* CONTENTS 1. Acknowledgement———————————————————–2 2. Contents———————————————————————-3 3. Introduction——————————————————————4 4. Abstract———————————————————————–5 5. Paper making process——————————————————-6 6. The work procedure of the company————————————–9 7. Brand development & marketing—————————————–11 8.
SWOT Analysis————————————————————-17 9. Distribution channels——————————————————-21 10. Warehouse work————————————————————35 11. Scopes & opportunities—————————————————-38 12. Conclusion——————————————————————40 13. References——————————————————————-41 * ABSTRACT * I learnt about the technical aspect of paper making and the overall work procedure of the company. I prepared a report on Brand Development & Marketing and based on the points mentioned in the report conducted a SWOT Analysis for the company. * I also prepared a report on the Distribution Channels undertaken in the industry. * I also studied the work procedure followed at the warehouse of the company and based on my discussion with the staff there incorporated some suggestions that can be undertaken. PAPER MAKING PROCESS Paper can be made from 2 different types of raw material sources:- * Virgin pulp ??? prepared from a mixture of straw, bagasse, soft and hard wood. Recycled pulp ??? prepared from waste paper/recycled paper The procedure from recycled paper is in much prevalence today in the paper industry as virgin pulp preparation involves deforestation. Thus the use of waste paper is much more convenient. Let us now discuss how paper is made from recycled paper. The entire process of paper making can be divided into 2 parts:- 1. Pulp preparation 2. Pulp casting and paper production 1. Pulp preparation ??? This process involves the conversion of waste paper into pulp by the addition of various chemicals.
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The preparation of final pulp involves the processes listed below:- a) Pulping ??? In this process, we use a large cylindrical grinder machine called Pulper, to which the waste paper is added along with several other components like chemicals and water(steam at temperature 50??C) to prepare the pulp. The pulp prepared is of either high consistency (13-15%) or low consistency (4-6%). Consistency is basically the ratio of fibres in the form of cellulose to the amount of water. b) Deinking ??? The next step is the removal of ink prints from the waste paper, thus the name deinking.
It is an important process to cleanse the used paper and involves the use of several chemicals like – Caustic, Sulphide and Peroxide. These surfactants bind to the ink in the pulp and form bubbles that float to the top of the cell, removing the ink from the pulp. c) Screening ??? Often we find several unwanted articles like pins, sticks, etc mixed with the waste paper bundle. Thus in order to remove all those we use the process of screening. For effective screening we use a 3 way process or a 3 filter process. d) Thickening ??? The slurry pulp is made to thicken in this process by the removal of extra water content. ) Refining ??? The pulp is then beaten to make the paper fibres swell and turn any bundles of fibres into individual fibres. In this process we make the pulp to pass through two cylindrical disks in order to prepare the pulp according to our specifications. f) Sizing ??? Sizing reduces the absorbency to lessen or prevent bleeding and feathering of watery media. Sizing also protects the fibre from oily media as well as dirt & pollution. In addition, sizing affects finish, printability, smoothness, and surface bond strength.
Generally for the process of sizing basic medium is used over alkaline medium, as it may prove hazardous. The most common chemicals used for sizing process are ASA (Alkenyl Succinic Anhydride) and AKD (Alkyl Ketene Dimer). g) Retention ??? The process of retention is used to improve quality, so that the fibres can stick together, providing better yield and minimise loss. For this purpose we use different types of coagulants and flocculants. h) Use of additives ??? To improve the basic quality of the paper produced we use various additives/chemicals.
We generally use these chemicals to improve pulp strength, brightness, viscosity and even to impart a slight tinge to the paper material. 1. 2. Pulp Casting and Paper production ??? a) Pouring the pulp over wire ??? In this step, the pulp prepared is pored over the wire by a machine named Headbox, to impart base and structure to the pulp for paper formation. b) Pressing and Drying ??? Pressing as the name suggests involves the use of a cylindrical drum that is used to press the pulp to remove water from it and to impart compactness. During drying the moisture content is reduced from 45-50% to around 5%.
The drying work is done over few stages, where the temperature through which the pulp wire passes is gradually increased. c) Calendering ??? The process involves the removal of coarse paper from the edges. The paper is passed through a machine from which its sides are clipped off. d) Lastly the paper is rolled onto a Pope Roll and is ready for industry use. THE WORK PROCEDURE OF THE COMPANY The work done by the company can be shown in sequence as:- a) Order received b) Stock verification c) Purchase of stock d) Verification of client’s previous records e) Sales f) Payment received ) Technical follow-up h) Building of customer relationship The whole work can be divided into various departments as follows i. Purchase department ??? The main purpose of the purchase department is to purchase stock. Various things have to be kept in mind while purchasing goods. These are:- * Stock in hand * Demand of stock (current) * Demand of stock (future) * Price of stock * Check on wastage of stock * Supplier verification and past records * Quality of stock ii. Operations department ??? The main purpose of the operations department is the maintenance of stock.
They need to keep in mind about the following:- * No stock is wasted * FIFO (First In First Out) process is followed * Just in time inventory * Keeping records of all stock iii. Sales department ??? The main work of the sales team is to ensure the sale of products to clients, win over new clients, ensure customer’s satisfaction, check on customer’s previous records, collection of payment and also build a rapport with clients. The sales team needs to check the customer’s previous records, maintain a follow-up after sales and ensure payment within the stipulated time. iv.
Marketing department ??? The main work of the marketing team is to keep a check on the competition, ensure/maintain a healthy relation with the client and on ways to improve the promotion and ultimately sales of the company’s product line. v. Logistics department ??? The main work of this department is to maintain records and in clearing the day to day work. They also need to coordinate with every other department to look after their needs. vi. Finance department ??? The finance department deals with the maintenance of all the finances of the company and helps in the taxation/auditing process. vii.
Legal department ??? The legal team deals with the legalities involved in buying/selling of goods and in ensuring their clearances for safe transactions by the company so as to remove any unnecessary harassment in the future. BRAND DEVELOPMENT ; MARKETING Successful brand development Being heard amid the roar of the competitor’s voices is a daunting task in today’s crowded marketplace. We find this to be shockingly true each time we read a magazine, watch the television, or surf the web. As a result, businesses are now seeking new and more effective ways of increasing brand awareness and more importantly, create brand loyalty.
One of the most important tasks involved in ensuring a brand’s success, is to develop an effective branding strategy. To successfully position a brand above its competitor’s continuing fight for customers, a brand proposition must be developed that when conveyed in marketing and advertising campaigns, will provide an attractive, unique, and relevant message to current and potential customers. In addition, this proposition must be realized and consistently echoed by senior executives, customer support, R;D teams, marketing staff, sales staff, and strategic partners.
Scott Bedbury is a leading branding consultant who has worked closely with companies like Nike and Starbucks, has written a book titled, “A Brand New World”, published by Viking Press. In it he gives excellent thorough definition of what a brand is. “A brand is the sum of the good, the bad, the ugly, and the off-strategy. If is defined by your best product as well as your worst product. It is defined by award-winning advertising as well as by the god-awful ads that have somehow slipped through the cracks, got approved, and, not surprisingly, sank into oblivion.
It is defined by the accomplishments of your best employee-the shining star in the company who can do no wrong-as well as the mishaps of the worst hire that you ever made. It is also defined by your receptionist and the music your customers are subjected to when placed on hold. For every grand and finely worded public statement by the CEO, the brand is also defined by derisory consumer comments overheard in the hallway or in a chat room on the Internet. Brands are sponges for content, for images, for fleeting feelings.
They become psychological concepts held in the minds of the public, where they may stay forever. As such you can’t entirely control a brand. At best; you only guide and influence it. ” The Brand’s Creed The development of a branding strategy must begin with identifying the brand’s (the business’) core values. These are qualities which an organization deems most important. For instance, an organization or business may identify its core values to include: honesty, integrity, excellent communication, and client satisfaction.
Though these values are usually never revealed to the public, they are evident in every aspect of the organizations’ business routine, from customer service, to direct marketing, to website design, to teleconferences, to the treatment of its employees and strategic partners. This conveys a consistent perception to the target audience in every medium of communication that is used. Great Strategy Begins with Great Research Once the brand’s core values have been identified, the road towards effective brand proposition development begins.
To ensure a successful outcome, comprehensive and objective research involving at the minimum, the brand’s strengths and weaknesses, the target audience, and the competition should be conducted. If the resources are available, research should also involve extensive observation into the brand’s industry, its history, the current market picture, and potential growth and direction. The Target Audience Holds the Keys to Your Brand’s Success It is very important to identify first who the target audience is and second, what their needs and desires are.
This information should be as comprehensive and exact as possible. Applicable factors such as; age, gender, income, and shopping habits (online and off) are good places to start. For some another business, the research will involve different factors. Truly understanding the target audience, in addition to having a realistic assessment of what the product offers, is invaluable in assisting in the development of a successful brand proposition. Developing a Brand Statement (Brand Proposition) From the research, development of the brand statement, often referred to as a brand proposition, commences.
The brand statement is a promise. The brand proposition must be clearly understood, engaging, presented in the right context for relevancy, and offer a solution to the target audience’s current wants and needs. A Promise Is a Promise Of course all of these promises are just that, promises. If the company’s products, services, and customer support didn’t support these promises, the initial surge of new customers would quickly come to a screeching halt and the brand would fade into obscurity along with the company. Deliver the Unexpected
When developing a brand proposition, the brand’s promise should never be one that is already expected; this is a sure way to NOT stand out from the competitors. Advertising efforts that utilize adjectives like “good”, or “nice” are sure to fail when seeking to be both engaging and unique. It must convey an engaging, unique, relevant, and consistent message to the target audience. Consumers already expect “good service”. This isn’t an engaging message nor is it unique. This message doesn’t lead towards a strong positive emotional relationship. Winning their Hearts and Minds
An important aspect of brand development is to create a positive emotional attachment to the brand which creates a response in its audience without the audience seeing the product or directly experiencing the service. Positive emotional bonding comes from a mutually beneficial relationship built on intrigue, trust, understanding, and support. Brand marketing Brand marketing is the art/science of making the right impression on prospects. It’s the active process of discovering, developing and bringing the right image or identity of your company to the marketplace.
Too often, clients are focused on the later stages of the brand identity development process, such as the presentation on a Web site or advertisement in a magazine. Effective Brand Marketing is a complete process of researching the market and developing an image for the corporate identity, and then engineering its presentation at optimal times and places. Since search engine users are looking for a specific product or service, having well-constructed brand presented in search engine listings, is perhaps one of the best brand impressions one can make. The Difference between B2B and B2C??Marketing
There is a difference between marketing to a business and marketing to a consumer. Although we are still selling a product to a person experience shows that the difference between these two types of markets runs deep. When we market to a B2B it is realized that these businesses work hard to streamline the buying process in order to save time and money. This often explains why a B2B purchase is based more on logic and why a consumer’s purchase is based more on emotion. It is true that the cost of a sale for the business-to-business market is more expensive and typically higher than the business to consumer market.
The easiest way to explain this is that a business-to-business transaction often takes more consideration. Marketing to B2B When marketing to a B2B we want to focus on the logic of the product. This is done by focusing on the features of the product. There is little to no personal emotion involved in the purchasing decision. Focus on understanding the organizational buyers and how they operate within the confines of their organization’s procedures is made. The B2B market has a thirst for knowledge and they are information seekers. Being more in-depth with the marketing materials helps.
The most effective marketing message focuses on how the product or service saves them time, money and resources. The business-to-business market is more interested in the logic behind the product. They will want to hear more about the features and how it will help them in saving time, money or resources. Marketing to B2C When we are marketing to a consumer we want to focus on the benefits of the product. Their decision is more emotional. Consumers are different in that they demand a variety of distribution channels for convenience, not so with the B2B market.
Consumers are less likely to be interested in a lengthy marketing message. They will want to get right to the point. Consumers don’t want to work to understand the benefits; instead they will want to be clearly pointed out the benefits. The most effective marketing strategies will focus on the results and the benefits that our product or service will bring to them. The business-to-consumer market purchase is more on emotion. They are more interested in the benefit of the product. They will want to hear more about how their product or service helps them and what benefits it brings to them personally.
It is thus very important to understand what both markets need in order to make a decision in marketing to be successful. Increasing Trend in Online Marketing In today’s economy B2B companies are decreasing their marketing dollars and spending more online. A recent survey by B2B Magazine revealed that over 48% of those surveyed were increasing their online marketing spend. Why is there such effectiveness in social media? Truth is so many people are tired of “marketing speak. ” Social media allows companies to relate to one another and bypass the fluff.
Social media describes the online technologies and practices that people use to share opinions, insights, experiences, and perspectives with each other. Social media can take many different forms, including text, images, audio, and video. Popular social mediums include blogs, message boards, podcasts, wikis, and vlogs. The definition alone should reveal to you how important it is that B2B companies explore social media marketing channels. In a recent study done by Knowledge Storm of B2B technology decision makers the following statistics were revealed: * 90% Participate in Video 80% Participate in Blogs * 80% Participate in Wikis * 69% Participate in Social Networks * 53% Participate in Podcasts In the same study it was shared that of 69% of B2B buyers use social networks “primarily for business networking and development. ” At a minimum B2B businesses should at least be involved in communities and social network where there customers already are. Explore the opportunity to reach out to key influencers in your target market and optimize your content and social media applications for syndication. Social media enables you to: Share your expertise and knowledge * Tap into the wisdom of your consumers * Enables customers helping customers * Engages prospects through customer evangelism Brand development & marketing case studies presented * Mercedes Benz USA ??? Design & Launch of the new “M” Class Off-roader * NOKIA ??? Building A Powerful Technology Brand * Value Pricing in the Chemical Industry ??? Most Powerful Lever to Profitability * TIGER BALM ??? An ordinary Asian product becomes an international brand * TESCO ??? The brand experience is everything SWOT ANALYSIS Attributes| Key highlights| Strengths | Weaknesses| Opportunities| Threats| Brand proposition| * Convey unique and relevant message across * Offer a solution to the target audience’s current wants and needs| * Belief in selling the concept of product * Selling imported goods at competitive price * High technology and high service product| The brand name of chemicals division is not as popular as the parent company| * Untapped local market * Focusing and developing the chemicals division to be equally popular, respected and profit making as the other parent companies| Overshadowing of the chemical division by its parent company| Marketing ; Advertising| * Improve the brand value and image * Strike a chord with the customer * Should be identifiable with the customer requirement| * Newsletter named “Snippets” published each month and sent to companies all over the world * Participation in Paper Ex each year| Lack of media advertising| Scope for increased articles in the newsletter on company’s growth, development and current news| Media advertisement and involvement in sponsorship events by ajor competitors | Organization’s core values| * Identify the company’s core values * Must be incorporated with the work ethics| Customer satisfaction| Non realization of the organization’s core values amongst employees| Imbibing key core values of the organization amongst its employees in order to get those messages delivered across| Slight shift of values from its mission may result in the loss/ deterioration of the brand value| Web design/ Online presence| To increase the general awareness about the company and tap potential customers| Apposite and useful product, technical and work details on the company website| * Certain technical glitches on the website * Complete absence from social networking sites| Regular blogs about the company and increased web presence might help get new business opportunities| * Professionalism must be maintained * Care must be taken to not divulge company’s trade secrets| Treatment of employees| * Satisfied employees means more business * To retain the voice and integrity of its employees| * Job satisfaction and security * Good communication with the employees * No politics involved| Overlapping of work for employees from various departments| Added incentives and perks| Stagnation of growth| Research| * Strength and weakness of brand * Target audience * Current market scenario * Potential growth| * Goodwill of the parent company * Well established organization in the market * Good technical team| * Lesser known chemical division * Targets should be set after survey of market demand| Slow and steady growth | * Tough competition from big MNC organizations| Delivering a consistent message| Consistent perception to the target audience in every medium of communication used| To consistently delight customers through value added service product| No brand tagline| To highlight and establish customer satisfaction reports/ feedbacks to potential clients| The message should not be too obvious, vague or irrelevant.
It should go hand in hand with the target audience and company values| Emotional attachment with the brand| To create a stimuli response in its audience without the audience seeing the product or directly experiencing the service| * Repeated orders are a proof of good work * Good CRM system| Lack of emotional attachment with the customers as the product use doesn’t involve direct customer involvement| To incorporate and highlight the principles of the parent companyThe brand name of the parent company can be used as a reference to build the emotional attachment with the clients| Certain companies prefer to buy even sub standard goods from only the big names| B2B/ B2C | Need to realize the difference between the two | Most of the dealings of the company are direct whereas only a few involve the use of dealers.
Thus most of the company’s business are B2B| Since most of the company’s dealings are B2B, thus it has to get itself involved with any disputes or issues| Can tap more clients by involving the dealers from locations and areas out of its reach | A fine balance needs to be maintained between the two types of dealings| Value pricing| * Need to achieve pricing excellence * Systematic and structured approach * Transportation cost * Warehouse/ storage cost * Competitive pricing| * Pricing very competitive according to market requirement * Pricing includes transportation, storage, bank costs * Thorough knowledge of the pricing by competitors| Too much reliance on market condition and customers while pricing| * Better pricing possible * Being a dealer and not a manufacturer helps as it can bring/ stop using any product to the market at any time| The company is dependent on pricing to its manufacturers.
Any increase in cost by them involves direct transfer of cost to the customers| Sales department| To build a strong dedicated and principled sales team| Consideration given to the contribution margin as well as number of clients bought by the sales department| Lack of enough manpower to bring more business| * Improved performance * Scope for an external survey/feedback process by the sales people depending on client| The general mentality of the organizations to deal with MNC’s as they bring foreign technical experts| Customer relevant information| * Willingness to pay * Profit made by customer| Preparation of trial reports for the potential customers| Lack of any comprehensive data on the usage and profitability of customers by using the products supplied by the company| Can give proof of price increase if have relevant data in hand on the usage and profits of the customers| * No opportunity to increase the prices.
Customer’s willing to pay only the standard rate irrespective of the product * Cronyism and corruption in the industry| Brand strength | * Symbolism * Value added services * Delivering the unexpected * Brand logo| * Good customer relations maintained * Imported goods sold at competitive rate * No false promises made * The company’s logo is unique and identifiable with the brand| Lack of testing labs| Better product service and technical assistance possible| Compromise on brand image and value at times| DISTRIBUTION CHANNELS Distribution (business) Physical distribution (or place) is one of the four elements of the marketing mix.
It is the process by which an organization or set of organizations (go-betweens) are involved in making a product or service available for use or consumption by a consumer or business user. The other three parts of the marketing mix are product, pricing, and promotion. Distribution decisions Product decisions may be the most important of all marketing decisions since these lead directly to the reasons why customers decide to make a purchase. But having a strong product does little good if customers are not able to easily and conveniently obtain it. This is where comes the second major marketing decision area ??? distribution. Distribution decisions focus on establishing a system that, at its basic level, allows customers to gain access and purchase a manufacturer’s product.
However, manufacturers may find that getting to the point at which a customer can acquire a product is complicated, time consuming, and expensive. The bottom line is a manufacturer’s distribution system must be both effective (i. e. , delivers a good or service to the right place, in the right amount, in the right condition) and efficient (i. e. , delivers at the right time and for the right cost). Distribution decisions are relevant for nearly all types of products and industries. While it is easy to see how distribution decisions impact the FMCG (Fast Moving Consumer Goods) industry, it is equally important for other industries like chemicals and services (e. g. , income tax services).
In fact, while the Internet is playing a major role in changing product distribution and is perceived to offer more opportunities for reaching customers, online manufacturers still face the same distribution issues and obstacles as those faced by offline manufacturers. In order to facilitate an effective and efficient distribution system many decisions must be made: * Assessing the best distribution channels for getting products to customers * Determining whether a reseller network is needed to assist in the distribution process * Arranging a reliable ordering system that allows customers to place orders * Creating a delivery system for transporting the product to the customer * For tangible and digital goods, establishing facilities for product storage
What are channels of distribution? Chain of intermediaries, each passing the product down the chain to the next organization, before it finally reaches the consumer or end-user…. This process is known as the ‘distribution chain’ or the ‘channel. ‘ Each of the elements in these chains will have their own specific needs, which the producer must take into account, along with those of the all-important end-user. Activities involved in the channel are wide and varied though the basic activities revolve around these general tasks: * Ordering * Handling and shipping * Storage * Display * Promotion * Selling * Information feedback * Type of channel members
Channel activities may be carried out by the manufacturer or the manufacturer may seek specialist organizations to assist with certain functions. We can classify specialist organizations into two broad categories: resellers and specialty service firms. 1. Resellers These organizations, also known within some industries as intermediaries, distributors or dealers, generally purchase or take ownership of products from the marketing company with the intention of selling to others. If a manufacturer utilizes multiple resellers within its distribution channel strategy the collection of resellers is termed a Reseller Network. These organizations can be classified into several sub-categories including: * Retailers ??? Organizations that sell products directly to final consumers. Wholesalers ??? Organizations that purchase products from suppliers, such as manufacturers or other wholesalers, and in turn sell these to other resellers, such as retailers or other wholesalers. * Industrial Distributors ??? Firms that work mainly in the business-to-business market selling products obtained from industrial suppliers. 2. Specialty Service Firms These are organizations that provide additional services to help with the exchange of products but generally do not purchase the product (i. e. , do not take ownership of the product): * Agents and Brokers ??? Organizations that mainly work to bring suppliers and buyers together in exchange for a fee. Distribution Service Firms ??? Offer services aiding in the movement of products such as assistance with transportation, storage, and order processing. * Others ??? This category includes firms that provide additional services to aid in the distribution process such as insurance companies and firms offering transportation routing assistance. * Channel decisions * Channel strategy * Gravity * Push and Pull strategy * Product (or service)<>Cost<>Consumer location * Importance of distribution channels While on the surface it may seem to make sense for a company to operate its own distribution channel (i. e. , handling all aspects of distribution) there are many factors preventing companies from doing so.
While companies can do without the assistance of certain channel members, for many manufacturers some level of channel partnership is needed. Benefits offered by channel members When choosing a distribution strategy a manufacturer must determine what value a channel member adds to the firm’s products. Several surrounding features can be directly influenced by channel members, such as customer service, delivery, and availability. Consequently, for the manufacturer selecting a channel partner involves a value analysis in the same way customers make purchase decisions. That is, the manufacturer must assess the benefits received from utilizing a channel partner versus the cost incurred for using the services.
These benefits include: * Relief for the manufacturer ??? Many manufacturers in the chemical industry prefer the involvement of dealers for selling their products. First these dealers generally buy the goods from the manufacturers and pay on a short term basis. Second the manufacturers do not have to deal with the customers and wait for the payment. Third it also exempts the manufacturers from providing technical assistance and service to the customers; which in turn now becomes the headache of the dealer involved. * Cost Savings in Specialization ??? Members of the distribution channel are specialists in what they do and can often perform tasks better and at lower cost than companies who do not have distribution experience.
Manufacturers attempting to handle too many aspects of distribution may end up exhausting company resources as they learn how to distribute, resulting in the company being “a jack of all trades but master of none. ” * Reduce Exchange Time ??? Not only are channel members able to reduce distribution costs by being experienced at what they do, they often perform their job more rapidly resulting in faster product delivery. * Resellers Sell Smaller Quantities ??? Not only do resellers allow customers to purchase products from a variety of suppliers, they also allow customers to purchase in quantities that work for them. Suppliers though like to ship products they produce in large quantities since this is more cost effective than shipping smaller amounts. Create Sales ??? Resellers are at the front line when it comes to creating demand for the manufacturer’s product. In some cases resellers perform an active selling role using persuasive techniques to encourage customers to purchase a manufacturer’s product. In other cases they encourage sales of the product through their own advertising efforts and using other promotional means. * Offer Financial Support ??? Resellers often provide programs that enable customers to more easily purchase products by offering financial programs that ease payment requirements. These programs include allowing customers to: purchase on credit; purchase using a payment plan; or delay the start of payments. Costs of utilizing channel members Loss of Revenue ??? Resellers are not likely to offer services to a manufacturer unless they see financial gain in doing so. They obtain payment for their services as either direct payment (e. g. , manufacturer pays for shipping costs) or, in the case of resellers, by charging their customers more than what they paid the manufacturer for acquiring the product (termed markup). For the latter, manufacturers have a good idea of what the final customer will pay for their product which means the manufacturer must charge less when selling the product to resellers. In these situations manufacturers are not reaping the full sale price by using resellers, which they may be able to do if they sold directly to the customer. Loss of Communication Control ??? Manufacturers not only give up revenue when using resellers, they may also give up control of the message being conveyed to customers. If the reseller engages in communication activities, such as personal selling in order to get customers to purchase the product, the manufacturer is no longer controlling what is being said about the product. This can lead to miscommunication problems with customers, especially if the reseller embellishes the benefits the product provides to the customer. While manufacturers can influence what is being said by training reseller’s sales people, they lack ultimate control of the message. * Loss of Product Importance ??? Once a product is out of the manufacturer’s hands the importance of that product is left up to channel members.
If there are pressing issues in the channel, such as transportation problems, or if a competitor is using promotional incentives in an effort to push their product through resellers, the manufacturer’s product may not get the attention the manufacturer feels it should receive. * Loss of better sales ??? A reseller may get satisfied once it meets a certain target for a certain period and may show lackadaisical attitude, whereas a manufacturer would always vie for better/more sales. * Loyalty Shifts ??? A dealer or reseller may shift their loyalties based on better offers/prices. Channel arrangements The distribution channel consists of many parties each seeking to meet their own business objectives.
Clearly for the channel to work well, relationships between channel members must be strong with each member understanding and trusting others on whom they depend for product distribution to flow smoothly. Relationships in a channel are in large part a function of the arrangement that occurs between the members. These arrangements can be divided in two main categories: 1. Independent Channel Arrangements 2. Dependent Channel Arrangement 1. Channel Arrangements: Independent Under this arrangement a channel member negotiates deals with others that do not result in binding relationships. In other words, a channel member is free to make whatever arrangements they feel is in their best interest.
This so-called “conventional” distribution arrangement often leads to significant conflict as individual members decide what is best for them and not necessarily for the entire channel. On the other hand, an independent channel arrangement is less restrictive than dependent arrangements and makes it easier for a channel members to move away from relationships they feel are not working to their benefit. 2. Channel Arrangements: Dependent Under this arrangement a channel member feels tied to one or more members of the distribution channel. Sometimes referred to as “vertical marketing systems” this approach makes it more difficult for an individual member to make changes to how products are distributed.
However, the dependent approach provides much more stability and consistency since members are united in their goals. The dependent channel arrangement can be broken down into three types: * Corporate ??? Under this arrangement a supplier operates its own distribution system in a manner that produces an integrated channel. This occurs most frequently in the retail industry where a supplier operates a chain of retail stores. * Contractual ??? Under this arrangement a legal document obligates members to agree on how a product is distributed. Often times the agreement specifically spells out which activities each member is permitted to perform or not perform.
This type of arrangement can occur in several formats including: * Wholesaler-sponsored ??? where a wholesaler brings together and manages many independent retailers including having the retailers use the same name * Retailer-sponsored ??? this format also brings together retailers but the retailers are responsible for managing the relationship * Franchised ??? where a central organization controls nearly all activities of other members * Administrative ??? In certain channel arrangements a single member may dominate the decisions that occur within the channel. These situations occur when one channel member has achieved a significant power position. This most likely occurs if a manufacturer has significant power due to brands in strong demand by target markets or if a retailer has significant power due to size and market coverage. Issues in establishing distribution channels Like most marketing decisions, a great deal of research and thought must go into determining how to carry out distribution activities in a way that meets a manufacturer’s objectives. The manufacturer must consider many factors when establishing a distribution system.
Some factors are directly related to marketing decisions while others are affected by relationships that exist with members of the channel. Following are the key factors to consider when designing a distribution strategy:- 1. Marketing Decision Issues 2. Channel Relationship Issues 1. Marketing Issues in Channels Distribution strategy can be shaped by how decisions are made in other marketing areas. a) Product Issues b) Promotion Issues c) Pricing Issues d) Target Market Issues * Level of Distribution Coverage As we will see the manufacturer must take into consideration many factors when choosing the right level of distribution coverage. However, all manufacturers should understand that distribution creates costs to the organization.
Some of these expenses can be passed along to customers (e. g. , shipping costs) but others cannot (e. g. , need for additional sales people to handle more distributors). Thus, the process for determining the right level of distribution coverage often comes down to an analysis of the benefits (e. g. , more sales) versus the cost associated with gain the benefits. Additionally, it is worth noting that for the most part distribution coverage decisions are of most concern to consumer products companies, though there are many industrial products that also must decide how much coverage to give their products. There are three main levels of distribution coverage – mass coverage, selective and exclusive. Mass Coverage – The mass coverage (also known as intensive distribution) strategy attempts to distribute products widely in nearly all locations in which that type of product is sold. This level of distribution is only feasible for relatively low priced products and those having longer usability periods. With such a large number of locations selling the product the cost of distribution is extremely high and must be offset with very high sales volume. * Selective Coverage – Under selective coverage the manufacturer deliberately seeks to limit the locations in which this type of product is sold. The logic of this strategy is tied to the size and nature of the product’s target market.
Consequently, because the market size is smaller, the number of locations needed to support the distribution of the product is fewer. * Exclusive Coverage – Some high-end products target very narrow markets that have a relatively small number of customers. These customers are often characterized as “discriminating” in their taste for products and seek to satisfy some of their needs with high-quality, though expensive products. Additionally, many buyers of high-end products require a high level of customer service from the channel member from whom they purchase. These characteristics of the target market may lead the manufacturer to sell their products through a very select or exclusive group of resellers. 2. Relationship Issues in Channels
A good distribution strategy takes into account not only marketing decisions, but also considers how relationships within the channel of distribution can impact the manufacturer’s product. a) Channel Power A channel can be made up of many parties each adding value to the product purchased by customers. However, some parties within the channel may carry greater weight than others. In marketing terms this is called channel power, which refers to the influence one party within a channel has over other channel members. When power is exerted by a channel member they are often in the position to make demands of others. For instance, they may demand better financial terms or demand other members perform certain tasks.
Channel power can be seen in several ways: * Backend or Product Power ??? Occurs when a product manufacturer or service provider markets a brand that has a high level of customer demand. The manufacturer of the brand is often in a power position since other channel members have little choice but to carry the brand or risk losing customers. * Middle or Wholesale Power ??? Occurs when an intermediary, such as a wholesaler, services a large number of smaller retailers with products obtained from a large number of manufacturers. In this situation the wholesaler can exert power since the small retailers are often not in the position to purchase products cost-effectively and in as much variety as what is offered by the wholesaler. Front or Retailer Power ??? As the name suggests, the power in this situation rests with the retailer who can command major concessions from their suppliers. This type of power is most prevalent when the retailer commands a significant percentage of sales in the market they serve and others in the channel are dependent on the sales generated by the retailer. b) Channel Conflict In an effort to increase product sales, manufacturers are often attracted by the notion that sales can grow if the manufacturer expands distribution by adding additional resellers. Such decisions must be handled carefully, however, so that existing dealers do not feel threatened by the new distributors who they may feel are encroaching on their customers and siphoning potential business.
For manufacturers, channel strategy designed to expand product distribution may in fact do the opposite if existing members feel there is a conflict in the decisions made by the manufacturer. If existing members sense a conflict and feel the manufacturer is not sensitive to their needs they may choose to stop handling the manufacturer’s products. c) Need for Long-Term Commitments Channel decisions have long-term consequences for manufacturers since efforts to establish new relationships can take an extensive period of time while ending existing relationships can prove difficult. Distribution systems Mindful of the factors affecting distribution decisions (i. e. marketing decision issues and relationship issues), the manufacturer has several options to choose from when settling on a design for their distribution network. For manufacturers the choice of distribution design comes down to the following options: 1. Direct Distribution Systems 2. Indirect Distribution Systems 3. Multi-Channel or Hybrid Distribution Systems 1. Distribution Systems: Direct With a direct distribution system the manufacturer reaches the intended final user of their product by distributing the product directly to the customer. That is, there are no other parties involved in the distribution process that take ownership of the product. The direct system can be further divided by the method of communication that takes place when a sale occurs.
These methods are: * Direct Marketing Systems ??? With this system the customer places the order either through information gained from non-personal contact with the manufacturer, such as by visiting the manufacturer’s website or ordering from the manufacturer’s catalog, or through personal communication with a customer representative who is not a salesperson, such as through toll-free telephone ordering. * Personal Selling Systems ??? The key to this direct distribution system is that a person whose main responsibility involves creating and managing sales (e. g. , sales person) is involved in the distribution process, generally by persuading the buyer to place an order.
While the order itself may not be handled by the salesperson (e. g. , buyer physically places the order online or by phone) the salesperson plays a role in generating the sales. * Assisted Marketing Systems ??? Under the assisted marketing system, the manufacturer relies on others to help communicate the manufacturer’s products but handles distribution directly to the customer. The classic example of assisted marketing systems is eBay which helps bring buyers and sellers together for a fee. Other agents and brokers would also fall into this category. | 2. Distribution Systems: Indirect With an indirect distribution system the manufacturer reaches the intended final user with the help of others.
These resellers generally take ownership of the product, though in some cases they may sell products on a consignment basis (i. e. , only pay the supplying company if the product is sold). Under this system intermediaries may be expected to assume many responsibilities to help sell the product. Indirect methods include: * Single-Party Selling System – Under this system the manufacturer engages another party who then sells and distributes directly to the final customer. * Multiple-Party Selling System ??? This indirect distribution system has the product passing through two or more distributors before reaching the final customer. The most likely scenario is when a wholesaler purchases from the manufacturer and sells the product to retailers. High Seas ??? The dealers are instrumental in the sale of the product but the good in this case is transported directly to the customer without any handling by the dealer itself. The dealer charges the manufacturer for the sale but has to provide service to the customer and also has to do all the necessary paperwork. The most likely scenario is when the manufacturer doesn’t have the sales license or the lack of potential of a customer to buy directly from the manufacturer. 3. Distribution Systems: Multi-Channel (Hybrid) In cases where a manufacturer utilizes more than one distribution design the manufacturer is following a multi-channel or hybrid distribution system. For example many MNC companies like Kemira indulge in direct distribution system as well as in indirect.
They even involve the assembly/shipment of their products manufactured from various countries at the location desired in order to effect sales. The multi-channel approach expands distribution and allows the manufacturer to reach a wider market, however, as we discussed under Channel Relationships, the manufacturer must be careful with this approach due to the potential for channel conflict. Establishing channel relationships Since channel members must be convinced to handle a manufacturer’s product it makes sense to consider channel partner’s needs in the same way the manufacturer considers the final user’s needs. However, the needs of channel members are much different than those of the final customer.
Resellers seek products of interest to the reseller’s customers but are also concerned with many other issues such as: * Delivery ??? Resellers want the product delivered on-time and in good condition in order to meet customer demand and avoid inventory out-of-stocks. * Profit Margin ??? Resellers are in business to make money so a key factor in their decision to handle a product is how much money they will make on each product sold. They expect that the difference (i. e. , margin) between their cost for acquiring the product from a supplier and the price they charge to sell the product to their customers will be sufficient to meet their profit objectives. * Other Incentives ??? Besides profit margin, resellers may want other incentives to entice them especially if they are required to give extra effort selling the product. Packaging ??? Resellers want to handle products as easily as possible and want their suppliers to ship and sell products in packages that fit within their system. For example, the shipping package must fit within the reseller’s warehouse or receiving dock space. * Training ??? Some products require the reseller to have strong knowledge of the product including demonstrating the product to customers. Manufacturers must consider offering training to resellers to insure the reseller has the knowledge to present the product accurately. * Promotional Help ??? Resellers often seek additional help from the product supplier to promote the product to customers.
Such help may come in the form of funding for advertisements, point-of-purchase product materials, or in-store demonstrations. Distribution Channels case studies presented * Strategic network design in the chemical industry * Effective distribution within the paper industry * Critical uses of business intelligence in the chemical industry * Yantra and Chempoint : extraprise management in the specialty chemical industry WAREHOUSE WORK Job summary at the warehouse 1. Receiving the purchased goods 2. Storage of material 3. Dispatches 4. All transit insurance related activities including the finalization of claims 5. All types of transport related jobs 6. Maintenance of stock 7.
Looking after all the excise related legal matters with the help of consultant 8. Filling of excise records 9. Maintenance of excise related records, correspondence 10. All type of administrative jobs at Chandmari Works 11. Supervision of labor activity 12. Conducting of all types of audit including the excise audit Job description 1. Receiving the purchased goods 2. Storage of material The primary work at the warehouse includes receiving the goods (for which the purchase order has been placed) from the manufacturers via the transport company and then storing them in the warehouse. The work sequence is as follows:- i. Purchase order copy received ii. Arrival of goods iii.
Check against purchase order copy for its quantity and amount iv. Check on sample made for its quality v. Storing the goods vi. Labeling the goods 3. Dispatches The work here includes dispatching the goods after a sale has been made and duly confirmed from the head office. The work sequence here is as follows:- i. Order Data Sheet (ODS) received ii. Check on stock iii. Check on various commercial activities including transport arrangement and clearance of central excise taxes iv. Dispatch of the product within 48 hours 4. All transit insurance related activities including the finalization of claims It is very important to get the goods insured against transit.
This is done to make sure the company doesn’t suffer huge loss in case anything goes wrong (damage, loss, etc) during the transit of goods to the customers. The general practice undertaken is that the company insures all the goods before transit. 5. All types of transport related jobs It is imperative to find a good and trustworthy transport company for the transit of goods to ensure that the goods reach its destination within the stipulated time and in proper condition. For this the general practice is that the company asks the customer itself to select their choice of the transport company in order to avoid any liabilities later on in case things don’t go as planned. 6. Maintenance of stock This is without doubt the most important task undertaken at the warehouse.
Stock maintenance includes:- * Maintaining the stock in its pristine form in cases where they have to be sold in the exact manner as they were packaged by the principals * Repackaging the goods either in small quantities or relabeling them * Mixing certain chemicals in order to produce a new product * Maintaining the stock FIFO (First In Fist Out) wise. This is in compliance with the ISO (International Organization for Standards) norms. 7. Looking after all the excise related legal matters with the help of consultant 8. Filling of excise records 9. Maintenance of excise related records, correspondence It is very important for legal business to pay the central excise taxes and comply with the government taxation norms in case of any dealings. For this the company consults the legal experts in all such matters.
Also proper filing of taxes and their maintenance and correspondence are done as and when necessary. 10. All type of administrative jobs at Chandmari Works All the day to day activities including regular correspondence and communication with the main office are done. Also proper documentation of various records like invoices, manufactured items, trading items, stock inventory, chapter books, etc is included in it. 11. Supervision of labor activity The company hires contractual labors at present for all the labor activities that include loading unloading, storage and movement and mixing and repackaging of the goods. 12. Conducting of all types of audit including the excise audit
The auditing of the company’s sales and regular excise audits are also done at the warehouse itself. Also assisting the government officials for the audit checks is important. Scopes and opportunities:- * Increased godown space and the general improvement in its conditions. It would also help in better management of FIFO process for the stock. * Improved customer service possible. Can confirm the delivery of goods to the clients by checking with the transport company and then inquiring about the same from the clients for their level of satisfaction. * Scope for better/automatic handling and lifting equipments. Currently manual handling is done. A onetime investment for the development of the vacant land at the warehouse may facilitate increased storage facilities for the goods and also help in goods loading and unloading from big trucks/containers from within the godown. The small roads prove hindrance to the big trucks’ movement because of the congestion and difficulties arising for the local people. * Ensuring complete removal of stock loss. Not only does it cause financial loss to the company but it also causes loss to the company in terms of wastage in manpower, time and space allocation. Also the disposal of waste chemicals has to be done in compliance with the government norms. The government also needs to be intimidated about the rollback of central excise duty and other taxes. All these cause loss to the company. * Better FIFO management process for the stock possible.
A database on stock inventory can be made which keeps a tab on these main points ??? stock lot number, stock lot amount, stock arrival date, stock expiry date and labeling the containers accordingly. The general method currently followed is to stack new containers at the back and in different rows. * Shortage of manpower at the warehouse for general work. * Improved communication between godown and main office to discuss stock inventories and other management issues. * Increased speed for conversion of decisions/sanctions into actions. * Availability of Stock inventory software at the warehouse and its synchronization with the one at the main office would ensure better and quicker stock management. * Hiring of permanent labors. Availability of protective gears like gloves and mouth cover for the labors would ensure them less harm while handling the chemicals. * * REFERENCES * * www. wikipedia. com * http://marketing. about. com/ * http://www. businesschemistry. org/article/? article=59 * www. knowthis. com * http://www. allbusiness. com/company-activities-management/operations-supply/13454684-1. html * International Journal of Business Strategy * http://wistechnology. com/articles * http://www. tuck. dartmouth. edu * Excerpts from Supply chain management and advanced planning by Hartmut Stadtler ; Christoph Kilger * Excerpts from Romancing the Customer by Paul Temporal and Martin Trott * Excerpts from Hi-Tech