Transcript
Sales and Distribution Management [A report on Nokias 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
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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
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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:
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Nokia Nokia Company released f irst irst mobile with Hindi menu in 2000
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They have come up with Wi-F i-Fi mobile which is called Nokia communicator in communicator in 2004
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In 2006 this company has started huge mobile manuf manuf acturing acturing plant in Sriperambathur nearby Chennai. hennai.
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Nokia Nokia Company has joined with Malayalam Manorama to launch f irst irst India¶s vernacular N vernacular News. ews.
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Distribution
SADM SADM
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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
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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
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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:
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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)
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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)
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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
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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 .
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Handset distribution business ² H CL Info, Nokia in new 5-year deal . (2006, (2006, 2 20) 20). R etrieved etrieved
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