territory management practices at element14
DESCRIPTION
electronic component distribution industry in indiaTRANSCRIPT
STUDY OF CONSUMER BEHAVIOUR
AND
TERRITORY MANAGEMENT PRACTICES
IN
ELECTRONIC COMPONENT
DISTRIBUTION INDUSTRY
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Project Report
ON
STUDY OF CONSUMER BEHAVIOUR AND TERRITORY MANAGEMENT
PRACTICES IN ELECTRONIC COMPONENT DISTRIBUTION INDUSTRY
For
ELEMENT14 INDIA PVT LTD
A project report submitted in partial fulfilment of the requirement for the award of
post graduate diploma in business management
Under the guidance of
Prof Regi V Mathew
SUBMITTED BY: RAHUL SINGH
BATCH: 17 B (2011-13)
ROLL: 119
SUBMITTED ON: 6th August, 2012
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ACKNOWLEDGEMENT
I would like to extend my deepest gratitude to Element14 India Pvt Ltd for giving me an opportunity
to work for the company as part of the internship program. The two months that I have spent in the
organisation have been the most fruitful and eventful period of my life. It has really been a game
changer and would go a long way in shaping my future career and attitude.
I also extend my sincere and heartfelt gratitude to my project guides Mr. Navin Honnvara ,(Marketing
Manager, Element14 India Pvt Ltd) and Ms kauser Fathima ,(Deputy Marketing Manager, Element14
India Pvt Ltd) for being there for me throughout the duration of the project. Without their constant
monitoring and support it would not have been possible to achieve so much in such a short duration.
I take this opportunity to thank Mr Regi Mathew (Dean, XIME) and Mr Joe Philip (President,XIME
for making summer internship program as a compulsory part of the PGDM course.
Last but not the least I also extend my thanks to my colleagues Mr Raghavendra K V (student, XIME)
and Mr Sanjay Jha(student, XIME) for making a perfect team at Element14.
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TABLE OF CONTENTS
LIST OF TABLES..................................................................................................................................9
LIST OF FIGURES................................................................................................................................9
LIST OF ABBREVIATIONS.................................................................................................................9
EXECUTIVE SUMMARY...................................................................................................................10
OBJECTIVE.............................................................................................................................10
RESULTS.................................................................................................................................11
CONCLUSIONS......................................................................................................................11
RECOMMENDATIONS..........................................................................................................11
CHAPTER 1: INTRODUCTION..........................................................................................................12
1.1 BACKGROUND.............................................................................................................................13
THE GLOBAL SCENARIO.....................................................................................................13
GLOBAL PLAYERS................................................................................................................13
THE INDIAN STORY..............................................................................................................15
1.2 COMPANY OPERATIONS...........................................................................................................17
BUSINESS TO BUSINESS FUNDAMENTALS...................................................................17
PRODUCT LINES...................................................................................................................19
OPERATIONAL FIELDS........................................................................................................20
1.3 PROBLEM DEFINITION..............................................................................................................21
BACKGROUND OF THE PROBLEM....................................................................................21
STATEMENT OF THE PROBLEM........................................................................................22
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MANAGEMENT DECISION PROBLEM...............................................................................22
OBJECTIVES OF THE PROJECT............................................................................................22
CHAPTER 2: METHODOLOGY.........................................................................................................23
2.1 EXECUTION...................................................................................................................................24
2.2 RESEARCH DESIGN.....................................................................................................................25
TYPE OF RESEARCH.............................................................................................................25
DATA FROM SECONDARY RESEARCH...........................................................................25
DATA FROM PROMARY RESEARCH................................................................................25
CHAPTER 3: ANALYSIS....................................................................................................................26
3.1 ANALYSIS OF PRIMARY DATA................................................................................................27
UNASSIGNED ACCOUNTS..................................................................................................27
CUSTOMER SEGMENTATION............................................................................................30
3.2 SWOT ANALYSIS.........................................................................................................................35
3.3 POTENTIAL MODELLING...........................................................................................................36
CHAPTER 4: RESULTS.......................................................................................................................38
4.1 RESULTS FROM PRIMARY RESEARCH...................................................................................39
4.2 RESULTS FROM SECONDARY RESEARCH.............................................................................39
4.3 OTHER RESULTS..........................................................................................................................39
CHAPTER 5: CONCLUSION..............................................................................................................40
CHAPTER 6: RECOMMENDATIONS................................................................................................42
CHAPTER 7: ANNEXURES................................................................................................................44
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7.1 COMPANY PROFILE....................................................................................................................45
7.2 QUESTIONNAIRE.........................................................................................................................50
7.3 ERP TOOLS....................................................................................................................................51
CHAPTER 8: BIBLIOGRAPHY..........................................................................................................52
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LIST OF TABLES
Table 1: ISSUES AND THE NUMBER OF CUSTOMERS................................................................27
Table 2: SEGMENTS AND THEIR NUMBERS.................................................................................31
Table 3: ANNUAL SALES...................................................................................................................32
Table 4: EDE & MRO PERCENTAGE IN SALES OF ELEMENT14................................................32
LIST OF FIGURES
Figure 1: WORKFLOW........................................................................................................................10
Figure 2: PAYMENT COLLECTION STEPS......................................................................................18
Figure 3: CUSTOMER SUPPORT FLOW DIAGRAM.......................................................................19
Figure 4: EDE & MRO PERCENTAGE...............................................................................................20
Figure 5: GRAPHICAL REPRESENTATION OF CUSTOMER ISSUES..........................................28
Figure 6: SHARE OF VARIOUS SEGMENTS....................................................................................31
Figure 7: SHARE OF EDE & MRO in ELEMENT14..........................................................................33
Figure 8: SWOT ANLYSIS...................................................................................................................35
Figure 9: GROWTH OF MEDICAL EQUIPMENT MARKET...........................................................36
Figure 10: SHARE OF ELEMENT14 IN MEDICAL ELECTRONICS MARKET.............................37
LIST OF ABBREVIATIONS
RFQ: Cheque on delivery......................................................................................................................18
COD: Request for quote........................................................................................................................19
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EXECUTIVE SUMMARY
This report represents the compilation of all the effort put by me over the course of two months of
internship. The project done was basically in the field of territory management, customer retention,
sales generation and customer segmentation. The aim was to have a thorough understanding of the B
to B business in India pertaining to electronic component distribution industry in India The report
contains the various issues that the customers of the company are facing along with suggestions and
recommendations to retain them. Apart from that it also suggests future strategies that the company
needs to adopt
OBJECTIVES
The project basically aims at understanding the dynamics of the electronic component distribution in
India. It basically aims to fulfil the following objectives in particular
Analyse the unassigned accounts of the company and understand the specific issues affecting
the customers
Generate sales enquiry from these unassigned accounts in order to pep up the profitability of
the company
Segmenting the given customer base into well defined industry verticals
Doing potential modelling of a select sector
SWOT analysis of Element14
WORK FLOW
Figure 1:
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ANALYSIS ON UNASSIGNED ACCOUNTS
CONSUMER BEHAVIOUR ANALYSIS
CUSTOMER SEGMENTATION
POTENTIAL MODELLING
RESULTS
The results of the work done can be summarized as follows.
We were able to do a thorough analysis of the unassigned account and acquainted ourselves
with the critical issues that the customers were facing.
We were able to generate a considerable amount of sales from these unassigned accounts
We were also able to segment the given database of customers into well defined industry
verticals
Potential modelling of a sector was done. I did for the medical sector.
CONCLUSION
After personally talking to the customers we were able to find out that Element14 as a brand is
reasonably well entrenched in the minds of the customers though certain specific issues do exist like
price, delivery issues, unavailability of stocks etc. The company would certainly help itself in a big
way by focussing on these issues and resolving them.
Huge potential exists in sectors like Alternative energy, Medical and the Education sector. The
company has basically failed to address the needs of these sectors. The company has less presence in
the field of MRO.
RECOMMENDATIONS:
There are areas which need to be looked at with a more proactive approach. Some of the
recommendations can be summarized as follows:
The company should increase its marketing effort in order to make itself more visible
Increase its focus on sectors like Alternative energy, Medical
Education sector has been practically neglected so far. It’s a huge future prospect. Needs to be
looked at seriously
Greater emphasis should be placed on upcoming MRO sector
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INTRODUCTION
BACKGROUND
ELECTRONICS COMPONENT DISTRIBUTION-THE GLOBAL SCENARIO:
With the advent of the electronic age, there has been a significant boom in the business of electronic
component distribution. The ever increasing demand of diverse electronic components, has led
numerous entrepreneurs to act as electronic component distributors for the numerous companies
that manufacture these components globally. Today there are several distributors of electronic
components, who after capturing the local markets in their home towns and nations are venturing into
distribution on an international level. Component distribution has come to occupy a central position in
the electronic supply chain acting, acting like traffic officers to move parts and services swiftly and
efficiently from suppliers and contract manufacturers.
A BIRD’s EYE VIEW
Electronic component distribution market has shown lot of fluidity in the recent paths basically
reflecting the dynamic and dangerous economic condition existing in the world. The market has
matured in North America and Europe but remains highly fragmented and uncertain elsewhere. The
North American market has been whittled down through an intense campaign of mergers and
acquisitions to a few major players that dominate the sector, leaving their smaller counterparts to
scramble for crumbs. In Japan, the components distribution market is still beholden to the country's
kereitsu system, under which the nation's leading electronics OEMs decide which distributors thrive
and which never rise above mom-and-pop status. In China, the market is even more chaotic, with
distributors numbering in the thousands, all struggling to establish a clear leadership position. Even
here, however, the leading Western distributors and Taiwan-based WPG Holdings have emerged as
top players by leveraging relationships with foreign equipment vendors and contractors. Asia Pacific
market on the other hand have shown constant double digit growth over the past.
THE GLOBAL PLAYERS:
Following are the torch bearers of the global electronic distribution industry. Given below is their
peaking order.
1. Avnet
Avnet is the world's largest distributor, based on sales, of electronic components, enterprise computer
and storage products and embedded subsystems. The company creates a vital link in the technology
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supply chain that connects more than 300 of the world's leading electronic component and
computer product manufacturers and software developers with a global customer base of more than
100,000 OEMs, electronics manufacturing services providers, original design manufacturers and
value-added resellers.
2. 2 Arrow
Arrow is a global provider of products, services and solutions to industrial and commercial users of
electronic components and enterprise computing solutions. The company serves more than 800
suppliers and 130,000 OEMs, contract manufacturers and commercial customers worldwide..Arrow
offers a wide spectrum of products and a broad range of services and solutions, including materials
planning, design services, programming and assembly services, inventory management and a variety
of online supply-chain tools.
3 WPG Holdings
WPG holdings are the No. 1 distributor of components in Asia and ranks third worldwide. And WPG
could potentially become the world's leading electronic components distributor by the end of 2010,
following its acquisition of fellow Taiwanese distributor Yosun Industrial Corp., according to
research firm iSuppli Corp.
4 Future Electronics
Headquartered in Montreal and operating in 41 countries around the world, Future Electronics is
known for the strength of its commercial and technical competencies through all stages of the
design/production cycle and for developing efficient, comprehensive global supply chain solutions.
Over the past year, Future continued to add to the list of component suppliers it supports. The
company now represents ZeroG Wireless (a developer of low-power embedded Wi-Fi applications)
and CogniVue Corp. (a supplier of programmable image cognition processors).
5 Bell Microproducts
Bell Microproducts agreed in March to be acquired by Avnet Inc. for $594 million. The company is a
value-added distributor of a wide range of high-tech products, services and solutions, including
storage systems, servers, software, computer components and peripherals, as well as maintenance and
professional services. It is one of the world's largest storage-centric value-added distributors.
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6 TTI/Mouser
TTI, which in 2007 was acquired by Berkshire Hathaway, is one of the top authorized distributors
specializing in passive, connector, electromechanical and discrete components. The company sells to
OEMs in the industrial, military, aerospace and consumer electronics markets worldwide.
7 Premier Farnell
Premier Farnell supports millions of engineers and purchasing professionals globally through its
component distribution services as well as by offering design assistance. It markets and distributes a
comprehensive range of products and services throughout Europe, North America and Asia-Pacific,
with operations in 24 countries and business in more than 100.
8 Electrocomponents
Electrocomponents is focused on the distribution of electronic components as well as electrical and
industrial supplies. It has operations in 27 countries worldwide and trades as RS in the United
Kingdom, most of Europe and Asia; Radiospares in France; Radionics in the Republic of Ireland; and
Allied Electronics in North America. Allied's sales in 2009 dropped to $209 million from $340
million in 2008.
9 Digi-Key
Online and print catalog distributor Digi-Key has grown mainly through organic expansion, clocking
an annual compounded growth rate of approximately 22 percent per year over more than 20 years,
according to president Mark Larson.
The company has no outside sales force and serves all of its customers from its headquarters in Thief
river Falls, Minn. Digi-Key ships electronic components to more than 140 countries and stocks more
than 300,000 products.
10 Nu Horizons Electronics
Nu Horizons is focused on the distribution of advanced electronic components to OEMs and EMS
providers, servicing them from sales locations in 54 centers worldwide. The company generated about
50 percent of its 2009 sales from contract manufacturers. Sales to customers in North America in
2009 were $372 million, or 58 percent of total revenue. Asia accounted for 31 percent of sales, while
Europe represented about 11 percent, according to Nu Horizon.
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THE INDIAN STORY
The electronic component distribution industry in India has still not matured having made a late
compared to some of the other developed economies of the world. But nevertheless it growing at a
breakneck speed forcing the global players to come and set shop in the country. Component
manufacturing has not taken off in a big way in India, and till date, a significant percentage of
components used by the Indian electronics industry is being imported. According to a recent survey
conducted by the Department of Information Technology (DIT) in association with Electronics
Industries Association of India (ELCINA), the size of the total electronics components industry was
over US$ 9.2 billion in 2010, of which over 60 per cent was met through imports. Furthermore, value
addition in locally manufactured components was low because of the high dependence on imported
raw materials and inputs. As a result, actual local content met less than a third of total demand.
In this backdrop, component trading is a flourishing business in India. As there is no duty on
imports of components, there are more traders in this segment than manufacturers in India.
The country has a strong base of distributors of electronics components—both domestic players and
MNCs—making the market very competitive with the presence of a large number of domestic and
international brands.
THE DOWNTURN AFFECTS:
The dream growth that the sector has enjoyed is slowly coming to a halt mainly due to the prevailing
economic condition.The global economic scenario looks bleak. The EUOROZONE crisis coupled
with less than expected growth rate of the BRIC nations is driving down sales and demands. Brazil,
Russia, India and China are all simultaneously slowing down. The World Bank has lowered its
forecast for global growth from 3.4% to 2.5%.Petroleim prices have multiplied by 5 times in the last 5
years. Further environmental considerations and regulations could modify supply chain organizations
All these events have had an impact on the global electronics/semiconductor industry. Companies
have resorted to cost cutting and various austerity measures to stay afloat. Element14 is also facing
the heat as it is quite evident from the just released quarterly results.
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COMPANY OPERATIONS:
The company basically operates in the B2B segment i.e. it does business with only registered
organisations. Doing business with another organisation is fundamentally different than doing it with
a customer as in case of B2C. That’s simply because people buying product for themselves vs. for
their companies represent a very different emotional experience.. In fact, there are profound
differences that one must remember when developing the marketing activities. B2B depends on
relationship building marketing efforts. Using consumer-focused strategies to market your B2B
business will, at best, just cost you money.
BUSINESS TO BUSINESS FUNDAMENTALS
B2B
Relationship driven
Maximize the value of the relationship
Small, focused target market
Multi-step buying process, longer sales cycle
Brand identity created on personal relationship
Educational and awareness building activities
Rational buying decision based on business value.
However the company has not neglected the other part of the spectrum i.e. the individual customers in
need of electronic components and parts. Their requirements are fulfilled through Kits n Spares
which is a partner of Element14. It is basically a venture of ‘Electronic for you’, a leading magazine
in the field of electronics.
The basic operations of the company can be explained as under
FROM PROCUREMENT TO CUSTOMER:
Step 1: As per the requirement purchase order is sent from the company to the manufacturer
Step 2: The part is received and a part number is assigned to it
Step3: Parts dispatched according to the orders
Step 4: Custom clearance at the airport
Step 5: Dispatched to the transit warehouse. Checking for quality, specification, part
number is done for the purpose of conformance
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Step 6: Dispatched to the customer
FROM INITIATION TO DELIVERY:
Step 1: Requirement comes from the customer
Step 2: Mode of purchase is specified by the customer and order is placed through field
sales/company website/tele sales team
Step 3: Order processing is initiated , order code is assigned and ERP is updated
Step 4: Request generated to the warehouses containing the required stocks
Step 5: Materials come to the transit warehouse where it is checked for conformance
Step 6: Dispatched to the customer
Step 7: In case of wrong delivery/ other issues material returned through reverse logistics
PAYMENT COLLCTION STEPS:
Figure 2:
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COD E-transaction Demand draft
Updation of ERP
Order placing
CUSTOMER SUPPORT FLOW DIAGRAM
figure 3
PRODUCT LINE OF ELEMENT14:
As far as the product line of the company is concerned the company is involved in distribution of
almost all kinds of electrical and electronic components. Following is an exhaustive list of
components handled by the company.
Connectors
Passive Components
Semiconductor-ICs
Semiconductor-Discrete
Switches and Relays
Cable Wire & Assemblies
Optoelectronics & Displays
Tools & Production Supplies
Circuit Protection
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RFQ
Purchase Order
Sales Order
Order Tracking
Shipment Details
Payment Follow-Up
Power & Line Protection
Automation & Process Control
Sensors & Transducers
Fasteners & Mechanical Components
Enclosures, Racks & Cabinets
Semiconductor Tools
Tests, Measurements & Inspection
Fans Heat Sinks & HVAC
Crystals & Oscillators
Office & Computer
Security & Audio Visual
Transformers
Batteries & Chargers
Static Control & Site Safety
Electrical
Semiconductors- Modules
Chemical & Adhesives
OPERATIONAL FIELDS
The company basically operates in the field of EDE (engineering design and environment)
and MRO (maintenance and repair operations). More than eighty percent of the business
comes from EDE while the rest from MRO.
Figure 4:
81%
19%
EDE&MRO PERCENTAGEEDE MRO
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PROBLEM DEFINITION
BACKGROUND OF THE PROBLEM:
Element14 was feeling the heat due to adverse economic condition.Net profit and all other major
indicators were down as per the latest quarterly results. The company needed to increase its
profitability and optimize its operations. As part of the customer database restructuring process the
following activity was undertaken and we were given the responsibility of handling the unassigned
accounts. It is expected to help Element14 in increasing its revenue in the future.
There are basically three kinds of accounts in Element14
Category 1: Accounts generating revenues in excess of 1 lac per month. These are specifically
handled by field sales representatives.
Category 2: Accounts generating revenues from 10000-1 lac per month. These are handled by
telesales representatives.
Category 3: These are the unassigned accounts which typically generate revenues of less than
10000 per month. Most of them are one time customers who for some or the other reason
have stopped doing business with Element14 or have not placed any order for a long time.
We mainly targeted this segment. Our challenge was to find out the issues specific to them and get
them on board. So basically we had to work on customer retention in the first phase. Apart from it
we also had to generate sales enquiries from these namely ‘unassigned accounts’. These accounts
belonged to the northern, southern and the western region. I was basically handling the northern and
some part of the eastern region.
Secondly Element14 has a list of blue chip customers that bring constant revenues. In order to
maximize the revenue generated from these companies they decided to go for a vertical
segmentation wherein these companies were divided into eight segments. They are enlisted as
follows.
Lighting
Medical
Alternative Energy
Sensing
Robotics
Instrumentation & Measurement
Wireless
Transportation
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STATEMENT OF THE PROBLEM:
At the company we were working as a team and our work was to find the solutions to the following
problems:
MANAGEMENT DECISION PROBLEMS:
To find issues specific to customers belonging to the various regions and do a consumer
behaviour analysis.
To do a vertical segmentation of the given database based on the industry they belonged to
OBJECTIVES
The project is aimed at gaining an insight into the territory management practices of Element14 in
particular; generate sales with emphasis on retention of lapsed customers, market segmentation of the
customers. The broad objectives of the project are enlisted as follows.
Analysis of unassigned accounts
Generation of sales inquiries
Customer segmentation into verticals
Potential modelling
SWOT analysis of Element14
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METHODOLOGYWORK IN STAGES
EXECUTION
Initial part of the project was spent on understanding the business model of the company, its
operations and functioning. After that started the process of calling the individual customers
belonging to the lapsed list, getting to know the reasons of them not doing business with the company
and get sales order if possible.
The execution was done in the following stages
In this phase of the execution we were given a list of 800 customers. We were required to
have one to one telephonic conversation with them and ask certain specific questions
pertaining to their business. The questions were in a fixed format. The responses received
were noted down and carefully analyzed.
The second phase of the project involved segmenting the customers into eight different
vertical segments. Again the exercise involved having telephonic conversations with the
customers and jotting down the responses. The questionnaires were in a fixes format.
The third phase involved doing a potential modelling for a particular sector. I did for the
medical sector.
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RESEARCH DESIGN
Type of Research:
Initially we were venturing into an unknown territory as we had little knowledge about the issues that
the customers were facing. So we adopted the exploratory system of research. Detailed analysis of
the customers was done through a questionnaire .The insight that we gained from our research helped
us in furthering our project.
Data collection from secondary sources
In order to achieve the project objectives good amount of secondary research was conducted.
It basically involved getting to know the various aspects regarding the functionality of the
company. For this we took the help of the company’s website. In addition to this we were also
provided personal access to the company’s intranet. Apart from this we were also using the
company’s enterprise resource planning system namely ‘ORBIT’, which contained all the
customer details relating to their transaction with Element14 which we could always refer to.
In addition to these we also gathered information from various websites like the
indiamart.com, electronics mart etc. This helped us in gaining a sound knowledge as far as the
electronics component distribution industry is concerned.
Date collection from primary sources
It basically involved the issues that we earthed out after individually calling the customers,
getting to know the reasons for their dissatisfaction with Elemet14. Apart from that we also
got various other information like number of employees, annual turnover, products that they
buy form us, their nature of business etc. We were also required to collect multiple customer
contacts in the companies we were calling along with their job roles which would help
Element14 in the long term. In the second phase it involved segmenting the customers
according to the industry segments they belonged to and developing the strategy for the
segments.
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ANALYSIS
ANALYSIS ON THE BASIS OF PRIMARY DATA:
Unassigned accounts
After talking to customers from across the country we were able to find out the specific issues and
grievances that they had with Element14 which caused them to become lapsed or dead customers. We
had gained useful insight into the working of the company, its businesses and functioning. Following
is the analysis on the basis of the data collected by us.
Sample size of the customers: 800
No of response generated : 159
Table 1 ISSUES AND THE NUMBER OF CUSTOMERS
Sl no ISSUES No of Customers
1. Price 41
2. Lack of awareness 16
3. Delivery 16
4. Customer support 25
5. Online transaction issues 05
6. No stocks 19
8. Delivery charges 05
9. No projects 17
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Figure 5: Graphical representation of issues
Price
Lack
of a
war
enes
s
Deliv
ery
Cust
omer
supp
ort
Onl
ine
tran
sacti
on is
sues
No st
ocks
Deliv
ery
char
ges
No p
roje
cts
1 2 3 4 5 6 8 9
0
10
20
30
40
Series1
The description of each issue as explained by the customer is as follows:
Price:
Element14 Pvt. Ltd. operates at premium price with an emphasis on quality quotient. Most of the
customers especially the small enterprises are therefore deviating to local suppliers. In certain cases
customers are even importing materials directly from countries like China as its proving cost effective
for them. Rival companies like Digikey, Mouser, R S components have benefitted from this as they
are more flexible in their pricing and have taken some amount of business away from Element14.
Many customers consider element14 for the procurement of special components and basically for
R&D purpose. These customers are satisfied with our service; if we negotiate for the price then we
can have them for regular procurement.
Lack of Awareness:
Many customers are unaware of our transition from Premier Farnell to Element14 Pvt. Ltd.
Mainly the customers who are not in core electronic business but they purchase the products for their
equipments maintenance. Ex: garments, Power generation plants. These customers make frequent
purchases for their worn out equipment parts. So, maintenance & service industry needs awareness of
element 14 and its product range. Mostly the customers who have little information about Element14
belong to the northern region. They are future prospects for the company. A little PR effort in this
regard could be useful.
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Delivery charges:
The delivery issues are; late delivery, Wrong product delivery, unable to provide proper COC. Mostly
in this segment, customer order because they need some obsolete components early, so it’s difficult
for them when they do not get delivery on time, complaint of around 4 weeks are also observed.
Customer support
Most of our customers are extremely satisfied with our service and specially our customer support
team. But there are certain minor issues on which we are focussing on.
The complaints are,
. Unable to contact customer support team.
. Not response to quotes/enquiries.
. Lack of support in the cases like product exchange, wrong delivery, return of payments.
. Customers kept in loop for long periods. Not getting proper response from the
customer support team.
Online transaction issues
There are some potent customers who lack computer/ Internet skills, no credit cards, unaware about
the COD facility. Some customers prefer traditional mode of business and hesitate the online
purchase. It is necessary to follow-up them frequently and slowly promote them for online purchase.
Product unavailability
The issue of not matching order quantity and customer design requirements is contributing in losing
business from the customers who is willing to purchase from element14.Certain customers wanted
element14 to add more manufacturers to its list.
Delivery charges
Some of the customers are showing negative response to our revised delivery charges. For some
customers delivery charges are the only reason they are not buying from element14.These charges eat
into the margin of such companies as most of them are small time players.
No projects
Market condition and traditional shift from manufacturing to retail and finished goods business has
led to decline in our customers. Many existing customer has changed their business stream. Many
have separated and started their own ventures.
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IN A NUTSHELL
As it is evident from the above analysis and due diligence of the issues that we have done for the
customers, one thing is crystal clear that customers are facing a tough time negotiating the prices that
Element14 is offering for its products. This inflexibility as far as the prices are concerned is driving
away a lot of customers after the first purchase. This especially holds true for the small and medium
sized companies as they always run on extremely tight schedules as far as the budget is concerned.
Apart from that there are issues that are customer specific like unavailability of projects. Company
specific issues like delivery charges, improper customer support is also providing wings to the flight
of customers to the competitors. Again this is affecting the small customers forcing them to source
their requirements from the local market as it is more cost effective for them. Then there are issues
like lack of awareness on part of the customers. They are simply unaware about Element14 as a brand,
and usefulness of the company as a one stop solution for all the electronic needs. More marketing
efforts in this regard could be useful in improving the visibility and recall factor of Element14.
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Customer segmentation:
This was done following a three pronged approach i.e. the different customers were segmented on the
basis of the following
Segmentation on the basis of industry verticals
Segmentation on the basis of operation (EDE & MRO)
No of accounts considered: 195
No of response generated: 99
Table 2: Vertical segments and their numbers
SEGMENTS NUMBER OF CUSTOMERS
Lighting 2
Alternative energy 8
Instrumentation & Measurement 61
Wireless 7
Transportation 3
Sensing 11
Robotics 13
Medical 8
Figure 6: Share of the various segments
Lighting2% Alternative energy
7%
Instrumentation & Measurement
54%
Wireless6%
Transportation3%
Sensing10%
Robotics12%
Medical7%
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Table 3: Annual sales
Segment Sales
Alternative Energy 1584726
Instrumentation and
measurement
7708051
Wireless 256696
Transportation 1020503
Sensing 2573064
Robotics 224787
Lighting 448663
Medical
The above table and the corresponding pie chart clearly highlight the fact that at present
Instrumentation and measurement is the major revenue generator for the company. Also maximum
numbers of customers belong to this sector. It is followed by Robotics and Sensing. Medical,
alternative energy, transportation and lighting complete the peaking order. One interesting trend to
be noted here is that though alternative energy lacks in terms of the number of customers it comes
second in terms of annual sales reflecting the fact that relatively high value transaction occur in this
field.
Table 4: EDE & MRO PERCENTAGE
Segments No of
customers(sample
size=41)
Total sales Approx
percentage of
purchase
fulfilled
EDE 29 13126221 63
MRO 12 179597 45
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Figure 7: Share of EDE & MRO in Element14
EDEMRO
SEGMENT WISE ANALYSIS:
Alternative Energy: Market penetration in this sector has been relatively weak. But an interesting
factor is that value of the sales is quite huge. But many of the existing customers are willing to invest
in this sunrise sector just because of the sheer scope. The basic reason for the customers choosing
Element14 is the quality.
Medical: Medical is another sector that needs to be seriously looked at because as of now Element14
has been only fulfilling 2-5 % of the total requirement. But this sector holds huge potential as it is one
of the fastest growing sectors. As far as the customers in this sector are concerned they are willing to
pay a premium but delivery is an issue for them.
Instrumentation & Measurement: Among all the segments this sector is the most diverse both in
terms of the issues as well as the operations. The company is doing reasonably well in this sector.
Much of the textile sector comes under this category. The major issue facing this sector is the pricing.
As this segment is the major revenue generator for the company, special attention should be paid to
this segment as well. The company should come up with special discounts and other offers.
Lighting: the customer list that was given to us contained very less customers belonging to this
segment. Nevertheless the overall picture that emerged was that this is a very promising sector with
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good potential. Constant improvements are being made in the field of lighting. Element14 should
increase its stress on this sector.
Sensing: many of the companies segmented in instrumentation & measurement also fall under this
sector. The market is quite big and has potential.
Robotics: Presently projects in this sector are limited and the procurement is also comparatively less,
but given the future prospect of Robotics Element14 should go deeper into this sector.
Wireless: Wireless is a specific R&D sector and their main issue is the product availability. This is
not a major concern in other sectors. So penetration is not that deeper. This is the industry where we
found fewer projects available compared to other sectors.
The above analysis clearly shows that the company needs to put in more effort as far as market
penetration in sectors like lighting and medical are concerned simply because of the huge potential
that they hold for the company. After speaking to the customers we found out that many new projects
are coming in the lighting sector in the field LED lighting. Apart from that there is great attention on
the use of renewable and alternative energy all over with a slew of projects lined up. Few of the
customers we spoke to are actually doing a strategic investment in this field with an eye on future.
Thus there is scope of business extension in these areas. Then there is scope in the field of MRO.
Indian MRO is expected to grow at a quantum pace in the next decade as India’s manufacturing
prowess grows.
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Figure 8:
SWOT ANALYSIS
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STRENGTHONE OF THE BIGGEST BRANDS
GLOBALLYENORMOUS EDE CUSTOMER BASE
SIMPLE WEBSITESIMPLE PROCESSED LEADING TO
QUICK RESPONSESTRON G EMPLOYEE WORK ETHICS
WEAKNESSGLOBAL SUPPLY CHAIN OPERATING FROM FEW
LOCATIONSINFLEXIBILITY IN TERMS OF
PRICES
OPPURTUNITYCONTINUED GROWTH IN
ESTABLISHED EDE MARKETINDIA EMERGING MARKET
INCREASING WEB PENETRATIONOPPURTUNITY IN MEDICAL, ALTERNATIVE ENERGY AND
EDUCATION SECTOR
THREATRISING FUEL COST
ECONOMIC TURMOILINCREASING COMPETITION
POTENTIAL MODELLLING:
In the third part of the project we were required to perform potential modelling. I chose to do for the
medical sector. It basically meant identifying the potential that this sector holds for the company. For
this we used the same data as we did for customer segmentation.
The Indian healthcare market (FY ’09) has been valued at Rs. 300,000 crores ($63 billion). Of this,
healthcare delivery makes up 72 percent, pharmaceutical industry 20 percent, health insurance 5
percent, medical equipment 1.4 percent, medical consumables 1.1 percent and medical IT 0.2 percent,
respectively.
Figure 9:
The above figure clearly highlights that medical equipment market has been on a continuous growth
curve over the last few years ant this trend is likely to continue.
Medical electronics has been valued at Rs. 3,850 crores ($820 million) of the overall Indian healthcare
market of Rs. 300,000 crores. The Indian medical equipment market is estimated to grow at around 17
percent CAGR over the next five years and reach about Rs. 9,735 crores ($2.075 billion).
After some intensive calling and personally contacting the customers over phone we were able to find
out that Element14 was only fulfilling around 5 % of the entire demand. This means that there is a
huge gap that remains to be fulfilled. In simple numerical terms this means that Element14 is only
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catering to the market worth Rs 200 crores. This leaves a huge potential gap of around Rs 3600
crores. The same point is elucidated in the following graph.
Figure 10: Share of Element14 in the medical electronics sector
95%
5%
medical electronics sector share of element14
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RESULTS
RESULTS
RESULTS FROM THE PRIMARY DATA:
The secondary research conducted by us helped in getting the following knowhow.
1. Issues afflicting the customers:
After an intensive round of research we were able to find out the specific issues that the customers
were facing and reported the same to the company. We found out that price was the main issue
affecting the customers. This in turn would help them to better focus on their core competency,
streamline their operations and do better customer engagement by addressing these vital issues.
2. Customer segmentation:
We were also able to segment the existing customer data base into eight different verticals. Most of
the customers were from the instrumentation and measurement sector compared to other upcoming
sectors like medical electronics sector, alternative energy and lighting. Also most of the customers of
belonged to the EDE sector and rest to the MRO sector.
RESULTS FROM THE SECONDARY DATA:
The primary data that basically involved the internet and the company’s ERP gave us the required
knowhow regarding the electronic distribution market in India. Apart from that it also helped us in
knowing the past sales pattern of the customers of Element14
3. Other Results:
Apart from that we were also able to generate sales for the company. Since we started
calling there had been an almost 18 % increase in the revenue from the unassigned account.
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CONCLUSION
CONCLUSION
There are certain fundamental issues afflicting the company. The effect of these issues has been
magnified by the current macro economic conditions existing across the world. The foremost among
them is the pricing strategy of the company which is invariably is on the higher side of the graph. This
is forcing customers to resort to local markets for their electronic needs and in certain cases even
importing from countries like China.
Element14 as a brand is comparatively less visible in the northern and western part of the country than
compared to the southern part of the country. This is because the company has not concentrated
enough in marketing itself and its products in that part of the country.
Element14’s exposure to new and upcoming sectors like Alternative energy, lighting, medical
electronics sector is comparative less though it is quite strong in traditional areas like the
instrumentation and measurement.
Lastly Element14 is serving very less customers in the MRO (maintenance repair & operations) as it
has concentrated its entire energy in the EDE sector. However India is poised to become the hub of
MRO activities in the future
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RECOMMENDATIONS
RECOMMENDATIONS
The recommendation can be summarized as follows.
1. As already mentioned in the report that pricing is the main issue that is affecting the customers
especially the smaller ones. To counter it the company could come up with special offers and
discounts to attract the customers. I suggested them
2. Secondly the company should lay more stress on sectors like medical, alternative energy as they
have huge potential and could prove to be game changers
3. Emphasis should also be laid on the education sector as it has been almost neglected by the
company and which holds great promise for the future as there are numerous institutions across the
country that are in content need of electrical and electronic components
4. It should also increase its marketing efforts in order to make itself more visible to the consumers. It
could also come up with special promotions and discount offers. The company could also go for
promotions like conducting road shows especially in the northern part of the country where
information regarding Element14 is less compared to southern part of the country.
5. Lastly as India’s manufacturing prowess grows it is poised to become the MRO hub of the world in
the future. The company would do well to take a serious look into this sector as it represents a huge
potential for the future.
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ANNEXURES
ANNEXURES:
Company profile:
Premier Farnell plc (as Element14 is known globally) is a high-service distributor of technology
products and solutions for electronic system design, maintenance and repair in Europe, the Americas
and Asia Pacific. As a digital enterprise, we bring together the latest products, services, and
development software, all connected to an industry leading online engineering community,
element14. Through our community, purchasers and engineers can access peers and experts, a wide
range of independent technical information and proprietary tools.
Its multi-channel focus ensures it can meet the varying needs of our customers and includes an
extensive global network of transactional websites and more traditional sales channels. To keep pace
with changing technology, our engineers actively identify and source innovative niche manufacturers
providing choice and competitive advantage for today’s most in-demand application areas, supported
by a global supply chain and an inventory profile in which we invest and develop.
Whether researching a new technology, designing an electronic product, or looking for parts to repair
an existing system, Premier Farnell is the trusted global source for engineering solutions.
KEY FACTS:
Operations in 35 different countries
4100 employees
Over 2 million customer contacts in 156 countries
Over 3500 leading suppliers
Over 450000 products stocked with access to over four million more on demand
Global leader in legislation ROHS,WEEE,REACH
STRATEGY:
At Premier Farnell we are always looking forward and finding new and innovative ways to grow our
business and ensure we continue to maintain our momentum in existing markets.
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Electronics is increasingly pervasive around the world in all areas of our lives. We have a critical role
to play in the distribution of new technology, the design of new electronic products and the
maintenance and repair of existing products.
In simple terms our strategy is supported by four key pillars:
1. Focus on the electronic design engineering segment
2. Growth in the profitable maintenance, repair and operations segment
3. Serving customers through their preferred and our most efficient channel: the web
4. Building our business internationally, especially in fast growing markets
Our profitable growth strategy has remained consistent since the outset of our transformational
journey with a proven ability to deliver results through the cycles. Ours is a strategy for all market
conditions, which we continue to evolve as we build our proposition and capability.
Our focus remains on the electronic design engineering or EDE sector whilst also growing our market
share in the more profitable segments within MRO.
As a multi-channel distributor we offer our customers choice about how they wish to do business with
us, although the web is increasingly becoming our customers channel of choice. We’re targeting for
70% of our business to ultimately come from ecommerce channels – a milestone already passed in
Europe. Globally we have more than 32.5m visits to our transactional websites a quarter - a number
that continues to grow.
We are internationalising our model to take advantage of the long term potential able in the growing
emerging markets, particularly China, India and Eastern Europe where we are building infrastructure
and capability to enable us to capitalise on these opportunities in the future. Increasingly design is
moving to these markets with nearly 50% of the world’s newly qualified engineers each year
graduating from universities in India and China going into indigenous businesses in their countries, as
the region becomes the design powerhouse for technology and industrial markets.
BUSINESSES:
The Premier Farnell Group (LSE:PFL), is a leader in the high service, multi-channel provision of
essential products, information, software and technology solutions to electronic design engineers,
maintenance and repair engineers and purchasing professionals globally.
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With over 70 years in electronics components distribution, Premier Farnell’s unique features include
29 local language transactional websites, the innovative online element14 Community for engineers
and The Knode on element14, an intelligent knowledge and search tool - both industry firsts.
Premier Farnell distributes its comprehensive portfolio of products and services throughout Europe,
North America and Asia Pacific, supported by a global supply chain of suppliers and an inventory
profile developed to anticipate and meet its customers' needs. Recently awarded Platinum status by
the Business in the Community Corporate Responsibility Index, the business takes its CSR
commitments very seriously.
Our primary electronics businesses currently trade as Farnell element14 in Europe, Newark
element14 in the US, Canada and Mexico and Farnell Newark in Brazil. Since 2010, the Asia
Pacific business has traded aselement14. Previously, operations in Asia Pacific were branded Premier
Electronics, Farnell and Farnell-Newark. Premier Farnell’s other brands
includeCadSoft, CPC, MCM and Akron Brass.
BRANDS:
Akron Brass is a market leader in the manufacture and sale of high performance fire-fighting
equipment for fire truck manufacturers, public fire services and industrial facilities. Its products are
designed to improve the safety and efficiency of personnel and equipment engaged in the suppression
of fire. It operates in premises in Wooster, Ohio, sells through its own field sales force and through
distribution to customers all over the world. It has a high share of the North American market for the
products it sells and seeks to grow by broadening its product range and reaching new geographic and
industrial markets assisted by appropriate acquisitions.
Akron Brass acquired Weldon Technologies in June 2005. Weldon is a US-based supplier of lighting
and electrical control solutions to a number of specialist vehicle markets, including those for
ambulances, school buses and fire trucks.
HISTORY:
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It started over 70 years ago with two businesses on opposite sides of the Atlantic. Each
breaking new ground as the radio industry was changing the way the world communicated.
The entrepreneurial startups known as Farnell in Europe, and eventually Asia, and Newark in
North America each began with a simple mission – put customers first. Help them get what
they need when they need it.
The world has changed a lot since the 1930s. The radio engineer has given way to other sorts of
engineers: maintenance and facilities engineers, industrial engineers, design engineers, student
engineers, and the purchasing professionals who work with them. And what was a simple trade
counter and catalogue business, has evolved into a global technology company, with millions of
customers and hundreds of thousands of products shipped a day.
Along the way we have charted our own course, delivering industry first innovations that have
redefined what is expected of a high-service distributor.
1934 – Newark Electronics founded
1939 - A.C.Farnell Limited founded
1990’s - First to offer eProcurement capabilities
1996 – Premier Farnell plc established following Farnell’s purchase of Premier Electronics, which
included the Newark Electronics, MCM and Akron Brass brands
2004 - Thought leader in RoHS legislation to segregate compliant product
2006 - New strategy launched – focus on Design Engineers, Web, Internationalization, and Profitable
MRO
2007 - Inaugural LiveEdge environmental design challenge, peel-back packaging innovation
2008 - iBuy launched
2009 - element14 Community launched, introduced DesignLink and award-winning biodegradable
packaging, joined the United Nations Global Compact
2010 - The Ben Heck Show debuts, achieved Platinum level status in the Business in the Community
Index, Asia Pacific region becomes element14
2011 - The Knode on element14 launched, listed in the Dow Jones sustainability index, element14 TV
debuts
2012 – Launch the Raspberry Pi computer
ELEMENTS:
Our Elements tell the story of "How" we execute Our Strategy. We are committed to becoming the
trusted global source for engineering solutions through a clear focus on our strategic pillard (EDE,
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Web, Internationalisation and Profitable MRO). The elements of our high performance culture are
what propel us to become the market leader. Our continued success is dependent on each and evey
one of us living our brand, demonstrating these elements and embodying these values.
SUPPLIERS:
Premier Farnell works with thousands of suppliers across the world and we stock in excess of 400,000
products and offer access to more than 4,000,000 other products. Our attraction to suppliers is directly
related to our ability to create demand from within the global customer base.
Our line card is one of the broadest in high-service distribution, covering a wide range of products,
services and solutions – from bench to board. All ready for fast delivery anywhere in the world. To
keep pace with changing technology, our engineers actively identify and source innovative niche
manufacturers to provide choice and competitive advantage for today’s most in-demand application
areas.Our direct relationships with industry-leading manufacturers and suppliers, means you can
access the very latest technology and information first, with no minimum order requirement.
APPLICATIONS
We also provide complete solutions for the most popular and growing applications areas. Our
engineers source the technologies and information that engineers count on to save precious time in the
design process.
Lighting
Sensing
Wireless
Alternative Energy
Robotics
QUESTIONNAIRE (ANALYSIS OF UNASSIGNED ACCOUNTS)
Customer name:
Phone:
Email id:
Primary job role:
Nature of business:
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Products procured from Element14:
No of employees:
Turnover:
Any enquiries:
Issues with Element14:
QUESTIONNAIRE (CUSTOMER SEGMENTATION)
Products used by the company
Business vertical
How your company knows about Element14
What percentage of faculty is fulfilled by Element14
What is the next big thing in your industry
ORBIT (ERP)
We were given complete access to the ERP system of the company. It proved to be of great help in
knowing about the customers of the company, their sales pattern and other stuff. It was basically a
informational powerhouse. This ERP system had been designed by IBM for Element14. Attached
below are few snapshots of it.
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BIBLIOGRAPHY
1 .”INDIAN MEDICAL ELECTRONICS INDUSTRY”,DELOITTE,DECEMBER 2011.
2. http ://in.element14.com
3. http ://premierfarnell.com
4. http ://indianmart.com
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BIBLIOGRAPHY
5. http://electronicsmart.com
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