B2B CE 1

Solutions:

1. Type A companies were the typical customers for the firm as it already had stable
relationships with them. The vendors would contact the materials and procurement
department of a prospect, expecting an average response time of the prospect client
of about two months. If a buyer organization requested any components, Farm
Electronics’ design and engineering department would provide the vendor with the
technical specifications of the equipment required for its operations. The vendor
then designed a prototype and submitted it to the materials and procurement
department, which usually would take more than a month. The prototype was
handed over to the quality assurance department, responsible for testing
performance and quality, which would then share a report with recommendations to
the management and finance department. The finance department would then
contact the vendor for a detailed price quote, which the buyer organization would
then review and enter final negotiations. Inquiries were then generated according to
the specifications and requirements. The customer’s procurement department
would then send a schedule to the vendor, who in return would send a quote based
on the price of raw materials. Once all of these steps of the buying cycle were
achieved, the products were packaged and dispatched. This formal process was
followed for type B accounts as well, though not all buyers would have detailed
specifications and requirements for the product and instead demanded standardized
products. Another typical customer for Farm Electronics were the ones, who would
buy directly for vendors featured in existing vendor lists. It is important to specify
that Farm Electronics’ vendors were vendors-to-vendors, thus its customers would
then resell the products from Farm Electronics to those organizations who needed
them for engineering projects such as railway networks.

2. As mentioned earlier, the significant elements of Farm Electronics’ value proposition

were quality, timely delivery, and after-sales service. The firm’s policies and
processes were thus designed to successfully deliver these elements. For example,
the firm provided 100percent repair and replacement of products, even after 90
days following the delivery. As the B2B market is highly competitive, Farm
Electronics offers testing and manufacturing facilities customized to the needs of its
core customers, as well as lenient credit policies. Farm Electronics’ customers
performed quality audits and ratings. Therefore, the firm is required to maintain all
standards for the norms related to testing, manufacturing, housekeeping & other
legal standard requirements, including those related to the quality of workplace
safety measures and the environmental responsibility of Farm Electronics. In
 conclusion, Farm Electronics committed to enhancing customers’ satisfaction by
providing superior quality of products and services at a competitive price, aiming to
continuously improve its quality management systems in all of the functional areas
of the organization.

3. Farm Electronics initially targeted farmers and later larger firms that had an ongoing
need for specific electrical components, either for manufacturing or building blocks
for larger equipment, railway networks. Targeting any new segment requires a
significant amount of effort on all fronts. The cost of prospecting type A customers
included prototype development, travel, and informative literature development,
which is roughly $1,000. Farm Electronics was very successful in this market segment
and gained various new customers, but to gain even more the firm would need to
start customized manufacturing facilities which would cost $50,000 plus many other
expensive additional processes. Yet, these manufacturing facilities could also be used
for other segments, including type B, C, and D accounts. Marketing expenses
required to target type C and D customers would be equal to 15percent of the firm’s
revenue for the first three years of pursuing these customer segments. Although the
marketing cost is very high in the short-term and the revenue gained from these
small local businesses is minimal, this type of segment is very wide and the number
of transactions with a single customer ranges from $500 to $1,500.

4. Targeting government companies or PSUs as customers requires designing processes

according to the eligibility norms, which is a tedious tendering process. Indian
Railways was one potential target customer that would bring high revenues to Farm
Electronics, thus it may be worth for the company to invest in manufacturing
equipment, application fees for several quality certifications, and workforce
recruitment in order to become the direct seller to Indian Railways. Finally, Farm
Electronics could target the overseas market in some African countries, which are
mostly dominated by Chinese manufacturers. Despite the competition, the Indian
firm may establish its sustainable competitive advantage by continuously providing
competitive pricing and better-quality after-sales services that make the company
superior to its Chinese competitors. This would also require substantial initial
investment in infrastructure, but entering the international market could be highly
profitable for the firm.

Submitted by AAKASH BHAKTA

Enrolment Number: 1-21-001
PGDM Batch 2021-23 (SEMESTER 3)
Shanti Business School, Ahmedabad