Leading like a Leader – Case StudyRamesh had joined Pidilite as a MT with Fevicol. He had just completed his final Sales Stint at Patna and had been placed as an ASM at Kolhapur branch. Patna was a market where Fevicol had a market share in excess of 90%. During his stint he had observed how carpenters at Patna swore by FevicolSH and did not even touch any other brand. The dealers however kept complaining that there was very thin profit margin in Fevicol SH. While initially he thought that the solution was to give more schemes, over a period Ramesh had matured to learn that because of fast shelf movement (Velocity) of Fevicol SH, even with thin margin dealers actually earn a healthy ROI (Return on Investment = Velocity x Margin). Ramesh had also observed that the sales of the premium Fevicol Variants like Fevicol Marine and rubber based premium adhesive, Fevicol Heatx was very low at Patna. As he analysed the reason for this, he realized that enough promotion work was not done to develop the sales of these brands. There were simply not enough resources to connect with carpenters and contractors so that the products benefit stories could be communicated. He had also observed at Patna that majority of the woodworking contractors took up jobs “including labour and material”. The contractor had to buy the plywood, laminate, accessories and adhesive etc, deploy carpenters and get the job done against a lump sum payment. Also in Patna, in more than 90% of the projects, the design was chosen by customers from Fevicol Furniture Design books that the contractors carried along. Only in 10% cases, there was a professional Interior designer who created the designs of homes, that too only with affluent customers.

As Ramesh started taking over the Kolhapur Branch area, he found it a completely different market. The Fevicol Market Share here was less than 60%. Rest of the market is dominated by a local company Sabcol (MS - ~30%)– (“Sab ka col – Sabcol”) and other international brands who were trying to enter the market like Faraldite and 5M had a combined market share of 10%.As he analysed the reason for why the competition brand was successful, he realized that the carpenters here were lured by Sabcolvia cash incentives in the form of tokens inside containers – e.g. As much as Rs 1000/- for carpenters inside 50kg drum and also a Silver Coin worth Rs 500 for the Contractor. It also offereda hefty rebateof uptoRs 1500 per drum to a few influential dealers. Compare this with a margin of Rs 300/- to Rs 500/- on Fevicol SH 50kg. Fevicolofcourse also had a relationship initiatives with the Contractors, where they formed Fevicol Champions Club (FCC) and a loyalty rewards programme, which gave points on every container. These points needed to be scanned and redeemed at the branch office, against a variety of gifts. The perceived value of the points on a 50kg drum was Rs 100/- only. The loyalty program is a long term initiative where the contractors need to accumulate points and then redeem gifts while the tokens offered by competition brands offer instant cash redemption. Fevicol also held social programmes e.g. Vishwakarmapooja and training programmes for contractors, through its FCC clubs.

Sabcol obviously was spending a lot of money, and it was funding this, by selling their products at a price which is Rs 20 / Kg premium to Fevicol SH. Obviously while their quality was acceptable on basic task of sticking wood to laminate, it was significantly inferior to Fevicol SH, and technical persons had shown this via a simple test. But who cared? The dealers and carpenters / contractorswho sold Sabcolwere all more happy making money. It was amazing that Fevicol still was holding a majority market share here, felt Ramesh. The involvement of Interior decorators is also fairy high at Kolhapur. Approximately 60% projects involved Interior Designers, however none of

them really cared to prescribe any specific adhesive. Contractors here undertook projects on the basis of “labour as a % of material” contracts only. i.e. The cost of plywood, laminate, accessories and adhesive etc. are borne by the home owner while they charged ~40% of the material cost towards the cost of labour for executing the project. However, the materials purchased by home owners are as prescribed by the contractors, and while the home owners were aware that contractors prescribed expensive materials, they felt that it is better to incentivise contractors to use good quality material than to have him cut corners to save cost.

Hence Ramesh’s team had also found it easier to sell some of the upgraded variants like Fevicol Marine and FevicolHiper. FevicolHeatx, which was based on a premium rubber based technology was also doing well at Kolhapur, and there was no equivalent product in the market. However the application techniques are different and many carpenters don’t really know how to apply it. Because of that the carpenters often face complains related to de-bonding and bubbles. But wherever the carpenters were trained by Fevicol Promotion team, the contractors bought into the idea. The company had in fact put in a team of 4 promoters for FevicolHeatX and FevicolHiper, and the feedback from them was that the trained contractors were finding the product beneficial, as it sticks laminates in 30 minutes as compared to 8 hrs that any of the white adhesive takes.

Ramesh was now given a project charter to increase Fevicol Market share by 10%, within a year. He had to present the Strategy for the same to the Managing Director in another 3 days. The MD had personally called him to impress the importance of the project. If his strategies worked, these would then be employed in similar other affected markets. These were the kind of challenges that Ramesh thrived on. He immediately got around to putting his thoughts in order.

1. Current Sales and MS trends.Brand Dealer Price/Kg Sales 2014-15 MS 2014-15 Sales 2015-

16MS 2015-16

Fevicol SH 150 33.0 37% 34.5 32%Fevicol Marine

172 14.0 16% 17.0 16%

FevicolHiper 195 9.0 10% 13.0 12%Sabcol 192 24.0 27% 31.0 28%FevicolHeatx 350.00* 2.0 2% 4.0 4%Other 190 8.0 9% 9.5 9%

Total 90 100% 109 100%All Sales numbers are Volume in Tons.HeatXfigs are in KiloLts

2. Discount & carpenter offer:Brand Trade Rebate (Rs/Kg) Market Operating Price (Rs) Carpenter/Contractor Offer

Fevicol SH Rs 15.00 Rs 140.00 1 Loyalty point / KgFevicol Marine Rs 15.00 Rs 165.00 1 Loyalty point / KgFevicol Hiper Rs 15.00 Rs 200.00 3 Loyalty point / KgSabcol Rs 40.00 Rs 180.00 Rs 35 / KgOthers Rs 38.00 Rs 180.00 Rs 20/KgFevicolHeatx Rs 0.00 Rs 400.00 2 points / Kg*1 loyalty point is approx. value Rs 2/- on the gift table.

Answer Sheet

Name: Roll No:

Institute: Course:

1) What are the critical factors in the Kolhapur market that should be considered while devising a strategy for Fevicol?

Fevicol 60% market share . Price, Trainin

the competition brand was successful, he realized that the carpenters here were lured by Sabcolvia cash incentives in the form of tokens inside containers. Rs 1000/- for carpenters inside 50kg drum and also a Silver Coin worth Rs 500 for the Contractor. It also offered a hefty rebateof uptoRs 1500 per drum to a few influential dealers. Compare this with a margin of Rs 300/- to Rs 500/- on Fevicol SH 50kg.

Sabcol was significantly inferior to Fevicol SH, and technical persons had shown this via a simple test

The involvement of Interior decorators is also fairy high at Kolhapur. Approximately 60% projects involved Interior Designers, however none of them really cared to prescribe any specific adhesive.

labour as a % of material” contracts

home owners felt that it is better to incentivise contractors to use good quality material than to have him cut corners to save cost. Hence Ramesh’s team had also found it easier to sell some of the upgraded variants like Fevicol Marine and FevicolHiper. FevicolHeatx, which was based on a premium rubber based technology was also doing well at Kolhapur

wherever the carpenters were trained by Fevicol Promotion team, the contractors bought into the idea. as it sticks laminates in 30 minutes as compared to 8 hrs that any of the white adhesive takes.

2) Who do you think should be the primary TG for improving Fevicol MS and why? a. Contractors b. Dealers c. Consumers

CONSUMERS. As when they demand it carpenters and contractors have no other way but to buy it.

3) What should be the Strategy for Pidilite as a company for improving its market share and why?

We need to target the customer/consumer which is the interior decorators or thehome owners themselves . As we know that Fevicol products have done well due to lack of incentives like others , the only reason can be if the home-owners instruct the carpenters and contractors to use pidilite products. So on the same lines we should create awareness about our product to interior decorators and home-owners as our product is of higher quality and they are cheaper than sabcol. We can do this in 2 ways. We can either tie up with interior decorator material shops like bathroom fittings, kitchen fittings and furniture shops where we can setup a small dedicated area in their showrooms, where we can influence the home-owners who come to buy then and there about our products.

4) What is the total money / resources that Ramesh should ask from the Managing Director, and how should he justify it?