a project report on mercedes benz channel ion document

8/3/2019 A Project Report on Mercedes Benz Channel ion Document

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A Project report onMercedes Benz

Channel Dist r ibution

PDCM (2011)Submitted to: Mr. Vinod Mutreja Submitted by:

Rishi Raj Bora

PG20102297



(Sec-G)

Acknowledgement

Through this acknowledgment, I express my sincere gratitude to all those people who have

been associated with this assignment and have helped me with it and made it a worthwhile

experience.

Firstly I extend my thanks to the various people who have shared their opinion and

experiences through which I received the required information crucial for my report.

Finally, I express my thanks and gratitude to Faculty Mr. Vinod Mutreja who gave me this

opportunity to learn the subject in a practical approach and guided me and gave me valuable

suggestions regarding the project report. I also warmly thank Mr. Varun Kumar (Asst.

Manager.) for his great response and contribution in making my project a fruitful one.

****************



Certificate of authentication

This is to certify that the Project report is genuinely made by Rishi Raj Bora and no

plagiarism is done. The project is done on the topic “Channel Distribution of Mercedes

Benz” under the guidance of Mr.Vinod Mutreja and have been completed successfully.

Faculty: Mr. Vinod Mutreja Student: Rishi Raj Bora

PG20102297

(Sec-G)



**************

Contents

1) SUMMARY

2) DISTRIBUTION CHANNEL AND TYPES

3) MERCEDES BENZ

3.1)-INTRODUCTION

3.2)-HISTORY

3.3)-MERCEDES BENZ AS INDIRECT CHANNEL

3.4)-A BRIEF REPORT ON THE SURVEY

3.5)-EXTRACTS FROM THE MEETING



3.6)-CRITICAL ANALYSIS

3.7)-OUR SUGGESTION

3.8)-OUR EXPERIENCE

3.9)-CONCLUSION

3.10)-REFERENCES

Summary

The project reflects upon the distribution channel which is needed for mobility of its product

and money in any existing company. The Project mainly focuses on indirect channel of

distribution.

One can understand the distribution system through factors like WHAT, WHEN, WHOM,

WHERE and HOW the indirect distribution channel is managed.

Through this report I have tried to capture the distribution channel system of ‘Mercedes

Benz’ and present it through whatever I have understood so far. A brief about distribution

channel management, channel partners, conflicts regarding distribution channel are



furnished. The greater emphasis is on creating and developing a better chain and distribution

system for smooth and Sound delivery of the product.

Objective of the project-The main motive behind the project is to identify, observe, collect,

interpret, evaluate/analyze and conclude the various data and facts regarding distribution

channels prevailing in a Company .This project helped us to get an in-depth and practical

knowledge about real world distribution system of a Company.

Distribution Channel

Distribution Channel can be best describe as path or 'pipeline' through which goods

and services flow in one direction (from vendor to the consumer ), and the paymentsare generated by them flow in the opposite direction (from consumer to the vendor).

A distribution channel can be as short as being direct from the vendor to the consumer or

may include several inter-connected (usually independent but mutually dependent)

intermediaries such as wholesalers, distributors, agents, retailers. Each intermediary

receives the item at one pricing point and moves it to the next higher pricing point until it

reaches the final buyer which is also called channel of distribution or marketing channel.

http://www.businessdictionary.com/definition/path.html

http://www.businessdictionary.com/definition/pipeline.html

http://www.businessdictionary.com/definition/services.html

http://www.businessdictionary.com/definition/flow.html

http://www.businessdictionary.com/definition/vendor.html

http://www.businessdictionary.com/definition/consumer.html

http://www.investorwords.com/1495/distribution.html

http://www.businessdictionary.com/definition/independent.html

http://www.businessdictionary.com/definition/intermediary.html

http://www.businessdictionary.com/definition/wholesaler.html

http://www.businessdictionary.com/definition/distributor.html

http://www.businessdictionary.com/definition/agent.html

http://www.businessdictionary.com/definition/retailer.html

http://www.businessdictionary.com/definition/receive.html

http://www.businessdictionary.com/definition/pricing.html

http://www.businessdictionary.com/definition/buyer.html

http://www.businessdictionary.com/definition/channel-of-distribution.html

http://www.businessdictionary.com/definition/marketing-channel.html

http://www.businessdictionary.com/definition/pipeline.html

http://www.businessdictionary.com/definition/services.html

http://www.businessdictionary.com/definition/flow.html

http://www.businessdictionary.com/definition/vendor.html


http://www.investorwords.com/1495/distribution.html

http://www.businessdictionary.com/definition/independent.html

http://www.businessdictionary.com/definition/intermediary.html





http://www.businessdictionary.com/definition/receive.html

http://www.businessdictionary.com/definition/pricing.html

http://www.businessdictionary.com/definition/buyer.html

http://www.businessdictionary.com/definition/channel-of-distribution.html

http://www.businessdictionary.com/definition/marketing-channel.html

http://www.businessdictionary.com/definition/path.html



A distribution channel is a method of getting a product to its consumer. Distribution channels

are part of a company's marketing mix. A marketing mix refers to each business' unique

combination of product, price, promotion and place. Distribution affects the place or path

through which consumers can buy and receive the product. A distribution channel may be an

on-site store, a virtual store, a retailer, a wholesaler , an agent, a telemarketer or direct mail.

Direct mail distribution channels work on a large scale. Materials advertising the product and

presenting an offer usually target a specific audience most likely to purchase the item. Direct

marketing materials inform and compel the target audience to take immediate action and

respond at once by mailing in the order form. The reward for the urgent response is often a

discount price or added value such as free gifts.

Telemarketing is also a distribution channel that works to get a target customer's direct

response to an offer. Unlike direct mail that may reach a national audience, telemarketing is

often done on a local or regional basis. Telemarketing distribution channels are most often

used for small businesses that offer services rather than products. For example, painting

contractors may telephone potential customers in the area with a special offer to try to

get new business.

Buying a house is a good example of a distribution channel that requires an agent. A real

estate agent markets the product, which in this case is the home for sale. Interested

consumers must contact the agent. Insurance is a common product distributed through an

agent. While it wouldn't make sense to distribute inexpensive, short-term, mass-produced

products such as breakfast cereal through an agent, it does works well for big ticket, unique

items such as insurance plans and homes.

Wholesalers and retailers are the distribution channel to get their products to a specific group

of people. Wholesalers market items to business owners that will in turn sell the products to

consumers. Retailers sell products directly to consumers. Distribution channels may change

when businesses grow; sometimes a retailer will become a wholesaler and vice versa. Many

companies do both retailing and wholesaling.

Distribution Channels Types-

http://www.wisegeek.com/what-is-a-marketing-mix.htm

http://www.wisegeek.com/what-is-a-promotion.htm

http://www.wisegeek.com/what-is-a-wholesaler.htm

http://www.wisegeek.com/what-is-a-telemarketer.htm

http://www.wisegeek.com/what-is-direct-mail.htm

http://www.wisegeek.com/what-is-telemarketing.htm

http://www.wisegeek.com/how-do-i-start-a-new-business.htm

http://www.wisegeek.com/what-is-wholesaling.htm

http://www.wisegeek.com/what-is-a-marketing-mix.htm

http://www.wisegeek.com/what-is-a-promotion.htm

http://www.wisegeek.com/what-is-a-wholesaler.htm

http://www.wisegeek.com/what-is-a-telemarketer.htm

http://www.wisegeek.com/what-is-direct-mail.htm

http://www.wisegeek.com/what-is-telemarketing.htm

http://www.wisegeek.com/how-do-i-start-a-new-business.htm

http://www.wisegeek.com/what-is-wholesaling.htm



Figure showing types of conflict with example

In the above fig., direct distribution is distribution channel in which a producer

supplies or serves directly to an ultimate user or consumer , without any middleman

(agent, distributor, wholesaler, retailer ) and this type of distribution is used mostly when

deeper penetration of market is to be done and also in the case of high worth products

whereas in indirect middleman like whole sellers, distributors etc. helps to supply products to

the end user. In multi-level distribution channel more than one intermediaries are involved.

Conflicts

Figure showing various types of conflict

Horizontal conflict is conflict between competitors of the same marketing channel, resulting

in oversaturation of the target population area and extreme competition. For example, if two

or more large home product retailers operate in the same marketing area, smaller competitors

will be at an extreme disadvantage. Vertical conflict is conflict occurring between two or

more different hierarchical members of a Channel of Distribution. For example, a retail

distributor may refuse to carry a manufacturer's product because of low sales, further

decreasing the manufacturer's total sales.

Intertype Channel Conflict is discord among members of different types at the same level of

a marketing channel, e.g. department store-convenience store discord.

http://www.businessdictionary.com/definition/distribution-channel.html

http://www.businessdictionary.com/definition/supplies.html

http://www.businessdictionary.com/definition/serve.html

http://www.businessdictionary.com/definition/user.html






http://www.businessdictionary.com/definition/distribution-channel.html

http://www.businessdictionary.com/definition/supplies.html

http://www.businessdictionary.com/definition/serve.html

http://www.businessdictionary.com/definition/user.html








Distribution Channel through various mediums

Figure showing the different Channel distribution system-Direct and Indirect

In the above figure (a) is an example of direct distribution channel where the goods and

services are delivered to consumers directly from manufacturer and (b) explains us the single

party distribution channel where only one intermediary is involved. Fig. (c) and (d) explains

Manufacturer

Customer

Manufacturer

Retaile

r

Custom

er

Manufacture

r

Wholesale

rRetailer

Custome

r

Manufacturer

AgentWholesaler

Retailer

Customer

(a (b (c)(d)



us the intermediaries involved in multiple-party selling system. This indirect distribution

system has the product passing through two or more distributors before reaching the final

customer.

Mercedes Benz

Mercedes Benz needs no introduction as the name itself is sufficient to explain its

Superiority. Mercedes Benz cars are dream for many .The elegant styling, comfort and

luxury makes the product unique. The Organisation is successful in proving their worth and

dynamisms by introducing wide range of vehicles since long years. Possessing a Mercedes is

a status symbol in country like India and owners are proud to have such car.

The Company’s Distribution Channel is spread whole over the world and the channel is

operated efficiently and effectively. The smoothness of the inflow and outflow of the fundand product is studied carefully in the organisation and apply necessary steps to improve it

time to time by the management. The loopholes /flaws of the channel are reduced and

removed by inspections through various outsourcing companies.

The History behind Mercedes-Benz

Mercedes-Benz is excellence materialized. Now, the company is known among the world’s

top manufacturers, when talking about cars. Everything about Mercedes-Benz is high-end,

and no other car company can compare to all that Mercedes-Benz has accomplished, if you

look at all the luxury cars, trucks, vans, buses, and its part in the motor car world.

Two men – Gottlieb Daimler and Karl Benz, started Mercedes Benz during the 1880's. It was

them who came up with vehicle powered by internal combustion engine. An interesting fact

http://www.mbusa.com/

http://www.benzfaqs.com/

http://www.mbusa.com/

http://www.benzfaqs.com/



about these two originators is that they had no idea about each other. Their work was closely

related, and they both lived in Southwest Germany, but they didn’t know each other. And

this is just the beginning of Mercedes-Benz history.

According to the Mercedes-Benz history, Daimler and Benz never met at all. They worked

separately, Daimler concentrating on his successful racing cars at Unterturkheim. Because

Daimler’s cars were so successful, a dealer from Austria named Emil Jellinek got the cars

into races and won more often than not. The cars were named after Mercedes – his daughter.

Jellinek, because he was very impressed with the cars, made a large order from Daimler and

his business partner and friend Wilhelm Maybach. It was agreed that Jellinek could modify

some of the designs, and that he could name the car Mercedes. Because of his great faith in

the cars, a large portion of what he had went towards investing on the company.

The name change warded off legal problems, because companies overseas already bought the

rights to Daimler’s name and also to his designs. Even now there are high-end Daimler cars

being made and sold in England. If the named hadn’t been changed to ‘Mercedes’, there

would have been a lot of things to straighten out. Good thing the change took place.

There were hopes to have American-built Mercedes factory, but the factory that used to be a

piano factory got burned down, losing the prospect place of the NY Mercedes-Benz factory,

and thus losing the hopes to have a branch of the world-class manufacturer in America.

At first, Daimler and Benz the originators of the luxury car weren’t in the same company. In

fact, they were definitely rivals when it came to the world companies. But due to the pressure

brought on by the hard times during the 1920s, the two companies had to work together,

merging into one company that soon progressed into the Mercedes-Benz that we know today.

http://www.benzfaqs.com/history-of-mercedes-benz/

http://www.coolsupercars.com/category/mercedes/

http://www.benzfaqs.com/history-of-mercedes-benz/

http://www.coolsupercars.com/category/mercedes/



Mercedes Benz as an indirect distribution channel

Mercedes Benz operates on indirect channel because it is selling its product through many

franchisees, main dealer’s agents at auto expos and participating in car races. The channel

can be understood from the flow chart below:

Flow Chart showing Indirect Channel Distribution of Mercedes Benz

The figure shows that the product is distributed through Main Dealers and Sub-Dealers from

Daimler Manufacturing Plant (Germany). Other flow channel is that agent plays vital rolehere in organising and selling and distribution of the cars through auto expos and

participation in car races. Orders might be in bulk for car races. The Company has its own

Logistic centre Known as “Mercedes-Benz Global Logistics Centre Germersheim” where

the cars are placed and distributed evenly whole-over World. The channel partners are Fed-

ex and DHL.

Channel

Partners-DHL,

Company owned

Logistic Mercedes-

Benz Global Logistics

Centre Germersheim



A Brief report on our Survey-

Venue: T&T motors

Date: 18th Jan 2011

Time: 4:30 pm

Person: Mr Varun Kumar (asst. manager Sales)

I got the opportunity to meet Mr. Varun Kumar and asked the following questions

Q: How is the Product marketed?

A: Mercedes Benz is a brand name in itself and therefore no vigorous advertisement is

required. Advertisements in the form of promotion activities are done through conducting

events like golf sponsorship, lunch and dinner parties. Mercedes also participates in reputedauto expos in Germany, USA, Italy, France, India etc. and also sponsors and participates in

Car races. Billboards, Print media, internet and TV commercials are other media.

Q: What are the Channel Participants and channel structure?

A: Companies like DHL, Fed-ex , Kuehne Nagel are some logistic partners. Mainly Cargo

Ships are used for imports and trucks are used for national distribution.USA is the hub of

manufacture of Mercedes cars. In India Mumbai, Delhi and Pune are main distribution hubs

for the product .Germany has the main Head office.

Q: How is the channel managed?

A: Special software's are used for managing complex problems and are recorded

accordingly. One example is TALLY for financial work. Other software’s are also there

which is responsible for varied function in channel distribution.



Q: What are the components of the distribution costs?

A: Distribution Cost includes Octroi , Custom Duties, Freight; Insurance etc are importantfactors while transferring the product. 12.5% tax is charged as tax on the overall figure.

Q: How are channel conflicts resolved?

A: All the functions are done in a systematical and orderly manner so there is no such

conflict. The documents are carefully kept, confidentially and judiciously used. Insurance

and other claim receipts are kept for proof which in turn reduces risk and conflicts.

Computers and e-commerce are preferred more to reduce error which cause conflict and

accuracy. Payments are made in advance to the main branch. Brand name also plays a vital

role.

Q: Who is responsible for designing and setting up of such channel?

A: Different councils sit upon and decide the main channels in Germany head Quarter. They

take decisions regarding cost, speediness, time saving etc. Various tools and statistical

instruments like (PERT CPM, assignment, transportation, regression, correlation, TQM, 6

sigma etc are used).

Q: How are the warehouses managed?

A: Warehousing is done by the transporters. The warehouses charges comes uptoRs.2500 a

day per car. E.g. Mathura Road Warehouse has capacity of 50-70 cars.

Q: What are the Logistics and Distribution Cost?

A: Logistic and Distribution Cost is huge as the product is from foreign country and

luxurious product. Taxes and Custom duty charges are comparatively higher than other

product. Other expenses include Octroi, freight, insurance etc.

Q: What are the various pricing strategies?



A: Prices are fixed according to competition. The prices of units cannot be reduced because

Mercedes needs to maintain its dignity by pricing. Generally, pricing is done by targeting

high income people.

Extract s from the meeting-

The meeting helped me to know how various factors like pricing, conflicts, product

marketing, warehousing are inter-related and can make a difference in Channel Distribution

of the product. The variation in any of factors will lead to change in strategies, planning and

decision making and also influences time, cost and scarce resources .Inventory, Sales and

payment data were not disclosed as to keep it confidential from competitors. The Company

deals in luxury brand so expenses are high and clever choosing of channel are important to

reduce the unwanted cost.

The high price of the product does not reduce the demand of the product as it is luxury

product so for status symbol people are ready to buy and therefore negotiation is notexpected in such product. The customer can take the product within 1 month or directly from

the showroom if he/she wants. But customization of the car may take an average time of 6

month as the customization is done directly from Daimler plant. The Pune plant (India) is the

assembly plant where parts are send through Cargo Ships from Daimler Plant (Germany).



The payment from the customer is taken both in instalment and lump sum with collaboration

with banks like HDFC. The logistic of Mercedes is fully developed due to outsource logistic

which creates difference through the expertise.People in India are ready to purchase

Mercedes due to 1) India has a majority population of young people who believes in

spending rather than saving 2) Growth in purchasing power parity (income) and living

standard of the people.

Therefore, opportunity of Mercedes through various distribution channels in India is rising.

Critical Analysis:

a. Supply Management –

Order fulfilling time- Mercedes Benz takes 7-10 days to deliver the car to its customers if

the car is readily available and takes about 6 months to reach to its customers if it’s the

customised car.

Payments/Outstanding- The payment system of Mercedes is complicated as there is no

direct support from Mercedes to take the car on finance rather it only helps the customers to

come in contact with a Bank for the financial support. In India Mercedes Benz is in

collaboration with HDFC, IDBI, BARCLAYS Bank etc for customer deals with payment as

majority like to pay in instalments (approx 70%).

The banks readily facilitates the company for both short term loan and long term loan for

expansion and growth and sometimes also provide overdraft for its reputation. The

expenditure and income is huge. Therefore many financial methods can be used for cost



effectiveness, investment decision, future growth prospects, purchase of raw materials, The

company’s payment to the employees are handsome. The creditors like government,

Outsource companies, raw material suppliers, associate companies, freight companies and

others are paid timely and due date is generally avoided by Company. The revenue generated

was euro 41,318 in the year 2009 where employees were payed euro 93,572 in the year 2009

and euro 97303,euro 97526 respectively in the year 2008 and 2007.

b. Demand management (periods of

shortages or excesses)

The Company don’t have to mess up for demand much as extra stock is

always kept for greater expectation people. Even if there is inequalities in

demand and supply, it is easily recovered due to ample time for delivery

of the product. The production plans are made according to damand of

the Customer. Shortage may be cause due to insufficient supply of raw

materials, inflation in the economy (recession),Consumer preference and

taste.

c. Speed of processes for complaints

regarding supplies

Mercedes Benz has well maintained complaint centres. Generally customers are satisfied

with Product quality but mainly orders come for customisations and addition of accessories.

The customers are provided with proper information regarding use of various parts of the

vehicle. Temporary Insurance is also given with the sale of car for the first few month.

Speedy services for speedy recovery of the car is taken care through mobile trucks from

nearest Mercedes Benz service centre are send if in case the car damages or breakdown in

mid road also assistance for accident is made available. Mercedes has call centres which

gives day and night service. Toll free number, mobile assistance and Online help adds value

to the service.



Anyone can avail the facility at any point of time and at any place which shows the beauty of

the service of the Mercedes Benz. Complaints are registered and removed according to

consumers preferences within a week.

My Recommendation

After observation and analysis of the channel of Mercedes I suggest the following-

1) Employees should be made better trained and aware of logistic system of Mercedes in

countries like India and other developing Countries so that flexibility remains in the

channel.

2) Mercedes Benz should concentrate in more outlets opening rather than exclusive

showrooms as the more distributors the more even will be the distribution.

3) Creation of new innovative channel which are cost effective. Therefore negotiation

can play a better role.

4) Search for new alternatives within traditional channels can create a magic spell.

5) Multi layer channel cannot be applicable in Mercedes Benz as the product is huge,

luxurious, prestigious and expensive. It may require lots of energy, time, money and

resources but return will be less.

My Experience with the meeting

As a student initially I was nervous about the approach and response of the manager of the

showroom but he greeted me well along with my friends and was courteous. He made us



comfortable by serving us with water and replied all our queries without any hesitation. It

was a matter of pride to survey such a reputed Organisation. He shared his experiences and

suggested his best about the survey. Our overall experience was overwhelming as it helped

us in following way-

1) We got the clear view of the channel distribution system of Mercedes Benz.

2) Understand the realistic situation of how a real Company runs and compete through

logistic.

3) Building up of professional attitude toward a person.

This survey not only showed the path to us but inspired and encourages us to create and

invent ideas by developing a different outlook about the channel system.

Conclusion

Distribution Channel system is backbone of every small, medium and big organization .In

modern times Organisation need to understand the role of Channel distribution system. The

winner is the one who takes the risk to produce new channels and alternatives instead of

limiting it to a particular network.

“Do not worry about scarcity; rather worry about equal

distribution”. –Anonymous

References



• www.mercedes-benz.co.in

• www.consumerphycologist.com

• www.lookpdf.com

• business.gov.in

• www.businessdictionary.com

• Text Book-Anderson, Coughlan.

-SUBMITTING WITH THANKS-

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http://www.mercedes-benz.co.in/

http://www.consumerphycologist.com/

http://www.lookpdf.com/

http://business.gov.in/

http://www.businessdictionary.com/

http://www.mercedes-benz.co.in/

http://www.consumerphycologist.com/

http://www.lookpdf.com/

http://business.gov.in/

http://www.businessdictionary.com/

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