2012

NOKIA DISTRIBUTION Network

Table of Contents
Table of Contents........................................................................................................ 2 Nokia distribution structure in India.............................................................................4 Distributors Coverage Plan........................................................................................11 Infrastructure required by distributor........................................................................11

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Terms and Abbreviations used

Nokia - Nokia India Pvt. Ltd. RDSS Redistribution Stockist Supplier HCLI HCL Infosystems Dealers Mobile phone retailers

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Nokia distribution structure in India When it comes to distribution, Nokia's lead is clear. Today, India has nearly 2,00,000 outlets that sell mobile phones. Out of these, according to companies own conservative estimates, 50,000 stores have only one brand available Nokia. Nokia started distributing its phones through a partnership with HCLI (formerly Hindustan Computers Ltd.), which had already built an extensive network for its own products. Recently, Nokia has decided to supplement that with its own distribution efforts. Nokia believed that there was a tremendous growth opportunity and it was best exploited when the resources utilization of both companies was optimized. Nokia and HCLI have decided to develop a go-tomarket strategy to jointly address the coverage needs of the urban and widely dispersed rural areas, while rest are handled individually. Nokia has always been secretive about its operation and strategies and have not spelt out clearly how the two partners have divided the markets, but some do clues exist in the way demand is shaping up. In the cities where the market is maturing, buyers are looking at more sophisticated mobile phones, such as Nokia's E-series phones (which serve business users) and the N-series (which have multimedia features). In rural India -which constitutes 70% of the population -- affordability is an issue. So there is a different range for this constituency. Different types of retail fronts selling Nokia mobiles are : Nokia concept stores A one-stop shop for mobile users has been brought into existence to provide an opportunity for consumers to experience the product before purchasing it.
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Trained Nokia personnel would brief customers about various handsets and features. The store would have the entire range of Nokia devices in all categories including latest range of mobile enhancements and exclusive Nokia merchandise apart from handsets. The new Nokia Concept Stores represent a rebranding of the previous Nokia Professional Centers. Nokia has so far been rolled out 9 Concept Stores in India with only Mumbai and Bangalore having 2 concept stores. Other Concept stores in India are located in Gurgaon, Indore, Jaipur, Hyderabad and Chennai. These stores would help Nokia strengthen it brand and at the same time save costs that it incurs in distributing to the dealers. Although it would have to bear the costs of training the employees but the transportation cost would be greatly reduced. It would also give the company the advantage of exclusivity. Since it has been opened in only metro and important cities, therefore, it would not be subject to state sales tax, if the CFA is located in the same city. Nokia Priority Dealers Nokia Exclusive Stores namely PRORITY DEALERS are all franchised outlets .The franchisee must fulfil certain criteria, for example, in the case of an existing store that would be converted to a priority dealer, there must be a certain number of footfalls, the location of the store should be prime real estate in that region, and certain other standards. Nokia provides support to these outlets in the form of help in visual merchandising, furniture etc. against a certain deposit by the owner which is refundable at the end of the contract if need be. Multi Brand Dealers

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Apart from its Nokia Priority dealers and concept stores, the company distributes its product to many organized multi-brand mobile stores with nation-wide presence in India and recognized for their service and price discounts. Few of the major players are Hotspot Univercell The Mobile store RPG Cellucom Besides these there are individual mobile retailing stores as well as wide variety of retail stores like electronics goods dealers, Stationary shops, etc who have started selling mobile phones over past few years. HCLI has also established over 150 Nokia Care Centres managed by HCLI and franchisee operations. Role of Channel Partners Nokia Nokia manufactures its mobile in Chennai manufacturing plant and then it transfers to nokias mother depot which is located in Gurgaon. They also provide assistance in selection of channel partners like redistributors, Dealers, Franchisees, etc. Besides this they provide monetary assistance in Store development for Nokia Priority dealers, help in promotion of products on mass scale as well as in store and training of the sales force of partners at every level.

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HCLI HCLI Info has been handling distribution of Nokia phones for 10 years. The agreement was due for renewal in August, 2006 and was renegotiated beforehand. Again on January28th 2009 a new agreement for territory division was signed between Nokia and HCLI. Nokia business accounts for 52% EBIT of HCLI. HCLI currently has 30,000+ channel partners (dealers), some of which it will transfer to Nokia. The pilot phase was launched in Mumbai and Bangalore to test the new distribution model. The absence of any other distribution partner ensures that there will be no price-cutting. In both the territories, Nokia phones were made available for a uniform price. HCLI starts distributing Nokias product from Gurgaon depot. HCLI takes order from 4 redistributors appointed in Delhi to cover North, South, East and West zones and then it supplies the product to the dealers with the help of RDSS (ReDistribution stockiest supplier). HCLI also takes care of appointing partners and operation of Nokia Care centres. Currently there are care centres in more than 180 cities across India. Re-Distribution stockiest supplier (RDSS) There are 6 RDSS in Delhi NCR region with territories divided as North, South, East and West Delhi, Noida and Gurgaon. RDSS are supposed to operate only in their designated territorial zone. In case of conflict HCLI acts as the arbitrator. RDSS, assisted by Nokia, also take responsibilities like recruiting sales force, training and developing. Stocking norms of Nokia- HCLI agreement says that
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HCLI depot should have 7 days supply, RDSS in city should have 5 days of supply.

Dealers Nokia Priority dealers, Multi brand and individual dealers in Delhi NCR are all served by RDSS. Dealers are explained the features of every new launch mobiles, different schemes and offers by Nokias representatives. Re-supplies are always just a phone call away and the delivery is made within a few hours. Besides, Nokia assists most dealers in the region in the store set-up and design. The price points sometimes dictate the type of outlet. Stock norms define that for how many days worth of stock does any level in the supply chain should have. These norms are defined by Nokia only. Given below are the stock norms: The expected target to be fulfilled by the particular level is determined by the following formula: Expected target = (30 / No. of working days) * Stock Norm for that level Nokia Concept Stores: There are a total of nine Nokia Concept Stores designed in the global formats across the country and the recent store in Colaba, Mumbai is the second NCS in the city itself. The aim was to provide customers a complete experiential mobile experience. The layout and design of the store follows the same pattern as Nokia Concept Stores around the world to guarantee an easy and informative shopping experience. With a simple-to-navigate setup, open doorways and low-glare lighting, the store provides a relaxed and satisfying customer experience. The idea is also to inspire and educate consumers on the benefits of Nokias latest products and technology through a hands-on experience.

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The offerings of concept stores: With its futuristic and high-tech ambience and a trained staff to assist customers, the stores provide the latest mobile applications and solutions across business domains. Our Concept stores are always equipped to deliver newer concepts, services and products, a completely redefined solutions experience in a truly compelling environment. The recent Mumbai store is also equipped with a gaming zone equipped with two giant LCD screens connected to Nokia multimedia devices where one can enjoy the latest n-gage titles from Nokia. The high-tech display terminals and dedicated areas for Imaging, Music, Gaming etc make it easy for consumers to bring themselves up-to-date with the latest technologies and trends in the mobile industry," Price Margins at each level The margins for the Nokia distribution segment have not been disclosed separately but are clubbed with the overall contribution of the office automation and telecom segment. Tentative margins found on the basis of discussions with dealers were :

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Margin not declared

18% Margin

2% Margin

8% Margin

10% Margin

Nokia and HCLI have never publicly declared their margins. Nokia business is the largest contributor to HCLIs revenues and profits. Nokia product distribution was the largest contributor to HCLIs sales (about 72% in FY2009). As a percentage of PBIT however, the share of Nokia distribution was at 61%. Since 2006, when Nokia took over 50% distribution channel from HCLI, revenue growth has almost been flat. When comparing with its competitors, Nokia offers almost half to one-eighth margins on its phones. Compared to 2% offered to dealers by Nokia, LG and Motorola offer around 8-10% and Samsung 18%. But still dealers prefer to go with Nokia as it has much more surer sales and have excellent support from RDSS and the company.

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Distributors Coverage Plan HCLI being the first level intermediary between Nokia and dealers, HCLI collects the goods from mother depot in Gurgaon and supplies to 5 RDSS across Delhi and Noida. Gurgain depot itself functions as RDSS for the Gurgaon. HCLI agents deliver the ordered mobile sets to RDSS within 4hrs of receiving orders. Mother depot maintains stock capable of catering to atleast 7 days of demand in its covered territory. In turn, RDSS ensures the delivery of goods within 4 hrs of the order made, sometimes even quicker. Night time orders are delivered net day morning. As each RDSS is given a small geographic territory, making quick deliveries does not prove to be hard. Although territories are geographically small, the number of retail stores in each zone make them commercially attractive to operate in. The small delivery time and close-knit relations with RDSS allows dealers to even order the mobile pieces as and when customer walks in demanding the handset. Again compared to this, Nokias rivals have appointed much more number of distributors in each region. Samsung has 15 or more distributors to cover Delhi NCR region. But Still Nokia manages to give services better than its competitors. Infrastructure required by distributor Nokias sole distributor currently in India is HCLI. Their deal was first inked over a decade ago just when Nokia was entering into Indian telecom market which was perceived to be ready to take a big leap forward. Nokia wanted an established partner with proven record in handling distribution across India. HCLI had an excellent wide-reaching distribution channel and support centers. This partnership helped Nokia in having a focused approach towards increasing penetration to Rural & Semi-urban areas and improvement in market share across the country.
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Nokia-HCLI have not declared any of their agreement details on public domain and hence its not known what infrastructure HCL is supposed to maintain as per the agreement or what infrastructure they have dedicated or use for servicing Nokia. Few details available in public domain are:

Service provider for the repair of Nokia Mobile Phones in India Pan India service network in 21 L3 locations equipped with state of art equipments

Mobile care vans across the country to increase remote coverage Nokia repair facility 100+ repair benches with 75K handsets/ month repair capacity L4 repair capability

HCLI maintains the mother warehouse located Gurgaon Support provided by the company to the distributor Nokia has an extensive support program dedicated to providing key benefits to HCLI and RDSS agents and qualified mobile phone dealers throughout Delhi. Nokia offers qualified dealers unprecedented access to Nokia's products and support services to better satisfy customer needs for Nokia products. It offers the tools and point-of-purchase support dealers need to deliver the best possible customer solutions to Nokia end users. Nokia also offers dealers extensive merchandising support such as counter top displays, product brochures, demonstration phones and a Nokia premier dealer plaque Point of Sales(POS) system : Nokia provides point of sale systems and software to dealers to help them manage their selling activity better. It encourages dealers to

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move away from their cash registers to IT managed account system. Almost all the Priority dealers have moved from cash registers to POS systems. In-shop Branding Schemes : The concept of mobile recycling was first introduced by Nokia, a campaign was launched to encourage people to give their damaged Phones to Nokia care, & avail the discount on buying a new one. Besides, Nokia offers multiple schemes to push sales of lagging mobile models. These schemes come in form such as added cash bonus of Rs.300-1500/ set for selling a 5 specific lagging set in 4 days. Retail element: Nokia assists priority dealers by assisting in the payments for the retail element part of their stores while the dealer is supposed to take care of the expenditure incurred on the services other than the retail element. The service charge payments for the retail element could be split into 'core' and 'additional' elements, with dealers paying pro-rata with for only those services they all have use of, and an additional element for any extras it specifically requires. Sales Collaterals : Nokia provides promotional collaterals and brochures to the dealers directly to help in promoting sales. They regularly send in posters and pamphlets of latest releases, updated brochures and handset fact-sheets to assist dealers in closing the sales. Training the dealers : Nokia sends in its executives to dealers to train them on the features and selling points of new launches and handset models not performing to their potential. Mostly these tasks are taken up by the delivery executives who also inform the dealers about their latest launches and the feature sets of these phones. Dealer encouragement schemes : Nokia has cash rewards to promote and motivate the dealers. They offer cash rewards for making predetermined level of
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sales fortnight which may ranges from Rs.500 to Rs.5000. For their high performing dealers they offer all expenses paid local/foreign holiday trips. Effect of Nokias sale if price of phone increase or decrease by 10% They shipped 2.2 million Nokia Lumia phones last quarter. It would not affect the sales of Nokias smart phone if the price is increased by 10%. People would not see only price before they go to purchase a mobile phone. There are many other factors that customer would see. Warranty , guarantee ,quality ,after sale service etc is being offered by company, . Although price is one of the important factor before one would go to buy a mobile phone. Nokia has 1000 Nokia care center for its customers. Sales of Nokia would increase if price is decrease by 10%. Nokias warranty period after sale service: The warranty period starts at the time of Products original purchase by the first end-user. The Product may consist of several different parts and different parts may be covered by a different warranty period (hereinafter Warranty Period). The different Warranty Periods are: 1. twelve (12) months for the mobile device and accessories (whether included in the mobile device sales package or sold separately). 2. six (6) months for the following consumable parts and accessories: batteries, chargers, desk stands, headsets, cables and covers; and 3. ninety (90) days for the media on which any software is provided,e.g. CDrom, memory card.

The Warranty Period will not be extended or renewed or otherwise affected due to subsequent resale, repair or replacement of the Product. However, repaired part(s) will be warranted for the remainder of the original Warranty Period or for sixty (60) days from the date of repair, whichever is longer. Qualification of being Nokias Retailer

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1. Raise the capital collateral necessary to become a Priority Dealer. Nokia will want you to prove that you have the financial wherewithal to be a strong distributor. The capital requirements vary, based on the location. 2. Provide your background and experience. A history of successfully running electronics or cell phone distribution shops is preferred to become a Priority Dealer. 3. Establish a location by signing a leasing, cleaning the shop and organizing the display area. When you become a Priority Dealer, you can hire staff, order supplies and obtain Nokia signage. 4. Sign the Priority Dealer contract with Nokia, and begin marketing and selling the phones. Service output deliveries expect of out Nokia Retail shop.

Nokia Strengthens After-Sales Service Enhancing Customer facility with Online Repair Status Checking. Adequate amount of stocks of sphere parts should available , customer should not wait too long time to get sphere parts. Retailer should listen problems is being faced by customer and try to sought out as early as possible, which would help to become long term relationship. Should have customer care help line center . Not Giving false promises. Mobile theft insurance.

Service for any malfunction in mobile phones. Service for any failure of hardware or software of mobile phones. Educating customers about product and features and how to use it

Zero per cent EMI scheme on smart phones

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