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

Manufacturers/products

Agents/brokers

Wholesalers/distributors

Retailers Retailers

Consumers and organizational end users

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).
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 any
firm with a product to sell. As competition in the market place intensifies and new technologies
evolve, 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 the
traditional retail channel to the direct sales model. The contracting arrangement between a
manufacturer and a retailer also varies from channel to channel. Some manufacturers use an
exclusive arrangement with a retailer while others use multiple retail channels for distribution
under both exclusive and non-exclusive channel arrangement.

Each manufacturer produces one product, uses an exclusive arrangement with a retail outlet to
distribute the product, and is allowed to vertically integrate with the downstream retailer. They
show that for low degrees of substitutability, each manufacturer will distribute her product
through an integrated channel; while for high degree of substitutability, each manufacturer will
use 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,

 Indirect marketing channels—medium value-added; medium cost of transactions e.g.

 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 industry

Dell Computer built a strong position in PCs by replacing traditional distribution with
telephone-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 a
radically different path by finding a means to sell products which normally required both
significant customer assistance and local stocking without a dealer or distributor network.
Dell created a new channel option by bringing new technology to traditional roles played
by the distribution channel. Dell takes orders over the telephone, it allows purchasers to
customize products to their own needs, it assembles products largely to order, and it
achieves rapid delivery. The combination provides a high degree of customer service at a
previously unattainable cost structure. With this distribution change as a major element of
its strategy, Dell grew to a profitable $7.8 billion business at the time when many larger
computer companies were giving up on the PC market.

Distribution Channel of Dell

Manufacturer/ Assembler

Telephones

Internet etc.

Customers
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

Manufacturer/ Assembler

Franchisee

Customers

Why Franchisee?

An authorization to sell a company's goods or services in a particular place. Or in other words

 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.
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.