AIR CONDITIONING INDUSTRY

SAMSUNG &
WHIRLPOOL
SALES & DISTRIBUTION MANAGEMNT
Group 5 Section B

Authors : Kunal Jha, Nishtha Jain, Prafull Raghuwanshi, Rakesh Kumar, Shreya Agarwal, Nalin Goel,
Nitesh Agarwal

Progress Of The Industry In Last Seven Years

AC market has been broadly categorized into following categories:

Room air conditioners: (RAC)

o

Window air conditioners

Split air conditioners

Packaged air conditioners

Central air conditioners

AC has started to be considered as more of a utility item now. Earlier it was considered as a luxury item.
There has been a significant price reduction over the past few years. But yet the main demand is in urban
areas with rural areas having negligible demand.
Key drivers of growth
o
o
o

GDP/Capita growth
Reduced indirect taxes
Import duties

In 2011 LG and Voltas dominated the AC market with a combined market share of 41%. Samsung
contributed to 12% of the market while Whirlpool. The Pie chart in Exhibit 6 shows the market share of
different manufacturers in Indian Air Conditioner Market. The Bar graph in Exhibit 7 depicts how AC
market has behaved in last four years.
Ongoing technological advances have transformed air conditioners as products that provide health
benefits as well. All major AC brands recognize the significance of building consumer awareness to
promote energy efficient and inverter based products. With change in lifestyle, the demand from tier II and
tier III cities has also increased. Today AC are not just machines that spew out cool air, but are also
loaded with several value added features.
Because of different changes in AC market over the years the following changes has taken place with
respect to the manufacturers.
Areas of focus for the manufacturers:

Product development
Aggressive promotion
More focus on engineering excellence
Differentiation based on product features

Air-conditioners, as it is more a seasonal product. With the demand from rural markets expected to grow
at a much higher pace in the years to come, and more brands coming into the market. In 3 to 4 months'
time, 80 % of turnover from the AC segment is generated. Typically, in a good year of AC sales, business
starts to rise from March onwards and continues till the end of October.
Modern retail trade's contribution to the overall sales: Though anticipated strong growth in the
modern trade area, the result was not so even for consumer durables. The total contribution of this
segment was only 8%-9% per cent last year. On the other hand, the contribution of the traditional
regional-based retail chains is reported at 87%. And the sales from company owned franchise is about 4
%-5%.

SAMSUNG- MARKET LEADER:

Channel Design Levels For customers business and institutions
Samsung India has its headquartered in New Delhi and has a network of 19 Branch. More than 2,200
Wholesale Dealers and more than 18,000 Retail Outlets. Samsung has two manufacturing unit one each
in Chennai and Noida. A national distributor takes care of logistic associated with distributing the goods
across the country. A carrying and forwarding agent is present in each of the main states. The C&FA takes
care of storing and transporting goods onwards to dealer and distributor. While warehouse for storing the
products are provided by the C&FA agents are still owned by the company. In big cities like Bangalore
the goods are shipped directly from C&FA agents to the dealers. In some cases the small dealer may be
supplied by some of the larger dealers. For big retail chains like e-zone the goods may be shipped directly
from the C&FAS warehouse to the warehouse owned by the retail chain. In both the case once the goods
are transferred to distributor the ownership is taken over by them. The transaction is on cash basis and no
goods are given on credit. In case of larger retailer the purchasing decision is taken at the national level
and happens directly between the company and the head office of the retailer.
Roles and key deliverables of channel members:
The distributor act as intermediary between C&FAs and dealer in small town which are far off to be
catered by the company or the CFAS. The next level is direct dealers whom the companys
representative visits regularly. These direct dealers help to disperse the goods to next level where
company cannot serve directly. Apart from this company has its own franchise owned outlet mainly for
brand promotion. These are divided into three category based on size Digital world, digital home and
digital plaza. The franchise outlets maintain a high assortment of Samsung products and also act as an
interface for company to directly interact with consumers. The company uses these outlets to showcase
their futuristic lifestyle products and an ideal environment. However in price and trade discount, the
company treats these franchise outlets at par with those of other dealers.
Product promotion, discounts, demand estimation and forecasting and overall monitoring and
coordination across the distribution network is taken care of through the sales offices distributed across
the country. Samsung works through the network of branch office and area sales office located all over
the country. In most cases Samsung place its own sales people to push its product to the dealer.
Samsung has been making effort to provide better after sale service to its customer.
It has adopted two ways to provide after sale services. It has supplemented its existing after sales
services network by setting Samsung service plaza in key metro location and Samsung prestige centers
in all the branch office location. Samsung gives certain amount of margin for customer care over each
piece. For instance to the small distributors it gives sum ranging from Rs 400 to Rs 800 for providing after
sale service to their customers.
Bulk buying:
Large retailer and dealers benefits from buying in bulk as they receive discount based on number of units
bought. Large retailers get discount around 16-18% discount. This allows them to cut their margins and
give further discounts to a customer which has brought price pressure on the small dealers.
The diagram in Exhibit 1 shows the distribution network of Samsung. It has its own branch network acting
as first level of distribution, which handles storage and distribution of goods. The next level is the direct
dealers whom the company representatives regularly visit. These direct dealers help to dispense goods to
the next level where the company cannot serve directly. The company reaches out to the customer in
through three channels and franchise is used to connect to sell to the corporate.
Samsung is keen to bring margins to 17-18 per cent across formats. This has not gone down well with
regional and national chains, since these enjoy margins of about 24 per cent. A small retailers margins
are 12-14 per cent; a large-format store, basically a large neighborhood electronics showroom, enjoys

margins of 16-17 percent. But big retailers argue a price differential is a must, given the volume of
business they generate over smaller retailers.
Product promotion, discounts, demand estimation and forecasting and overall monitoring and
coordination across the distribution network is taken care of through the sales offices distributed across
the country. Large retailers benefit from buying in bulk as they receive discounts based on number of
units bought. Large retailers get around 16-18% discount. This allows them to cut their margins and give
further discounts to a customer which has brought price pressure on the smaller dealers. The franchised
outlets maintain a higher assortment of Samsungs products and also act as an interface for the company
to directly interact with the consumers. The company uses the outlets as a means to showcase our
futuristic, lifestyle products and an ideal environment. However, in price and trade discounts, the company
treats these franchisee outlets at par with the other dealers.
CHANNEL MEMBER MANAGEMENT
Monetary methods
Monetary methods are one of the strongest forms of motivation that Samsung uses for motivating its
dealers and other retail chains. The CFAs are paid with additional reimbursements for certain specified
expenses. The company also has a credit policy for its distributors. The large distributors and the retail
chains get credit for up to 30 days. Apart from this, Samsung also remunerates the distributors through
trade schemes from time to time where they are given free products on the purchase of a bulk of some
specified products. Typically, schemes offered by companies include discounts on bulk buying for dealers
and annual tie-ups wherein dealers or retailers surpassing certain targets get extra discounts. Samsung
gives 2%-3% margin to retailers and 5%-7% to distributors.
However, institutional retailers are demanding to raise the margin to 4%. More than 750 electronics
outlets have either stopped selling Samsung products or cut back on fresh orders after it slashed dealer
margins on the Air Conditioning products early this year. Samsung cut dealer margins by 3-8% early this
year after a tough 2011 when rising raw material prices and depreciating rupee drove up input and import
costs, and sales took a hit Retailers say they work on a net margin of 5-7% and face high operating costs
from rentals, promotional expenses and manpower payouts. Samsung's margin cut has significantly
dented their profitability.
Samsung discounts policy up to 2010 - 2011

Genre

Discount(Approx)

Large Dealers

16% 18 %

Retail Chains

20 %

Small Retailers (Served by Distributors)

8% - 10%

CFA

1.5%(Commission)

Non Monetary methods

Dealers and distributors play an important role in the consumer durables business as they are the ones
selling. Hence the company provides them with many non monetary benefits to keep them happy. Some
of the prominent ways include sponsoring trips for the dealers and their families and invitation to company
sponsored events like cricket matches and other incentives. Samsung also holds company specific

parties to increase bonding among the various members of the channel. The company also provides its
own salesperson to the dealer to help them sell the products better and thus increase their ROI.

Target setting mechanism

Samsung is targeting a very aggressive growth rate of 30% to maintain and increase its leadership
position in many categories in the consumer durables segment. The target setting is being done top
down. The process followed is a mix of the past sales figure, the expected growth rate of the company
and the regional growth rate of the concerned market segment. These figures are much skewed because
the data is often not realistic and the target setting is flawed.
Monitoring Mechanisms
Samsung uses customer feedbacks to keep a track of its dealers. The consumers provide feedback about
the dealers they have visited through the company website. These feedbacks help the company keep a
track of how well a distributor is performing and if he is meeting customer expectations. The company
sales person present at the dealers are also important source of information to the company.
Training and HR inputs
Consumer durables are high value goods and the consumers do a lot of information search before they
buy the product. These are also high involvement product. Hence, it is important for Samsung that the
dealers know all about the products, their functionalities and benefits. The company provides regular
inputs to the dealers about the new product launches by any competitors or by Samsung. Every new
product feature is well demonstrated and explained to the dealers so that they are well aware of all the
functionalities. The dealers are also encouraged to use Samsung products at home so that they can be
aware of the problems that can be faced by the consumers and the remedies to them. The company also
provides them information and training on the design of the store, the layout, lighting etc. to make the
store look more attractive.
FIELD FORCE MANAGEMENT
Monetary Methods
The company sales persons play very important roles for Samsung. They directly interact with the
consumer and sell the product. At the same time they gather feedback on the consumer requirements and
also serve as monitoring system for the dealers. They are well rewarded by the company. They are on a
salary as well as incentive pay structure where the company gives them a basic pay irrespective of their
performance. This allows them to cover their basic expenses even if they do not perform well in a
particular month. Over and above this basic pay, they get paid for every appliance sold, or if they meet a
particular target set by the company. The basic pay is decided based on the qualification level of the
employee and his past experience. The incentive provided to all the sales persons is the same
irrespective of their basic pay.
Non Monetary methods
Most of the motivation of the field force is carried out using the monetary methods. The non monetary
methods mostly include free holidays and invite to company parties. One important non monetary method
the company uses is awarding sales person of the month for every region based on the sales.
Target setting mechanism

Target setting for the sales force is based on the target set for the dealers. The target for each sales
person is proportional to the target set for the dealer and the number of sales people appointed at that
particular dealer.
Monitoring Mechanisms
The performance of the sales force is monitored based on the sales generated by each of them. Apart
from these some subjective factors like the training modules attended, and special recommendations
received from the dealer/customer also plays an important role in analyzing the performance of the field
force.
Training and HR inputs
The training module for the sales people is divided into two parts. One is the technical training where they
get in depth information about all the products the company makes and their technical specifications.
They are trained so as to be in a position to handle any technical query made by the customer. Apart from
the technical training, the sales persons are also trained on the soft skills of talking to the customer,
making convincing argument to re assure the customer, listening to customer requirements etc.
TRANSPORT AND LOGISTICS
Imported Goods
These are handled by a 3rd party logistics company which in this happens to be SembCorp Logistics
Services. They import goods in containers from Korea, Malaysia and Indonesia for Samsung, arrange for
customs clearance and then transport these to the Chennai logistics centre where the good s are stacked,
stored and MRP-labeled in accordance with India's legal requirements. SembCorp is the designated
carrier for all Samsung products, handled through its own and associated fleet of container vehicles
Within the country
Samsung has two manufacturing units one each in Chennai and Noida. A national distributor takes care of
the logistics associated with distributing the goods across the country. A Carrying & Forwarding
agent(C&FA) is present in each of the main states. The C&FA takes care of storing and transporting the
goods onwards to dealers and distributors.
Modes of Transportation till Dealer
The Consumer durables are transported mostly by road from the Factory to the RDC, RDC to CFA and
from CFA to the dealer. Usually trucks are used for the transport of these products.
Modes of Transportation after Dealer
Usually customers come to the dealers shop to buy these durables and sometimes end up taking the
products themselves if they don't require any assistance in using it. However if the customers require
assistance in getting started with the product which happens in the case of Ac's a technician is assigned
to deliver the products by commercial 3-wheelers etc and then has to ensure that it runs properly at the
customers place.
Break up of Sales and Distribution Expenditure for Samsung
Transportation and Logistics
Freight and Forwarding

Sales Force Training and Motivation

Incentives
Rewards Program
Warehousing
Channel Maintenance
Issues in distribution
Parallel imports
Parallel import is eating company's business in consumer electronics and durables markets. Gray-market"
products are those products that are rampantly sold in an undesignated territory or market without the
permission or authorization from the IPR owner/manufacturer. This gray market or the parallel import
market as it is also referred to, has been growing at a phenomenal rate and is a menace for the
company's authorized partners business as well. Samsung India has taken an initiative to sensitize and
educate channel partners on the issue. In the first phase of this initiative Samsung India has sent across
an educational letter on parallel imports to around 300 Star Partners.
Channel Conflicts
Vertical conflicts
Small dealers procure from a distributor which most of the times is a large retailer who also sells directly
to the customers. This leads to squeezing of profit margins for the small dealer.
Multichannel conflicts
Different discount to retailers: Single outlet retailers face threats from price cutting by upcoming retail
chains like Ezone, Next etc. They are generally competing with each other with same products being
offered to same customers, but retail chains are able to offer better discounts owing to reduced costs from
their bulk purchasing. These discounts cannot be matched by single retailers. Hence this is creating a
channel conflict where the consumers would like to buy from retail chains which offer wider variety and at
the same time, give larger discounts than one off retailers.
Shelf space/ Display/Demos
Ensuring that the company's products get adequate shelf space in dealer's shop amongst several
competing brands is becoming extremely difficult. Also, it is imperative to ensure that sales force at the
dealer's outlets is sufficiently motivated to push Samsung's products over others. Apart from the push, it is
also important for the sales force to be well aware of the product features so that he can convince the
customers, and at the same time give demos. Refer the marketing flow channel for Samsung in Exhibit 3.
Physical possession and financing are the two big concerns in case of Air Conditioner costs for the
channels with promotion a close third. Ordering, payment, risking and negotiation are not as big of costs
as they are mostly pre-determined and agreed upon by the firm and the channel. The highest normative
profit share in case of air conditioners and especially in the case of Samsung is the firm followed by the
dealers and distributors and last the end-customers.
SOD Service Output Delivery Template (B2B):
Industry/
clients
Institutes
Hospitality

Bulk
breaking
Medium
Medium

convenienc
e
Low
Medium

Delivery
time
Medium
Medium

Variety/
assortment
Low
Medium

Customer
service
Medium
High

Information
provision
Low
Medium

Health
Medium High
High
Low
High
Medium
sector
Real state
Medium Medium
Low
Medium
Medium
Medium
Bulk Breaking is medium for all the industry/clients because it is a consumer durable item and
large quantity requirements do not secure much of a discount for the clients. In case of large
industrial installations, the client is charged for the whole unit plus installation as a whole.
Delivery Time is medium for institutes and hotels because the order is placed during construction
phase in most cases. In health sector it is high because the requirements are very specific and
time bound.
Variety is not much of a consideration in most corporate clientele. Standardized versions are
sought and the clients are shown a smaller catalogue to choose from. In health sector the
requirements are very specific as per the client so variety does not matter as such.
Customer service is of huge importance in any B2B purchase as it is a long term commitment and
relation in case further units are needed. Samsung generally complies to the service levels
demanded by the client.
Samsung move against growing modern retail
Samsung has begun taking over smaller dealers across the country as franchisees to have a grip on
distribution in smaller markets. The strategy is also an aggressive move to tackle the increasing clout
and bargaining power of the big retailers, who are also on an expansion spree. For small dealers, it's
equally good business to tie up with the industry biggies than take on competition from the big dealers
who are luring consumers with huge showrooms and attractive product display. Samsung Electronics
India now has two sales verticals-one selling products to distributors, stand-alone multi-brand outlets
and Samsung brand stores, and other focusing only on national and regional retail chains. The
change in sales approach will help the firm meet the needs of the large, widespread and growing
multi-brand outlet world as well the specialized needs of the large format retail channel. Samsung's
move is a testament of the growing importance of key accounts like big retailers and regional stores.
"This will help Samsung interact closely with the customer, understand their needs and provide
customer intimacy," Under the new structure, Samsung has given higher responsibility to a lot of
executives for leadership roles and it plans to expand the sales team. At the regional level, there will
now be two branch heads for audio-visual products and home appliances to grow the business in
multi-brand outlets under the regional manager. There will also be key account managers at the
region and branch level who will push sales.

WHIRLPOOL FOLLOWER TO SAMSUNG

Channel design- Levels for customers, businesses and company
For the end consumers (household people) the company has divided the market into 5 Zones, i.e.
North, East, West, South and Central. It has got 18 sales branch offices in India which have in turn they
have 1 CFA each. The company markets its products through CFAs who further provide the goods to the
Direct Dealers. The Direct Dealers can also source the products directly from the company. Another
Alternative Channel is selling through Sub-Dealers who in turn source their products from either the
Distributors or the Direct Dealers. They also have exclusive showrooms that sell all whirlpool products
sourced directly from the firm.
Industry/Business Level:
For industry/business level setups, company goes through direct interface with the business or through
authorized dealers who are approached by the business.
The figure in Exhibit 2 shows the marketing channel design Whirlpool follows for targeting different type of
customers. The red line shows the one level marketing channel design whirlpool follows for targeting
various institutions (educational, corporate offices, factories). The Green channel design shown the two
levels scheme whirlpool follows for small town customers. Here, Distributors and the sub dealers act as
intermediary. For the covering big town parties, whirlpool again follows a 2 level network but here it
involves CFAs, then through the direct dealers the product reaches to the end customers in the big
towns.
Whirlpool does not have a wholesaler as their channel. All the general consumer sales are done through
direct dealers or sub dealers. While institutional sales are directly handled by the distributer. Direct
dealers source their products directly from Whirlpool through CFA. Sub-Dealers source their products
from either the Distributors or the Direct Dealers. 60% of the sales at Whirlpool are done through
Distributors while the rest 40%is undertaken by the direct dealers and sub dealers. Whirlpool on the other
hand has two types of dealers: Multi brand and Exclusive (Brand Outlets). These dealers are included in
the design channel in to order to have better customer influence.
Categorization of distributors (ABC Classification):
C&F Agents takes 1 day to service reorder within their zones.
If goods have to be procured from the warehouse then it takes 2-3 days (average) for the goods
to arrive at the C/F or distributor and delivered to the stores.
Franchisee showrooms do have a system in place to consolidate their inventory and sales with
the company main office.
If any reorder do come in during the month then the regional warehouse that entertains them
properly services them.
Distributors are appointed for cities which require more focus and attention. Company sends
goods to the distributor on outright sale basis. Conduct sales and marketing on behalf of the
company. Distributor sends his people on field to book & execute orders.
Distributor maintains his own sales, delivery and accounts people for the units working & is
served by the nearest C/F for all his requirements.
The company divides the Indian market into 5 Zones, i.e. North, East, West, South and Central.
The company has got 18 sales branch offices in India which have in turn got 1 CFA each. The co.
markets its products through CFAs who further provide the goods to the Direct Dealers.

 As opposite to FMCG sector, for consumer durable it is not feasible to do ABC classification of
dealers.
Institutional business is taken care of by the distributors directly.
Whirlpool now insist that trade partners can sell their product only at the market operating price,
or MOP, which means there is no room for double discounting.
Selection of Distributor:
The criteria for selecting distributors include mainly the distributor's operation scale, financial position,
reputation, sales volume and growth, warehousing capability, transportation capability and customer mix.
In particular, customer mix refers to whether the distributor has an extensive and in-depth customer
network comprising a number of second-tier wholesalers and retailers which can cover a regional-level
city.
The distributor's credit position is the first and foremost criterion in the selection process. In assessing the
distributor's strengths in this aspect, its financial position and in particular its ability in settling payment for
goods is of utmost importance for Whirlpool.
The distributor's reputation is a good indicator of its reliability and thus another important selection
criterion for Whirlpool. The reputation of the distributor can be gauged by means of its company image
and customers' feedback.
It is also crucial to examine whether the distributor shares the same development goals, industry
prospects and market views with the manufacturer. A good assessment method is to observe the
distributor's corporate culture and values. The sharing of common goals and values is pertinent to the
smooth cooperation and effective integration between Whirlpool and its distributor and is given due
consideration before agreeing on a partnership.
The management capability of the distributor is a key factor in determining whether it can effectively
implement agreed business decisions and plans, which will in turn affect sales performance. The
continuity of the management staff is also important. If management personnel are changed frequently,
the cooperation relationship may be disrupted and the business performance may be affected.
With regard to the distributor's sales capability and performance, two assessment standards may be
used. One is the number of sales personnel employed by the distributor and their caliber, and the other is
whether the distributor's market coverage meets the manufacturer's requirements.
Warehousing:
Whirlpool has divided its warehousing structure into two major categories
1. Mother Warehouse
2. Branch Warehouse
Mother Warehouse

Warehouse where the products from the factory are kept and from that
warehouse, the products are then sent to the Branch Warehouse
Whirlpool Washing Machines - near the factory in Pondicherry

Branch Warehouses

located in different regions in India

Ghaziabad Warehouse Dasna
Transportation via trucks from Pondicherry
Warehouse has 7 locations set up for following purposes Selling, Secondary
Sales, Insurance claim, Write Off material, Destruction of Item, Court Case
Material, Repair

Inside the warehouse, the products are pin-up with 3-colour paper to give easy information about the
delivery:
Red Card This is to prevent the product from distribution into the market
Green Card - This is to allow the product for delivery in the market
Yellow Card - After the product is labeled with Green, it is allowed to move into the market
Whirlpool Ghaziabad comes under the North Distribution region. This region includes the following
locations:
NCR covering Delhi, Gurgaon , Noida and Ghaziabad
Different districts of Uttar Pradesh
Different districts of Haryana and Punjab

The minimum time requirement for delivery from the Warehouse to different dealers from Ghaziabad
warehouse is given as under:
Local Delivery 4 hours
Upcountry Delivery 12 hours
Within 200 km 24 hours
Beyond 200 km 48 hours
Margins for Distributors:
Whirlpool considers the investment which a distributor has to make investment in the form of rent for the
premise, salary, payment for merchandising, transportation of goods, electricity etc before deciding the
margin for the distributor.
The distributor margin is around 3.25% while the dealer margin is around 1.25%. The margin given to
distributors is almost same for both rural and urban areas. Refer Exhibit 9 for details.
Whirlpool is highly concerned about its channel elements meeting and exceeding their sales quotas. It is
also concerned about the level of stock returns as it discerns the performance of the channel element
from this figure as well as the handling capacity of the element. The next targets are set on the basis of
stock returns. Salesmen personally check the stock levels periodically to ensure minimum stock-outs.
Customer complaints of channel elements are of high importance to the firm and it keeps a check on the
number as well as reasons for complaints to ascertain which channel element is at fault.
Channel power and conflict:
The after sales service seems to be a reason. Dealers do not get good after sales service from the firm
while it allots proper resources to distributors for the after sales service. Also, distributors intruding into the
area of dealers for institutional sales is a concern for dealers.

SALES COMPARISON:
Comparison Between Whirlpool and Samsung
Company
Design of territory

Whirlpool
Area
assigned
as
per
geography.
Channels
in
metros are well mature and
hence decided in terms of
channels
(dealers,
distributors). In up market the
territory is divided in terms of
area.

Structure of sales organization

Front Line Sales Team: Sales

Representatives usually stay
here for 0 6 yrs, the job role
remains the same but the
designation changes also the
level
of
responsibility
associated increases.
There are typically three
parameters:
1) How they deliver on
targets.
2) To what extent he
achieved targets, each
sales representative is
assigned a series of
product some make
more
revenue
however others more
profit. To what extent
he has sold each.
3) Distribution,
the
number of new billing
points he opens up
and maintains the old
ones.
Two modes of hiring:
1) 25%
-30%
representatives
are
hires through referrals.
2) Rest is hired through

Performance measurement

How are sales representatives

hired

Samsung
Sales offices are distributed across
the country. Samsung has a
network of 20 branch offices and
40 Area sales offices located all
over the country. In some cases,
Samsung places its own sales
people to push its products at the
dealer. So sales reps are assigned
the areas according to geography.
Front line sales team
Front line sales manager

3 parameters
1) Based on the sales
generated by each of
them.
2) Subjective factors like
a. Training modules
attended.
b. Special
recommendations
received from the
dealers/
customers.

Through recruitment consultants

only.

recruitment
consultants.
Compensation structure

All employees in whirlpool

have almost 10 % of their
compensation as variable
depending on the performance
of the organization.
For the sales staff the variable
compensation is higher and
depends on the product if
suppose a new product is
launched then there is a
higher percentage of variable
income associated with it.

Methods of training

On the job training is the only

way used. No particular
training method employed.

Degree
of
automation

sales

force

It is in progress right now and

will be completed in next 12 to
18 months.

Monetary- They are on a salary as

well as incentive pay structure
Over and above this basic pay,
they get paid for every appliance
sold, or if they meet a particular
target set by the company. The
basic pay is decided based on the
qualification level of the employee
and his past experience. The
incentive provide to all the sales
persons is the same irrespective of
their basic pay.
Non- monetary The
non
monetary
methods mostly include
free holidays and invite to
company parties.
Awarding sales person of
the month for every region
based on sales. His
picture is published in the
internal magazine of the
month.
Other
certificates
and
medals.
Training module is divided into 2
parts Technical training
Soft skills
No such process.

Samsung has much better and organized training module as compared to whirlpool,
Sales people are well trained and given in depth information about all the products the company
makes and their technical specifications. Salespeople are trained so as to be in a position to
handle any technical query made by the customer.
They are also trained on soft skills of talking to the customer, making convincing argument to re
assure the customer, listening to customer requirements, etc.
On the other hand, training provided in Whirlpool is just on the job training which is not well
organized.
The performance measurement of Samsung
Drags the attention of the sales people towards the training module as there is an incentive of
compensation for the number of training modules attended. Also, their performance structure is
such that, salesperson are encouraged to build up good relationship with the customers and the

dealers. This can help them in cross- selling as they have already existing huge customer base,
which generates high revenues. The salespeople are provided high incentives based on the
feedback from customers and dealers.
However in case of Whirlpool the performance measures are indicating more towards the
generation of sales. Also, there is no such incentive of customers and dealers feedback.

Whirlpool is looking forward towards the implementation of sales force automation which can give an
advantage to it over Samsung which uses the conventional system as distribution of Whirlpool accounts
for 60% of the business and that will be automated in the billing process.

Recommendations for the Follower

Managing the channel conflict between small retailers and large national retail chains. The large retail
chains, by virtue of bulk purchases would command lower costs and would be able to beat the small
retailers on price. Whirlpool may handle this conflict by helping the small retailers provide a better quality
service so that they are able to compete on quality instead of price with the large retail chains.
Whirlpool may attain this by taking the following steps:
Appoint own, specially trained and well-informed, salespersons at the small dealers' outlets. However,
large retail chains would manage their own sales-force. Assist small dealers in improving their ambience
and educate the entire sales-force at the dealers' outlets.
Launch internet based direct sales channel
An additional channel for selling Whirlpools' products would be internet based sales. However, since airconditioners electronics' is a high involvement product, users would be inclined to go to a showroom to
have a physical look at the product. However, with increased instances of time constraints of consumers
and their preferring the ease of internet, internet sales are expected to pick up especially for certain
products. The internet channel would cater to mid-to high end professionals who are generally
constrained on time. Therefore, this service should initially be launched in metros and big cities so as to
control the logistics costs.
A key challenge to this strategy would be the channel conflict that may arise from the internet sales. This
would be particularly acute in case of small dealers, who though, would be helped through enhancing
their service quality. Moreover, Whirlpool might introduce separate products for sale through internet to
handle the issue of channel conflict in case it becomes acute.
Provide facility for online feedback and complaints

Whirlpool may utilize internet to enhance its after sales support by allowing users to register complaints
through email and through internet. Subsequently, Samsung's service engineers may proactively reach
out to the customers to address their issues.
Improve the distribution network in Tier 2 and Tier 3 cities
The company must make conscious efforts to improve its distribution in smaller towns. Here, localized
communication must be provided to pull the demand to complement the improved distribution network.
Focus on retail experience. Buying experience is increasingly becoming an essential part of purchase of
consumer electronics.

Exhibit 1

Logistics
Partner

SAMSUNG

Retailer

Institutional
Customer

Dealer/Franch
ise

CFA

Retailer

Customer

Customer

CFA

Distributor

Retailer/SubDealer

Customer

Fig: Samsung Sales Channel in India

Exhibit 2

Manufacturing Units

CFA
(Each of the 18
sales branch offcie
has 1 CFA)

Distributors

Institutional
Customer

Sub-Dealers
Direct Dealers

Customers
Customers
Figure 2 Sales Channel of Whirlpool
Exhibit 3
Marketing Flows in Channels for Samsung:
WEIGHTS FOR FLOWS:

PROPORTIONAL FLOW
PERFORMANCE OF
CHANNEL MEMBER:

COSTS

BENEFIT
POTENTIAL
(High,
Medium, or
Low)

FINAL
WEIGHT

1
Man
ufac
turer

2
Distr
ibut
or

3
Deal
er

4
End
User

TOTAL

PHYSICAL
POSSESSION

25

High

30

30

20

20

30

100

OWNERSHIP

10

Medium

10

25

20

25

30

100

PROMOTION

10

Low/Medium

45

50

100

NEGOTIATION

Low

30

40

20

10

100

FINANCING

35

High

40

30

25

25

20

100

RISKING

Low

10

35

35

20

100

ORDERING

Low

10

40

35

15

100

PAYMENT

Low

20

40

30

10

100

TOTAL

100

N/A

100

N/A

N/A

N/A

N/A

N/A

Exhibit 4
Marketing Flows in Channels for Whirlpool:
WEIGHTS FOR FLOWS:

PROPORTIONAL FLOW
PERFORMANCE OF
CHANNEL MEMBER:

COSTS

BENEFIT
POTENTIAL
(High,
Medium, or
Low)

FINAL
WEIGHT

1
(Ma
nufa
ctur
er)

2
(Dis
trib
utor
)

3
(D
ea
ler
)

4(En
d
User
)

TOTAL

PHYSICAL
POSSESSION

30

High

35

25

25

20

30

100

OWNERSHIP

12

Medium

15

20

25

25

30

100

PROMOTION

10

Low/Medium

40

10

50

100

NEGOTIATION

Low

30

40

20

10

100

FINANCING

25

High

29

30

25

25

20

100

RISKING

Low

20

30

30

20

100

ORDERING

Low

10

40

35

15

100

PAYMENT

Low

20

40

30

10

100

TOTAL

100

N/A

100

N/A

N/A

N/A

N/
A

N/A

Physical possession and financing are the two big concerns in case of Air Conditioner costs for the
channels with promotion a close third.
Ordering, payment, risking and negotiation are not as big of costs as they are mostly pre-determined and
agreed upon by the firm and the channel.
The highest normative profit share in case of air conditioners and especially in the case of Whirlpool is the
firm followed by the dealers and distributors and last the end-customers.
Exhibit 5

Key Performance Indicators for Whirlpool (On the scale of 5: 1- Lowest.5- Highest):
KEY PERFORMANCE INDICATORS
Achieving sales target
Zero complaints from customer
No stock return
Credit control
Minimum stock outs
Investment level
Upkeep of showroom
Exhibit 6

Indian AC Market Share for

2011

Year 2011 was first year which saw a decline in the AC sales in last 5 years.

Exhibit 7

RATINGS
5
3
4
3
4
2
2

Exhibit 8
Margins for Distributors in Samsung:
Samsung considers the investment which a distributor has to make investment in the form of rent for the
premise, salary, payment for merchandising, transportation of goods, electricity etc before deciding the
margin for the distributor. For our study we have selected Chitra Electronics located in 215/6, Main
Jacubpura Road, Near Mission School, Gurgaon which is a distributer for Samsung.
Parameters
Financial status
Goodwill in market
Infrastructure
Location
Market coverage
Present business
Total Score

Score( 1- 5)
4
5
3
4
3
4

Weights (100%)
30
25
20
5
15
5

Weighted score
1.2
1.25
0.6
0.2
0.45
0.2
3.90

Exhibit 9
Margins for Distributors in Whirlpool:
For our study we have selected Happy Refrigeration & Air Condition located in H block market Saket
which is a distributer for Whirlpool.
Parameters
Financial status
Goodwill in market
Infrastructure
Location
Market coverage
Present business
Total Score

Score( 1- 5)
3
4
3
4
3
4

Weights (100%)
30
25
20
5
15
5

Exhibit 10

Weighted score
0.9
1
0.6
0.2
0.45
0.2
3.35

TECHNIQUES OF SALES PROMOTIONS

Consumer Market Sales

Promotions

Trade Sales Promotion

Sales Force Sales Promotion

Price discounts

Off-Invoice Allowance

Sales contests

Price pack deals

Buying allowance

Incentives

Rebates/refunds

Display and advertising

allowance

Awards and prizes

Continuity programs

Buy back allowance

Premiums (gifts)

Coupons

Bill back allowance

Sales meetings

Samples

Count and recount Allowance

Training

Contests and sweepstakes

Slotting allowance

Sales manuals etc.

Premiums and advertising

specialties

Merchandise Allowance

Free trials

POP displays

Brand placement

Cash rebate

Event sponsorship

Free goods

Product warranties

Trade coupons

Exchange offers

Dealer listing

Internet promotions

Dealer loaders

Low interest financing

Sales contests

Free service camps

SPIFFS (push money)

Incentives
Sales training programs
Trade shows