dave and saxena (2005) in their study made some suggestions for both marketing managers and dealers. Marketing managers must gear up to understand ground realities of computers marketing scenario and should understand the distribution aspect of the product. Marketers should realize the need to rework on marketing plans and strengthening the distribution channels of thier product offering. Marketers who are looking forward for distinct competitive advantage are advised to leverage the tool of Customer Relationship Management (CRM) with the help of effective dealer management. Companies must take care of dealer's profitability needs and providing adequate incentives to the dealers should popularize the concepts of exclusive dealership. Marketing managers should focus on product awareness programmes; continous efforts should be made on dealer communication and feedback. Frequent traning programmes, dealer's meet should be organized by marketing department to update dealers about technological advancements and changing marketing management practices. More emphasis should be given on opening new retail outlets and channels for selling products like PCs with total solution provider approach. The distribution management practices must be given due emphasis . Inorder to combat competitive forces the marketing managers should strive for cost reduction. According to above study, distribution is ranked at last which indicates that enough attention is not being paid on distribution element of marketing mix. This is a matter of concern and

validates the importance of present study. Marketing practitioners should pay more attention to the aspect for cost saving which is thrust area in today's market.

As we have seen, there are various studies on distribution channel decision, selection procedure, conflicts and their resolution, channel communication and channel power. But on the same there are significant gaps due to different studies as no comprehensive study has been done on distribution functions in white goods in Indian context. In this study we will be knowing about effectiveness of distribution channels as per manufacturer's, dealer's and customer's point of view.

Even as most of India Inc has struggled to match its sales growth of last year, consumer durables makers have managed to do better. Most durable makers reported acceleration in sales growth in the September 2009 quarter, even compared to the September 2008 quarter. Whirlpool of India has reordered a 34 per cent sales growth in the latest quarter compared to 23 per cent last year. - Business Line Delhi, November 5, 2009 Godrej is targeting a 25-30 per cent growth this financial year. Other companies are also expecting to close FY10 with sales growth in the range of 25-30 per cent compared to last year, due to the overall buoyancy and the festive season sales. LG Electronics is expected an over 25 per cent sales growth in FY10. Moon B Shin, MD, Adds: We expect this festive seasons sales to grow by more than 40 per cent. All products saw good sales. The same goes for Whirlpool. Shantanu Das Gupta, Vice President, Corporate Affairs and Strategy, Asia South, estimates the aggregate of September + October sales to be 40 per cent above the same period last year. Samsung India clocked 40 per cent growth in September-October as compared to the same period last year.
-

Business Standard Delhi, October 22, 2009

The sales of every company grow during last quarter of the year i.e. September to December due to festive season and companies provide different special offers to the customers also. 33

For example Entry level 40-inch LCD TV (top brands) Rs. 65,000 70,000 down 10%, assured free gifts on some brands and models. Samsung is giving away a 22-inch LCD television free with the purchase of an LED television of 40-inch and above screen sizes. Godrej is offering microwave for free with certain models of frost-free refrigerators and 5-star rated split air conditioners Entry level 32-inch LCD TV for value, price fighter brands available at Rs. 23,000 25,000. Companies such as Sony, Samsung, LG and Voltas are offering interest-free finance schemes, some even translating into zero down payment and processing fee. Retail All retail chains are offering decent discounts on almost all items. The Economic Times, Delhi, October 12, 2009

Green has become the key to success for consumer electronics giants such as Samsung, LG, Philips, Godrej and Whirlpool. The green drive, which started with the introduction of energy-efficient air-conditioners and refrigerators to judge the market sentiment this summer, is now being extended to other consumer electronics goods such as television sets, washing machines and microwave ovens.
-

The Telegraph Kolkata, September 22, 2009

White goods companies are now switching to rural markets. As LG has figured more offices in smaller towns and cities. It has also introduced cheaper products like its Sampoorna television range. But LG is not only White Goods manufacturer that is striking deep into rural India. There is also Mirc electronics which late last year launched its operation Vistaar(meaning expansion). Videocon has just begun a fresh thrust to boost sales outside the metros.but it is not desigining new products for rural markets.

Korean brands, LG and Samsung, have cornered nearly half of the Rs 10,000 crore Indian home appliances market for the first time in the later half of this year. While the LG leads the market with around 35 per cent of the overall market, Samsung improved its position from around 13 to

around 16 per cent now.

According to a survey released by the Japan Electrical Manufacturers Association, Japanese white goods have higher brand recognition and are more popular in India than products from the U.S., Europe and South Korea, an industry group said Monday. The high- tech image of Japanese products such as automobiles and television sets boosted their popularity and recognition in India. But the name recognition of each individual Japanese company was lower than that of South Korean competitors, including LG Electronics and Samsung Electronics, due mainly to the companies slower pace in getting products from the manufacturing facility to the market.

After the deep study of market of White Goods companies, we have concluded the following characterstics. Market characteristics 1The consumer goods market in India is of USD 4.87 Billion. 2Around 45 companies cater to this market. Onida is having a very small share of this market. 3In the Indian market space, Brand loyalty is giving way to value-for-price contest. 4There is an intense competition on price. 5The companies are Companies focusing on product differentiation, value added offerings and exchange offers. The MNCs like LG, Sony, Samsung, Phillips and Videocon command a high market share. These brands score high on following factors: Product Line: These companies (LG, Sony, Samsung, Phillips and Videocon) have a wider product range compared to Onida to target customers from all segment. 35

Positioning: Their Image of a multinational company in the minds of consumer helped them to grab market share instantly. It gave a perception that these companies have better technology. Videocon on the other hand leveraged its MNC image by it tagline of Indian MNC. Advertisements: LG has Abhishek Bachhan, Samsung Has Aamir Khan, Videocon had Amithabh Bachhan and now Sharukh Khan, and All these players have used celebrity to a good effect to endorse their brands. On the other hand Onida is stuck with its old Devil which isnt helping. Visibility: The companies are associated with events and sponsorships. Like LG and Videocon are associated with cricket. This has resulted in better brand visibility.

Research methodology
Marketing mix consists of 4Ps i.e. Product, Price, Place and Promotion. Due to any change in conditions, any company can change in product, price and promotion but it is very rare that any company changes its distribution channel. As a strategic marketing tool, the field of distribution channels had for many years, taken something of a "back seat" to the other three strategic areas of the marketing mix: Product, Price and Promotion. But in recent years this relative neglect of distribution channels has been changing due to: 1. 2. 3. 4. 5. Greater difficulty of gaining a sustainable competitive advantage. Growing power of distributors and retailers in marketing channels. The need to reduce distribution costs. The new stress on growth. The increasing role of technology. The increasing awareness among customers about product and services might influence dealer's practices in due course specially in distribution. The focus on holistic solution approach rather than stand alone product might result in fierce competitiveness among dealers.Consequently there is a rush to reach to the market place with innovative products. In order to retain and increase market share in retail segment it is essential that white goods

companies penetrate in growing markets. In order to have an edge in market, the management of their distribution channel are essential for companies. A proper and methodical system is essential for thier growth as effective channel members. The purpose is to ascertain an effective distribution channel system so that committed and motivated dealers are established. The performance of channel members will be critically assessed to find out the gaps in existing system. F0r the purpose of this study,the sub objectives have been identified as below

To study the present state of channels of distribution in white goods industries. To analyse the significance of distribution channel decision in overall marketing mix. To analyse the type and responsibilities of intermediaries. To analyse the factors in selection procedure of distribution channels influencing the white goods companies. To evaluate the performance of the dealers and distributors from company's point of view. To study the effectiveness of distribution channel from customer's point of view.

The geographical coverage is restricted to whole Haryana. There are 15 companies in white goods market in Haryana. There are more than 500 dealers of white goods in Haryana.We have covered in our study 4 major players of white goods in india, that are- LG electronics; Samsung; Whirlpool and Videocon. Here we adopted exploratory cum descriptive approach. This apporach is considerd appropriate to carry out the project as we tried to evaluate the effectiveness of distribution channels in white goods companies. A structured questionnair consist of three parts has administered to the respondants. 37

The study consists of three parts : 1. Survey of company's managers and executives to know about the selection parameters and assessment of the distribution channels. 2. Survey of dealers and distributers to know thier perception about motivators and barriers of thier performance. 3. Survey of customers to know about thier perception about the effectiveness of distribution channels. The nature of research design is such that probability sampling procedure has been followed. Non disguised structured questionnaires has been framed to meet the specific requirement of the study. The design of the questionnaire has kept simple and both open and closed ended questions has included. A majority of questions are closed ended while few quwstions at the end are open ended to seek opinions and suggestions from the respondents.

For first part of the questionnaire 15 managers of different levels of the 4 major companies has been taken for primary data collection. In second part of the questionnaire a sample of around 22 dealers covering all types like urban, semi urban and rural dealers has been drawn. . For the third part of the questionnaire a sample of 46 customers has been drawn from all parts of Haryana.

Data collection is a basic step and of vital importance. On which success or failure of the study depends. In the data collection method, we have collected both primary and secondary data to meet our objectives. The primary data was collected by a survey based on the questionnaire consisted of three parts and exercised upon the managers and executives of the white goods companies, dealers of these companies and the consumers of the white goods. The secondary data was collected from various sources like

---web sites of different white goods companies --- Articles and books on white goods industry ---Annual reports of the white goods companies etc.

Analysis and interpretation of questionnaire for employees of company Part- A

1. Which company do you belong to?

Name of company

No. of employees

39

LG electronics

Videocon

Samsung

Whirlpool

4 3.5 3 2.5 2 1.5 1 0.5 0 No. of employees

LG electronics Videocon Sam sung Whirlpool

Interpretation : As we found response from 15 employees of four major companies of White

Goods in India. In which 4 employees were of LG; 4 were of Videocon; 4 were of Samsung and 3 were of Whirlpool .

2. What is level in the company you are working with?

Level

No. Of Employees

Executive level

Manager level

Senior manager level

7 6 5 4 3 2 1 0 No. Of Em polyees Executive level Manager level Senior manager level

Interpretation: Half of the respondent employees were of executive level. Other half of the
respondent employees were of manager and senior manager levels.

41

3. What is the distribution channel used for distribution of your products?

Type of distribution

No. of responses

Dealers/Distribution

15

Agents

Store retailing

12

MLM

Any other

16 14 12 10 8 6 4 2 0 No. of responses

Dealers/Distri bution Agents Store retailing MLM

Any other

Interpretation : All employees responded that they distribute their products through dealers
and distributors. And beside this channel 80% are using Store retailing also.

4.

What is the reach of your products ?

Reach

No. of responses

In metro cities only

In towns only

In small towns

All of the above

15

16 14 12 10 8 6 4 2 0 No. of responses

In metro cities only In tow ns only In sm all towns All of the above

Interpretation : All of the employees responded that their company is having a strong 43

distribution network which includes not only metro cities but big towns but small towns also.

5. How do you select dealers/distributors for the products?

Type

No. of responses

Exclusively

Generally

7.5 Exclusively 7 Generally

6.5 No. of responses

Interpretation : 56% of employees responded that they distribute their products through

exclusive dealers and rest of 44% of employees responded that their company is having general dealers also in some areas. 6. Give ranking to the following parameters which you consider while selecting distributor.

Parameter 1st

Rank 2nd

No. of responses 1. Economical background 2. Social background 4 8

3. Population of the city/town

4. Awareness of the products

5. Domain of the person 6. Location of the store 8 5

8 7 6 5 4 3 2 1 0 1st rank 2nd Rank

Econom ical background Social background Population of the city/tow n Aw areness of the products Domain of the person Location of the store

45

Interpretation : The employees responded to three parameters. 56% of employees gave 1st rank to
location of store. According to them location of store is the major parameter while selecting dealers and after that they see economical background. 24% took economical background as 1st parameter to select dealers after that they see other parameters. 20% took population of city as 1st parameter while selecting dealers in a particular place. 33% responded to location of store as 2nd parameter and 13% responded population of city as 2nd parameter in their selection of dealers. 7. How do evaluate the performance of distributors/dealers? (Give ranking)

Parameters

No. of employees Rank 1st 2nd 8 5 2

Revenue generation Sales volume Brand image building

5 10

Customer loyalty

12 10 8 6 4 2 0 1st 2nd Rank Rank Revenue generation Sales volume Brand im age building Custom er loyalty

Interpretation: More than 65% responded that their company takes sales volume as
a major parameter for performance evaluation of the dealers. While rest of the employees responded that Revenue generation is the major parameter to evaluate the performance of dealers. And more than 56% took revenue generation as 2nd important parameter for performance evaluation of their dealers. 33% of others took sales volume and rest of the employees took brand image building as 2nd important parameter for the same. 8. How frequently do you evaluate the performance of dealers / distributors ?

Options

No. of responses

Weekly

Monthly

12

Half yearly

Yearly

12 10 8 6 4 2 0 No. of responses Monthly Half yearly Yearly Weekly

Interpretation: About 80% of employees responded that performance of 47

dealers and distributors is evaluated on monthly bases by their company. And rest of the 20% employees responded that their company evaluates the performance on weekly bases.

9. How the dealers / distributors affect the price of products?

Options

No. of responses

Costs high

Costs low

Remains equal

15

15 Costs high Costs low 5 Rem ains equal 0 No. of responses

10

Interpretation: All the employees responded that Dealers and Distributors do

not affect cost of the product.

10. Weather distribution channel helped in making the product easily available in the market?

Options

No of Responses

Yes

15

No

49

15

10 Yes 5 No

0 No of Responses

Interpretation: All the employees responded that their distribution channels have
helped to make the product easily available to customers.

11. How does a distributor help in promotion of a product?

Option

No of Responses Rank

1st

2nd

Visibility of product Conducting Seminars

15 0

0 3

Road shows

12

16 14 12 10 8 6 4 2 0 1st 2nd Rank Rank

Visiblity of Product Conducting Sem inars Road Show s

Interpretation: All employees agreed that dealers and distributors help in visibility
of product. And 80% employees responded that they also help in promotion of product by arranging road shows and rest of 20% of employees said that dealers also conduct seminars to promote the product.

12. Weather distributor plays an important role in product innovation?

51

Options

No of responses

Yes No

2 13

14 12 10 8 6 4 2 0 No of responses Yes No

Interpretation: More than 85% of employees responded that dealers and distributors
do not have any role in product innovation.

Analysis and Interpretation of the questionnaire for Dealers and Distributors of the Company.
Part-B

1. Which companys dealership you have?

Name of company

No. of responses

LG electronics

Videocon

Samsung * Whirlpool

7 6 5 4 3 2 1 0 No. of responses LG electronics Videocon Sam sung * Whirlpool

Interpretation: As per the limitation of time we got response from 22 dealers and
distributors of white goods in our area. In which we included 6 respondents of LG; 7 respondents of Videocon ; 6 respondents of Samsung and 3 respondents of Whirlpool.

2. DO you own monopoly for the products of the company?

53

Option

No.of responses

Yes

No
25 20 15 10 5 0

22

Yes No

No.of responses

Interpretation:
All persons responded that they are not the single distributor of the companys products in this city. There are other distributors and dealers also working in a particular place.

3. Which category do you belong to? Category No. of responses

Dealer

15

Distributor

15

10

Dealer Distributor

0 No. of responses

Interpretation:
There were 15 dealers and 7 distributors among 22 whose response has been calculated for the study.

55

4. Do you think dealers/distributors help In marketing mix? A. Product price Yes 2

No

20

20 15 10 5 0 Yes No

Interpretation: 20 persons have responded that distributors help in fixation of price of products. While 2 said that there is not any role of distributors in fixation of price.
B. Innovation of new products

yes

No

16

20 15 10 5 0 yes No

Interpretation:
Out of 22 ; 16 have responded that they help in product innovation while 6 have said that product innovation is done only by the company s employees A. Product promotion

Yes

22

No

25 20 15 10 5 0 Yes No

Interpretation:
All have responded that product promotion is mainly done by them.

57

5. Mention any four major responsibility of a dealer/distributor?

Interpretation
As this was an open ended question .We could not express it in graph because responses were different depending upon employees own capabilities. However, all have responded that the first and most important responsibility of them is sales. And others are advertisement, maintaining records for the company people, maintaining good relations with customers, maintaining brand image by providing after sales services.

6. According to you what is the selection criteria of a company for a dealer/ distributor? (Give ranking)

Parameter 1st

Rank 2nd

No. of responses 1. Economical background 2. Social background 4 15

3. Population of the city/town

4. Awareness of the products

5. Domain of the person 6. Location of the store

20 15 10 5 0 1st 2nd rank rank econom ical background social background population of city/tow n aw areness of products dom ain of the person location of store

16

Interpretation
Out of 22 respondents 16 have said that location of store is the major criteria for their selection and then company see the economical background of the person . While 4 respondents have said that economical background is the basic factor for the selection and

59

according to 2 respondents population of city /town matters first for the selection of the dealers / distributors.

7. Are you satisfied with marketing policies of the company?

Yes

14

No

14 12 10 8 6 4 2 0 No Yes

Interpretation
14 respondents were satisfied with the marketing policies of the company. Rests of 8 respondents were not satisfied.

8. Are you satisfied with sales of your products?

Yes

15

No

15

10

Yes No

Interpretation:
Out of 22 respondents 15 were satisfied with their sales. While 7 respondents were not satisfied with the sales of products.

61

9. Are you satisfied with the profits you are gaining presently?

Yes

No

16

20 15 10 5 0 Yes No

Interpretation :
Out of 22 respondents 16 respondents were not satisfied with profits and rest of 6 were satisfied with the profits they are gaining.

Analysis and interpretation of the questionnaire for the customers of the white goods.
Part - C 1. Which companys electronic products do you buy?

Name of the company

No of respondents

LG electronics

13

Videocon

12

Samsung Whirlpool

14 7

14 12 10 8 6 4 2 0 No of respondents

LG electronics Videocon Sam sung Whirlpool

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Interpretation: As we can find one or more white goods in each and every modern house.
So the sample frame was very large through which we have selected 46 respondents randomly. In which 13 respondents were of user of LGs products; 12 respondents were of user of Videocons products; 14 respondents were of user of Samsungs products and rest of 7 respondents were of user of Whirlpools products.

2. Why you prefer this company to buy electronic goods?

Options

No. of respondents

Image of the company Product quality Dealers image

10 28 8

30 25 20 15 10 5 0 No. of respondents Im age of the com pany Product quality Dealers im age

Interpretation : Majority of respondents replied that they choose this companys products
due to product image. 10 customers responded due to companys image and very less customers responded that they have choosen this companys products due to dealers image.

3. According to you , how distributor helps a customer?

Option

No. of respondents

Making awareness for the product

Provides knowledge for the product

Provides after sales services

Easy availability of the product

38

40 35 30 25 20 15 10 5 0 No. of respondents

Making aw areness for the product Provides know ledge for the product Provides after sales services Easy availability of the product

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Interpretation : 38 customers responded that distributor make the product easily available to
the customer. While 6 persons have responded that they also provides knowledge of the products and 2 persons have said that they also make aware to the customer about the products of the company.

4. Do you think distributor affects the costing of the products?

Yes

No

40

40 30 20 10 0 Yes No

Interpretation: majority of customers responded that dealers do not affect the cost of the
product. Only 6 customers were of such view that dealers or distributors affect the cost.

5. Are you satisfied with the distribution channel of a company?

Yes

40

No

40 30 20 10 0 Yes No

Interpretation : majority of the customers were satisfied with distribution channel of

the company of their products. But still there were 6 customers who were not satisfied with the distribution channel of the company of their products.

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6. Do you think distributor plays an important role ?

Yes

42

No

50 40 30 20 10 0 Yes No

Interpretation : When asked about the role of a distributor majority of respondents were in favour . Yet there were 4 customers who were not agree that distributor plays an important role.

After the analysis & interpretation of data which is collected through questionnaire for employees following conclusion has been drawn.
All the companies make their products available in the market through dealers and distributors . A distributor is one who is having dealers chain also. And beside the dealers distributor chain , maximum companies are doing store retailing. There products are also available at familiar departmental stores. Eg. Big Bazar. Every company is trying to make their product available to every part of the country. Now they are focusing on the rural markets also. In the small towns companies are having general distributors and in the big cities companies are having exclusive distributors also. While selecting dealers and distributors companies mainly consider the location of store and economical background of a person. While evaluating the performance of their dealers and distributors companies consider the sales volume and revenue generation of them. Most of the companies evaluate the performance of their dealers and distributors on monthly bases

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As the distribution channels result in higher sales, so it do not effect the cost of the product. All the companies consider distribution channel is most important way to make available their products to the customers because * Customers can go to the dealers and see the product actually . * Distributor also help in promoting the product by arranging the road shows and conducting seminars to tell about the product.

* Distributors play an important role in product innovation also because he is the media between the customers and manufacturer so he better knows what the customers want.

After the analysis of the data which is collected from the questionnaire for the dealers and distributors, following conclusion has been drawnThere is so much competition in the market. Dealers and distributors not only have to compete with the other companys dealers but also with the same companys dealers. Every company is having more than one dealer in the same city. For example LG is having more than 5 dealers in Rohtak city.

Distribution channels are very necessary for the product promotion because distributors advertise the product at local level through road shows and seminars.

Dealers of all the companies are having very much pressure to meet the sales targets. Though they are satisfied with the marketing mix policies of the company , yet they are not satisfied with their profit margins.

After the analysis of the data which is collected from the questionnaire for the customers of the white goods, following conclusion has been drawnCustomers are very much quality conscious. They buy the product on the bases of good quality of the product. And after that other parameters like companys image and dealers image matter. Customers view the dealer as very important media to make available products in the market.

According to customers dealers play an important role and they are the media to provide satisfaction to them in the shape of products.

Recommendations
Based upon the survey conducted on Analytical study of effectiveness of functions of distribution in white goods companies, following recommendations are made . As companies are distributing their products through dealers and distributors mainly, it should keep in mind their benefits first as they are the persons who are making the brand image. To encourage the sales company should provide them Higher profit margins. Lesser competition i.e.no of dealers should less in the same city. Interesting schemes. Credit facility. Help in reach to the customers. Proper advertisement of the products. Competitive prices of the products. Higher incentive schemes depending upon sales, revenue generation, building brand image and other parameters also Proper schemes for the competition among dealers i.e. providing best dealer award.

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Providing positive motivation rather than negative motivation i.e. scheme of not providing credit facility to the dealers who are not doing well. Equality in treatment with dealers.

It is recommended to the companies to maintain exclusive dealers more. It will lead to more brand loyalty in the eyes of customers.

Companies should not forget that to become a leader in the market ,they should have strong and motivated dealers network

As almost all the companies of White Goods are MNCs . They should take care of cultural environment of the country, they are working in. Companies can promote other channels of distribution to upgrade the sales. Like store retailing; in this companies can distribute their products through popular stores as LG is doing. Lg is distributing its products in Big Bazaar. It can widen its store range from Big Bazaar to others like Vishal Mega Mart and Reliance Fresh etc. The same is recommended to other companies also. Big towns market of White Goods is at its penetration stage. So it is recommended to the companies to move towards small towns with full fledge operations. That means with new openings of offices and specialized products. It is evident through the past that little cut down in the prices lead to more increase in sales. So it is recommended to the companies who are not having good market share like Onida, can adopt this policy to improve the sales. Companies should try to keep the same sales flow all over the year, rather than the better sales only in the last quarter of the year. For this it is recommended to the companies for better schemes for whole of the year.

Recommendation to the dealers of White Goods companies.

Dealer is a person who acts as a media between the company & the final consumer. Customers cannot get satisfaction without the support of dealer. The following should be followed by the dealers to meet the sales targets Be fair to the companys policies Be fair to the customers. Provide full knowledge about the products to the customer. Help in innovation of new products by telling customers interest. Help in promotion of the products by local advertisement. Can advertise the products by arranging more and more road shows ; exhibition and also seminars. Can provide different schemes on his own part other than company. Eg. Lucky coupons. Yet there are another service centers of the companies now a days, still he should not ignore the customers complaints after the sales. He should response all the queries made by the customers before and after the sales to maintain his good image among the customers.

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It is recommended to the dealer to be more social to maintain good image.

References - The Economic Times Delhi,(November 9, 2009) Premium Consumer Goods

High in Demand - Business Line Delhi, (November 5, 2009) Consumer durables: Sales growth accelerates -Business Standard Delhi,( October 22, 2009 )growth projections in durables -The Times of India Delhi,( October 20, 2009) Festive fervor brings sales back on track -The Economic Times, Delhi,( October 12, 2009)Crackers of Deals -Business standard ,Wednesday (nov,25,2009 )LG Samsung half of the corner - The smart managers (july,2005) Some tips on conflict management -Science Direct-journel of retailing and consumer services Volume-14,issue (1,January 2007,) pages 17-23
-Arti sharma

(april 03,2004) white goods switching on in rural area

-Business Standard (Dec02,2009) -The Asian Age Delhi, (August 25, 2009)White Goods companies bet on cities to overcome demand shortfall in villages

-www.lgindia.com -www.videocon.com -www.whirlpoolindia.com -www.samsung.com/in -www.wikipedia.com -Kotler Philip and Keller; Marketing Management; PHI, New Delhi -Kothari, C.R., Research Methodology -Cooper, Donald R and Pamels Schindler, Business Research Methods, Tata McGraw Hills, New Delhi

Questionnaire
For analytical study of effectiveness of fuctions of distribution in white goods companies Part - A

For Employees of Company:

1.Which company do you belong to? 1LG 2Videocon 3Samsung 4Whirlpool 5Any Other 2.What is level in the company you are working with? Executive Level Manager level Senior Manager 3.What is the Distribution Channel used for distribution of your products? Dealers/Distributors 75

Agents Store Retailing MLM Any Other

4.What is the reach of your products? In Metro Cities only In towns only In small towns All of the above. 5.How do you select dealers/distributors for the products? Exclusively Generally 6.Give ranking to the following parameters which you consider while selecting distributors? Economical Background Social Background Population of city/town. Awareness of the products Domain of the person. Location of store. 7.How do you evaluate the performance of distributors/dealers? Revenue generation. Sales Volume. Brand/Image building Customer Loyalty All of the above. 8.How frequently do you evaluate the performance of dealers/distributors? Weekly Monthly Half Yearly Yearly 9.How the dealers/distributors affect the price of products? Costs High Costs Low Remains Equal 10.Weather distribution Channel helped in making the product easily available in market? Yes No

11.How does a Distributor help in promotion of a product? Visibility of product Conducting Seminars Road shows arranged by distributors 12.Weather distributor plays an important role in product innovation? Yes No

For analytical study of effectiveness of fuctions of distribution in white goods companies Part B

For Dealers or Distributors

1.Which companys dealership you have? 2.Do you own monopoly for the products of the company? Yes No

If no, how many other dealers are there in this city? 3.Which category do you belong to? 1Dealers 2Distributor 4.Do you think dealers/distributors help in marketing mix? Product Price 77

1Yes 2No Innovation of New Products 1Yes 2No Product Promotion 1Yes 2No 5.Mention any four major responsibilities of a dealer/distributor? 1______________ 2______________ 3______________ 4______________ 6.According to you, what is the selection criteria of a company for a dealer/distributor? Economical Background Social Background Population of city/town. Awareness of the products Domain of the person. Location of store. 7.Are you satisfied with marketing mix policy of a company? 1Yes 2No 8.Are you satisfied with sales of your products? 1Yes 2No If no, what is the percentage of increment that you expect? _______ 9.Are you satisfied with profits you are gaining presently? 1 Yes 2 No If no, what is the percentage of increment that you expect? _______

For analytical study of effectiveness of fuctions of distribution in white goods companies Part C

For Customers
1.Which companys electronics products do you buy? LG Videocon Samsung Whirlpool Any Other 2.Why you prefer this company to buy electronic goods? 1Due to image of a company 2Product quality 3Dealers image 4All of the above 3.According to you, how distributor helps a customer? 1Making awareness for the product 2Provides knowledge of the product 3Provides after sales services 4Easy availability of the product 79

4.Do you think distributor affects the costing of the products? 1Yes 2No 5.Are you satisfied with the distribution channel of a company? 1Yes 2No 6.Do you think distributor/dealer plays an important role? 1Yes 2No