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CASE STUDY 1 Bharat Petroleum Ltd (BPCL) is the second largest integrated refining and marketing public sector

oil giant with 5,000 petrol outlets and 970 kerosene dealers spread across the country. It posted annual revenue of Rs 48254.3crores for the year 2003-04. With the liberalization and deregulation of the petroleum industry, competition has increased. New players including Reliance, Essar and Shell are entering the stronghold of public sector oil companies petroleum product retailing outlets. This has promoted BPCL to take various measures to beat the competition. Firstly, BPCL has revamped the look and feel of their fuel (petrol and diesel) outlets or the filling stations. The outlets, which used to wear a dusty look, have been renovated on international lines and have also been equipped with state-of-the-art infrastructure. They now have imported electronic filling machines that enable the service provider to dispense several different products at a single machine, and to dispense a pre-set quantity of fuel, or fuel equivalent to a pre-set price. Each filling station has been given a new looking with good lighting arrangement and the companys logo prominently displayed. Together with fuel retailing, many outlets provide additional amenities like ATM centers, air gauges and a convenience store. The company has invested nearly Rs 10 lakhs to Rs 1 crore on each filling stations depending upon the location and the revenue it generates. Another major customer service initiative that BPCL has taken is the Pure for Sure campaign. Customers are concerned mainly with the quality and the quantity of the fuel they get at filling stations. To ensure that customer get the quality and right quantity of petrol and diesel at their outlets, the company had launched the Pure for Sure campaign. As part of this campaign, the company has taken many measures to maintain the quality and quantity of the fuel sold. In order to prevent the adulteration of fuel in transit, the company has installed tamper-proof locks called Abloy locks on the trucks that transport fuel to the outlets. These locks have two master keys-one is kept at the BPCL terminal where the fuel is loaded onto the truck, and the other is which the retail outlet owner. The dealer (owner of the filling station) can check the quality of the petrol before unlocking the tanker. Customers can also check the quantity and quality of the petrol at the outlets using special equipment provided by the company. Customers

can check the density of the petrol, and whether the petrol has any contaminants by using the filter paper provided at the outlets. Outlets are also provided with water detecting paste to check whether petrol contains water. In order to check the quantity, special calibrated five liter vessels are kept at the outlets. The company certifies an outlet as Pure for Sure only if the outlet passes the companys stringent certification process tests. The company also ensures that outlets comply with the parameters on a continuous basis by making periodic surprise audits at the outlets. The company also ensures that customers receive courteous service at the outlets with the Pure for Sure sign. The service personnel at the outlets wear a standard uniform, greet customers with a smile and offer personalized service. The service needs to be quick so that both the customer and the company can save time. Such service initiatives satisfy and delight customers. Apart from the good ambience and service quality, the company also provides value added services that offer convenience and a wider choice to its customers. The company has set up a chain of store called In & Out stores that stocks various goods and provides service including photo goods, fast food, music, greeting cards, a drop box for credit card/mobile phone payments, and ATMs. It has installed free air filling machines. BPCL Launched a customer loyalty plan called Petro cards in March 2000 to retain and attract customers. Petro cards are like pre-paid smart cards that can be used to pay for purchasing petrol and other products at the BPCL retail outlets. A customer can purchase these cards for a one-time fee. They are then loaded with amounts ranging from Rs 500 upwards. Customers get bonus points for each rupee that they have paid for the products and services at the outlet. These bonus points can be redeemed for various gifts and benefits. This is largest customer loyalty program in India. The program has 1.5 million members making 1, 00,000 transactions worth nearly Rs 4.5 crores daily.

Question for Discussion:

1. In order to provide quality service, service providers need to understand customer expectations and establish service standards that match them. Describe the measures BPCL has taken to meet customer expectations? 2. Petro card is the largest customer loyalty plan in India. Discuss in what ways the customer loyalty program benefits BPCL.

CASE STUDY 2 Asian Paints is Indias leading paint company and one of the worlds largest. It has a wide product range, catering to the decorative and industrial paint segments. Asian Paints recorded revenue of Rs. 1595 crores, with a net profit of Rs. 142 crores in 2003-2004. Nearly 90% of the revenues came from the decorative paints segment in which it is a market leader. Asian Paints market share was 46% in the organized paint market and 26% in the overall decorative paint market. During late 1990s, the company faced growth constraints due to a slowdown in the economy and stagnation in the paint market. This prompted the company to explore various avenues to expand and increase its sales volumes. It launched new products at various price ranges, targeted at virtually every customer segment. It launches Utsav distemper and Tractor emulsion paint for the low end and Apcolite distemper and Royale emulsion for the higher end of the market. Apart from launching new products, the company also focused on brand building through innovative promotions. The company introduced the Color World concept- a computerized automatic tinting and dispensing system installed at the paint dealers through which customer can select the color of his choice and the quantity required from a kiosk and get the paint of specified quantity from the system. In another major customer oriented initiative, Asian Paints launched an Asian Paints toll free help line in 1998, which enabled customers to ask for and get any information related to painting such as shades, pricing, maintenance, color combinations, home dcor etc. encouraged by the response to the help line, Asian Paints started Asian Paints Home Solutions, the worlds first paint service by a paint manufacturer, as a pilot project in the year 2001. The service was begun in Hyderabad and extended to Kolkata, Delhi, Bangalore, Chennai and Mumbai. Asian Paints, said, The helpline helped us realize the fact that customers didnt want to take the trouble of selecting the right color, deciding which paint to buy and from where. Asian Paints Home Solution provides hassle free painting service to customers. It was mainly targeted at higher income bracket customers. Commenting on the target customers, an Asian Paints spokesperson said, Really anyone who does not want to deal with the hassle of constantly supervising a contractor, especially the elderly and the retired as well as individuals who want

more aesthetic solutions but who do not have the resources to employ their own interior designer. The service delivery began with customers requesting for toll free help line (1600-225678). This would be followed by the companys sales associate visiting the customers home and assisting them in selecting the type of paint and color. Later the sales associate would quote a fixed rate that was all inclusive (cost of labor and material) on a per square foot basis, enabling the customer to make a single payment. The time required for the painting work would also be decided. Once these formalities were complete, painting work including scrubbing, puttying, painting and cleaning would be looked after by the company. The painting work would be done by a team of company- authorized applicators. A relationship associate would supervise the painting work to ensure that the customer received prompt delivery and quality service. The relationship associate was expected to make periodic inspection to monitor work. The company also provided a one-year warranty on the painted surface. On the pricing front, the company charged rates 10% higher than the prevailing market rates. Despite all efforts, Asian Paints got a mixed response to this venture. The company witnesses a 30% annual growth since its inception, but was yet to achieve profitability. Analysts cited various reasons for such an anomaly. Customers found that the authorized applicators and the relationship associates the company appointed were often neighborhood contractors and workers. This made customers feel that the company was charging higher rates for service that was no different from what the unorganized paint contractor offered. Further, customers were dissatisfied with the service quality. One dissatisfied customer commented that, The terms of the contract that one sign with the company should be tighter and the deliverables should be put up front. For instance, the time promised for getting the job done is more like an informal understanding. It should be put down on paper. So, there is a slight delay, which takes place and one would not expect that from a service thats branded. On looking into the complaints, Asian Paints discovered that the poor service quality resulted from lower compensation paid to the paint contractors. To solve this problem, Asian Paint identified top performers and weeded out non-performers. Salaries were also increased and a part of the compensation was tied up with commissions. The company provided the latest and advanced gadgets like laser measuring torches to contractors to provide faster and better service.

Asian Paints claims that nearly 10,000 housed have been painted till now (2004). Defending the slow growth, Mr. Anand says, If we grow any faster, we may not be able to offer the best quality.

Questions for Discussion: 1. Analyze the design of the service offering in the light of its appeal to the target customer

2. Evaluate the Asian Paints selection of target segment SEC A and B group customers in
terms of growth potential and structural attractiveness.

Satyam Info Way was set up as a subsidiary of Satyam in December 1995 in Chennai (Tamilnadu) to leverage opportunities created by the Internet growth in India. Later it was rechristened, as Sify and was made an independent entity with Satyam reducing its stake from 52.5% to 37.1%. It had presence in both B2C and B2B segment. In the corporate segment Sify offered end-to-end Internet solutions such as Electronic Data Interface, Virtual Private Networks, Security Services, Network Management Services, eSolutions services such as Internet Consulting, Architectures, Design and Development, Hosting and Management Services and eCommerce products. In the consumer segment, Sify offered dialup Internet service, broadband Internet service, iway cyber cafes, e-commerce portal and email service. Sify was the pioneer in offering off-the-shelf ready to use Internet connection packs. It was also one of the first players in the organized cybercaf chain business. At present Sify provides two types of Internet service offerings in the consumer segment dialup and broadband Internet access. Dialup Internet access is offered in two variants- specified number of hours or unlimited usage within a specified time period. The customers need to purchase a CD that enables them to access the Internet through usual telephone lines. Table 1.1 shows the price list of various dialup Internet access packs. Sify also offered a high-speed Internet service (broadband Internet service) which is many times faster than the dialup access. Sify used unique technology to deliver broadband Internet service

to the customers, which does not require any telephone connection to connect to the net. In this technology stationary 10 X 10 rectangular device called the subscriber-unit is installed on the roof of the cable operator building which receives and send signals to the nearest Sifys base station. The cable operator in turn provides Internet access through wired cable connected to the customers system. The broadband Internet services were priced according to speed and hours used or according to the speed and data transfer and unlimited access for a specified period. Table 1.2 gives a list of pricing for the broadband service offerings. Being the first entrant into the organized broadband Internet service, Sify has now become the largest player in this segment. But Sify will face competition from the state owned BSNL, which is planning to launch broadband service named Dataone through ADSL technology which allows BSNL to offer high-speed Internet connectivity over phone lines without interfering with the voice service. So a customer can access Internet as well receive phone calls simultaneously. The service which BSNL claims will be at the speed 256 kbps being offered at very competitive price of Rs 500 per month. Reliance with its pan Indian presence also well poised to launch its broadband Internet service Netway by the end of 2004 or early 2005. TataIndicom (which recently acquired leading Internet service provider Dishnet DSL) has already started offering this service. Apart from big players, broadband Internet service is also being offered by various regional ISPs and cable operators. Table 1.1: Sifys Dialup Access Plans Startup Packs Validity 10 hrs 25 hrs 40 hrs 100 hrs 250 hrs 500 hrs Unlimited Unlimited 1 month 3 month 6 month Features ---MRP Rs 99/Rs249/Rs 349/Rs 799/Rs 1799/Rs 3199/-

12 month -24 month -36 month -1 month 3 month

Special CLI based product Rs 199/Special CLI based product Rs 399/-


Table 1.2: Sifys Broadband Service Plans Speed No.of Hrs/Mbs Validity (Months) Hourly Range HI Speed Range 64 kbps 64 kbps 64 kbps 64 kbps 64 kbps 64 kbps 96 kbps 64 kbps 96 kbps 64 kbps 96 kbps 128 kbps # 128 kbps # 128 kbps # 128 kbps # 128 kbps # 128 kbps # 128 kbps 256 kbps 256 kbps 256 kbps 10 30 40 120 240 Unltd Unltd Unltd Unltd Unltd Unltd Night Unltd Night Unltd Night Unltd 100 MB 250 MB 350 MB 750 MB 1 GB 1.5 GB 2 GB 1 1 3 6 12 1 1 2 2 6 6 1 2 6 1 1 3 6 6 12 12 299 462 998 2395 4491 631 903 1175 1720 3172 4533 363 703 2042 299 462 898 1796 2495 3493 4491 330 510 1100 2640 4950 695 995 1295 1895 3495 4995 400 775 2250 330 510 990 1980 2750 3850 4950 Basic Price Mrp (Incl.Tax)


Questions for Discussion:

1. Pricing policy not only influences the companys sales and revenues but also reflects the image of the service provider. Critically analyze the Sifys pricing policy in this context. 2. What are various issues that Sify has to consider while setting the pricing policies for its services?

McDonalds is leading international fast food restaurant chain with 30,000 restaurants spread across the globe. In India, it launched its operations in 1996, with two stores. It now has 54 restaurants with a daily inflow of 5 lakh customers. It plans to add 15 more outlets by the end of 2004. As pr the Information Eating Out (IEO) survey involving the survey of branded food chains in India, conducted by ACNielsen, McDonalds was found to be the leader in fast food chains. Many factors can be attributed to the success of McDonalds Indian operations. First, McDonalds had focused on products and changed its menu to suit the tastes of Indian consumers. It launched India specific items including McVeggieTM burger, McAloo TikkiTM burger, Veg. Pizza McPuffTM and chicken McGrillTM burger. Considering the Indian preferences and sensibilities, the company doesnt offer pork and beef items in India. It offers egg-less sandwich sauces for vegetarian customers and vegetarian items are prepared at a separate counter at the outlets. On the pricing front, McDonalds has adopted customized pricing for each of the cities depending upon the tax structure, demand, and purchasing power of the population. However, to attract mass-market customers it has launched a new menu called Happy Price Menu in which select items are priced at Rs 20 across all the outlets in the country. As McDonalds is into the food business, establishing an efficient supply chain infrastructure is of great importance. McDonalds has, therefore focused on setting up an efficient and effective supply chain. Its supply chain three tiered, consisting of farms, processing plants, and distribution centers. The company has selected the farmers who can meet its quality and supply standards and directly sources the produce from them. They are supported by McDonalds in terms of seed technology and latest irrigation methods to enable them to obtain higher yields and

better produce. The next level of supply chain activities involvers the processing of farm produce. For this, the company has tied up with various local suppliers like Vista Processed Foods Pvt. Ltd. A joint venture of OSI Industries Inc., USA, and McDonalds India Pvt. Ltd. That processes chicken and vegetarian food product at its plant situated at Taloja, Maharashtra. Dynamix Diary supplies cheese, butter, ghee, and milk products and Amrit Food supplies long life UHT Milk and Milk Products for Frozen Desserts from its fully automated plant situated at Ghaziabad, Uttar Pradesh. The next level of supply chain activity is the distribution of processed food to the outlets. For this, the company has tied up with Radhakrishna Foodland, which is into food products distribution. Foodland provides logistics support to McDonalds by providing cold storage facilities and transporting the processed foods to the outlets using temperature controlled transport vehicles. To maintain the service standards, the company has made it mandatory for personnel to undergo periodic training programs. The core principles of McDonalds that are, Quality, Service, Cleanliness, and Value (Q.V.C. & V), guide its training programs. The companys highly structured training programmes are conducted at four levels: crew development program, restaurant management program, mid-management program, and executive development program. Entry-level workers are trained under the basic crew development program. The training is conducted at each restaurant. Crew members are given on-the-job and off-the-job training. The next level of training is the management development program. This training program ranges from the basic level to the advanced level. McDonalds also focused on creating a right ambience in the outlet. Since it has been positioned as a family restaurant, McDonalds ensured that the physical environment reflected that image. The outlets are spaciously designed, well lit and has an informal atmosphere, so that kids can play around and families have the opportunity to conduct events like birthday parties. Besides, no-smoking zones have been set-up in the outlets, taking into account the sensibilities of families. The company had also laid special emphasis on the convenience of kids. The height of the counters at some outlets is lower than normal, so that they are easily accessible to kids. In addition, McDonalds had made use of vibrant and pleasing colors, and paintings based on different themes, which children can relate to. McDonalds had also created localized ads titled What Your Bahana. The ads have the same theme as the Im lovin it global campaign. The

characters in the ads cite weird reasons for eating out at McDonalds. Humor has been used to put across the message to the consumers. To keep up the interest in the brand, McDonalds also ran various sales promotion activities targeting the children and family, such as offering toys and conducting contests.

Questions for Discussion:

1. The service marketing mix consists of three additional elements like people, process, and physical evidence apart from the traditional marketing mix elements such as product, price, promotion, and place. How McDonald was able to utilize these additional three elements to market its services? 2. The proliferation of western fast-food chains such as McDonaldss, Pizza Hut, Subway, and Dominos in the Indian market has only been a recent phenomenon. What are the reasons that have contributed to the increased popularity of western fast food chains in India?

BSNL, a Rs 28,500 crore company, is Indias leading telecom service provider with 43.5 million basic telephony subscribers and 8.1 million cellular service subscribers (as in March 2004). Till the early 1990s, BSNL enjoyed monopoly status by virtue of its being the only player in the Indian telephony market. With the opening up of the telephony market and the entry of private players, BSNL began to face declining revenues and the erosion of its customer base. It realized that to stay on in the market, it would have to restructure its business. BSNL took various measures to sustain its position in the marketplace. It revamped its customer service functions, opened call centers, and developed an Interactive Voice Response System (IVRS) to provide immediate information to customer queries. It also launched various online services eServices - through its website such as online bill payment, and requests for transfer of phone, caller line identification facility, call transfer facility, and call waiting services. BSNL tied up with the government of southern state of Andhra Pradesh to use the latters e-Seva (a government project for e-governance) centre network for the collection of telephone bills. It also tied up with ICICI Bank, UTI Bank, and HDFC Bank to act as payment partners for the online

bill payment facility. The bills payment facility was also integrated with the Internet banking systems of these banks. On the product front, BSNL took various measures to improve its service product line. First, it tried to make the existing products line better and more attractive to customers. The first basic phone service, the main revenue earner for the organization contributing nearly 90% of the total revenues, was improved and special features like caller line identification, SMS service, and voice mail service were added. It also waived the registration fees for new connections. Besides, the tariff rates were reduced to match the rates of other fixed line telephone provides and mobile service providers. Apart from the basic telephone service, BSNL also entered other high growth areas like mobile services. It launched its mobile serviced in November 2002 under two brands EX-cel (for prepaid cards) and Cellone (for the post-paid service).to differentiate its mobile services from those of the competition, it offered a wider network reach even in rural areas, higher talk-time value, and lower tariffs. Other value-added services such as MMS, Wireless Application Protocol (WAP), national and international roaming were also introduced in course of time to meet the changing needs of customers. In Internet services, BSNL sold prepaid Internet cards through the Sancharnet brand, valid a specific period and number of hours. However, it was the caller line identification (CLI) based Internet service that helped BSNL achieve the leadership position in Internet services. The CLI based service does not require subscribers to create and maintain any Internet accounts and eliminates the need for buying renewal packs. The billing is done according to the hours used and sent along with the bill of the basic phone service. It launched National Internet Backbone (NIB), a government sponsored project, in 2001 aiming to increase its share in the Internet services market and provide value-added services to the customers. BSNL also started the Internet telephony service, WebFone, in September 2002 through which customers could make international calls at lower charges. BSNL plans to introduce the broadband Internet service Dataone in over 98 cities during 2005 using ADSL technology. With this technology, BSNL can use the existing copper line network used for its basic telephone service to provide broadband Internet access to its customers. This means that BSNL will not

have to spend a huge amount on setting up new infrastructure. Also, it will be able to tap the captive market of basic telephone users. In addition, has adopted new technology and increased capacity to meet the growing demand due to changing market place conditions. It plans to add 15 million lines to the existing network at an investment of Rs 10,000 crore (to be completed by the first half of 2005) and eventually reach the 120 million line mark by 2010.

Questions for Discussion:

1. With the opening up of the telephony market and the entry of private players, BSNL began to face declining revenues and the erosion of its customer base. Discuss the basic measures adapted by BSNL to restructure and revive its business from the service quality gap model context.

2. BSNL plans to launch the broadband Internet service Dataone in a big way. What kind
of pricing strategy should BSNL adopt to attract customers and improve market share?