b2b case 2 nal final

7/29/2019 B2B Case 2 NAL Final

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Case 2- NAL

By VijayHarsJamaKara

KomKumLlewM VrMaheMann

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PROBLEM SOLVINGAPPROACH FOR DSP 2

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SYMPTOMS

Low share of DSPs consumption two of six departments and 30of potential

Resident Representative has not met GM, steel plant of DSP forlast 3.5 years. Infrequent communication - visit only once in aweek

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PROBABLE CAUSATIVE FACTORS OBJECTIVESETTING

Customization of contracts according to various sub divisions of the company Improper Sales Quota Improper sales territory definition Improper Sales strategy, situation and style Low Employee Morale, Growth opportunity Personal reasons of Regional Representative for not living in Durgapur Improper identification and communication with appropriate members of DM

like Initiator Decision maker Buyer user Influencer Gate Keeper

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TARGET AND LIMITATIONS

TARGET

To win entire DSPaccount

LIMITATIONS

Intra industry rivalry

Bargaining power of DSP due torise in power of other supplier

Threat of new entrants

Pressure from parent company

Risk aversion policies of the cli

Internal conflicts in DMU

Replacing of people like Mr. Ya9/2


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COST BENEFIT ANALYSIS

Reorganization Cost

Training Cost

Cost of setting up and monitoringcommunication channels

Increased Market share and

Avoiding merger with Austra

Faster response to changing

COSTS BENEFITS

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Implementation

Independent Variables

Type of Product Fabricated product

Time pressure on Buyers - High

Perceived risk of Buyers - High

Size of the Firm - Large

Buyers background PSU

Situtional factors Assuming they remain constant and do not have averse effect Dependant Variables

Degree of centralization Mixed

Degree of Source Loyalty Low loyaity (exists till personal needs are satisfied

Cost vs Quality Varies to different departments

Purchase criterion - Varies to different departments

Interaction between Buyers and Actual users - Less 9/2


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Implementation

Improper Sales Quota

Setting proper sales target

Revisiting the policy for setting sales target on a regular basis

Setting up mechanism for Monitoring and control of Regional representatives

Activity based compensation for Regional representative

To interact all members of DMU daily

Maintain the database of contacts for DMU Submission of status reports related to summary of interaction on a regular basis

Improper sales territory definition Defining DSP as a separate territory

Deploying sales force appropriately - appointing separate sales team for eachdepartment of DSP

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Implementation

Improper usage of Selling Strategy and Style in the given selling situation Changing definition of selling situation from Outside order taker to Creative sel

of Tangible products

Change selling strategy from Commercial selling to Client profit planning

Changing selling style from Commercial/Technical to Consultative selling

Identify Intermediate variables

Identify Composition of DMU Technical GM

AGM of utilities and Maintenance

Buyers and Accounts department

Identify conflicts in decision making unit

Identify whether conflicts take place if so between who?

Information handling habits

Identify information needed by DMU before, during and after purchasing decision9/2


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PROBLEM SOLVINGAPPROACH FOR ZUARI 10

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Symptoms

Despite of BETZ not supplying to Zuari, NAL is not able to increase their shar

Relationship with company is not what is expected.

Competition is trying to eat into market share of NAL.

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Causative factors

RR based at Mumbai which is at distant location from Goa where Zuari is bas

Expensive products as compared to Local suppliers.

Perceived as only order taker.

Absence from the promotional activities.

Very infrequent follow up.

Buyer was extremely price-conscious.

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Objective setting

Proactive approach.

Total Technical Service.

To achieve 70% of the total purchases done by Zuari, within the next 2 years.

To create an impression on all the probable members of decision making unit(mixed decentralized buyer firm).

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Target and Limitations

TARGET Increasing share of supplies to

70% of the total purchases byZUARI.

LIMITATIONS Much lower price offered by

local suppliers.

Man power constraint.

Compromising Profit Margin. Production constraints.

Factory location.

Motivation level of RRs.

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Alternatives

Relaxed credit terms

Improving service level by deploying a dedicated personnel at clocation.

Decreasing price by 5%

Promotion by advertising.

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Cost Benefit Analysis

Alternative 1 : Cost

Before relaxed credit terms After relaxing credit terms

Total purchase by Zuari 5 (lets

say).

Total purchase by Zuari - 5

NALs share 2 (40%). NALs share 3.5 (70% - objectified).

Interest on Current credit for 2

months for 50% of sale 0.0133

Interest on Future credit for 6 months

for 50% of sale 0.07

Profit Margin - 0.15 (assumed) Profit Margin - 0.15 (assumed)

Total profit 0.3 Total profit 0.525

Actual profit 0.287 Actual profit 0.455

Adjusted profit 0.143 Adjusted profit 0.13

B

Increased

Zuari.

Preferred

competito

Healthierthe decisi

and NAL.

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Extra lodging, fooding, travel and phone bill charges toemployee 3 lakh per year approx.

Demotivated employee because of his distance from the

main office.

Infrequent reporting to the main office of the company.

Alternative 2 : Cost Ben

Free flow of com

between vendor a

Greater percenta

productive intera

Regular follow up

Ensured total te

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Reduced profit by 5 %.

Should concentrate on volume sales to compensate for thereduced profit margin.

Alternative 3 : Cost Ben

Buyers are very

vendor can levera

Increased share

purchases by the

Cost cutting fact

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Advertisement cost for the vendor can be as much as 3 croreper year.

Wrong communication by the advertisers can lead todisaster.

Industrial products might not be adept for promotionthrough advertising.

Can lead to development of a new front for the war fromthe competitors.

Alternative 4: Cost Ben

Result in top of

the buyers view.

One of the most

communicate it

increase the awar

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Best alternative

Best alternatives with which the vendor should go are:

It should relax the credit terms.

It should deploy an employee at the buyers site.

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Implementation

An in-depth analysis should be done about the decision making unit of the buyer. Presentation should be customized according to the attributes of the DMU, to successfully conve

sales leads.

Who is the most important person of the entire unit?

Their expectations from any vendor regarding the materials quality and selling terms.

Feedback in both the cases - for satisfaction and dissatisfaction among the buyer Proper CRM mechanisms should be in place, so that the customer is not felt left out of the proce

anywhere.

Since the weightage of decision is 50-50% each for the technical people and comnegotiation, both should be communicated frequently.

Thorough research about the competitors as in what extra the offer which is notoffered by NAL.

The commercial and quality aspect of the competitors product.

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Implementation

Usage of Selling Strategy and Style in the given selling situation Change selling strategy from Commercial selling to Client profit planning


Setting of Quotas


To interact all members of DMU daily (Sole purpose of deploying a local RR)

Maintain the database of contacts for DMU Submission of status reports related to summary of interaction on a regular basis

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PROBLEM SOLVINGAPPROACH FOR NOCIL 23

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SYMPTOMS

Relation with NOCIL top management not up to the mark.

Very expensive as compared to other local manufacturers(perceived as expensive)

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PROBABLE CAUSATIVE FACTORS- ObjectiveSetting

RR not giving proper time to NOCIL Acting very late at the time of contract renewal only

Not having a proactive approach

Import from USA After sales service (BETZ RR was present all around the week)

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OBJECTIVE SETTING

Setting up a synergy between the Sales and After Sales Approach

Sales ObjectivesAfter SalesObjectives

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TARGET AND LIMITATIONSTARGET

To reach 2 cr business from NOCILtaking much of the share fromlocal manufacturer

LIMITATIONS

A3 is based in Pune so easier for them tsupply with incurring low cost

Current perception of customers that Nonly order taker

Compromise with the profit

Perception of NOCIL is that NAL is veryexpensive

Reluctance of the top management to gfor reduction in price

Manufacturing capacity might not be abto meet the increased demand

Justifying NOCIL that there would not bany supply irregularity 9/2


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COST BENEFIT ANALYSIS

High Investments to be made initially

High degree of risk involved due t lesseramount of suppliers(assuming A3&A4 havebeen sept out)

High delivery time

Lower consumption rate of c

eventually saves on the toal

High quality products being

Constant supply of high qual

Easily available in the marke

COSTS BENEFITS

Company %age ofTotalBusiness

Total Cost per unitof SpecialtyChemical(Assumed)

Total units Sold ConcentStrength

NAL 25 100 1,00,00,000/100 = 1,00,000 1

A&B 25 70 1,00,00,000/70 = 1,428,571 2 9/2


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ACTIVITY ANALYSIS

Setting up of SalesTerritory

Proper Training forthe RR

After sales technicalsupport should beoutsourced from a

local trusted agency

A team supporting theRR should be formed

Appointing local tech.rep. which will be

solely responsible forday to day working of

NOCIL

Try to get rawmaterials from India

or from China forlow cost ofproduction

Increase output ofthe plant

Introduction of leanmanagementtechniques to

improvise cost ofproduction

Distribution networkto avoid long lead

time in supply chain

Convincing NOCILabout the

differentiationfactor High quality

and dedicatedmaintainence

Come up wibetter prom

technique witManagemen

NOCIL

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CONFLICT MANAGEMENT

MOTIVATIONProviding a base

pay andincentivizing theRR for additionalperks and benefitsbased on the aftersales feedback C

ONTRO

LTop Managementshould visit theNOCIL centersatleast twice amonth to bridgeand solve anyformulation-

implementationgapGUIDANC

ERR as wlocal terepreseshould provideadvancin the U

foreseeproblemfollow arather reactiv

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Implementation

Independent Variables

Type of Product Fabricated product

Time pressure on Buyers - High

Perceived risk of Buyers - High

Size of the Firm - Large

Buyers background Private

Situational factors Assuming they remain constant and do not have averse effec

Dependant Variables

Degree of centralization Highly Decentralized

Degree of Source Loyalty Low loyalty (High for Competitor- BETZ)

Cost vs Quality Technical Quality very important. Buying Unit has very lower sa

Purchase criterion Technical Qualities is the main decider

Interaction between Buyers and Actual users - Less 9/2


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Implementation

Improper Sales Quota

Setting proper sales target

Setting the quota to 50% of total business from NOCIL.

Setting up mechanism for Monitoring and control of Regional representatives


To interact all members of DMU daily

Maintain the database of contacts for DMU

Submission of status reports related to summary of interaction on a regular basis

Improper sales territory definition Defining NOCIL as a separate territory separate from Zuari Agro Chemicals

Deploying sales force appropriately - appointing separate sales team for eachdepartment of NOCIL

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Implementation

Improper usage of Selling Strategy and Style in the given selling situation Changing definition of selling situation from Outside order taker to Creative sel

of Tangible products

Change selling strategy from Commercial selling to Client profit planning


Identify Intermediate variables

Identify Composition of DMU

Technical GM

AGM of utilities and Maintenance

Buyers and Accounts department

Identify conflicts in decision making unit

Identify whether conflicts take place if so between who?

Information handling habits

Identify information needed by DMU before, during and after purchasing decision9/2

b2b case 2 nal final

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