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Topics
1.0. Introduction 1.1. Origin of the Report 1.2. Objective of Report 1.3. Scope of the Report 1.4. Methodology 1.5. Limitations 2.0. Organization Overview 2.1. LG company history 2.2. Market coverage 2.3. The channel 2.4. Distribution Process of LG 2.5. The product 2.6. Management 2.7. Controlling 3.0. Package enticements 3.1. Managerial product and sales training 3.2. Regional warehousing 3.3. New product development plans 3.4. Market Management Manufacturer Management 3.5. No penalty stock rotation 3.6. List pricing
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3.7. Comprehensive Cooperative Advertising 3.8. Price Protection 3.9. Drop shipment capability 3.10. Rapid or Time Delivery 4.0. Channel conflict 4.1. Over-distribution 4.2. Stocking levels 4.3. Assigned markets 4.4. Transshipping 4.5. Competition resources 4.6. Size of profit margin 4.7. Pricing issues 4.8. Overselling without regard to Availability 4.9. New product launches 4.10. Sales quotas 4.11. Large account coverage 4.12. Competitor 5.0. Better alternatives for the company 5.1. Indirect channel 5.2. Increase Warehouse
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1. Introduction
1.
Our instructor, assigned us a report, which is a partial requirement of the course "Distribution Management". A research was conducted on the distribution channel of the LG Company. 1.2 Objective of Report: The objective of this report is to asses the existing distribution system, the impact of the Distribution process, and to find out better alternatives for the company. 1.3 Scope of the Report: The report contains a brief discussion of the various activities of the company and its distribution process, also the sales promotional activities. Due to some limitations discussed here the departments and its activities are not explained in details, which is been discussed later.
4.
Methodology:
The data collected for this report are both secondary and primary. Past records of the company were analyzed to gather information and direct interviews were conducted to collect information.
4.
Limitations:
It was not possible for us to cover all the segmented regions of Karachi city let alone all districts. There were also problems of collecting the primary data from the sales force. For above mentioned reasons we had to come up with some arbitrary data.
2.
Organization Overview
1.
LG company history:
LG Electronics, Inc. (Korea Stock Exchange: 6657.KS) was established in 1958 as the pioneer in the Korean consumer electronics market. The company is a major global force in electronics and information and communications products with more than 64,000 employees working in 76 overseas subsidiaries and marketing units around the world. With annual total revenues of more than US $16.9 billion (non-consolidated), LG Electronics comprises three main business companies: Digital Display & Media, Digital Appliance, telecommunication equipment & handset. LG Electronics' goal is to enable the intelligent networking of digital products that will make consumers' lives better than ever.
2.
Market coverage:
For market coverage the company use intensive distribution system by authorizing several distributor to sell products in a given market segment. They have total 129 direct sales in the country, 36 direct sales force in Karachi. They have their showrooms as well. They are setting up or expansion their channel where necessary and they also have more than one show room in some of the areas. 3.
The channel:
To reach the market company use their direct sales force. They have total 139 direct sales force
and to reach the regional end user company also use their direct channel system and to serve the market more smoothly they are planning to set up 300 showroom in the country by 2012. 2.4 Distribution Process of LG: LG is an international brand world wide. They have their unique distribution channel in Pakistan; they market their product through a domestic renowned company known as BUTTERFLY. LG has given their license to BUTTERFLY Company to market their product. LG import their product from KOREA and the product come to the Karachi port and then it send to the warehouse, from where the product delivered to the different showroom located in the country. Lastly the showroom or the direct sales force can sell to the end user.
Imported
Warehouse LG
Showroom
END-USER
LG Showroom
LG Showroom
2.7 Controlling:
They strictly control their work force. Each day the direct sales force channel report everything to the head office. They record sales copy, customer copy showroom copy and send it to the head office.
4. Channel conflict
1.
Over-distribution:
Sometime Company over distribute their product. These kinds of problem happen when company authorizes several distributors in the same area. LG management and sales department authorize one distributor in each area and not facing any over saturation. If they need to authorize more than one distributor they set up showroom according to the demand or either they just expand the current showroom.
4.4 Transshipping:
Out of authorized product shipments by distributor is call transshipping. This kind of activity is harmful for the company, because of strict control and better managerial performance transshipping dont happen in LGs distribution process.
4.12 Competitor:
AC-General, Refrigerator-monopoly business, Washing machine-Samsung, Microwave oven-Samsung, TVSony 5.
5.1. Indirect channel: Distribution is a cost transfer business, by using indirect channel the company can transfer the cost and can save money. Traditionally they are spending their own money to set up a showroom which is quiet costly. They can take the help of indirect channel.