Marketing Problems in Business – A CASE STUDY

By: V S RANGARAJAN Posted on: 2008-02-27 ** Print Article ** ** Copy Article ** ** Email Article ** - Category Feed

Article Summary: The author of the paper is a Textile Technologist and having consultancy experience in an Absorbent cotton wool I P industry engaged in production of Absorbent cotton wool

Marketing Problems in Business – A CASE STUDY

Introduction

The author of the paper is a Textile Technologist and having consultancy experience in an Absorbent cotton wool I P industry engaged in production of Absorbent cotton wool
IP

The author of this paper felt that by giving his points through the findings of a Case Study research will be much appreciated and hence this approach is followed

The author of the paper is confident that the findings ( obtained through case study research ) will certainly throw light on the subject ‘ Marketing Problems in Business’

THE FOLLOWING ARE THE FACTORS WHICH AFFECED THE EFFICIENT FUNCTIONING OF THE UNIT PARTICULARLY IN MARKETING ITS PRODUCTION OF THE ABOVE PRODUCT

1) The problems faced by the unit due to sole selling agent

The company appointed a Sole Selling agent to market its production. Unfortunately the person appointed did not have the experience in the field. The company entered into an agreement for three years.

The Sole selling agent deviated in his operations not adhering to the agreement in the following ways
1) He did not achieve the Sales Target as per the agreement
2) He did not put effort and at the same time did not allow the company to sell the product in the market
3) The sales that he achieved ( without effort )enough profit for the little investment that he made in his distribution business
4) Very intelligently in the clauses of the agreement he put one of the clauses as minimum sales to be achieved in terms of kilograms ( ie ) in quantity instead of sizewise quantity to be sold
5) The company was producing different sizes of the product ( viz )
Weight per pc price per pc price / kg cost of production

25 gms Rs 5.00/- Rs 200/ - Rs 50/-

50 gms Rs 8.50/- Rs 170/- Rs 45/-

100 gms Rs 15.00/- Rs 150/- Rs 41/-

250 gms Rs 30.00/- Rs 120/- Rs 38/-

500 gms Rs 45.00/- Rs 90/- Rs 35/-
From the above it could be seen that the smaller the size of the packet more is the Profit for the company

In the industry 500gms packets are sold easily to bulk buyers ( like Hospitals, Big shops, etc ) The cost of obtaining and executing orders by the distributors of the larger packets is less. Hence the sole selling agent instead of seling all sizes of the Product sold only larger packets ( 500 gms ) causing loss to the company

The agent was making false claims of shortages of supply on the supplies made

Since the agent did not follow up efficiently with the retailers they did not sell the company’s brand. They stocked the company’s brand of product bought on credit and did not sell the company’s brand. They stocked the company’s brand of product bought on credit and did not take any effort to sell. Instead they were selling only the competitors brand. At the time of due date the retailers returned the stock to the agent as unsold stock. When the reason was asked for the return of goods they informed that the customers gave complaints on the quality of the product

After seeing the poor performance of the Sole Selling Agent for nearly one year company wanted to sell the product directly in the market.

By that time the company got into working capital shortage problem. Stocks piled up at both the premises , factory’s store as well as in the Sole selling agents godown

The company faced following marketing problems when it started selling directly

2) No proper Delegation of Authority and Responsibility to perform Marketing function

All the three Directors of the company started canvassing orders directly fixing price, using sales promotion discounts, etc as they like to increase sales.

With the result the company lost its reputation in the market. Customers started suspecting the Pricing method being adopted by the company

Sales Planning / Production Planning became difficult for the company

3) No market expansion program was considered

a) Terrytory

The company did not take any steps towards entering new markets ( new Territories like full of South, North, East and West areas ) by appointing distributors district wise

This Market Expansion program would have given increased sales to the company if attempts were made properly

b) Type of Market

The company sold its Production to

Consumer Market ( through salesman to Medical shops )

Government sector ( directly by participating in tenders )

But did not take any effort in selling to Institutional and Non Governmental organization sales.

c) Type of End user market

The company was selling its production only to patients for curing cut injuries. The product had other applications like supply to ear bud manufacturers as raw material for them to clean the dirt in sophisticated electrical and computer applications, photo copying shops, etc. The company did not sell to other application areas.

4) Did not Try marketing its product in foreign countries

The company did not tap the export market potential of the product. The reasons known to the company may be due to non availability of adequate working capital lack of confidence on the supply of product on the quality standards stipulated by the foreign buyers regarding bill payment, etc. The company did not take any steps to export the company’s product whereas the competitors did

5) The Technology constraints in the Production process

The company was not able to produce product of the required quality standards due to the following reason

i) Want of skilled personnel
ii) Purchase of inferior quality raw material ( want of funds )
iii) The obsolete technology of the machines installed in the unit compared to its competitors, etc
iv) Want of adequate good quality water, etc

The company was not able to retain its customers with them. The dissatisfied customers when approached by the company again for orders were not favored

6) Non attractive Packaging and Non standard Packaging

The outer paper colour chosen for packaging the product was very attractive. The label used by the company was also not attractive. The letters / words printed on the label was not bold enough for the customers to read easily. Normally packaging / labeling is used as a selling tool in marketing a product. In this case the packaging has worked against the company in selling its product

The company due to want of funds use to buy packaging paper on small lots from different sources and hence there was no uniformity / standardization on the packaging material which created a bad impression about the brand

Hence the sales did not pick up from the consumer market

7) No efficient liaison officer for collection of Out standing bills from Government for the supplies made to Government organizations

The company made supplies to Government hospitals. As we know supply made to Government organizations need follow to expedite the collection of bill amount. Since there was no proper person / agency to function as efficient liaison officer to work between the company and the Government organizations the company had difficulties to collect the bill payments in time. This affected the working capital flow

8) No Minimum stock of product of different sizes at the factory godown


Since the company was not having enough working capital funds the production activity was carried out in the company based on the orders received .After getting the orders only the company started producing the product. This situation made the company not having minimum finished goods inventory ( in all sizes of the product ) to cater to the immediate requirements of orders given by other customers. This way the company had lost many profitable orders because of supply to be made in short notices

The company out of necessity took up small lot orders not giving importance for Economic order quantity ( EOQ )

Conclusion

Companies should always be in search of scope for market expansion or market penetration by finding new markets and finding new product application areas to grow. Before considering to go for indirect marketing the company has to study the strengths and weakness of the marketing middlemen and also its own.

It is advisable for any company to sell the product in its own brand name. Then only the end user is aware of the existence of the company. This only reduces the dependence of the company on the sub contractors or middlemen. But when the companies sell their product in their brand name it has to be doubly sure about the quality of the product.

It is always better for any company to have Market Intelligence team to gather information on what is going on in the market to take appropriate action to rectify the problems without delay

Article Source: http://www.upublish.info

About the Author:
V S RANGARAJAN
EDUCATIONAL QUALIFICATION B TECH, MBA, M PHIL, ( PH D ) EXPERIENCE INDUSTRIAL CONSULTANCY 18 YEARS INDUSTRY 3 YEARS TEACHING 5 YEARS

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