A case study on Sudhir Telang Machinery Equipment company

8/17/2019 A case study on Sudhir Telang Machinery Equipment company

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EMBA 2015-16 Strategic Marketing:

Case Study on Sudhir Telang Machinery Components

By Group 3 :

ASUTOSH DAS

UEMF15004

IPSITA SATAPATHY

UEMF15015

SOHAM PRADHAN

UEMF15027


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STRATEGY MARKETING CASE STUDY GROUP 3 1 | P a g e

Contents

1. SITUATION ANALYSIS (WHERE ARE WE ?) .................................................. 2

2. WHY ARE WE THERE? .................................................................................. 2

3. Target of STMC: (WHERE COULD STMC BE?) .............................................. 3

4. PROBLEM STATEMENT ................................................................................ 3

A. What type of pricing strategy to be followed ? ......................................... 3

B. What marketing strategies to be adopted to ............................................ 3

5. RECOMMENDATIONS (HOW TO GET THERE?) ............................................ 3

FOCUSSING MORE ON CUSTOMER PERSPECTIVE ..................................... 3

DEFINING COMPETITIVE ADVANTAGE ...................................................... 4

DEFINING PRICING STRATEGY .................................................................. 4

TACKLING LOW COST COMPONENT MANUFACTURERS ........................... 6

DERIVE BENEFITS BY INCREASING THE PRICE : .......................................... 6

MARKETING STAREGIES TO BE FOLLOWED ............................................... 7


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1.

SITUATION ANALYSIS WHERE ARE WE ?):

Sudhir Telang Machinery Components (STMC) is a spare and components manufacturerfor Tasaku Textile Machines.

Deals with only casting and machining of components only.

Healthy Business growth : Sales on 1977 was Rs. 15 Lakhs which had been doubling every

year since 1973.

2.

WHY ARE WE THERE?

Branding and Positioning:

STMC promoted them shelves as ”High Quality “ oriented supplier with reference to its

competitor.

Current Pricing Strategy:

The company was using Cost + Margin Formula for pricing their products.

Single price offer for all type of buyers.

Sold no parts with loss.

Competitor:

Textile Machinery Manufacturing Company (TMMC) who is the manufacturer of Tasaku

Textile Machinery.

Small machine-shops manufacturer who route their products through established

suppliers to textile mills.


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Nature of Demand:

On an average STMC sells Rs. 1000 worth of components per machine.

The demand distribution is highly dispersed in nature due varied age of machine and

quality of spare parts used.

3.

Target of STMC: WHERE COULD STMC BE?)

To double its sales form Rs. 15 Lakhs in 1977 to Rs. 30 Lakhs in 1978.

To introduce spare sand components of new textile machine being introduced to Indian

market.

4. PROBLEM STATEMENT

A. What type of pricing strategy to be followed ?

Cost Based pricing vs. Market based pricing or

Whether to enter into price war with small manufacturers or

Whether To be price competitive with Original manufacturer of equipment or

Should meet the price level expected by the mils.

B. What marketing strategies to be adopted to

Expand Total Market

Defend Current Market Share

Expand Market Share

5.

RECOMMENDATIONS HOW TO GET THERE?)

FOCUSSING MORE ON CUSTOMER PERSPECTIVE

One Price strategy will not fit All. STMC has to work for optimal price that will based on

the value of the customer. The company should consider customer’s view in designing

there marketing strategy and price propositions.


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DEFINING COMPETITIVE ADVANTAGE

There are basically 3 key areas to focus on when choosing a competitive advantage;

Quality: You can choose to beat the competition by offering a superior quality than

others.

Price: you can choose to beat the competition by offering the lowest prices

Service: or you can choose to beat the competition by offering an unforgettable

customer service.

There’s always an alternative to quality; if STMC focus on only offering the highest quality

at a premium price, customers will scout around for a lower quality at a cheaper price.

There’s always an alternative to price; if STMC focus on offering the cheapest price possible

it will require that you find a way to drive down your cost to the barest minimum. And this

can turn out in form of low quality products or services and customers will start to complain.

So what STMC should do?

STMC shall pick either of the two; price or quality as your competitive advantage and

complement it with service. Without the element of service in STMC competitive strategy it

can never deliver happiness to the mill owners.

DEFINING PRICING STRATEGY :

Pricing should take into account the following factors into account:

Price sensitivity of various market segment.

Market position of the firm

Stage of Product life cycle

Economies of scale in production and distribution

Competitive price move

Accordingly STMC can opt for :

1. Discriminatory Pricing: Charge different prices to different segment for essentially the

same product if the segments are sufficiently insulated for each other and some

differentiations in product or service can be made.

2. Market Based Pricing : Maximising revenue or profit , by taking demand factors in to

consideration.

An organisation can adopt a number of pricing strategies, the pricing strategy will usually be

based on corporate objectives.

http://www.naijapreneur.com/competitive-strategy/http://www.naijapreneur.com/competitive-strategy/


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1. FOR EXISTING PARTS :

Penetration pricing strategy should be used by recalculation to reduce the prices. It will

enable to capture market share by entering the market with a low price relative to the

competition to attract buyers. The idea is that the business will be able to raise

awareness and get people to try the product. Even though penetration pricing may

initially create a loss for the company, the hope is that it will help to generate word-of-

mouth and create awareness amid a crowded market category.

Economy pricing: STMC can opt for a no frill very basic low cost approach to marketing,

just the bare minimum to keep prices low and attract a specific segment of the marketthat is very price sensitive.

2. FOR NEW PARTS :

Premium Pricing-

Premium pricing strategy establishes a price higher than the competitors. STMC can

effectively use this strategy when there is something unique about the component or

when the component is first to market and the business has a distinct competitive

advantage. Premium pricing can be a good strategy for companies entering the market

with a new market and hoping to maximize revenue during the early stages of the

product life cycle.

Price Skimming

As STMC is well known for quality which is competitive, it can enter the market with a

price skimming strategy designed to gain maximum revenue advantage before other

competitors begin offering similar products or product alternatives.


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TACKLING LOW COST COMPONENT MANUFACTURERS :

( With reference to HBR : Strategies to fight Low cost Rivals by Nirmalaya Kumar)

DERIVE BENEFITS BY INCREASING THE PRICE :

Company need to increase the price of the components which TMMC has priced higher than

STMC.

The current total price for these components priced by STMC is Rs 426 and by TMMC is

709.50. STMC can derive benefits by bridging the gap of Rs 280 atleast.


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MARKETING STAREGIES TO BE FOLLOWED

1. Expanding Total Market:

The Total market share can be expanded by:

I. Add New Users:

STMC must try to add new users. They must try to attract new buyers who are either not

aware of the product and its benefits or are resistant due to high price and lack of desired

features.

New users can be added in several ways:

a. Convincing non-users to use the product (market penetration strategy).

b. Adding more users in user-class (new market strategy)

c. Winning competitors customers (aggressive strategy).

d. Selling product in other markets (geographical-expansion strategy).

II. Discover New Uses:

Another option to expand the total market consists of discovering and promoting new

uses of the existing products. The strategy can be applied to industrial products as well as

consumer products. A wise firm can get idea regarding new uses of product from

customers tactfully. Users are encouraged to suggest the new/innovative uses of the

product. In the same way, the company’s sales wing can also contribute in discovering the

innovative uses of the product.

2. Defending (Maintaining) Current Market Share:

This strategy is based on the theme: ‘Customer-retention is more profitable than

customer- creation.’ At any cost, the current market share must not be endangered.

While expanding total market, STMC must continuously defend its current market share

of manufacturing spare parts and components for existing machines against rivals’

attacks.

Continuous innovation, better customer service, distribution effectiveness, and cost-

cutting can increase competitiveness. It has to ‘plague holes’ to keep the enemy away. In

short, it must continuously monitor its operations to avoid weaknesses that can attractrival attacks. Sometimes, leading firm has to apply the military principle – The best

defence is a good offense.

Defence strategy that could be used:

I. Flank Defence:

Here, the purpose is to protect weak sides or fronts. Flank defence consists of erecting/setting

outposts to protect weak fronts that are vulnerable to be attacked. Such protection attempts

serve as invasion base for counterattack, if needed. Introduction of low-price products or(discrimination pricing of existing products), aggressive sales force who could pitch in the


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benefits of having a high quality STMC spare part and generate sales, etc., makes sense for

STMC if it wants to improve.

II. Mobile Defence:

Mobile defence – also called shifting defence – is much more than simply protecting theterritories. STMC would stretch or expand its domain (area) over new territories that can

serve as the future centres for offense as well as defence. STMC would deploy its resources

in such a way to avoid the future invasion and create an impression in mind of competitors

that STMC is capable to safeguard its territories.

Approaches to Mobile Defence:

Market Broadening: It involves shifting firm’s focus from the current product to

forthcoming new technology and concentrating more on research and development

activities. However, too much focus on the future at the expense of the present is notadvisable. Company must maintain its strengths today to fight in the future. It must

go for reasonable broadening.

Market Diversification: Market diversification calls upon moving quickly into

unrelated industries to strengthen its position.

3. Expanding Marketing Share

Instead of expanding total market and defending current market shares, sometimes, the

market leader prefers to improve profitability by increasing market share. The extent to which

the increased market share results into improved profitability depends on a lot of variables.

Here, company must do something to snatch the market share from the pockets of

competitors.

Several ways are:

Adding New Product Lines:

In order to expand market share, STMC is considering to add new and diversified product lines

to make the product mix comprehensive and attractive. However, there must be adequate

demand for new product lines. Looking at the introduction of a new textile machine in the

market, STMC is looking at introducing components for those machines.

Existing Product Lines:

It calls upon expanding current product lines by adding new models, varieties or items with

attractive features and superior qualities (durability, reliability, usefulness, safety,

convenience, etc.) This strategy may attract more customers.


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Increasing Promotion Efforts:

Heavy advertising, aggressive sales force, effective sales promotion, and attractive publicity

efforts can help expanding market share faster relative to competitors. STMC can use few

intermediaries to make the product available or acceptable to those customers for whom

relationship plays a role in cracking the deal.

Improving Distribution System:

Market share can be expanded via better distribution system. Both direct and indirect

channels and overall physical distribution system must be modified so that customers can

avail the products with the least difficulties. Similarly, effective distribution system can bring

down overall selling costs which can further improve profitability. For STMC, having few

intermediaries could help to increase sales and raise market share.

Deploying Aggressive Sale Force:

Effective personal selling efforts could also have positive impact on sales volume, market

share, and profitability as well.

Applying Price-cut:

To attract price-sensitive customers, leader can practice price-cut strategy. In order to target

Rs 15 Lakhs from the existing product line and Rs 15 Lakhs from the spares of the new

machinery, the company should reduce their price on certain aspects so as to generate

volume in sales and thus benefit from economies of scale.

Improving Production Efficiency:

A leader must improve production efficiency to reduce overall costs. Due to improved

production efficiency, STMC can sell better-quality products even at low price.

Partner with allies.

Marketing partnerships have a number of benefits to push a marketing campaign. For

starters, when you collaborate with someone else, you tend to deliver better content. On top

of that, marketing partnerships are cheaper to create, see success more quickly, and exposeyour brand to a new audience.

Collaborate with influencers.

Another way to gain a new audience and extend brand awareness is by collaborating with

the top influencers in your industry.

Get employees involved.

STMC can have their employees be their biggest champions and brand advocates.

http://www.socialmediaexaminer.com/marketing-partnerships-with-andrew-davis/http://www.socialmediaexaminer.com/marketing-partnerships-with-andrew-davis/


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Don't forget about existing customers.

It is important to obtain new customers if we want our business to grow. But we should not

forget about the customers we already have.

STMC can employ few experienced resources which could help them have a better

youngster versus experienced resource ratio.

A case study on Sudhir Telang Machinery Equipment company

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