CASE STUDY 1

Yet another poor year Profits down by 15%, sales and turnover static in a market
reckoned to be growing at a rate of some 20% per annum- these are the words of Vipin Kumar,
Senior executive of Superficial products Ltd. Kumars concern is that the company may be out of
business if the next year turn out to be as bad as this.
Superficial products produce a range of sophisticated electromechanical control devices. Major
customers of Superficial Products are chemical processing industries. The control devices are
fitted to the chemical processing plants in order to provide safety and cut out mechanism to
prevent anything hazardous during the manufacturing process. The products are sold through a
national sales force of some twelve people. Each operates in a different area of the country and
all are technically qualified mechanical or electrical engineers.
The company believed till now that if the product was right, i.e., well designed and manufactured
with a high level of quality, there would be a market. Therefore, very little advertising and
salespromotion was carried out. The assumption was that the product should sell on its own.
Pricing of the product was done on a cost-plus basis with total cost being calculated and a fixed
percentage added as a profit. Prices were fixed by the accounts department and sales had no say
in how they were worked out. This led to much dissent among the sales people and they
constantly argued that prices were not competitive, and if those were not reduced, sales would
decline substantially.
There were also very few discounts given to big buyers.
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Here again, the salespeople had to get all such discounts first approved by the accounts
department. In the matter of discounts, the companys old philosophy prevailed: Why offer
discounts for large quantities- if they did not want that many, they would not order them.
Delivery periods were slow in Superficial compared with average in the industry. Here also, the
companys old philosophy ruled: If they want the products badly enough, they will wait for it
Marketing has become more competitive now with many new entrants particularly from foreign
countries coming into the Indian market. Many of those new entrants have introduced new and
upgraded products. These new products are seen by many buyer as technically innovative. But
Superficial has been ignoring product life cycle expecting that customers would come back to
their products.
Kumar is worried about the developments over the past five years and there is need for changes
in the company. He is aware that the more successful new entrants have introduced a selling and
marketing philosophy into their operations. But Superficials Sales Manager, who is expecting to
be shortly made Sales Director, is of the view the marketing is suitable for a baked beans
manufacturer, but not for a company engaged in the manufacture and sale of sophisticated
control devices for the chemical industry. He argues that Superficials customer would not be
swayed by superficial advertising and market ploys.
a) What are the reasons for the decline of sales of Superficial products?
b) What advice can you suggest to the company to retain its customer base?
c) Do u think appointing a new sales and marketing manager will solve the problem of
declining sales. If yes, discuss the role of a sales manager.


CASE STUDY 2

Mephisto Distributors Ltd. imports washing machines and dryers from an Italian manufacturer
and markets them in India. They have selling franchise arrangement with the manufacturer and
this arrangement has worked quite successfully in the last eight years.
The selling operation within India is mostly direct to customers. Sales representatives are
engaged on a virtual self-employed basis. They are retained on a low basic salary plus
commission. They are supplied with a demonstration kit of a washer and dryer and a small
company van. The van is maintained by the company, but the sales representative pays for petrol.
Sales representatives are given sales leads from the head office on a weekly basis. These
sales leads and performance of sales people are closely monitored, and if a salesperson regularly
falls below the average success rate of converting leads into orders, he or she is dismissed. The
company believes in the survival of the fittest. Needless to say, in a system like this, the turnover
rate of salespeople is quite high.
For after- sales service of washing machines, the company has outsourcing arrangements with a
network of service engineers who also service other makers of washing machines. Mephisto
Distributors provide the service engineers with a stock of spare parts which are unique to their
machines. The company also uses his network of engineers to provide the backup for the
warranty during the first year. It is expected that the service engineers would have sufficient
stock of spare parts to do simple repairs and major parts could be supplied from Mephisto
Distributors warehouse within 48 hrs. However, for some of the older machines, stocks of major
components/parts are not kept and have to be ordered from Italy.
For some years this sales system worked satisfactorily, but it could not work for long. For the
first time in the companys history, sales had fallen. It was felt that this had happened because of
some bad and, in the companys opinion, unfair publicity. One of the companys washing
machines was featured on a well known consumer affairs television programme, and some of the
selling tactics used by Mephisto Distributors sales people were deemed to be rather suspect. It
was also said that once the sales has been made, the company no longer took any interest in
after- sales service. In some cases, parts were not available even after four weeks of machine
break- down.
There was also growing dissatisfaction among many sales staff. The sales force had found that
many potential customer were raising sales objections like is this the machine that you cannot
provide parts for? Sales people were asked to counter such objection by stating that these were
isolated cases of few older machines and new machines could be serviced among immediately.
But this did not fully satisfy a potential customer, and it was felt that many sales were lost.
a) State the reasons for the decline of sale of Mephisto Distributors.
b) What advice would you give to the management of the company to bring back the
lost sales?
c) Do u think the company followed the selling process? If not, state the reasons for the
same.