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Sales And Distribution

Nokia Mobile distribution system, clearly explained how nokia does distribution

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Sales and Distribution Management  [A report on Nokias distribution system] 14/10/2009 Submitted to Ms. Manisha Nayar Submitted by: BLR Nirupan M BLR Chetan J BLR Sainath V BLR Aravinthan V P 1 0903031021 0903031007 0903031023 0903031032 MBA 12 SADM SADM Major  assignment Contents Introduction ............... ...................... ............... .......... .. ............... ....................... ................ .......... ............... ....................... ............... ......... .. ................ ....................... .......... ... 3 Distribution channel structure ................ ....................... ............... .......... ............... ....................... ............... ......... .. ................ ....................... ............... ........ 4  New  New concept stores: ............... ...................... ............... .......... .. ............... ....................... ................ .......... ............... ....................... ............... ......... .. .............. .............. 4 Franchisees: ............... ...................... ............... .......... .. ............... ....................... ................ .......... ............... ....................... ............... ......... .. ................ ....................... .......... ... 5 R ural ural market distribution: ............... ....................... ................ .......... ............... ....................... ............... ......... .. ................ ....................... ............... .......... ..... 5 Other distributions ther  distributions in India: ............... ....................... ............... ......... .. ................ ....................... ............... .......... ............... ....................... ................ .......... .. 5 Channel distribution f or GS or  GSM M handsets:....... handsets: ............... ................ ................ .......... ................ ........................ ............... ......... ............... ................. 6 Channel distribution f or CD or  CDM MA handsets:........ handsets:................ ............... ............... .......... ............... ....................... ................ .......... ............. ............. 6 Activities of channel f channel member:........ member:................ ............... ............... .......... ............... ....................... ............... ......... .. ................ ....................... ............... ........ 7 Interview with HOTSPOT mobile distribution member: ............... ....................... ................ .......... ............... ....................... ........ 9 Conclusion: ................ ....................... ............... .......... ............... ....................... ................ .......... ................ ........................ ............... ......... ............... ....................... .......... .. 10 R ef erences erences ............... ....................... ................ .......... ............... ....................... ............... ......... .. ................ ....................... ............... .......... ............... ....................... ........... ... 10 2 | P a ge MBA 12 SADM SADM Major  assignment Introduction Distribution (or  place) or  place) is one of  marketing element in marketing mix and hence designing a distribution Network  f or  or  a  product is very important aspect f or  or  any company¶s  product.  product. The success of the f  the channel design will  be declared as the  product is readily available at ease f or  or  the consumers. consumers. Here we as a group have chosen the Nokia mobile company f or  or  doing this assignment. assignment. The company established in 1865 having its f oundation oundation in Finland. inland. Nokia is one of  the leading mobile communications in the world, it has 14 manuf  manuf acturing acturing  plants throughout the world and they have 58, 58,876 employees. employees . The company owns R&D centers in Japan and China. hina.  Nokia  Nokia mobile industrialized company  plays a major  role in India and have huge market share than other  players other  players.. They have started its  process in India in 1995 and have their  off ices ices in major  cities like New Delhi, Mumbai, Chennai, K olkata, olkata, Hyderabad, and Bangalore. angalore. They have increased their  man  power  f rom rom 850  people to 15000 f rom rom the year  of 2004 to 2008. And also they have targeting all class of  people f  people  by releasing diff  diff erent erent kind of  mobiles with diff  diff erent erent f eatures. eatures. China started mobile services in 1988 whereas, India started mobile services in 1995. By By 2001 India India exceeded China¶s growth rate in mobile services. services. This This shows how the distribution channels of the f  the mobile companies working in India. ndia. Here in this report we are trying to  bring out the eff icient icient network o network  of distribution f distribution addressed  by Nokia in India. ndia. Achievements of Nokia: Nokia: y  Nokia  Nokia Company released f irst irst mobile with Hindi menu in 2000 y They have come up with Wi-F i-Fi mobile which is called Nokia communicator in communicator  in 2004 y In 2006 this company has started huge mobile manuf  manuf acturing acturing  plant in Sriperambathur  nearby Chennai. hennai. y  Nokia  Nokia Company has  joined with Malayalam Manorama to launch f irst irst India¶s vernacular N vernacular  News. ews. 3 | P a ge MBA 12 Distribution SADM SADM Major  assignment channel structure  Nokia  Nokia manuf  manuf actures actures its mobile in Chennai manuf  manuf acturing acturing  plant and then it transf  transf ers ers to nokia¶s mother  depot which is located in Gurgaon, HCL will start distributing Nokia¶s  product f rom rom here on. on. HCL takes order  f rom rom all the distributers in the region and then it supply the product the  product to the retailers with the help of RDSS (R e-D e-Distribution stockiest supplier). supplier) . RDSS are f urther  urther  divided in to two types  based on quantity distributed and geographic nature as RDSS city and RDSS MD (Micro (Micro Distributers), RDSS city caters to large cities and supply directly to the retailers whereas RDSS MD will supply to its micro distributers to carter small carter  small towns and through them it will  be supplied to retailers. retailers. The above mentioned distribution channel structure of Nokia ± HCL is restricted to north and east  part of India. ndia. For  west and south India Nokia has developed its own distribution channel which takes responsibility of  transf  transf erring erring handsets to end users apart f rom rom that Nokia also takes responsibilities like recruiting sales f orce, orce, training and developing. developing. Stock  norms of Nokia- HCL says that how many days stock  should be should  be maintained in each level of distribution f distribution in the supply chain which are as, HCL ± 7, 7, RDSS city ± 5, 5, RDSS MD ± 4 and MD ± 3. Anything Anything below  below this number  of  days would  be replenished immediately to avoid stock  out. out. The T he expected target to f ulf  ulf ill ill the stock  level can  be determined  by the f ormula ormula (30/number  (30/number  of working f  working days)* stock  norm f or  or  that level. level. (Handset (Handset distribution business distribution  business ² HCL In I nf o, o, Nokia in new 5-year deal -year  deal , 2006) 2006) New concept stores:  Nokia  Nokia rolled out its new channel distribution as Nokia concept store. store. The T he shop  provides one stop solution f or  or  mobile users to give away the opportunity to experience the desired mobile in the outlet  bef   bef ore ore  purchasing the same. same. These stores would have wide range of Nokia mobiles along with mobile enhancements also. also. The The new concepts had launched new branding new  branding which was extended to other  Nokia retailer  and other  multi-brand shops. shops. These concept outlets will help in reducing the distribution cost and transportation cost. cost. These concept 4 | P a ge MBA 12 SADM SADM Major  assignment outlets are opened only in metros and large cities which  bring out exclusivity towards the  brand.  brand. (Handset (Handset distribution business distribution  business ² HCL In Inf o, o, Nokia in new 5-year  deal , 2006) 2006) Franchisees:  Nokia  Nokia f ranchised ranchised its  brand exclusivity in the name of Nokia N okia Priority Dealers. ealers. All the outlets which are under  the f ranchiser  ranchiser  should f ollow ollow certain f ootf  ootf alls alls of  the f ranchiser¶s ranchiser¶s company. company. This would include converting a normal outlet into Nokia Priority Dealer  outlet. outlet. But the f ranchiser  ranchiser  will help in visual merchandising and loan f or deposits or  deposits which are ref  ref undable. undable. Rural market distribution:  Nokia  Nokia did not concentrate more on rural market as the products the  products are widely used in urban cities but cities  but due to competition in the market Nokia  planning to venture in rural marketing along with the concept of micro f  micro f inancing inancing f or its or  its product  product which would help in covering high market share. share. Nokia N okia  planning to leverage the distribution network  in order  to expand to rural sectors and to serve untapped market. market. The company  planned to educate the  benef   benef its its of  its mobile towards the villagers. villagers. Other distributions in India: A part f rom rom its Nokia concept stores, the company distributes its product its  product to many multi-brand mobile stores which are well known in India f or their  or  their service service and  price discounts. discounts. They T hey are  Hotspot: it is ranked as the number  one outlet f or  or  its wide collection of  mobile of  all range and also f or  or  good af ter  ter  sales service. service. A part f rom rom handsets, it also sells mobile accessories, mobile network connections, network  connections, recharge vouchers and gaming device. device. Univercell: it is considered as the highest selling outlets among the other  mobile retailers in India. ndia. This is  because of  their  service f lexibilities lexibilities like online shopping, door  delivery, and af ter sales ter  sales service. service. The mobile store: it is a recently emerged mobile outlet which is also well known f or  or  the wide range of  mobiles and its enhancement  product along with the well known repair  center  5 | P a ge MBA 12 SADM SADM Major  assignment insides it¶s each outlet. outlet. R ecently ecently the store had won award as ³ most wanted mobile retailer´ in India. ndia. Channel distribution for GSM handsets: The handsets are transf  transf erred erred f rom rom Nokia Chennai manuf  manuf acturing acturing center  to Gurgaon mother  warehouse near  Delhi and f rom rom there it is supplied through HCL distribution network to network  to north and east part east  part of India India.. HCL distributes to its regional distributors and f rom rom them to RDSS city and they will supply directly to the retailers  but in the second channel called RDSS MD f irst, irst, they will receive and send it to micro distributors and through them the the handsets will reach retailers and then to its customers. customers. GSM GSM handset distribution structure:  Nokia mother  mother warehouse warehouse HCL Distributor  RDSS MD RDSS City City MD MD R etailer  etailer  R etailer  etailer  R etailer  etailer  (Handset (Handset distribution business distribution  business ² HCL In Inf o, o, Nokia in new 5-year  deal , 2006) 2006) Channel distribution for CDMA handsets: 6 | P a ge MBA 12 SADM SADM Major  assignment The distribution system f or  or  CDM CDMA will  be little diff  diff erent erent f rom rom GSM GSM as there is a need f or  or  SIM SIM f rom rom the mobile network  operators. operators. The T he CDM CDMA handsets are manuf  manuf actured actured and send to  Nokia¶s  Nokia¶s mother  warehouse located in Gurgaon. urgaon. And A nd then f rom rom there it is delivered directly to the mobile network  operators of India. ndia. There they will assemble their  respective mobile network¶s SIM SIM card and then send it to its own operators¶ outlets and large distributors. distributors. The T he large distributors will f urther  urther  transf  transf erred erred to agents, chain of  stores, etc. etc. and f inally inally it will reach the end customers. customers. Nokia Nokia has a tie-up with TATA Indicom Indicom and R eliance eliance network f  network  f or its or  its CDM CDMA handsets. handsets. CDM CDMA distribution structure:  Nokia's  N okia's mother  warehouse Network operator Large distributor distributorss Mobile store, Agents and Dealors Network owned oulet s  Activities of channel member:  Nokia  Nokia owns the distribution centers in west and south of India  but, in northern and eastern  part of  the country Nokia distributes its  products through HCL. HCL has served the customers as a  partner  of Nokia f or  or  more than 10 years. years. HCL consist a large  part of Nokia services, it has its centers in more than 180 cities, and these care centers are owned and are operated eff iciently iciently  by HCL, HCL, the operations of HCL is limited only to north and east India only. only. (Distribution (Distribution Structure of Nokia, Nokia, 2007) 2007) 7 | P a ge MBA 12 SADM SADM Major  assignment The mother  depot of Nokia is in North India in Gurgaon, all the high end sets which are imported and all the sets which are manuf  manuf actured actured in Chennai are transf  trans f erred erred here f irst. irst. As we mentioned in the distribution channel diagram as how the distribution is handled  by HCL in Himachal Pradesh, the stock  will transported f rom rom Gurgaon to a small center  in Parvanu, Himachal Pradesh which is owned  by HCL. HCL will receive orders f rom rom various distributers in the region, af ter  ter  taking the orders the RDSS will take care of the f  the f urther  urther  f low low in the supply chain, this is how the retailers receive the product the  product.. As the RDSS is divided in to two  parts, the RDSS-city RDSS -city will distribute the products the  products directly to the retailers in the region then, the RDSS-M RDSS-MD D will take care of the f  the regions outside the city and small towns. towns. (Distribution (Distribution Structure of Nokia, Nokia, 2007) 2007) Firstly the  products will  be distributed to the micro distributes and then the micro distributer  will distribute to the retailers in small towns and  places outside the city,  by this way they are trying to supply the demanded quantity to smaller towns smaller  towns and remote location. location. This is the same f ormat ormat used  by HCL in all states of  north and east India. ndia. In the regions where HCL does not operate Nokia outsources some other  regional distribution company and this company holds all the responsibilities to appoint a sales f orce orce and take care of  other  req requirements of  the distribution channel. channel. This outsourced company reports to Nokia¶s Area Sales manager . They have R egional egional Manager¶s f or  or  north, south, east and west  part of  that area, f or  or  each  part there are three to f our R  our  R egional egional sales manager and manager  and one area sales manager   per  state, the area sales managers are segregated on the  basis of up f  up market and a sales f orce. orce. (Distribution (Distribution Agreement f or N or  Nokia, 2008) 2008) 8 | P a ge MBA 12 SADM SADM Major  assignment Table of Management f Management structure f or N or  Nokia channel distribution: R egional egional GM (one each or  N, S, W & E) f or N E) egional sales Manager  R egional (3 to 4 in every region) Area sales mangers Sales f orces orces (Distribution (Distribution Structure of Nokia, Nokia, 2007) 2007) Interview with HOTSPOT mobile distribution member: or  its  Hotspot  mobile retailer  is considered as a leading multi-brand mobile store in India f or  wide range of  varieties and mobile enhancement spares. spares. The owner  of HOTSPOT mobile store Mr . Chandraprakash C handraprakash chopra says, ³The ³T he store gets its supply f or  or  many  brand like Nokia, Sony Ericson, Fly, Samsung, Motorola and many other  but  but the Nokia is the best the  best  brand whose supply is appropriate in nature which helps in saving cost on inventory´. inventory´. Af ter  ter  a detailed interview with him, we f ound ound out the f ollowing ollowing  positive and negative aspects relationship  between Nokia  brand manuf  manuf acture acture and HOTSPOT dealers. dealers. They T hey are Positive relationship aspect: 1. Nokia had chosen HCL as its distribution  partner  which is well known f or its or  its largest redistribution  points in India; hence the product the  product delivery is f lawless lawless and 2. The T he capital, logistics and  business inf  inf ormation ormation are  provided f or time or  time to time operation  period which helps the company to improve its operation 9 | P a ge MBA 12 SADM SADM Major  assignment  Negative  Negative relationship aspect: 1.The 1.The main negative aspect is that the Nokia is not concentrating more on tapping rural market which restrict the retailer  to open up a store in rural  premises and 2. T he company had chosen two diff  diff erent erent channel distribution systems  based on CDM CDMA and GSM GSM handsets model which  brings a diff  diff erentiation erentiation in handset receiving time and also the retailers need to maintain two diff  diff erent erent suppliers  prof   prof ile. ile. (Distribution (Distribution Structure of Nokia, Nokia, 2007) 2007) Conclusion: ound out that the distribution system of Nokia is well designed and Finally, our  team had f ound  properly structured f or  or   both CDM ndia. The company¶s CDMA and GSM GSM model handsets in India. distribution system is strong in north & east  part of India as it is taken care  by HCL distribution and also eff icient icient in south and west  part of India as it is taken care  by Nokia itself. itself. T he company is  planning to increase its market share  by covering up rural market through expanded distribution network . The company is also  planning to come up with micro-f  micro-f inance inance idea f or its or  its handset  purchasers.  purchasers. And And our recommendation our  recommendation f or the or  the company is to maintain the existing distribution network  and to take measure f or  or  f illing illing the time gap  between the CDM CDMA & GSM GSM handsets¶ product handsets¶  product delivery time to the retailer . References onsumer C onsumer durables. (n.d.). R etrieved etrieved 10 12, 12, 2009, 2009, f rom rom Naukrihub: http:// http://www www..naukrihub. naukrihub.com/ com/india/ india/consumer-durables/ consumer-durables/companies-list /top-players/ top-players/nokia/ nokia/   Distribution Agreement for Nokia. (2008) (2008). R etrieved etrieved 10 12, 12, 2009, 2009, f rom rom Forum Nokia: http:// http://www www.f  .f orum. orum.nokia. nokia.com/ com/inf  inf o/sw. sw.nokia. nokia.com/ com/id/674508 id/674508ed-ab ed-ab06 06--40e 40e4-8 bc5  bc5 b1189  b1189cc2 b492  b492cc/Nokia_  /Nokia_ PC _connectivity_solution_distribution_agreement PC _connectivity_solution_distribution_agreement.. pdf.  pdf.html html   Distribution Structure of Nokia. (2007) (2007). R etrieved etrieved 10 12, 12, 2009, 2009, f rom rom Siliconindia: http:// http://www www..siliconindia. siliconindia.com/ com/shownews/HCL shownews /HCL _   _ Inf o_  o_  Nokia_in_new_   Nokia_in_new_ 5 5 _year_deal-nid31038.html 31038.html 10 |P a ge MBA 12 SADM SADM Major  assignment   Handset distribution business ² H CL Info, Nokia in new 5-year deal . (2006, (2006, 2 20) 20). R etrieved etrieved 10 12, 12, 2009, 2009, f rom rom Thehindubusinessline: http:// http://www www..thehindubusinessline. thehindubusinessline.com/2006/02/21/ com/2006/02/21/ stories/2006022102340400. stories/2006022102340400.htm htm   Nokia - C H  l. l. (n.d.). R etrieved etrieved 10 http:// http://www www..hclinf  hclinf osystems. osystems.com/ com/ hcl_nokia. hcl_nokia . pdf   pdf  11 |P a ge 12, 12, 2009, 2009, f rom rom Hclinf  clin f osystems: osystems: