MATHEMATICA LIMITED

Presented By: GROUP-3

GENESIS
y y y

A Subsidiary of Pawan Electricals established in 1941. Initial investment on motors and generators ² diversified later. In 1960s, made control devices for motors and generators, amplifiers and tape recorders were added later on. Crossed 100cr sales in 1970. Late 1970s, started exporting : planned profitable use of the import licenses.

y y

CALCULATOR INDUSTRY
y

Desk models introduced in 1960s and pocket models in 1970s by Moscal (leader) Incoming competition from Televista, Nelco, Weston ² market share ~75% Competitors added in for specialized calculators: Aristo for slide rule models and Keltron for desk models. Competitors also had regional strengths ² UMS in South India Basic components of a calculator : LED and IC, imported from US companies Japan entered the supplier industry and price competition was visible.
80 70 60 50 40 30 20 10 0 Year X Year Y

y y

y y

y

CALCULATOR INDUSTRY
y

Pocket calculators demand was projected to increase, even in the primary schools. And that would reduce cost of the calculators to $ 5. Prices expected to stabilize between $ 3-5 due to costs of products / distribution. Reduction of prices would not be much due to various taxes and duties.

y

y

** Exchange Rate b/w INR and USD in 1970: US $ 1 = INR 9

PRODUCT RANGE
y

Starting Model: 4 function pocket model without memory up to, programmable desk models with cassette transport for programmable storage Lower End: electronic calculators competed with adding machines and slide rules. Higher End: competed with micro and mini computers. Challenge came from the manual computing area (human brain). Product development became a industry wide activity with no clear market leader.

y

y y y

COMPETITION NATURE
y y y y

y y y y y

Target was to achieve 2,00,000 pa. But initially they had 20,000 in 1975. Got an approval for 20,000 more. Expected a letter of intent for 10,000 more. But due to unused capacity in industry Govt. did not provide more licenses. gave rise to price competition Other factors for price war: 1. Nearly identical product features and cost structures. 2. Declining prices of calculator components. 3. Failure of the market to grow as expected. BUYING PRACTICES AND RESULT Components were imported in bulk to get discounts. Orders were delayed by manufacturers with hope of lower input prices. Inventories were varying in number due to the above buying practices. Delay in delivery of product. Competition arose between those who could provide shorter delivery periods.

COMPETITION NATURE
y y y

Peak sales during first and last quarter: First Q : from Govt. offices at the time of financial year ending. Last Q : Commercial and bank year ending responsible for peak demand. Competition from the product features point of view was minimal. R&D, Reliability, Service, Quality Control were the main appeals used by the manufacturers to promote their products. Hence, before price cut in Sep 1976, DCM conducted a promotional campaign stressing all these selling points.

y y

y

PRICE BEHAVIOR
y y y

Basic 4 function: 1000 a year ago. Other brands 20% cheaper. By 1976, other brands selling at 900.Then, July 800 August 650 September 530 Other brands: 100 (tax + duties)

COST STRUCTURE
y y

Falling price of calculator components

Price reductions of calculator.

It was observed that profit margins at current prices were quite low but there was a good profitability of the margins being squeezed. Larger manufacturers were in a position to squeeze out lower priced small competitors who had 1 / 2 models to offer. If components prices would have decreased, then that will lead to reduction of prices even more.

y

y

SUGGESTIONS
y 1. 2.

To get into competition, the following was suggested: Introduce Mathematica line at prices lower than leading brands. Price 4-function model with single memory and other models at very low price, Mathematica could make stronghold over the volatile calculator market. The low price, together with ex-stock availability of the calculators, would build a customer franchise for the new line rapidly. Other brands announced price cut and the market achieved some stability. So, less chance of immediate new price cut. So before the next competition starts, Mathematica could position itself as a frontline brand by gearing up its sales and distribution effort.

3.

y

y

CONCERNS
y 1. 2.

Marketing manager of Mathematica had issues about the introductory strategy. The DCM price move was followed by leading brands within 3 weeks. The DCM was perceived as a price lender. THE MARKETING MANAGER ADVISED TO: Pricing strategy was advised to be viewed in a long term perspective. Low introduction price for Mathematica would leave no maneuverability for future. View pricing policies in context with product and promotion policy. It was felt that Mathematica can stay out of the price war by focusing on price range. It was advised to Mathematica to support product launch with wellpromotional campaign . This can help it to enter micro and mini computer field.

1. 2. 3. 4.

But counter-argument from MD was that industrial customers are more likely to be more sensitive to price than the potential customer of pocket model.

Solution awaited from Mathematica «

Sign up to vote on this title
UsefulNot useful