PROJECT REPORT

ON

SALES AND DISTRIBUTION MANAGEMENT

Submitted to: Submitted by:

Prof. U C Mathur Ajay Jain 005

Arijit 018

Arindam 019

Himanshu 046

Indranil 047

Introduction

Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption.

- Philip Kotler

Basic Channels of distribution

Distribution objectives

Minimize total distribution costs for a given service output

Determine the target segments and the best channels for each segment

Objectives may vary with product characteristics

(e.g. perishables, bulky products, non-standard items, products requiring installation & maintenance).

Manufacturers/products

Agents/brokers

Wholesalers/distributors

RetailersRetailers

Consumers and organizational end users

Acknowledgement

Completing the task is never one-man effort. It is other often the result of valuable contribution of a number of individuals in a direct or indirect manner that helps in shaping and achieving something.

It gives us immense pleasure, having done a project on an interesting and knowledgeable topic like Study any company’s distribution channels and recommends to this company a new channel. We thank the Institute who has given us an opportunity to show our skills. We also thank all our nearer and dearer ones without whose support this project would not been possible.

We express our deep sense of gratitude and sincere thanks to our project guide Prof. U C Mathur for his directions, suggestion and information provided which were of utmost importance for the successful completion of the project.

Objectives

Our objective is to analyze any company’s existing distribution channels and find out their effectiveness. And basis of our study and need of the organization we have to recommend a new channel as a part of their distribution channel. For this we have chosen Dell.

Distribution Strategy

Selecting an appropriate structure for distribution channel is a major strategic concern for anyfirm with a product to sell. As competition in the market place intensifies and new technologiesevolve, the firms are taking fresh looks at their distribution channels to squeeze out inefficiencies.

As a result, many types of distribution channels have come into being ranging from thetraditional retail channel to the direct sales model. The contracting arrangement between amanufacturer and a retailer also varies from channel to channel. Some manufacturers use anexclusive arrangement with a retailer while others use multiple retail channels for distributionunder both exclusive and non-exclusive channel arrangement.

Each manufacturer produces one product, uses an exclusive arrangement with a retail outlet todistribute the product, and is allowed to vertically integrate with the downstream retailer. Theyshow that for low degrees of substitutability, each manufacturer will distribute her productthrough an integrated channel; while for high degree of substitutability, each manufacturer willuse either a decentralized or an integrated distribution channel.

Transaction cost by Channels

As the value-added increases, the cost of transaction also increases

Direct marketing channels—low value-added; low cost of transactions e.g. e-commerce, telemarketing

Indirect marketing channels—medium value-added; medium cost of transactions e.g. retail stores, distributors

Direct sales channels—high value-added; high cost of transactions e.g. own sales force.

Example of Dell

Increasingly, we see examples of companies which disrupted apparently stable industrystructures by making major changes in a traditional industry sales and distribution channel process. And one of the successors is Dell.

Dell Computer built a strong position in PCs by replacing traditional distribution withtelephone-based sales and ordering. It adopted direct distribution channel.

Dell entered the PC industry at a time when most companies sold through small, specialized, high-cost dealers which provided customers with support on both how to purchase and how to use computers. This high-cost channel was quickly obsolete and most PC suppliers switched to large, megastore retail chains.

While the other suppliers were struggling with retail channel evolution, Dell took aradically different path by finding a means to sell products which normally required bothsignificant customer assistance and local stocking without a dealer or distributor network.Dell created a new channel option by bringing new technology to traditional roles playedby the distribution channel. Dell takes orders over the telephone, it allows purchasers tocustomize products to their own needs, it assembles products largely to order, and itachieves rapid delivery. The combination provides a high degree of customer service at apreviously unattainable cost structure. With this distribution change as a major element ofits strategy, Dell grew to a profitable $7.8 billion business at the time when many largercomputer companies were giving up on the PC market.

Distribution Channel of Dell

Manufacturer/ Assembler

Customers

Telephones

Internet etc.

Dell’s focus on

Buying criteria for flowers:

- Price

- Ordering speed

- Delivery flexibility

- Personal selection & customization

- Expert advice

- Channel appeal & attractiveness

- Purchasing events

Critical Success Factors – Dell’s point of view

Low cost

Accessible

No intermediaries – It saves more money.

Increase in Sales.

Customer’s point of view

High service quality

24/7 accessibility

No intermediaries

Convenient

Customer’s choice is considered

Flexibility

Timeliness services and delivery

Recommendation Channel to Dell

Why Franchisee?

An authorization to sell a company's goods or services in a particular place. Or in other words Authorization granted to someone to sell or distribute a company's goods or services in a certain area. Some of the benefits of Franchisee are

Get a head start. Compared to normal start-up companies, franchises provide a head start to the business owner by providing support on an as-needed basis. A common saying in the franchise industry is "You're in business for yourself, but not by yourself."

Gain additional training and assistance. Franchises have a vested interest in your Success. As a result, many offer extended training and assistance with business set-up, personnel training, site selection, lease negotiation, collective buying power, and advertising.

Profit from name recognition. One of the most difficult things to do when starting a business is to develop a recognizable presence with your customers. This usually only happens over time. Franchises eliminate this hurdle by developing an image in the marketplace. This is important because it saves you both time and money. However, be certain that the image is a favorable one before you invest.

Manufacturer/ Assembler

Customers

Franchisee

Some of the disadvantages are

Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.

The franchise agreement usually includes restriction son how you run the business. You might not be able to make changes to suit your local market.

The franchisor might go out of business. Other franchisees could give the brand a bad reputation. You may find it difficult to sell your franchise - you can only sell it to someone approved by

the franchisor. All profits are shared with the franchisor.

Why we choose Franchisee for Dell and what positive things we find in this channel.

Dell is more available on Internet and other things, so there should be such channel which ensures the awareness of its products to every customer. Normally many people don’t aware about Internet.

Services quality will be at high standard as customers will get direct access to the showroom.

Dell’s products would be more available in the market as people can buy their showrooms rather than online.

Many people complain that by internet of by telephone we cannot see the product and cannot check as it is only possible when they get its delivery.

To the franchisor, franchising means the spreading of risks by multiplying the number of locations through other people’s investment. That means faster network expansion and a better opportunity to focus on changing market needs, which in its turn means reduced effect from competitors.

The opportunity to learn the latest developments and changes in the local and global market from the franchisor and focus entirely on developing the sales revenues.

Avoiding the unnecessary trial and error period in starting and operating a new business.

Conclusion

Dell’s existing channel is very much successful so it would be a risky step to introduce a new channel in the current scenario. Apart from some disadvantages we find that Franchisee in today’s environment is a very attractive channel. As it benefits to all the parties including manufacturers to customer. It has number of benefits like profit for company, delivery method, service quality and availability for customers. Although Dell has many competitive advantages now but this new channel also helps. As for as its succession’s concern we hope that it woulde be helping Dell to increase their sales as a result profit will increase and company will be get long term sustainability advantages.