Kelaniya Uni – Marketing in Practice- 2012

Case Study 3

Hoorakanna’s Corporation’s DilemmaThe Managing Director of the Hoorakanna’s Corporation was furious and blaming his marketing team for dismal sales figures during the last four quarters. We have a fantastic range of products, fine distribution system, customer oriented pricing system backed by a very good promotional program but still you cannot achieve a modest level of the targets given. If you cannot do your job, just resign and leave this place. There are so many others in the market place that would jump and join this company.

Quarter Target Achieved (figures in Rupees)

1st 10 million 7 million

2nd 12 million 6 million

3rd 15 million 5 million

We have reduced prices several times at your request as you were complaining that our prices were not competitive. We also started importing products from China to offer better prices. Further during the last three quarters we have continuously increased our advertising budget at your request. But no improvement in sales. Now what is your excuse?

We have been in this hardware business for more than 30 years now. Everyday about 100 customers come to our Colombo retail outlet. Therefore, at least we sell products to 30000 customers a year only at our Colombo retail outlet. Out of that 90% are cash customers and other 10% are credit customers. Some of our customers are owners of businesses, they are different fields and we just do not know much about it. Certain customers place continuous orders and they have a bigger volume of purchases but we just do not know how big it is. Some of them are contractors, I am sure many of them would get contracts in the North soon to build houses. We just do not have much information about our customers.

We have addresses of credit customers but you have failed to visit them and find out their requirements and opinions about our company and products. You are always trying your best to get new customers as we are loosing the current customers by 20% to 25% every year.

No one knows what is happening to our business. We are doing everything in the marketing book and using our wide knowledge and experience in marketing for the last 30 years but still we are not performing well. Day by day we are loosing business to many other competitors.

It is strange that Maradivyaputhrayas Corporation is developing their business day by day. They do not have a good product range, they do not directly import products, and they do not even advertise their products. How do they improve business? What is the secret? The proprietor is a drunkard and he drinks with all the sundry guys in the night. I think there is some specialty with their company to grab customers. Their counter is always full of customers. Maradivya and his son are always at the counter.

Our Stock Control system and accounting system is fully computerized. We can input many information to it and generate many reports. But only routine work are done to provide basic accounting and sales information. We always

discuss about the sale revenue graphs, expenses graphs and working capital and other banking details in the meetings. I understand that Maradivya do not have much meetings but he knows what customers want and who are his real profitable customers.

Some of the products that we have imported are in excess and they just do not move well. Some are gathering rust and some may become obsolete with the modern technology. What are we going to do with them.

We get so many emails from our suppliers about new products but they are saved in the computer in the import division.

Further rate of bad debtors in our company are also in the increase. Some of our old customers are having problems and they do not pay as they used to be. We have a special guy to collect credit from our customers and we pay him a big salary plus other transport costs etc. He goes to every credit customer and come back with very low collection. He has a file with the customer’s reasons for the delays in paying. Our sales division still serves them in the same manner as they are our old customers. When the expenses of collection are concerned, I see it is better to stop sell goods on credit.

We also have a service division where they serve at least 25 customers a day. They always share their experience with customers with you in the quarterly general meetings that we have. But you forget them after some time and take decision as if you did not know anything about it.

Our Delivery Assistants also have experience with customers and they too share their experience with you when you meet them casually.

We provide everybody a time to read newspapers. There are so much of information about markets, suppliers, buyers and competitors to us in newspapers. You talk about it on the day of publication but then just forget.

I have also seen the lackadaisical attitude that some our sales team have on customers. We do not have the enthusiasm that we had in the past in serving customers. Some say that they are not even greeted well by our staff.

We also would have done well with customers if we have taken the comments made by Sales Reps when they visited prospective customers and our existing customers. They in fact have tabled such comments to our meetings but after that those comments were restricted to their reports in files.

We used to get many import and supply orders in the past when certain specific goods were not in the market. We had a list of such customers who purchased goods in that form but it is just in the filing cabinet.

Some of the items such as electric drills that we sell are repaired by “Aluguththeru Bass” few meters away from our sales outlet in Colombo. He knows us well and those days he used to talk with us about the complaints made by customers. We used to call him for the new Year day for Ganu Denu . Now we do not even give him a call or pay a visit to his place.

We have one MBA guy and three Marketing Diploma Holders. What you were doing all these days. You are no better than others who have not been to formal education in marketing. At least now it is time for you to show your knowledge and skill. Find out what is wrong with our company and devise a plan to resuscitate the company.