Q4|

1. Analyse the situation and recommend to TAC what they should do with the offer with
a justification?

From the case we can see that the annual growth rate is about 20%. Which means that even at
this current rate after 5 years its sale value is going to be around roughly US $18M annually.
After 3 years it would be US$12.8M.
Now the distributer is charging US$ 10000 monthly which converts to US$ 120000 annually.
On top of that a flat 2% as sales commission. So, it seems to be too much.
The new sales that are made for first time eligible for charge but later on the customer may go
for a straight rebuy but for that also the distributer will get a commission.
The distributer predicts to double the market share in 3 years which would means the sales
value would be US$14M. The distributer will get US$ 120000 and along with that 2% of
US$14M means that US$2.8M. So, the profitability will not get hampered much.
Considering the above two situations we can say that they might take a chance only if they are
able to negotiate the commission rate to be made as per new customer acquisition and not the
existing ones

2. What safeguards should TAC put in place when entering into this distribution
agreement.
Distribution agreements come in all shapes and sizes. While in some circumstances,
foregoing a written agreement may be to the advantage of one of the parties, in most cases,
entering into a written distribution agreement is advisable and provides both parties with a
road map to their obligations and rights in the relationship.

1. Scope of Distributorship
a. Territory: The agreement should specifically define the area in which the distributor is
permitted to sell and promote the products.
b. Products: The agreement should specify what products, product lines, or brands are
included under the agreement. The agreement
should also address whether and to what extent any new brands developed or acquired by the
supplier would be included, or
specifically, excluded from the agreement.
c. Exclusivity: The agreement should specifically state whether the distributor is given the
exclusive right to sell the products within the defined territory, or whether other distributors
will also be permitted to promote and sell the same products, or other products

2. Rights and Obligations of Parties

The agreement should clearly set forth the rights and obligations of both parties to the
agreement.
The agreement should specify delivery parameters for both supplier and distributor, minimum
inventory requirements, and any quality control measures that a distributor or supplier would
be expected to undertake. If agreed to by the parties, the agreement could also include
minimum purchase requirements.
3. Pricing & Terms of Payment:
a. Pricing: The supplier must set the price for the products being sold to the distributor, but
the agreement should also include provisions governing resale pricing. The distributor may
have the sole right to set the resale price or the parties may agree on, or at least discuss, the
resale pricing for the products.
b. Payments: The agreement should clearly set forth the terms for payment, including timing
and location for payments and any penalties in the event of any late or missed payments
4. Termination:
a. When Is Termination Permitted: The termination provision in a distribution agreement
should always include a provision allowing for termination “for cause” by the parties. This
means that if one party breaches the agreement, the other party can terminate.
b. Post-Termination Obligations: One of the most important provisions to include in the
distribution agreement concerns the parties dealings once the relationship is terminated. The
agreement should always include a detailed post-termination section that sets forth the
obligations of both the supplier and distributor. This provision should address the status of
open or outstanding orders after termination, the return, buy-back or transfer of remaining
inventory, and any ongoing marketing or other obligations that would continue beyond the
termination date of the agreement.

Q2. If you were Rajesh Gupta, the Marketing manager of Infrasoft Technologies, what
would be the various ways you would segment the market for the company? What
parameters would you use to measure the success of the segmentation strategy?
a. As Marketing Manager of Infrasoft Technology, I would segment the market based on:
• Geography
• Technology
• Buying behaviour
• Product offered
Here we need to go for full market coverage because we are offering differentiated marketing
for each market segment that is providing different services for each segment. Since there are
lot of banks in Western and southern parts of the country, as a marketing manager I would
target those regions bank for our services. The product can be built using technology in two
different ways, that is, the product costing less than Rs. 20 Lakhs & requiring just an minimal
technology which could be offered to the banks in rural areas and the other product having
sophisticated technology with a higher price range of Rs.1 crore which allows people to do
internet banking without the hassle to visit the bank every time for transaction.

To measure the success of the segmentation strategy, I would first look at the competition
from other companies such as TCS, Wipro and Infosys to understand how they are providing
the banking services and how can my company differentiate from theirs. In order to measure
the success of segmentation, I need to look at the size of the target market to understand what
my market share and position would be in targeting this segment. By concentrating on this
market segment , what strategies I can use to attract the segment and stay substantially in the
market by promising sufficient business to justify the efforts to serve the segment. Another
important criteria for segmentation would be to understand the growth rate of Infrasoft
technology by providing this banking service.

b. As transition from license fees to transaction fees happens, Infrasoft should first analyse as
to how many banks are willing for this transaction and in which regions, they are more
effective. As internet banking has grown to large extent during the pandemic, I would suggest
Infrasoft to concentrate on banks in metropolitan cities. I would like to encourage the banks to
shift from license fees to transaction fees as customers are increasingly using online
transactions and potential for increase in volume of transaction is very high.

Transaction based charges will optimize Banking services and increase customer satisfaction.

Enhanced support services to enable banks to cope up with surge in transitions 24/7 with
dedicated Project Managers and Customer Service Staff
Q3 ) What should be their approach to their customers if they want to ensure steady
growth and profitability of business?

AOS is engaged in many customers with varying % of revenue, growth, and gross margins.
We recognise that the goal of AOS is to achieve steady growth and profitability of business.
Over the years the profitability of AOS has been falling this may be due to retention of old
customers which are now not so profitable. We perform our analysis on a region wise
customer basis to understand how AOS can better manage their customers:

1. Eastern Europe: The only factor that is attractive about the singular customer in Eastern
Europe is gross profit that is earned. But on an overall evaluation neither the total business
earned not the growth over the years is satisfactory, in fact it is the lowest among all
customers. AOM should either try to get more business from them or cut them off completely.

2. India and Philippines: Both the market customers are optimum for AOM. They make for
good customers to provide AOM with steady growth and profitability.

3. USA: On first glance USA market seems similar to Eastern Europe but there is growth
potential. The growth of business from USA is highest and although the % of revenue is low
the % of gross margins are steady and satisfactory. AOM should try to earn the customers
trust and try to gain more business with better prices.

The Sales and Marketing teams need to focus on the following:

• Instead of directly cutting off customers out last mile efforts to increase business with
the customers which seem less profitable now or to get better pricing.

• If the above is not possible it is only in the best interest of the company to cut off such
customers and move on to better focus efforts on more profitable customers.

• Markets like USA have a lot of growth potential because they are developed markets
and there are more customers for the business. But there is also an added factor of equivalent
tough competition. So, marketing team need to work equally hard to get a fatter share of the
market.

• Focus more efforts on customers in India and Philippine because they can provide
steady and continuous growth to the business. Their revenue % are satisfactory and have
consistent business growth which is in line with AOM’s Business Objective.