Eddington Sales & Service Private Limited ( ESSPL)

ESSPL sells photocopiers, printers, faxes & computers to offices under its own brand name.

Situation
Sitting in his office in January 2009 Alex DeSouza was wondering how his life had suddenly become stressful after Suresh Pradhan joined as the new Regional Sales Head. Till now he was being treated in the company as a genius sales manager but now Suresh treated him as if he was a rookie field sales manager. As a Field Territor Head (FTH) of ESSPL a company selling photocopiers, printers, faxes & computers to offices under its own brand name - he had built up a good reputation within the company for the last 4 years as someone who always met his sales targets. He was known to work hard and it was considered an achievement that in a mature territory of South Mumbai he had achieved a CAGR of 12% in the past. Once he had said; mature market is a euphemism invented by the MBAs in the marketing department. My market is not mature, it is declining !

Source Of Conflict
Last week, when he met Suresh Pradhan for setting targets for the new year 2009-2010, Suresh was not at all happy with the 12% target was had set. In fact he had asked him to consider a target of 25% growth in the coming year. Alex had said; Boss, not only the market is declining in my territory but the marketing this year is neither planning anything by way of new products or more schemes or more advertising. There is no basis whatsoever for planning this kind of growth. You should achieve your target by asking people in central and north Mumbai to sell more their markets are growing; mine is not!. To this, Suresh replied; In a short span of last few months I have seen that your decisions are more guided by emotions than by facts. I suggest you please undertake a systematic review of what your own people are doing in the field and you will come to know how you can achieve 25% growth next year. In fact I asked your own assistant Veena Talpade to get a few facts out from your own databaseand I suggest you come back after studying it and tell me what you will do to achieve 25% growth. No less please!. The figures he gave are as per Appendix attached.

Background
Alex was a fair person and was looking back whether he had been wrong all these days with his mature market assumption. He recalled that in the annual conference held in April 2008, there was a big discussion on the likelihood of dwindling market size in his territory. In fact the CEO had mentioned at that time that in other metro cities of India too similar mature

Caselet by Prof S K Palekar. For Private Circulation Only. For class discussion only.

territories existed and he had, in fact, asked the head of Brand Management Kanika Surpur to study and recommend whether the marketing department should be organized around market type rather than product types. Currently ESSPL follows a Product Management system wherein each type of product category has a manager and all report to Kanika. The starting point of this discussion was the point made by Alex forcefully in the 2008 conference as follows; The real estate boom in Mumbai has now created millions of square feet of office space in central Mumbai like lower Parel and also further north in Bandra Kurla Complex, Andheri, Vikhroli etc. The costs and rents are cheaper in these new locations and there seems to be a flurry of movement to these locations. The number of offices are actually declining in my territory. When Alex had repeated all this to Suresh last week, he had only one response; still there are plenty of offices out there where you are not selling. Go and sell to them.

Products
The products are imported from China but specifications are decided and enforced by its own office in China before the products are shipped from China. This arrangement ensures that its products are seen by the customers as being no less in quality than its MNC competitors. Of late, even the MNCs have been getting their products made in China anyway.

Organization Under Alex

He has 5 areas (sub-territories) under him and each is headed by an executive. The names of the executives Q ( Quentin), M (Murali), B (Banerjee), W (Wadhwa) and K (Kapoor). Each was responsible for sales as well as service revenue of the designated clients. The sales orders, once booked, were passed on to the local warehouse to execute. The service orders ( sales of annual service contracts and consumables and repairs) were passed on to the service center to manage and execute.

Caselet by Prof S K Palekar. For Private Circulation Only. For class discussion only.

Appendix
EDDINGTON SALES AND SERVICE PRIVATE LIMITED
5 SALES EXECUTIVES UNDER ALEX
PARAMETER UNIT Q M B W K

POTENTIAL CALLS pm PRESENTATIONS pm CLOSURES pm ORDER SIZE / CLOSURE TOTAL SALES REVENUE pm AFTER SALES CALLS pm PRODUCTIVITY :AFTER SALES CALLS pm ORDER SIZE / AFTER SALES REVENUE AFTER SALES REVENUE pm TOTAL REVENUE pm AFTER SALES REV % ALL REV SHARE OF NEAREST COMPETITORS

INDEX # # # Rs L Rs L # % Rs L Rs L Rs L % %

110 50 15 12 1.03 12.36 12 30% 0.30 1.08 13.44 8% 40%

160 30 23 11 1.10 12.10 23 30% 0.35 2.42 14.52 17% 30%

90 40 20 13 1.23 15.99 20 20% 0.20 0.80 16.79 5% 60%

150 30 12 10 0.98 9.80 30 40% 0.40 4.80 14.60 33% 30%

130 50 30 11 1.00 11.00 10 20% 0.15 0.30 11.30 3% 60%

Caselet by Prof S K Palekar. For Private Circulation Only. For class discussion only.