1

Philips India: Bidding for Floodlighting Eden Gardens

It was October when Ashok Sen, head of sales and marketing, Lighting Division, Philips
India Ltd., stood gazing at the luscious green garden that stretched out beyond his office,
contemplating his next steps. Earlier in the day, he received word that Cricket
Association of Bengal (CAB) had invited bids from short-listed vendors for floodlighting
the Eden Gardens Cricket Ground. CAB was the governing body for cricket in West
Bengal.

The Pepsi Cup, a scintillating cricketing series sponsored by the Pepsi Group, was to
commence in November. The games were expected to be conducted over a period of six
months in the Eden Gardens at Kolkata. It was to be a mix of test matches and one day
games that fifteen contesting nations had to play on league basis. The matches were
scheduled to be played back-to-back to beat the following June monsoons. In deference
to the spirit of sportsmanship of West Bengal cricket fans, BCCI had decided that
Kolkata would host all the matches, and requested CAB to manage the entire event. This
was also going to reduce logistics challenges as well as security challenges for players,
since all games will be held in the same venue. CAB wanted to leave no stone unturned
in making the series an enjoyable and ‘value-for-money’ experience for both cricket fans
as well as sponsors. Among the many investments CAB was contemplating towards
modernizing the stadium for the forthcoming event, installing high-quality floodlights
was high on its agenda.

Along with Philips India, CAB had short listed other vendors such as Bajaj Electricals,
Crompton Greaves, Siemens, and GE Lighting. The vendors were invited to bid through
closed bids for the prestigious job. The final decision was to be based on the bids as well
as discussions CAB would hold with each vendor to assess their solutions approach. The
last date for submitting closed technical and price bids was 10th November.

Sen had gathered through informal grapevine that each of the other contenders proposed
to bid on the basis of lowest price, as they felt CAB was in the pursuit of obtaining the
best deal in terms of price, quality and availability from the vying vendors. Further, Sen
had learnt that one of the bidders had quoted as low as Rs. 1.5 crores for the entire
project, anxious to bag the order.

______________________________________________________________________________________

This case has been prepared by D. V. R. Seshadri, IIM, Bangalore and Ms. Shobitha Hegde, Research Assistant, IIM
Bangalore and Mr. Apu Bose, Philips India Ltd., as a basis for classroom discussion rather than correct or incorrect
handling of a managerial situation. The authors wish to sincerely thank Philips India Ltd. for the support in sharing data
and perspectives. The authors also wish to express their gratitude to students of the PGSEM Course (2008-2009 batch),
IIM-Bangalore and students of the PGPX Course (2008-2009 batch) IIM-Ahmedabad as this case is based
significantly on the assignments submitted by the students. The financial support of IIM Bangalore to develop this
case is gratefully acknowledged. The authors wish to thank Mr. T. A. Krishnamurthy for his administrative support in
preparing this case.

© 2009, Indian Institute of Management, Bangalore.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means -
electronic, mechanical photocopying, recording or otherwise – without the permission of the copyright holders.
 2

All vendors except Philips had already submitted their bids. CAB was expected to be an
extremely price-sensitive buyer, while not compromising on quality. Sen was excited at
the thought that bagging such a prestigious contract would open doors for Philips to
execute similar projects for other stadiums in the country and even the sub-continent.
Being a seasoned manager, he realized that winning the bid would not be that easy.
Nevertheless, he was confident and eagerly looked forward to the challenge.

Philips India Ltd. – Lighting Division

The foundations for what has become one of the world's biggest electronics companies
were laid in 1891 when Gerard Philips established the company in Eindhoven, the
Netherlands to manufacture incandescent lamps and other electrical products. Today,
Royal Philips Electronics is among the global top 30 electronics corporations with sales
of over EUR 30 billion in recent years. The company has always strived to introduce
meaningful products and technologies for its customers and end users.  Its aim has been
to explore new ways to improve products and to offer an exciting range of products that
enhance the lives of consumers, anticipating their needs.  At the forefront of technology,
Philips holds about 75,000 intellectual property rights, 22,000 trademark registrations and
6,000 design registrations. The company has operations in nearly all countries in the
world. Philips India has five divisions: Lighting, Consumer Electronics, Appliances,
Medical Equipment and Semi-conductors. The company has its corporate office in Delhi.

Project Specifications

Making himself comfortable on a chair in his office, Sen decided to put together some
broad guidelines his marketing team would need to work on the project. He first
reviewed a document that provided background information on Eden Gardens and the
city’s climatic conditions, an understanding of which was essential to providing a
superior solution. He also perused the Request for Quote (RFQ) document that CAB had
prepared and circulated to the shortlisted vendors. This document had the broad design
that CAB expected the selected vendor to implement. Sen reckoned that the reason the
other three contenders submitted their bids well before the tender closing date was that
they took the CAB specifications as a given: ‘They must have quoted for the
implementation of CAB’s design,’ he reasoned. He however did not favour that
approach. Instead, he wanted to leverage the many years of expertise Philips as a
company had across the globe, implementing challenging lighting systems for many
stadiums. Based on the available data, Sen arrived at a few important conclusions that he
felt needed to be considered in designing a high-quality lighting solution for Eden
Gardens.

With a seating capacity of 90,000, Eden Gardens was one of India’s oldest cricket
stadiums comparable to Lords in UK and MCG in Melbourne, Australia. The stands
available for seating spectators were at different heights with no continuous roofing,
making it difficult for installation of skirt lighting, which was available in most of the
 3

modern cricket stadiums, especially such as the one in the city of Dubai. The free area
available at the periphery of the stadium provided ample space for setting up four lighting
towers to cover the playing field. Eden Gardens being close to the Tropic of Cancer,
usually witnessed varying intensities of sunlight and wide temperature variations during
different seasons. Kolkata received heavy rainfall during monsoons and was a city with
high humidity and salt content in the air, which invariably increased corrosion in steel
structures.

In the light of the above background and other information that the marketing team had
previously compiled on floodlighting of outdoor stadiums, Sen decided to draw up the
project specifications jointly with his marketing team and the engineering team.
Discussions over the next two hours with the two teams helped to evolve a
comprehensive list of specifications, which Sen was confident would meet CAB’s
expectation of a superior lighting solution.

A first pass at the solution

Based on preliminary design calculations using the CAB specifications for light intensity,
the team thought it would be appropriate to install a conventional four-tower lighting
system which would illuminate the stadium adequately from all angles. Each tower
would carry close to 85 Philips floodlights fitted with 2KW proprietary-designed lamps,
which were energy efficient and generated less heat. Instead of the lights being mounted
on the conventional straight pole, the poles would bend inwards at the top to increase the
intensity of lights at the centre of the playing field. This would also ensure that the lights
are used more efficiently, resulting in lower power consumption. The steel trusses that
make up the lighting pillar would be made of special alloy coatings to prevent corrosion,
thereby ensuring a minimum life span of thirty years, which was three times the life of
more commonly used steel columns. Further, the alloy coated steel trusses would require
no maintenance or repairs for the first thirty years. The colour and texture of the towers
would be designed so as to blend with the daytime sky, avoiding any distraction for the
players when taking high catches. The towers would offer greater stability with less
vibration and damage in high winds.

Philips would use its stadium lighting products that are specially optimized for television
broadcasting. These products ensure television picture quality akin to that viewed in
natural daylight and facilitate the telecast of high-quality action replays. These unique
features would be viewed as major advantage by television coverage companies, the key
revenue generators for CAB. Care would be taken to minimize glare arising due to other
artificial lighting. Multiple levels of luminance would optimize the usage of power during
transitions from daylight to night. This would result in significant electrical energy cost
savings for CAB over a period of time, ultimately leading to faster recovery of the initial
investment on lights. Instant re-start would be another special failure changeover
mechanism that would be installed to restore lighting instantly through electrical power
backup system, in the event of failure of the main power system. Conventional lighting
systems for such large scale lighting invariably took 15-20 minutes to resume power
 4

supply during interruptions. The lighting system would also include an auto cleaning
feature providing savings in labor cost equivalent to 100 person-days per year.

The team also considered packaging a five-year maintenance contract offer along with
the bid and maintained that it would be difficult for competitors to include maintenance
costs in their low quotes. Philips engineers would carry out quarterly visits to the site to
assess the general ‘health’ of the lighting system and provide necessary services and
recommendations.

In short, the preliminary consensus of the project team was to meet specifications that
centered around the following focus areas: lower power consumption than competing
systems to minimize power bill of Eden Gardens; reduction in radiation and heat
generated from the lighting system; better durability of the system than what competing
lighting systems could provide; and minimise repair and replacement costs.

The Stakeholders

Sen recognized that a key factor influencing the lighting solution was the interests of the
various stakeholders and what they wanted to ensure from the lighting system. He penned
a few such interests he felt the stakeholders were likely to have.

Sen and his team reasoned from their years of experience, that CAB’s chief concerns
would be to obtain a lighting solution that is economical, has minimal total cost of
ownership, uses state-of-the art technology, is reliable with no breakdown during play,
provides good playing conditions at all times, has long life since CAB would be more
interested in a permanent solution, and one that is environmentally friendly and
maintenance-free.

The sponsor’s interest would be to have a lighting system that is reliable, provides
opportunities to advertise, is environment friendly which in turn would enhance the brand
image of the sponsor through its association with Philips, and the lighting solution should
be in line with CAB’s financial considerations.

Cricket players would want the lights to be reliable, cause no strain or irritation to the eye
and provide good playing conditions at all times. Additionally, the interests of the
spectators, media persons, environmentalists and other stakeholders would have to be
considered. Sen was not sure however how to reasonably manage this complexity, and
what he should do to meet the aspirations of these myriad stakeholders.
 5

Decision Making at CAB

From prior experience in dealing with similar buyer organizations, Sen understood that a
bid committee would review the bids and decide which vendor to award the contract to.
The bid committee would most likely have an evaluation committee and a review
committee.

The different functions of evaluating the technical reliability of the proposed solution,
evaluating the financial attractiveness of the proposals, ensuring that the proposals adhere
to the contractual/legal terms and conditions, etc. would be performed by the evaluation
committee. The committee members would include a senior official of CAB, an expert
from BCCI who would have been a member of a similar panel in the recent past, a
technical expert to evaluate technical specifications of the bids, the maintenance head at
Eden Gardens, a representative of the local governing body, an environmentalist, and
several others. There could also be several advisors to the committee.

Heading the review committee would most likely be the president of CAB. He would be
assisted by the treasurer at CAB, a member from the sponsor group, a respected cricket
legend, and a representative of the public at large, among others.

CAB would have to select a winning bid that optimizes its lighting needs with respect to
price, quality, time and scope.

The process so far and the journey ahead

Request for Quotations (RFQs) were sent across to the short-listed vendors. The RFQ
contained details of the functional and non-functional requirements, the project details
such as timelines that need to be met, the support that could be expected from CAB, legal
and regulatory requirements, etc. The RFQ sought structured information from each
bidder, such as the technical specifications of the project, pricing details, implementation
timelines, warranty that would be provided, service level agreements, details
implementing similar systems recently, references / recommendations of past customers
and alternative technical & pricing proposals for superior benefits.

On receiving the sealed bids from vendors, the evaluation committee was expected to
scrutinize the same and hand it over to the review committee with its recommendations
and suggestions. The review committee would typically hold multiple rounds of
discussions with the individual bidders before awarding the contract. Intense
deliberations, counter questioning and mutual comparisons between offerings of the
bidders could be expected during these meetings.

Based on industry grapevine, Sen felt that the decision making process at CAB was likely
to be somewhat ‘murky’ and more relationship-based, given that CAB was a bureaucratic
organization not guided by strict accountability norms. He believed price and quality
would be treated as the order qualifiers when evaluating supplier offerings. CAB was
likely to compare bidders against dimensions of quality and cost savings. As CAB
 6

derived majority funding from BCCI, Sen felt that the bid committee would make
purchase decisions based on largely on minimum price rather than on minimizing ‘total
cost of ownership.’ Although he did not have hard facts about competing systems, he
intuitively felt, based on Philips’ long standing in lighting, that it would have an edge on
cost of ownership to the buyer. CAB was unlikely to have the technical expertise or
knowledge to make ‘value’ calculations and therefore a low quote was likely to have an
edge. The ultimate decision of awarding the contract would be made by the president of
CAB, with the sponsor having significant influence. The decision maker however would
have to factor in the needs of various stakeholders to get their buy-in.

The Marketing Strategy

Sen was keen to find a way out of the price war that he was sure would likely unfold.
Based on his team’s estimation of the financial health of CAB, the high money stakes
involved in a high-profile international event like the Pepsi Cup, and the potential value
that the Philips solution would provide to CAB, Sen arrived at a bid amount of Rs. 5
crores in consensus with his team. With the last date for submitting the bids nearing
rapidly, Sen’s attention was now fully engaged on drawing up a marketing strategy to
showcase Philips superiority over competition. Sen was keen to bag the coveted order at
the desired price of Rs. 5 crores against competitions alleged low-ball quotes of about
Rs.1.5 crores. He definitely did not want to enter into a brutal price war with the other
contenders.

Later that afternoon, the marketing team gathered at Sen’s office to brainstorm a
marketing strategy. After hours of debate and discussion, the team evolved a preliminary
course of action to pursue, which however was very tentative, and needed more
refinement.

The core focus of the proposed strategy was to shift the mindset of the buyer from the
‘gain the best price’ to one that recognizes the ‘value’ of the solution. During the
discussion on the technical bid, the marketing team’s efforts would be concentrated on
building trust, showcasing the value, and highlighting both the tangible and intangible
benefits of the Philips solution without dwelling too much on price concerns. This was
however easier said than done, since CAB being a seasoned buyer, would want the
vendor to focus on price, by suggesting that as far as it was concerned, all vendors were
on the same platform.

A two-man engineering team would make a field visit to Eden Gardens to study the
stadium and assess the situation at the ground level. The information so gathered would
be essential input to come up with an innovative solution that can be presented to the
decision making unit at CAB, to convince them of superior value of the Philips offering.
The meeting with CAB would need to include both the marketing team and the Philips
engineering experts. The latter would tackle technical queries that were likely to arise.
 7

Evolving the Philips offering

The team that Sen got together was full of energy. They recollected up a large list of
advantages that CAB would get by going in for Philips systems. They felt that it would
be best to present a complete plan demonstrating the value addition in terms of energy
savings, reliability, and longevity of the lighting equipment. Special features like the
unique design of the towers, twin power lines, automatic fault detection system, light
intensity monitor and controller, special alloy coating of the towers, retractability features
of the towers, and the possibilities for future upgrades, were features that the buyer
simply could not ignore.

The value elements of the Philips solution that the team felt were significantly different
from competitor offerings would have to be clearly articulated and communicated to
CAB. These value elements included:

o Patented optics that deliver greatest energy efficiency and exceptional lighting
levels
o Reduced glare on account of built-in-reflectors in the lighting system
o Ease of installation and replacement of lamps
o Availability of instant restart which ensures immediate restoration of lighting
during power supply disruptions.
o Lower power consumption as compared to competitor’s lighting solution.
o Installation and maintenance support will be provided by experts
o Philips lamps have longer life

Quantifiable measures such as savings in power consumption due to use of energy

efficient lamps, lower running and maintenance costs due to longer life of lamps, savings
associated with frequency of floodlight replacement, savings associated with auto-
cleaning feature, etc. would need to be vividly demonstrated to CAB. In addition, CAB’s
attention would also be drawn towards the qualitative measures such as the Philips brand
reputation, reduced glare resulting in high-quality television broadcasting of the
cricketing series, and uniform lighting resulting in enhanced viewing experience for
spectators. The marketing team would perform analyses to demonstrate that long-term
benefits from Philips solution would come in the form of these features rather than lower
price.

Philips would establish the superiority of its solution over competitor’s lighting systems
by highlighting that it is the leader in global outdoor lighting systems. For instance, it had
70% market share in football stadium lighting. One of the team members noted that
competitors would be quick to point out that lighting a cricket stadium was a very
different ball game compared to lighting a football stadium. Philips could also showcase
its cutting-edge technology, such as its efficient light scattering systems that can cut
through even semi-transparent objects.

CAB would need to be told that a tournament of such a massive scale over so many
months would stress the lighting system in unprecedented ways and lighting failures
 8

would cause huge losses in advertising revenues. Given such complexity, Philips would
need to convince CAB that Eden Gardens lighting deserves a brand like Philips and not
the system of any other vendor.

The elusive winning marketing strategy

Sen wryly realized that such a laundry list of benefits was also likely to be presented by
the other equally formidable contenders for this coveted order, since they too were top
global firms. They were also most likely to tout similar advantages, thus accelerating the
commoditization of the offering and nullifying any edge that Philips may have in terms of
superior domain expertise. He felt he needed a way to establish trust with CAB and
somehow build a collaborative relationship with CAB. He was however not sure how to
do this. He mulled about what the winning marketing strategy should be.

The Selling Unit

Leaving the weighty question of a potent marketing strategy for another day, Sen
considered what the ideal selling center team should be, that will interface with CAB in
the weeks to come. Once the bids were opened, each vendor would be invited for detailed
discussions. He felt that it would be best to create a cross-functional team of experts to
build and present a convincing response to the RFQ from CAB.

The project team needed a marketing lead who had vast experience in working on large
projects by bringing together inter-disciplinary teams to deliver effective solutions. A
sales lead was necessary to cultivate strong relations with CAB, and unearth competitor
moves. A lighting systems design expert would perform technical evaluations and
recommend superior solutions. The lighting systems expert would validate the feasibility
of the proposed solution from the perspective of CAB. The team needed a financial
analyst to keep a check on the costs and the possible bottom line impact of various
options being proposed to CAB. A legal counsel would validate the Philips response to
the RFQ and ensure commitments made were in line with Philips norms. There would be
others who would need to be added to the team to strengthen it. He felt in appropriate to
head this team.

Since the deal was strategic in nature, Sen decided to create a ‘supervisory’ team to
oversee the activities of the project team. This team was to comprise the business unit
head of the lighting division, the sales head, financial controller, the legal head of Philips
India, and himself. The supervisory team was to review the CAB deal periodically,
provide necessary management support, and leverage the global technology expertise of
Philips throughout the life cycle of the deal.

Bidding and Execution Challenges

Sen reckoned that although the Eden Gardens project presented a huge opportunity for
the Philips brand to make its presence felt in the most important segment of outdoor
stadium lighting in India, viz., cricket, there were several challenges ahead before the
 9

opportunity could be turned into reality. Sen deliberated on some of these challenges
amidst the quiet in his office.

CAB being a bureaucratic organization with a lot of centres of power, we may have to deal with
decision makers more interested in pursuing their own interests and fulfilling personal demands.
The various stakeholders may have conflicting goals and only the objective of the most powerful
actor might rule. Given the history of unprofessionalism and internal politics in such
organisations, the decision makers may not necessarily choose the most beneficial lighting
solution. I wonder if CAB is different.

Communicating the value of the Philips lighting system to CAB is a real challenge and if CAB
fails to see the value being provided by the best of breed solutions of Philips, then we would be
left dealing with a buyer interested in only price reductions, which would make the whole deal
unattractive to us. In that case I wonder if we should really enter the fray. Convincing CAB about
the superiority of our solution and taking the focus away from price would be a huge challenge.
Further, if any of the key decision makers has prior affinity towards a particular vendor, the entire
bidding process could end up being a sham.

The large difference between our bid price and competition’s alleged low ball quotes may
adversely affect CAB’s decision making process. The other bidders will try their very best to
dissuade CAB from going for a high-priced solution such as ours. If this happens, there is real
danger that we will be out of the game even before it starts!

The problems did not end there. Sipping at the coffee he had just been served by the
office boy, Sen enumerated several challenges Philips would encounter if they won the
contract.

All departments and entities like the electrical department of CAB, stadium architects, suppliers of
materials, vendors we may outsource the work to, etc. need to work in tandem with us to take the
project to completion. Any negligence or lack of interest from any of these parties would prove
catastrophic for the success of the project. Meeting timelines of the project execution would be a
challenge given the fact that West Bengal is known for Leftist organizations, and work
interruptions due to bandhs and hartals is not uncommon in Kolkata.

It would be important to monitor the performance of the lighting system on a continuous basis,
check for non-performance of the system as per design, and ensure flawless supply of key
consumables and components that could fail from time to time. We would be putting the Philips
brand and reputation on line even if minor mistakes or delays are committed during execution and
subsequent maintenance, not only by us but by our sub-contractors.

Limiting our expenditure and controlling costs to ensure the deal is profitable to us is a big worry.
How can we avoid scope creep? I am told that getting prompt payments from CAB could be an
issue.

There is a mismatch between the value systems of CAB and Philips. Our personnel must be
sensitized to this fact so that petty issues do not spiral to major problems and work stoppages.

Deep down, Sen was slightly nervous about winning the bid. Would the bid committee be
able to see Philips superior solution that it was planning to develop and implement as
beneficial in the long-term, or would they consider it as merely a marketing gimmick and
a high-priced solution that would compromise on CAB’s expected return on investment?
Would the marketing team be successful in convincing the bid committee of the long
standing advantages of their superior solution? Or would he and his marketing team need
 10

to compromise on the solution design in order to deliver an acceptable low-cost solution

to CAB? What should be the superior solution that Philips must come up with, that took
into account the interests of various stakeholders? These were some of the uncertainties
bothering Sen. He helped himself to a second cup of coffee, contemplating ways to
manage the bid at hand.