Lava PDF
Lava PDF
Lava PDF
Submitted by,
Sudin
Sriram
Ashwathi
In partial fulfillment for the award of
Post Graduate Program in
Business Management
BS House No 31, Dr. Radhakrishnan Salai, 9th
Lane, Mylapore, Chennai, Tamil Nadu 600004
DECLARATION
Sudin Theja Sesha Anish, Sriram, and Ashwathi as bonafide students of the
department of Marketing and Sales, Chennai Business School, would like to
declare that this project done on Sales and distribution management on
Consumer Durable Industry: Lava International, is for fulfillment of the Post
Graduate Program in Management of Chennai Business School and is original
work.
Date:
Place:
TABLE OF CONTENTS
INTRODUCTION:
The Indian phone is the fastest growing industry in the world and the industry is
expected to be a 174 million in 2017. From communication, networking,
entertainment and games to high speed data at the tip of your fingers, the
industry has revolutionized the way people live. The mobile phone industry has a
healthy FDI percentage to keep the market booming with production units. It is a
market that has no dearth of players, with each brand relying on aggressive
advertising via all marketing channels.
INDUSTRY SEGMENTATION:
Premium Segment:
Loaded with features, this segment caters exclusively for high-end technology like
top-end camera, extended memory, etc.
Low-to-medium cost:
This segment looks at value for money. There is expectation of features and its
balance with cost. The trade-offs in this case is what differentiates one
smartphone from its competitor.
Being a cost leader is the main objective in this segment, with basic features
included calling and messaging, address book, etc.
LAVA INTERNATIONAL:
Amongst the many phone companies trying to capture the market in India, Lava
International is a notable Indian based MNC headquartered in Noida. Though the
company has had its roots since 2003, it became officially known as Lava
International in 2009.
Lava International is renowned for its fierce R&D with in-house teams employed
in India and China for gaining the tech edge over the clutter in all its range of
phone products. Lava, its flagship product caters to the low to mid income
segment, while its Intel-powered Xolo smartphones aims to capture the high-end
customer segment. However, Lava and Xolo are considered as different business
units.
The company is seen to have a 10% market share in India (in 2014) and ranked 5th
in safety in a report by The Brand Trust Report 2014. Owing to the low,
affordable cost of Lava mobiles, it reaches out to customers in Tier 2, tier 3 and
the rural crowd.
Lava sustainability feeds in its vision to the future. It is already looking at bringing
out cost-effective 4G LTE (Long term evolution) connected devices; a healthy
strategic company stride that is bound to bear fruit.
Its entry level smartphones are priced at Rs. 4444, while its mobile phone range
starts at Rs. 900. It has a network of 1000 distributors with whom they have a
direct relationship. At its retail front they have a well-developed 50,000 sale
counters to reach their customers. This is apart from their online presence.
PEST ENVIRONMENT:
Political:
Economic:
Social:
Technology:
SWOT:
Strength:
Weakness:
1.) Market penetration not yet as strong as competitors such as Karbonn and
Intex.
2.) After-sale service not as per standards.
3.) Low margins.
4.) Comparatively lower brand awareness.
Opportunities:
Threats:
1.) Customers are spoilt for choice and hence, exude a high bargaining power.
2.) Top-end technology at a more affordable price is the key focus.
3.) Camera, top processor and storage are the main points of consideration for
a buyer, and vary across segments.
1.) Though the market is cluttered there is still space for new entrants in terms
of technology, price, and features.
2.) Entry is easier in the low segment as opposed to the premium segment
where investment is much higher.
1.) Phablets
2.) Tablets
3.) The features of each of these products vary and the segments respond
differently to each of the product and hence, this factor is considered as a
low factor.
ORGANIZATIONAL CHART:
Sales
North Regional
Distribution
Zonal Manager Sales
West Regional
Distribution
Sales
South Regional
Distribution
Sales
East Regional
Distribution
Roles:
MEASUREMENT PERFORMANCE:
1.) Sales performance is mainly based on units sold in allocated area (based on
sales projections).
2.) Market coverage and inventory management are the next level of
performance indication linked to KRA.
3.) Performance also depends on cross-department function and process flow
for completing the work within the target deadline.
T&D INITIATIVES:
Manufacturer
Distributor e-commerce
Retailer Consumer
Lava International is proud its direct interaction with the distributors. By cutting
down the intermediaries, this cost benefit can pass on to their customers, which
will give Lava an edge on competition with lower prices.
Vertical:
Horizontal:
There are mobile showrooms like Univercell and Poorvika (to name a few) and
many unorganized players who sell mobile phones. In the case of Lava mobiles,
distributors have the responsibility of selling to both organized and unorganized
retailers, especially as these phones target BOP and tier 2 cities.
Multi-channel systems:
Mobile companies usually use a mix of distributors for physical retailers and e-
commerce sales to reach the same target customer. The direct marketing channel
is used to target BOP, where infrastructure isnt great and needs the conventional
system for distribution. E-commerce is more for tier 1 and tier-2 (picking up
online shopping), where an increasing number of shoppers are turning to these
convenient platforms for even their consumer durable needs.
As Lava has a direct relationship with the distributors, the relationship is more
collective than individualistic. Lava doesnt yet have a great pull factor so the sales
will have to be a push factor. This means that the distributor sometimes may have
an upper edge in the negotiations (credit terms and volume).
The relationship in the channel structure is generally good, with decent margins
given to the distributors. In times where sales are needed to be pushed, discounts
on margins are given and the company can still make a profit.
Spatial:
Most mobile companies manufacture their products in China and assemble the
final product in India before entering the next leg of the transportation chain.
Lava mobiles, however, has a factory in Noida and Tirupati, from where they
reach the various distributors. This shows a smaller spatial discrepancy as the
manufacturing facility is within the country.
A recommendation would be to not increase the capacity of the Noida facility but
instead start a Greenfield project in another strategic location of the country, so
that the spatial discrepancy will decrease further.
Temporal:
The temporal discrepancy, though an important factor for phones, may not be
easy to reduce by Lava International.
Assortment:
Financial Support:
Days of credit are extend up to a maximum of 15 days in this industry, for each
the distributor and retailer. Financial support is also given in terms of discounted
cost and increased margins to help push the sale of Lava mobiles.
For rural markets: Cooperative society and self-help groups can look for
sales.
Mobile van selling Can give an experiential feeling to the customers as a
part of the marketing strategy.
Event selling strategy: Gaining popularity by the masses.
IT SYSTEMS:
DISTRIUTOR:
Ajanta Mobile Pvt. Ltd. is a distributor for Itel and Lava mobiles founded in 2013
by Mr. Kishore. It is a small scale profitable company situated in Sankarapuram
(Villipuram district).
Itel and Lava mobiles are the 2 brands that Ajanta Mobiles deals with.
The target for each sales representative is a billing of 1 lakh a month, keeping an
average of 50 mobile units sold. There are 3 sales representatives (along with two
sales executives who ride as a buddy).
ACTIVITIES:
Daily:
Weekly:
Monthly:
Annual:
1. Review yearly performance as per sales target. Collections are also reviwed
for the sales rep. If sales performance is poor, the sales rep is fired.
2. Revisit relationship retail network and look at new markets to expand to.
Yes, all these activities add value. However, the process flow can be improved by
leveraging work hours to increased efficiency. The performance system is sales
oriented, and has only a fixed component to it.
As sales are the main focus of the company, forecasting is done. The
method is mainly subjective, and based on input from sales team based on
previous experience with retailer comments.
The sales force team maintains a small PDI, where the compensation and is
largely fixed. Possibility of high attrition rate as career growth is pretty
much non-existent.
Channel system discrepancies are reduced as the distributor is close to the
target market and can respond to demand very easily.
Logistics is developed as per the infrastructure of tier-3 and rural areas, and
has high reliability.
RETAILER:
Sakthi Mobile Store (SMS): SMS is a consumer durable store that sources its Lava
mobiles from Ajanta Mobiles. The store sells a variety of products, from the low-
utility category to the premium segments.
Daily:
1. Administer day-fills.
2. Manage inventory.
3. Stocking on shelves and store-check.
4. Interact with customers.
5. Record sales, walk-in, and bills generated.
Weekly:
Monthly:
Annual:
Yes, all these activities add value. The process flow is more organized as there is
timely review of sales and good balance of supply and demand.
Retailer does forecasting for each category and brand. Basic software is
used for this purpose (name undisclosed).
Assortment matrix and breaking bulk is done by retailers as it is the final
stage (customer interface). These are done based on buyers profile in the
area.
Pricing is as competitive pricing and the communication mix is given in the
local language.
Software
Retail
Retailer (re-order <10%)
Scooter/auto
Car
Customer
TRADE MARKETING:
NEGOTIATION:
As Lava works on a push strategy, distributors and retail partners have an upper
hand in negotiations. Lava has to entice distributors by giving extended credit if
necessary, and discounts based on slab of stocks are pretty common.
INITIATIVES TO INCREASE JOINT PARTNERSHIP:
Direct contact and communication with distributors.
Salesmen look at developing a long-term relationship and can do so by
increasing margins, even at the expense of the profit of the company.
TRADE CONFLICTS:
Conflicts arise in cases of money, money and money, or in technical terms
sales revenue, profits, and collections.
Timely delivery and fill rates are not a point of conflict except for in
emergency cases due to unprecedented factors.