Durapro: Driving sales through distribution channel

HRISHIKESH MAHAPATRA (UEMF16009)JYOTI UPADHYAYA (UEMF16010)RUCHIRA PANIGRAHY (UEMF16013)SABYASACHI MISHRA (UEMF16014)

Case FactsCompany Background

Indian manufacturer of domestic kitchen appliances like hand blenders, mixer grinders

The company achieved annual turnover of INR 750 million in 2011, out of which, INR 250 million was sold in the Indian market

Ramdoss Was hired as Sales Manager in Durapro Limited to increase sales of Durapro products from Indian Rupees (INR) 15 million in Dec 2011 to INR 25 million in 2012

He had no experience in handling subordinates.

Consumer segment in Appliance Market – Kerala

Almost all consumers also consulted their friends and relatives before visiting any appliance shopIn case they had received adverse comments about the performance of any brand purchased from them, they would almost certainly reject the brand as well as the shopShops mostly stocked a limited set of brands and there was a stable status quo which existed in the market

Case FactsCompetitors

All competitors of Durapro kept MRP pegged at 110% of DP

They sold their products at a discount of 10% on DP while the Indian competitors offered 15% on DP.

Durapro billing was at 20% discount on DP while the payment and service terms were comparable, thus Durapro offered higher margins to retailers.To make the deal attractive to big MNC retailers, Ramdoss had selectively offered upto 5% additional annual discounts on achievement of the annual 5 targets

Distributers

The distributors were important for Durapro as they were exclusive to the state.

They sold Durapro products to the retailers directly and did not use any sub – distributors.

Strengths & Weakness of DuraPro

Strengths

Quality and ‘value for money’ proposition

Attractive MRP for the price sensitive customers

Steady growth of 15% & Expected to grow further.Relatively higher profit margins to its intermediaries (Distributors & Dealers) in comparison to its Indian & Multinational competitorsGood service levels & fair dealing with the dealers

Weakness

DuraPro’s weak brand image

DuraPro products remained confined in price-sensitive channels

Failed to get a footprint in other retail channels

Durapro's Market Share

2010 2011 20120.0%2.0%4.0%6.0%8.0%

10.0%12.0%14.0%16.0%18.0%20.0%

14.4%13.4%

17.9%

Decline of Sales

Jan Feb Mar Apr May0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

12.8%

18.6%20.9%

23.3% 24.4%

19.5%

26.0% 26.0%

15.6%13.0%

Kitchen Appliance ...

Month-wise Contribution of Sales (Kitchen Appliance Market vs. Durapro) 2012 (Jan–May)

What Went Wrong?No prior study of market before joining the company

Over confidence : Ramdoss agreed to a 67% growth target which was unrealistic(15 million in 2011 to 25 million in 2012)

Just an additional 5 per cent discount on achievement of target is neither sufficient not attractive

No additional sales force & extra sales pressure

Dependency of Durapro on Retailers for sales growth

Retailer’s Dissatisfaction : Low margin & price cut in market

Consumer’s query : Price difference in market

Reasons for the Decline in Sale

The weakness of Ramdoss as a first-line manager

Problem with Brand Advertising

Skills of an Efficient Sales Manager

Commitment & Responsibility

Decisiveness & Persistency

Pay Attention to Negative PatternsShouldn’t mix Personal & Professional

RelationshipContinuous focus on Market & Rivals

The weakness of Ramdoss as a first-line manager

Lack of delegation of work

Lack of communication regarding sales

expectations

As a Manager should be clearer in communicating

Improper usage of position

Through contacts could manage to

achieve the sale in last three days

Lack on focus on the Market Data

Good at Tactical Decisions than Strategic

Higher discounts to pull the business up

Less Analytical skill – forced Ramdoss

succumbed to the situationLack of proper Team Co-

ordination

Failure to Promote as a BrandDu

raPr

oLack of Brand awareness among

Customers

Market presence in Small Retail Shops

Poor Brand Recall

Lack of Follow up with the Customers

Remedial Action PlanLong Term Training &

coaching plan

For Sales Executives

For Distributor proprietor Milind

Training Program

Knowledge & skills to perform the selling tasks

Dealer network management Market information & Survey Identification of growth opportunities

Immediate Action Plan

37% of the yearly business during June–August periodRamdoss can develop a ‘Quantity Purchase Scheme’ for the top 15 dealersHe should use the budget of the 5%This scheme has two benefits : Scheme will ensure targeted business value from the top dealers & It will prevent them from buying competition productAdvantage of lower retail price and profit marginLoyalty Discounts, Bulk Purchase Discounts – For RetailersBundle offers – For Consumers

Conclusion

Just by hiring a people from an MNC does not imply a great market performanceChange in Market Strategy as per the market requirementPerformance measurement system is a must in any sales organization Efforts should be made to encourage and restore the confidence of the old distributorsDuraPro should focus more on the efficiency of the whole-value chain rather than strengthening its components into bits and pieces.