Prithvi Electricals BBMK3.docx

CASE ANALYSIS PRITHVI ELECTRICALS Business to Business Marketing (BBMK3)

Date of submission: 16th June 2016 Submitted by: Group 44 Gurdeep Singh (15F520) Sushmitha Shankar (15F555) Oishik Banerji (15S630) Sidhant Khadanga (15S748)

Context Prithvi Electricals was established in 1976 by brothers-Jayantilal and Gordhandas as its partners. By 1996, the organization was recognized as Prithvi- the mixie brand by the urban lower middle class, while the remaining market was still unaware of the firm. Prithvi mixies were mainly targeted to the lower middle class and smaller families. The firm’s strategies with respect to manufacturing, pricing, promotions and distribution were solely focused on reaching out to these target customers. The manufacturing unit comprised two sections- the motor assembly, with a capacity of 2500 units of 250 watt motors, and the mixie assembly which provided for about 3000 units per month. By 1999, the company did not see any growth even in the mixie brand and its sales went down by 10%. Underutilization of resources, entry of new multinational players, strained relationship with distributors, limited product offering and lack of establishment as a brand were the key issues which were possible reasons behind the drop. To extend their business and create a position for Prithvi Electricals in the market, Gordhandas decided to set foot into the motor business. Since the motor business is highly competitive with an already existing 55% of organized sector players and stabilized designs, without much of a changing technology, it is critical for Prithvi Electricals to enter the market with the right strategy. To enable the same, Prithvi Electricals has made an offer to Mr Gopal for the post of Marketing Manager, which would come with a lot of responsibilities. Problem Statement In what ways can Gopal strategise the entry of Prithvi Electrical’s motors in the B2B market in terms of pricing, distribution channels, promotional plans and services offered, considering optimal utilization of existing resources to make the new business sustainable. Critical Factors Pricing – Since the market has a lot of established players in both the organized and unorganized sectors, and there isn’t much to be innovated n terms of technology and designs, it would be highly necessary for Prithvi Electricals to give utmost importance to pricing the motors competitively, so as to gain an initial customer base. Quality – In order to sustain in the competitive environment and also considering the buyer preferences, quality is very often considered as the most important factor driving the business. Delivery – The AC motors would mainly sell in a B2B market. Hence, timely delivery would help to gain loyalty and trust among the clients. After Sales Service – The service provided to customers after the sales imposes a crucial factor to the business. The after sales service can help the company to standout in the motor business among the competitors and also help in expanding their current business. Effcient after sales service will have an important role in promotion of their brands and products. Promotion – Since Prithvi Electricals are shifting from the mixie business to the AC motor business, so their targeted customers would change. This makes it most important to make the new potential customers aware of their business. Designing a comprehensive promotional

strategy, highlighting the points of difference in the Prithvi Electricals’ motors and the high quality offering would help to attract customers. Shift in target customers – Since inception i.e. in 1975 Prithvi Electricals were first into repairs of the electrical appliances, then copper winding of motors and then into the mixie business. All the services provided so far were mostly targeting the lower middle classes, specifically for domestic use. However, entry into the motor business comes with a marked change in the target customer base. The potential customers would now be businesses, the dynamics of which would be totally different. Resource Optimization – Considering the mixie business, despite having an assembly capacity of 3000 units, only 2000 units of 250 watt motors were manufactured, limiting the assembly of mixies to the full capacity. This clearly meant that Prithvi Electricals underutilized its resources and had inefficient operations management.

Proposed Solutions Product offering- Considering the buyer preferences in the market, delivering a high quality product on time becomes top priority for the company. Unlike for the mixie business which had random sampling method for quality testing, Prithvi should adopt efficient quality testing techniques to enable 100% defect-free motors, which could be their differentiating factor. Offering all varieties of the product is also essential considering the variations in customer preferences. Also, to enable timely delivery of products, efficient management of manufacturing schedules and inventories has to be looked into. Competitive pricing - As per the sample feedback from 48 motor buyers in Bangalore, 37 clients weighted their preference towards price and 40 clients weighed on quality. Hence through derived deduction we can state that prospective customers do not buy exclusively on price but are driven on value buoyed by the disparity between the benefits of our product/service offering and the price that is charged. Since the image of the company is not strong in the field of motor manufacturing, the company has to create a competitive pricing combination added with optimized after sales service offerings. Price promotion strategy - Going ahead Prithvi electricals needs to decide whether they want to go ahead with a price taker strategy or a price getter strategy. As motor technology hasn’t changed and customer purchase decision is divided between organized /unorganized sector, it indicates that the industry is mostly commoditized. In order to sustain in a commoditized market, Prithvi needs to ensure effective discounting on a deal-by-deal basis to achieve the target waterfall. The consumer purchase decision is clearly revolving around the question “Is this brand right for us?”

Target segment(geographically)- Prithvi is a well-known brand in Karnataka. It has been providing its services in Karnataka since 1984. Sales can be capitalized on this factor by gaining trust of the customers. The promotional strategy in Karnataka will clearly be focusing on the following share points. 1. Prithvi is BIS(ISI) certified company. Since quality of product is one of the most important factor as per the research report. Prithvi can capitalize on this factor. 2. Bench strength (inventory wise how much can we supply to the client ) 3. Product demonstration (Product demo calls across the area) 4. Communication of TCO (TCO is a financial estimate intended to help buyers and owners determine the direct and indirect costs of a product or system). Promoting a lower TCO will provide more value to the brand. 5. Promote a higher ROI to associate the brand with profit center acquisitions of the client companies rather being part of cost center plans. 6. Defining a clear channel of buying process: The customers need to be communicated with a seamless and time saving channel of buying the product 7. Promoting partnering options to be long term and sustainable supply partners to prospective clients. Target segment(Customer Profile) – Since Prithvi is new in the motor segment, it would be better to target Contractors and Industries as they can utilize capacity of the existing production system. It might not able to fulfill large orders by OEM’s. Further there will be more competition from organized sector companies. However, contractors will concentrate more on margins. Hence, they would concentrate more on low cost which could be the forte of Prithvi. Distribution channel - Direct channel from manufacturer to the user would be suitable for Prithvi electricals as the product consists of high technicality which could be communicated directly rather than going through information loss over indirect communication channels. Also, for the company, initial unit costs would be higher. Thus, in order to maintain sustainable margins it would be suitable to carry on with a direct channel. With an absence of a wholesale service a direct channel can be useful in market penetration. Also this would help Prithvi Electricals to maintain a lean delivery and after sales service operation.