Distribution: Plastic Chairs

Marketing Management

Presented By: (Div-D)

• Aditya Pathare
• Ishaan Agarwal
• Ketan Parmar
• Poonam Mundada
"People were shifting from steel and wood to plastic as they are light, durable, and
inexpensive”. They also give a wide choice of eye catching colors and design
helped. But there was a hitch while plastic furniture was doing very well in the
institutional segment, such as offices, restaurant and in the outdoor public places,
the idea did not find enough acceptances in the home segment. The reason was that
consumers did not see plastic furniture as belonging to the living room, and bought
it mostly for outdoor use.
"We are looking for designs which fit indoors"
To cover the home segment, we are introducing a basic and durable design chair
that will provide solution for day to day activities of the consumers.
The unique selling point of our product will be its design and the comfort level as
per daily usage.
The colors of the chairs are far beyond the plain vanilla. The product will be
available in the market ranging from five to six different color options.
For a durable product like plastic chairs, establishing the most appropriate
distribution strategies is a major key to success, defined as maximizing sales and
profit.
It is a product for which it is not possible for manufacturer to directly reach to a
final consumer and hence it needs various channel partners to cater the entire
market.
We are adopting an extensive distribution strategy to make our product reach to the
final consumer.
Our distribution strategy will aim at:

 Mapping our product to the end-user.

 Determining customer’s channel preferences and comparing these
preferences with actual availability.
TYPES OF PLASTIC CHAIRS

There are several types of chairs available in the market. These chairs are priced
differently from each other because of the quality and designing of the chairs. The
price ranges from Rs.300 – 900.
TYPES OF MARKETS

There are two types markets available for the plastic chair manufacturer.

 Consumer market
 Business market

CONSUMER MARKET

For this market the company will use channel partners. The channel partners are
wholesalers and retailers. This channel is explained in detail in the following pages.

BUSINESS MARKET

This market includes restaurants, banks, decorators, etc. these are institutions where there
will be a huge requirement for plastic chairs. The manufacturer will directly sell the
chairs to these instituions.
DISTRIBUTION STRUCTURE FOR PLASTIC CHAIR

I.
MANUFACTURING
UNITS

MOTHER GODOWN

WSS
(WHOLE SALE
STOCKIST)

WHOLESALER RETAILERS

FORMAL
INFORM
II.
MANUFACTURING
UNITS

MOTHER GODOWN

ORGANIZED
RETAILERS

FORMAL

The organized retailers here include organized retailers like Big Bazaar, Spencer’s, D-
Mart, More and other organized retailers. The company in this case will directly sell its
products to these big retailers.
EXAMPLE DISTRIBUTION STRUCTURE

MANUFACTURING UNIT

MOTHER GODOWN
(Zonal)

WSS (2)
WSS (1)

WHOLESALER RETAILER RETAILER WHOLESALER

FORMAL
INFORMAL
OWNERSHIP TRANSFER

MANUFACTURING UNIT

CHALLAN

MOTHER GODOWN

CHALLAN

INVOICE UNDER THE COMPANY’S NAME

PRIMARY SALES
WSS

SECONDARY SALESBILLING IN THE BOOKS OF WSS

RETAILER BILLING IN THE BOOKS OF RETAILER

The goods are first manufactured in the company owned manufacturing units situated at
Bhiwandi. Here the goods are posted in the challan under the company’s name. Then the
goods are sent to the various mother godowns spread across the major markets in the
country for further distribution.
Then the goods are sent to the Company owned Depots. From here the goods are
invoiced under the company’s name and sent to the WSS who in turn bill the goods under
the name of their respective concerns and sell the goods to the retailers. The retailers also
sell the goods to the end consumers under their dealership.
TRANSPORTATION SYSTEM

THE TRANSPORTATION SYSTEM

The transportation system from the factory to the respective distribution stages are
covered solely by road.
 From the factory, the goods are transferred to the mother godowns in respective
zones via trucks.
 From the mother godown (Zonal), trucks are used to transfer the goods to
company depots.
 From the company depot, the goods are sent via trucks to different WSS in their
assigned regions.
 From the WSS, the goods are sent to wholesalers or retail outlets, via three
wheelers or vans.
 Sometimes the goods are sent to their company depots directly from the
manufacturing unit, instead of going via. Mother godown depending on route
compatibility.
 DESCRIPTION OF CHANNEL PARTNERS

I. WSS

The company appoints various wholesale stockists who are a very important link between
the Company and the retailers. The number of these stockists is not fixed and varies
according to the sales potential and geographic size of the region.

Primary sale takes place at the Wholesale Stockist. Hence their selection, motivation and
evaluation becomes very important to the company.

TYPES OF WSS

The company has divided the WSS on the basis of their sales value and sales potential.
The various categories of WSS are

1. CLASS A: These stockist are the ones who have a sales potential above Rs 30
lacs
per month.

2. CLASS B: These stockist have the sales potential between Rs 30 lacs and
Rs15 lacs
per month.

3. CLASS C: These stockist have a sales potential of less than Rs 15 lacs per
month
II. RETAILER

The WSS sell the goods to the retailers who in turn sell it to the end consumers. The
retailers are classified in terms of their sales potential in the following manner-

Class A - Greater than Rs 4 lacs pm

Class B - Between Rs 4 lacs-2 lac pm

Class C - Below Rs 2 lac pm

SELECTION OF WSS

Criteria are:-

1) Capital Investment :

This is dependent not only on the present required turnovers but also on the
estimated future capital investments that will be required by the distributor (based on
company’s growth plans in the area). Amounts required vary from area to area and
markets to markets.

2) Relevant Experience :

It is imperative that the distributor has had some prior experience as a channel
member in the Furniture sector so that no training is required to be imparted to him on
the aspects of the business. The distributor should not be dealing in competitor’s
products and should be able to function as a dedicated channel. Also, he should have
at least 2-3 years of experience as a distributor in the market. But most importantly
the business should not be totally driven by his staff rather has complete self-
involvement of the WSS.

3) Infrastructure :

The basic infrastructural requirements for a WSS are:

a) Delivery vehicles preferably 3 wheelers
b) Sales executives called Interim Sales Representatives or ISRs.
c) Storage Godown
However, there are no set guidelines for the above criteria with the same being variable
with market condition and turnover expected of a WSS. Every new WSS furnishes the
Company with basic information in a format specified by the Company called a WSS
Appointment Form (Annexure) which had details about his shop registration number,
type of delivery vehicle, computer configuration etc.
INCENTIVES TO THE WSS

1) Margin
MARGIN LAYOUT
COMPANY to WSS

 WSS A buys the product at Rs. 305 from the Company.

 WSS B buys the product at Rs. 304 from the Company.

 WSS C buys the product at Rs. 303 from the company

AT THE RETAILER

 The retailer is given 2% cash discount by the WSS, which is common to all the
retailers. This 2% cash discount is divided into two parts-

a. Cash Discount 1% on bill.

b. Discount of 1% if the money is delivered within 20 days.(the credit period)

 The MRP is 425 and the actual selling price varies across retailers.
*All the above margins are in Rs.
RATIONALE OF DIFFERENT MARGINS FOR WSS.

The basic logic of giving higher margins to lower class WSS is that as the business of
the stockist is lower in terms of value, he may not be able to make up for his
infrastructural costs which are accrued in storing and transportation.

In case of Class A WSS, he is able to generate enough volumes to justify his

infrastructural costs. Hence even though his margins are lower, he is able to generate very
high volumes and meet his additional costs.

EVALUATION

Once a distributor is appointed, the company generally does not take away business from
him, except when the underperformance has been observed over long periods. While
evaluating his performance, his targets performance is studied relative to that of other
distributors in the nearby area (because growth patterns may vary by regions). Also, if a
WSS is found guilty of Stock inflow, he is terminated.
If a retailer has not been paying his credit for long periods, he is discontinued from the
channel .Also, if a WSS is found guilty of Stock inflow, he is terminated.
TRAINING PROGRAMMES

 WHOLESALE STOKISTS :

The WSS prove to be a very important channel partner for the company as
they forward the goods to the retailers and make them aware about the same.
Hence, product awareness becomes a mandate for this level so as to completely
understand the product utility and application. Also the company has some
policies which the small distributors may find difficult to understand and thus
falter in implementation.

To avoid the above situation, the company sends distribution managers

from the head office to brief them about the products and also give them the
complete system and functioning description. They are also elaborately told about
the schemes launched by the company because they would be further responsible
to ensure that retailers are rightly aware of the schemes.

This training is mostly given to the B and C class WSS.

 RETAILERS :

The retailers are the most important channel partners as they are the direct
link between the company channel partners and the end consumer. They are also
given training in the form of seminars and meets organized by the company.