India Engineering Company

by Prof. Ravi Kowadkar

India Engineering Company is a leading Electrical goods manufacturer in India. In their Motors division, they
manufacture variety of motors, used in applications like fans, sewing machine, pump, hoist, compressor etc. IEC has
head office in Mumbai, Regional offices in Mumbai, Delhi, Kolkata and Bangalore. Under each regional office, IEC
has branch offices. Each branch office covers 5 – 8 districts. Each branch has sales staff, one/two persons in accounts
department and one Peon/Office boy on contract. Branch has a branch manager, below branch manager different
Division heads, under Division head 2 – 4 sales executives/sales officers. Motors division has two subdivisions, Trade
and Non-Trade. Trade division generates business through Dealers and Non-Trade division generates business through
Direct Customers.

Pravin, a young engineer, BE from one of the premier institutes in our country with throughout distinction, joined IEC
Pune branch, four months back, as a Sales Executive in Motors Trade division. Pravin is very intelligent and introvert
by nature. Prior to joining IEC, he worked with an MNC for one year, as a Trainee. During this one year, he worked in
sales for last three months.

Within one week of Pravin’s joining, his division head resigned the job for better prospects. Pravin is handling 30 dealers
in Pune. All of them are multibrand dealers. They sell IEC’s products as well as the competitor’s. Dealers are divided
in three categories, A, B & C, based on their sales. Out of 30 Dealers, 3 fall in A category (average sales of Rs. 25 Lacs
per month), 6 in B class (average sales of Rs.10 Lacs per month), 21 in C class (average sales of Rs 4 Lacs per month).
Company gives price policy every month, which mainly gives range of discount to be given to dealers. This varies with
demand. The exact discount to be passed on to dealers is decided by the Sales Executive. Generally A class dealers get
highest discount. Sales executive often use discount to negotiate quantity of an order.

Every sales person plans his journey cycle for the next month and submits it to Branch Manager, HR and Division Head
before 30th of the current month. General guideline for Journey Cycle Plan is, A class dealers to be visited every day, B
class once a week and C class once a month. These visits are flexible in exceptional cases, where B class has a potential
to become A class and C class has potential to become B class. Adherence to Journey Cycle Plan has to be above 85%.

Pravin follows these guidelines. In his first month of operation, he finds A class dealers very arrogant, always talk about
the problems, don’t pay in time or find reasons not to pay. Comparatively B and C class are quite receptive. C class are
the best in terms of behaviour. They always welcome Pravin, offer him tea, lunch, dinner etc. ask for guidance and help.
Pravin feels more comfortable with C class, and starts visiting them more often, offering them good discounts, joint
visits etc. Keeps visits to A class, demand based.

Three month are over. Suresh, new division head joins IEC Pune branch in Motors Trade Division. Suresh when goes
through the Market share data of IEC and competitors, finds IEC’s share falling consistently. Visits all the dealers. A
class dealers complain about lot of issues like pending cases of faulty/damaged supply, pending claims, customer
complaints, some cases of price war by C class dealers etc. Do not show much interest and give more emphasis on
competing brands. Finds B class indifferent, praise the sincere efforts of Pravin. C class are delighted for the efforts
taken by Pravin.

Suresh asks for Journey Cycle Plan of Pravin. He finds Pravin makes 8-10 calls a day, as against 4-6 average. Visits
each C class and B class twice a week minimum. A class once a week or as and when required.

Questions:

1. Why is IEC’s market share falling?

2. What corrective action do you suggest to ensure this problem will not repeat in future?