Group

10

D.LIGHT DESIGN
Marketing Channel Strategies in India

mmm
M

BY:
Sahaj Kumar N (18A2HP430)
Hari Haran V (18A3HP608)
Siddharth Sehgal (18A1HP090)
Shashi Kumar V (18A3HP614)
Gaurav Gautam (18A1HP108)
Rishav Raj Shukla (18A1HP075)
Archak Pal (18A1HP018)
 SUMMARY

D.light Design was a start-up founded by Sam Goldman and Ned Tozun which manufactured solar
powered LED lamps which was founded in 2007. Goldman gained his experience by working with Peace Corps
in Africa. Over there he realized huge number of people in developed countries are dependent on kerosene
lamps for light. With experience he understood disadvantages what kerosene lamps had on its users. After
understanding the pros and cons he decided to replace the traditional lamps with solar powered LED lamps.

According to their research, out of 190 million households, 135 million households in India belong to rural
area – and they were largely dependent on lamp oil lights. The d.light administration trusted that there is a
high plausibility of them making sales to 0.01 - 0.1% of the families and this was their objective market
population. By 2019, the organization was prepared to provide two unique varieties of the solar powered LED
lights that it had made - S250 and S10 both with various term of light giving limit and diverse different
advantages. The organization realized that that will generally be fruitful in the market they needed to
demonstrate the customers the interest of the item and teach the intended interest group that why the item
is important and other esteem included advantages. For this they needed to configuration promoting
channels.

With a tremendous market, the originators realized that without a doubt, they need to look of an approach
to drive the selection of the solar powered LED lights rapidly. They could consider two essential channels to
handle the issue: A “Focused distribution channel strategy” and a “Multiple distribution strategy”. The former
would use only one route to market their product and would consume less capital compared to the latter.

The central issue now on the authors Sam Goldman and Ned Tozun's head was whether their organization in
India, with constrained subsidizing should focus on one distribution channel or go for multiple channels for
their business to meet the demand of targeted audience.
 Q1 What channel alignment constraints face d. light as it thinks about how to establish a
channel structure in India? List and describe any legal, environmental and managerial
constraints.

The Goal of d. light design is to spread the usage of solar lamps and wipe out the usage of
kerosene lamps, but every start up company always have some problems in their respective
field while entering and the same way d. light also faced problems in Indian market. The
problems faced by them are:

1. LEGAL:
 The company has a manufacturing plant in Shenzhen, China and they only have
regional and sales office in Delhi, India. So that it may increase the product cost
while importing. This may affect the motto of the founder to give feasible
solutions, so it might be a barrier for achieving the mission.
 Due to this the government may induce high taxes for the products.

2. ENVIRONMENTAL:
 Most of the rural people in India used to follow the culture of using kerosene
lamps in their homes and introducing a new product would be difficult.
 Though India maybe a tropical country but it has some regions were there would
be heavy rainfalls where these solar lamps would be of no use.
 There would be a lack of well-developed transportation.
3. MANAGERIAL:
 Company has only limited capital and it is able to procure its capital by winning
draper fisher jurveston venture challenge and received only 250,000$ which is
quite less.
 Lack of education, i.e., illiteracy rates was high in rural areas. So difficult to
communicate and train them to use the new product.
 As it is a new product and brand, it has not created any brand trust in the
market.
 The rural people never tried to seek for other alternatives to kerosene. So there
seemed no need in the market.
 Customer reachability was difficult due to less media exposure to rural people as
newspapers and radio couldn’t cover 50% of the rural population and tv was the
only possibility which covered 63% of the rural population. But advertisement on
tv would cost much more.
  There was a need for demonstration and free trials which needed investment in
salespeople who would effectively convey the information and educate the rural
people.
 The Indian market was already flooded with fake and poor-quality goods which
made the rural people hesitant in buying new products.
 Lack of brand recognition and awareness.

Q2 For rural consumers in India ,discuss how these channel alignment constraints lead to demand-
side misalignments if the company sells through the:

a) Rural entrepreneur channel and link these misalignments to constraints

Since the company d.light is having a limited capital problem and majority of the people in the rural areas
are illiterate, so, the reachability of the product is difficult. Not only d.light many companies opt rural
entrepreneur channel to increase their sales and reachability. Generally companies select people who are
having good image and network as their Rural Entrepreneurs. These people carry forward the reputation
and brand name of the company.

 Rural Entrepreneurs should be motivated continuously for increasing the sales.

 In terms of marketing skills and expertise, the Rural Entrepreneurs, however good their sales might
be, they are still not professionals. They cannot work as the professionals do.
 The rural sales force did not respond to the economic incentives when offered in exchange to excess
sales
 As the Rural Entrepreneurs were not properly educated, they could not handle and manage the large
sum of money. There is always a difference in the sales and the money they submit.

(b) Village retailer channel and link these misalignments to constraints.

 There are large variety of products available in cities, whereas in villages, small retailers have very
limited products to offer. So, villagers do not have many options..
 The final price of the products used to be very high in villages because the distribution system
continues from the wholesalers, but the majority of the rise in price is due to the “last mile” i.e when
it reaches the village retailers.
 Retailers did not show much interest in selling the goods S10 and S250 of d.light, because when
compared to FMCG products it is difficult to sell them whereas FMCG goods are frequently
purchased so they can be easily sold.
 The company have to recruit more sales executives for selling their products for better explanation
of the product and requires the application of “push selling” strategy.
 C) Centralised shops channel and link these misalignments to constraints.

Selling through Centralised Shops have following constraints over other options:-

 1) Large retailers sell more varieties of products therefore they don’t have required trained sales
force which is needed to promote D.light solar lamps among rural customer, these people are
essentially required to convince rural customer to purchase the product.
 2) Impoverished rural customers don't have sufficient purchasing capabilities to purchase from
centralized shops. As most of the customers coming there have more purchasing power than
average rural customer.
 3) Selling through Government owned oil company thousands retail outlets have huge growth
potential as people trust government but at local level dealers doesn't have enough motivation to
sell D light solar lamps.
 Selling through Centralised Shops can side misalignments by following ways:
 1) D.Light can fund salespeople training and Hiring cost of Large central retailers.
 2) Combination of Large retailer with rural entrepreneurs can also help company in making
consumer aware of the product.
 3)Providing incentives to dealers for the sale they generate can also help in making people aware
and buy D light solar lamps.

d) Conclude from this analysis what d. light’s channel structure should be. Which route(s) to market
should be its highest priority, and why?

d. light’s channel structure should be consists of the following features:

1) As d. light is start up & their products is new to the Indian market with the facts that rural literacy
rate & mass media is lower than urban areas (From exhibit 7), they should invested in a channel
whose people will be committed to educating the customers about three things mainly. They are:
A. They should be aware about the Product
B. They should be aware about the benefits of using the product which will be very
significant than the price they are paying
C. What are the disadvantages of not using the product & that can affect their life.

2) Cost effective distribution channel with good customer reachability.

3) A channel structure capable of creating a brand trust among rural consumers.
4) Motivated sales person who are loyal to the sales of d. light’s product instead already existed well
known product/(s).
5) Sales person who can handle large amount of money & products, have deeper penetration within
rural area & sell products effectively.
Major advantages & Disadvantages of channels:

Advantages Disadvantages
Rural Entrepreneurship  Good customer  Complicated nature of the
reachability distribution channel
 Creating brand trust  Did not response to
 Increase in employment incentives
 Improvement in economy  Not capable of moving
large sums of money
Village Retailers  Capable of moving large  Not previously successful
amount of goods & (Only 4% actual sales rate)
money  Not able to push selling
 Influencing power to
make a purchase
Centralized shops  ‘Well known & trusted’ by  Not good for
people impoverished consumers
 Cost effective distribution of rural area
channel
Partnering with Nonprofit  Pre-existing networks  Not an ‘distinct
 Cost effectiveness distribution structure’
 Previously successful in
HUL products selling

d. light’s decision should be in such a way that it should use a multi-channel approach to reach the
customers of rural India instead of relying on only one channel. Being a start up with limited capital
the customer reachability should be the main focus of d. light to succeed in the market.

In our opinion the highest priority should be Nonprofit organization because even though they are
not a ‘distinct distribution structure’, they are cost effective, motivated to develop the rural India
who also have a good customer reachability. The second priority should be Rural Entrepreneurship
as they can improve the economy by increasing the chance of employment.
Also, training them about handling large amount of money & professional selling technique would be
a onetime investment, therefore cost lower than creating new channel structure.

Q3