CASE STUDY

Scenario: ‡ Mr. Gulu has recently joined IBM, Bangalore. During his tenure of 6 months, Mr. Gulu covered various warehouses and retail outlets of IBM. He has presented the following findings to his boss:

46 lakh .50 lakh Less (wholesaler and retailer margins @ 30%) Company s own stock Less (company margins @ 20%) Own cost (capital blocked) Borrowed @ 10% interest Interest burden paid per month Interest burden per day Interest loss per day = annual salary 250 cr (-) 75 cr 175 cr 50 cr 125 cr 12.04 cr per annum 3. 0.CASE STUDY *50.5 cr per annum 1.000 laptops X Rs.

THE UNDERLYING PROBLEM ‡ To sell of the existing dead stock by ensuring: ± Company margins are not hit ± Price point is reduced ± Interest burden is taken care of .

SOLUTION B2B institutional sales .

ASSUMPTIONS ‡ Stock found out in first few months ‡ Been in the warehouse for 1-2 months ‡ Technology has increased over the past 7-8 months .

SOLUTION Salesman salary + incentive. own sales force Salary Rs. geographically separated markets ‡ 12 companies targeted per month ‡ ‡ ‡ ‡ ‡ ‡ . 10.000 Incentives 5% on company block Per order 15 laptops 22 days available days 3 meets per week fewer buyers.

SOLUTION ‡ Success ratio of 20% ‡ Per Salesman per month 2 (2.4)companies will buy ‡ Per order 15 laptops ‡ Hence we need a workforce to sell the product in: ± 1 to 6 months .

000 2.16.00.08.00.SOLUTION To sell of entire stock in 1 month 2 months 3 months 4 months 5 months 6 months Per salesman oders per month 2 2 2 2 2 2 Per salesman Per salesman number of number of laptops sold laptops sold per order per month 15 15 15 15 15 15 30 30 30 30 30 30 No.12.000 3.000 4. of salesman needed to sell 50.00.00.04.000 .000 6.24.00.20.000 laptops 1.00.667 834 556 417 334 278 Total interest burden 1.000 5.

) ‡ Time taken to sell of 50.. LG ‡ Average number of laptops sold per company: ‡ 1 1.SOLUTION ‡ Current laptop market in India lakh units (January 20--) ‡ Growth rate ‡ Assuming current market size lakh units ‡ Existing players . Sony. HCL. Dell. Lenovo.000 (institutional): ‡ 5-6 months . Acer.HP.5 lakh units(guess .

00.000 .24.00.SOLUTION To sell of entire stock in 5 months 6 months Orders per salesman per month 2 2 Per salesman Per salesman number of number of laptops sold laptops sold per order per month 15 15 30 30 No.20.000 6.000 laptops 334 278 Total interest burden 5. of salesman needed to sell 50.

000 12.000 .000 1.6 MONTHS OVERHEAD 50.00.000 1.000 37.46 lakh 6.50.00.24.00.000 10.50 lakh Less salaries (278 x Rs.00.00. 0.000 laptops X Rs.500 35.000*6) Less (salesman margin @ 5%) Company s own stock Less (company margins @ 20%) Own cost (capital blocked) Borrowed @ 10% interest Interest burden paid per month Interest burden per day Interest burden for 6 months TOTAL COST PER UNIT 2.75.04 cr per annum 3.50.00.000 12.000 25.00.00.80.000 1.00.25.000 50.5 cr per annum 1.00.10.834 334 2.66.

00.75.00.000 12.00.000 12.00.50.50.20.5 MONTHS OVERHEAD 50.00.00.000 25.00 2.00.67.46 lakh 5.00.000) Less (salesman margin @ 5%) Company s own stock Less (company margins @ 20%) Own cost (capital blocked) Borrowed @ 10% interest Interest burden paid per month Interest burden per day Interest burden for 5 months TOTAL COST PER UNIT 2.000 laptops X Rs.10.000 50.5 cr per annum 1.000 37.04 cr per annum 3.000 1.00.00.000 1.00.000 .500 35. 0.000 125.834 334.000 10.50 lakh Less salaries (334 x Rs.

CONDUCT A MARKET RESEARCH ‡ Preferable geographic markets for institutional sales: ± B2B ‡ ‡ ‡ ‡ Government Agencies Educational Institutes Companies with large sales forces (pitching. presenting) POS solutions .

PROMOTIONAL STRATEGY Push strategy Sell directly to the consumer Bypass other distribution channels Promotional tools .Business product seminars and advertising ‡ All marketing communications must convey business features ‡ Collaborating with retailers and suppliers using IT for smarter management of inventory ‡ ‡ ‡ ‡ .

TARGET BUYERS ‡ Government Agencies ‡ Educational Institutes ‡ Sales force of businesses (pitching. presenting) .

THANK YOU .

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