SELLING AND SALES MANAGEMENT

CASE STUDY

Mr Sadanand Murthy is the newly appointed Sales Manager of Pricol Instruments

Limited, a company headquartered at Coimbatore in Tamilnadu. Pricol is well positioned
in the automobile dashboard segment and commands a large market share. The
company's lie-up with Denso (for four-wheelers) and Nippon Seiki (for two-wheeler) has
ensured that the company has an edge over the unorganized sector. The automobile
segment will continue to see growth in future years. Pricol caters to a number of original
equipment manufactures (OEM) in these two segments and it would certainly benefit
from a higher volume growth. It has also diversified into manufacturing control valves
and disc brakes, which will add to the turnover of the company.

The sale of dashboard instruments and accessories accounted for 72.7% of Pricol's
turnover in the financial year 2000 and was the mainstay of the company. Other products
like oil pumps, handle bar switches, and defence-related equipment contributed a
turnover of 13.3%, 3.7%, and 2.4%, respectively. During the same year, Pricol sold for
the first time 46,650 units of speed control valves valued at Rs 51.5 million. This
constituted 2.5% of the company's turnover. Other items sold included electronic control
instruments, industrial gauges, and special purpose machines.

Pricol meets the dashboard requirements of auto majors in the two and four-wheeler
segments of the market. Major customers include Maruti, Telco, TVS Suzuki, Kinetic
Motors, and Hero Honda. Nearly 80% of the Maruti 800 model of passenger car's
requirements and the entire requirement for the Maruti Esteem and Maruti 1000 models
of passenger cars arc met by Pricol. The company has a technical tie-up with Denso of
Japan for Maruti dashboards. It also has a technical arrangement with Nippon Seiki for
the Honda range of vehicles. Pricol has a capacity to manufacture 55, 00,000 dashboard
units per annum. Pricol supplies two-wheeler oil pumps to firms such as Bajaj Auto, TVS
Suzuki, and Hero Honda. Defence control instruments contribute to around 2.4% of the
turnover and include panel instruments and sensors used in T-72 tanks and BMP vehicle
carriers.

In financial year 2000, the company started assembling idle speed control valves
exclusively for Maruti Udyog Limited. The installed capacity for assembling these valves
was 180,000 units per annum. On an average, Pricol sells around 80% of its domestic
output to the OEM segment while the rest goes to the replacement market. Exports
accounted for 10.9% of the turnover in 2000 as against 13.1% during the previous year.
Dashboard instruments contributed to a major part (80%) of the export turnover. The
principal export markets were the US and the UK, while Philippines, Singapore,
Malaysia, and the other Southeast Asian countries have increasingly become important.
With a view to diversify into other segments of the auto ancillary industry, the company
has decided to enter the disc brake and speed control valve segments. These are to be
exclusively supplied for Maruti's new vehicles and disc brakes for the top end of the
motorcycle market. The sales mostly happen through the sales force and Murthy has
completed the review of the sales force he inherited from the previous sales manager.
Now he has to take an important decision on one of his salespersons, Jayvelu.
Murthy, as the head of the sales force, reviewed the field operations and performance of
each salesperson.

He traveled with the field force for a week to collect as much information as he could
about the salespeople in the field. He spent three days with each salesperson in compiling
and conducting a territorial analysis. This analysis broke each territory into specific trade
areas, which were analyzed on the basis of the total number of accounts, competitor’s
accounts, and the potential of the territory and trade area. Also analyzed were other
territory parameters like the market position of Pricol visa-vis the competitors' and the
procedure followed by salespersons to select and target the customers in the trade area.
Murthy has a strong conviction that a proper territorial analysis will help in finding out
whether or not the salesperson has done a good job in covering the market and if he
knows the customers properly in his market. Some pertinent statistics uncovered by the
territory analysis can be seen in following table.
Sales performance of individual salespersons
Sales Sales Sales
Representatives volume (Rs) volume (Rs)
2002 2003
Chitaram 216,000 206000
Tagore 123,000 103000
Vivek 235,000 247000
jayvelu 112,000 102115

Results of territorial analysis

Sales repre- Number of New accounts in Average daily

sentatives accounts 2003 calls
_..Chitaram 65 9 5
Tagore 35 4 4
Vivek 72 5 6
Jayvelu 29 0 3.4

Murthy looked at figures of both the Tables and concluded that Jayvclu's sales
performance could be improved. He has been working with the company for last 15 years
but his performance never matched up to his potential. While evaluating the call reports,
account statements, and the expense statements, Murthy found that Jayvelu has an
infrequent travel pattern in his territory. He only sold 29 active accounts, which was well
below the company average of 45 accounts as per the targets.
With only a few accounts and a daily call norm of 3.4, it is evident that Jayvelu was not
working very hard. When his sales figure was compared to the potential of his territory, it
was observed that he only utilized 55% of the potential of the territory. When compared
with the performance with other salespeople, his territory ranked the lowest.
Murdiy wrote a letter to Jayvelu mentioning that they need to meet and decide on a travel
plan.that he needs to follow during the coming few months. Jayvelu will make minimum
four calls per day under the new travel plan. Surprisingly, JayveluV refused to meet
Murthy and also did not increase the number of daily calls. His refusal was based on the
proposition that he needs at least two days to serve one Maruti customer in a week. He
also mentioned that if Murthy will not allow him to do that, other competitors will love to
do it for thai particular client.
Murthy thought over his decision. He felt that there are three options in front of him.
1. He can fire Jayvelu and risk losing the big customer, Maruti. Maruti was the biggest
account for Pricol in the Indian market. He realized this decision might bring adverse
consequences to his own career.
2. He has the second option of rearranging Jayvelu's territory by transferring a certain set
of customers to other sales representatives.
3. The third option is to accept the situation and let him do what he wishes to do as he is
handling the biggest client. He remembered a joke cracked by a friend that 'doing nothing
is sometimes one of the finest strategies in man management situations!'