sdm project overview_group 2_havells housewires

7/30/2019 SDM Project Overview_Group 2_Havells Housewires

1/20

Project

Report Title

Sales and Distribution

Management - Project Report

Group 2

Saurabh Agarwal (PGP03.050)

Prem Dehariya (PGP03.042)

Pallav Mowke (PGP03.038)

Gautam Karni (PGP03.027)

Amit Kumar (PGP03.008)

Mridul Dhiman (PGP03.034)

Dinesh Kumar (PGP03.080)


2/20

Table of Contents

Objective ....................................................................................................................................................... 2

About Havells ................................................................................................................................................ 2

SWOT Analysis............................................................................................................................................... 4

Calculating Companys Responsiveness on a 4 point Scale .......................................................................... 8

Channel Structure ....................................................................................................................................... 10

Channel Structure of Havells and RR .......................................................................................................... 10

Channel Structure of Anchor (Competitors of Havells) ............................................................................ 11

Suggested future expansion plan for Havells ............................................................................................. 12

Challenges ................................................................................................................................................... 14Other Learnings ........................................................................................................................................... 16

ATL/ BTL ...................................................................................................................................................... 17

Promotion Suggestions ............................................................................................................................... 18


3/20

Objective

To do the rigorous market survey, identify the current scenario and then formulate the marketing

strategies for the company (our main focus would be towards the distribution channel only but we

would also try to cover the other marketing aspects as both are inter-related).

About Havells

Havells India Ltd is a billion dollar electrical equipment company founded in 1958. It produces

variety of electrical products. Its products ranges from industrial & domestic circuit protectionswitchgear, cables & wires, motors, fans, power capacitors, compact fluorescent lamps (CFL),

commercial & industrial, luminaries for domestic, applications, modular switches covering

household, commercial and industrial electrical needs, water heater to domestic appliances.

Havells owns global brands like Concord, Crabtree, Sylvania, and Luminance and has 94

branches / representative offices with over 8000 professionals in over 50 countries.

40% of the total income comes from the Cable division.

Investments in building the manufacturing capacities in this segment have led to Havells

emerging as one of the largest producers of cables in the country. The state-of-the-art facilities,

equipped with fully automated machines using best quality raw material, ensure a uniformly

superior quality of cables. Havells flexible copper cables, which are fire proof, have found a

good response from both industrial consumers and other consumers, enabling a marked shift in

demand from the unorganized to the organized sector.

The division produces two types of cables:

Industrial underground cables- which find usage in commercial and industrial ventures Domestic cables- which are used in buildings and residential apartments.
http://en.wikipedia.org/wiki/Compact_fluorescent_lamphttp://en.wikipedia.org/wiki/Havells_Sylvaniahttp://en.wikipedia.org/wiki/Havells_Sylvaniahttp://en.wikipedia.org/wiki/Compact_fluorescent_lamp


4/20

Both products have found good acceptability in the country. Better awareness on the safety

aspect has seen consumers shift to branded products in electrical wires. Havells focus in

building awareness through media education campaigns and advertisements on the safety front

has helped significantly. Income in this category has increased from previous year; income from

the Cable division was ` 1,692.5 crores during this financial year 2012-13 as compared to `

1,593.0 during financial year 2011-12.

This division accounts for 40% of the total income.

Contribution margins were also better at 9.1% of net revenue up from 7.9% in the financial year

2011-12.

Cables segment is captured in Primary business segment of Havells. The cable segment

comprises of domestic cables and industrial underground cables.

In 2012 Havells launched Copper Flexible Cables under the Standard brand

Havells is 2nd largest manufacturer of Cables and Modular Switches

Havells was also judged as the best Cables Company by the renowned Zee Business in its First

Edition of Good Home Awards.

Based on the surveys of the various dealers and distributors and retailers in the

Rohtak and nearby areas, the internal and external analysis of the3 major brands


5/20

of the Housewires were done (90 metres)- Havells, Anchor and RR. The market of

the branded wires is around 70 percent in the areas of Rohtak and surrounding

areas.

Share of Havells, Anchor and RR in the branded wires in Rohtak : 90 percent

Other branded wires are Fenolix and Plaza (general perception of Plaza is till a non-

branded one though)

Monthly sale of housewires in Rohtak and surrounding areas : Rupees 2.75-3

crores

Unbranded housewires : PVC, DeeGee, Arkaylite, Sona, etc.

SWOT Analysis

SWOT: Internal Analysis

Prioritization of Strengths & Weaknesses with respective weights

Rank Strengths Wt. (%) Weakness Wt. (%)

1 Margins for the retailers/dealers 0.07 (7%) Visibility in stores : On time

Product availability0.07 (7%)

2 Brand Recognition 0.07 (7%)Trust in the current structure fromthe dealers / retailers side e.g.

due to keeping of commitments ,

etc.

0.07 (7%)

3 Certifications/ Approvals 0.07 (7%)Focus on timely delivery 0.06 (6%)

4 No internal market competition 0.07 (7%)Efficient marketing : continuous

push through salesman/ infrequent0.06 (6%)


6/20

between different dealers/retailers visits

5 Good Quality 0.05 (5%)Promotions for the influencers-

dealers/ retailers 0.04 (4%)

6 Wide Distribution Network 0.05 (5%) Promotions for the influencers-electricians 0.04 (4%)

7 Standard policies 0.05 (5%)Fast responsiveness to market

dynamics e.g. change in prices 0.04 (4%)

8 Affordable Pricing for customers 0.03 (3%)Unattractive Packing 0.04 (4%)

9 Option of credit time 0.03 (3%) Inefficient advertisements : TV,

posters, etc.0.04 (4%)

10 Wide Product Range 0.01 (1%) Providing on-time rewards and

recognitions 0.04 (4%)

Total 0.50 (50%) 0.50 (50%)

Calculating Companys Responsiveness on a 4 point Scale

After prioritizing strengths and weaknesses, the responsiveness of the Individual brands is

checked and the responsiveness is then rated on a scale of 4:

1. Very Poor Response2. Poor Response3. Strong Response4. Very Strong Response

The average response is therefore should be (1+4)/2 i.e. 2.5.

Below this score, the company is underperforming and susceptible to its internal attributes and

above this score of 2.5, the company is operating better than the average and thus utilizing its

resources and hence, strong internally.


7/20

Attributes Weight Havells Anchor RR

Strengths

Margins for the

retailers/dealers0.07 3 2.5 3.5

Brand Recognition 0.07 4 3 3

Certifications/ Approvals 0.07 4 4 4

No internal market

competition between

differentdealers/retailers

0.07 2 3 3

Good Quality 0.05 4 3 3

Wide Distribution

Network0.04 2.5 3 2

Standard policies 0.04 3 3 2.5

Affordable Pricing for

customers0.04 1 3.5 3

Option of Credit

Time/Target Flexibility0.04 3.5 3 4

Wide Product Range 0.01 4 4 2.5

Weakn

ess

Visibility in stores : On

time Product

unavailability

0.07 4 4 3

Weak trust in the

current structure from

the dealers / retailers

side e.g. due towrong/false

commitments , etc.

0.07 4 32

No focus on timely

delivery0.06 4 3

3

No marketing : no

continuous push

through salesman/

infrequent visits

0.06 4 42


8/20

Promotions schemes /

ways for the influencers-

dealers/ retailers0.04 3 3

3.5

Promotions schemes for

the influencers-

electricians 0.04 2.5 2.53

Slow responsiveness to

market dynamics e.g.

change in prices0.04 3.5 4

1

Unattractive Packing0.04 4 3

3

Inefficient

advertisements : TV,

posters, etc.

0.04 4 32

Providing on-time

rewards and

recognitions0.04 3 2.5

3.5

Total (Weighted Sum of Product) 1 (100%) 3.37 3.285 2.87

VERDICT:

Havells has a good standing w.r.t the market but good amount of work in needed in the

respective fields to establish Havells as an attractive brand in the market as there are attributeson which Havells housewire is not doing great.

SWOT: External Analysis

Prioritization of Opportunities and Threats with respective weights

Rank Opportunities Wt. (%) Threats Wt. (%)

1 Untapped local markets 0.11 (11%) Competition 0.20 (20%)

2 Untapped industrial markets 0.11 (11%) Economic Slowdown 0.05 (5%)


9/20

3 Untapped global markets 0.06 (6%) Fluctuation of Copper Prices 0.05 (5%)

4 Hedging of copper 0.05 (5%)Government Policies

((Taxes , Security Regulation)0.05 (5%)

5 Mergers and Acquisitions 0.04 (4%)Fake brands : similar packing,

similar names0.05 (5%)

6

Tie ups with the banks, third partylogistics, local transport e.g.

Newspaper distribution vendors,

etc.

0.04 (4%)Fake brands : same packing, same

names0.05 (5%)

7 Technological Advancements 0.03 (3%) Rumors about the brands 0.05 (5%)

8

Utilization of resources e.g. orders

from outside when machines are

idle

0.03 (3%)

9 Global alliances 0.03 (3%)

Total 0.50 (50%) 0.50 (50%)

Calculating Companys Responsiveness on a 4 point Scale

The responsiveness of the various companies is rated on a 4 point scale with

1. Very Poor Response2. Poor Response3. Strong Response4. Very Strong Response

The average response is therefore should be (1+4)/2 i.e. 2.5.

Below this score the company is underperforming and not utilizing its resources and above this

score of 2.5, the company is operating better than the average and thus utilizing its resource and

having a quick response towards the external environment.

Attributes Wt. Havells Anchor RR

rtunit Untapped local

markets0.11 2 2

3

Untapped industrial

markets0.11 2.54 2.5

2


10/20

Untapped global

markets0.06 2.5 2.5

1.5

Hedging of copper 0.05 2.5 2.5 2.5

Mergers and

Acquisitions0.04 3.5 3.5 2.5

Tie ups with banks,

third party logistics,

local transport e.g.

Newspaper

distribution

vendors

0.04 2.5 2.5

2.5

Technological

Advancements0.03 2.5 2.5

2.5

Utilization of

resources e.g.

orders from outside

when machines areidle

0.03 2.5 2.5

2.5

Global alliances 0.03 3 3 2

Threats

Competition0.20 3 3.5

3.5

Economic

Slowdown

(considering less

purchasing power,

decreasing of infra

building)

0.05 2.5 3.5

2

Fluctuation ofCopper Prices

0.05 3 32

Government

Policies

(Taxes , Security

Regulation)

0.05 2.5 2.5

2

Fake brands :

similar packing,

similar names

0.05 4 4

2

Fake brands : same

packing, same

names

0.05 1 1

3

Rumors about the

brands0.05 2 2

2

Total (Weighted Sum of

Product)

1 2.6044 2.75 2.325

Note: Weightages of attributes in Red color need to be verified by an industry connoisseur as exact details not

explored yet.


11/20

VERDICT:

Havells has to do a good amount of work to improve its standings in these areas if it wants to

increase its market shares in Rohtak and its surrounding areas. .

Channel Structure

Channel Structure of Havells and RR

Key points :

Havells has only one major distributor in Rohtak i.e Ganesh Electricals , Old bus stand and he

supplies to the following dealers and retailers. There are dealers and retailers who are taking

material from the distributors of Delhi too. Havells is not concerned about the dealers and

retailers. Only one salesperson is deployed by Havells for marketing purposes. He makes a trip

in every 3-4 days to look into the issues and see whether any projects are coming up in the area

so that he can sell the wire. The wholesole responsibility to provide material to choose the

dealers and retailers and supply lies with the distributor only. Havells tried to go for direct

delaers i.e to provide them material from the company directly but the distributor was against

it. Watching the power of the current distributor, the company had to withdraw the plan.

There are dealers/retailers who buy from Delhi directly because of more margins.


12/20

Challenges

Strong bargaining power of big distributers in the long term Loose details about the dealers and retailers available Improper mapping of the whole chain makes forecasting tough Inconsistent prices in the market (Prices offered to the dealers/ retailers by the big

distributors may be lower than what company offers to the distributors too)

Kachcha system encouraged - unethical No proper demarcation of regional boundaries for the distribution Risky situation: More business in hands of less people (big distributors). In case a

distributor decides to switch, he would definitely take a big chunk of business withhimself (plus his network)

Channel Structure of Anchor (Competitors of Havells)

Key points :

Anchor has not made any distributor in these areas. They make dealers which directly get the

material from the company from the CFA in Delhi. Hence, dealers are those counters in Haryana

for Anchor which directly get material from the company and provide to small retailers based


13/20

on their own discretion and networks. There are dealers who get the material from their own

sources (e.g distributor in Delhi too). The salesperson makes a trip once in a week. The

marketing efforts seem to be very weak. Dealers interviews tell that the salesperson does no

hard work to look into the projects. The name of the brand is the only driving force behind the

sale of Anchor housewires. Some dealers of Anchor also told that although they are delaers ofthe company, they at times take the material from the distributors from Delhi.

Advantagesof direct dealers

More control over the Distribution Chain- Enhance the Knowledge base of the company Synchronous prices - More control Easier forecasting Easier allocation of regions to the dealers Less bargaining options for the dealers

Challenges

Formation of right dealers Promotional schemes for the dealers More Management of Channel Partners needed(as more in numbers) Internal channel conflicts between the dealers of the in a particular area

Suggested future expansion plan for Havells

Approach 1 - Increase the number of distributors in the various districts:


14/20

Not much feasible (big players would be difficult to find plus demotivation for thecurrent distributor)

Price wars between distributors might again harm the market. Internal price wars mightreduce the margin of the distributors and hence, they might reduce interest after some

time.

In most of the districts visited, huge clashes of ego are noticed between the variousretailers. 90 percent of the dealers/ retailers are reluctant to buy from a distributor

locally (if there) and hence, they buy from Delhi.

Hence, brands like Anchor, RR, etc. are only focusing on making dealers in the Tier 2 areas like

Rohtak or Jhajjar.

Verdict: REJECTED (idea of making new distributors in the various districts)

Approach 2 - Increase the number of Dealers in the same region plus in nearby new markets

Dealers/ Retailers in the visited districts are very much inclined towards making relationships

with the companies directly (rather than selling a brand via distributor). The ones who are

selling through the distributors are only taking the order of Havells majorly because of any

specific demands from someone in the market.

Making only the dealers seems to be a good option but with some changes as suggested below:

Restrict the distributors of Delhi on certain terms so as to control the market prices(Prices should be in sync across the market) else the dealers would again buy from Delhi

and not via the company.

The current distributors should not be immediately replaced by the dealers seeking thestrength and reach of the current distributor. The current distributor cannot / should

not be removed. Their work may get distributed a bit though by formation of dealers.

Area expansion areas neighboring the areas like Rohtak/ Jhajjar can be visited andpossibilities of any opportunities can be found out. Hence, new market can be foundand then approached. The current distributor can be given the authority to provide the

material to those areas. It would be a kind of motivation for the distributor as the

morale of the current distributor is already down.


15/20

Verdict: ACCEPTED (make new dealers in the various districts plus area expansion). Route via a

distributor supplying to the dealers should also be assisted with the direct supply to the dealers

as the distributor way is proving to be ineffective.

Challenges

Apart from the issues of distributors as discussed above, the key issue in this case isPrice War between our dealers and the big distributors (Prices offered by the big

distributors may still be lower than what company offers to the dealers)

Proper demarcation of regional areas of the current distributors and the dealers. Threat and De-motivation of the dealers as both they and the distributors are taking the

material from the company and different offer prices/schemes might be there because

of the non-standardized approach.

In case of more than one dealer in one area , Internal wars between the dealers in thatparticular area- it has been observed that different dealers might offer various prices

depending on the competitor dealer in the area.

Sizes and the respective MRPs of the wires:

Size Havells Anchor Plaza RR Finolex

.75 mm 970 792 1130 940 745

1 mm 1300 1053 1400 1250 1050

1.5 mm 1925 1548 2080 1870 1545

2.5 mm 3085 2493 3360 3060 2495

4 mm 4555 3645 4950 4660 3655

6mm 6855 5490 7580 6630 5520

10 mm 13500 NA 13140 10860 NA

16 mm 21330 NA NA NA NA

*NA = Not Available


16/20

Average Cost Price and Selling Price of 1.5 mm FR (maximum sale) :

Brand

Average Cost

Price for a

counter

MRPAverage Selling Price at

a counter

Havells 955 1925 980Anchor 815 1548 830

RR 905 1870 928

Plaza 800 2080 850

Average Discount Structure of the wires:

Discount structure for Havells Anchor RR Plaza

General dealers/ retailers 47% + VAT46.5 % inclusive

of VAT48 % + VAT 56% + VAT

Direct dealers/ distributors (Cash

Discount included)

50% inclusive of

VAT48% + VAT 52% + VAT 62% + VAT

Cases of emergency:


17/20

Apart from the self-network, the sales person of Havells also helps the Channel Partner to

arrange the material from the nearby Channel Partner available. To see all the demands and

supplies, the salesperson of Havells plays an active role (visiting the distributors and dealers

once in every 3 days)

Other Learnings

For any brand to set up, there is no use of analyzing all the counters in a particulargeographical area. The wire market seems to be on line with Perito Law: 80 percent of

the market is run by only 20 percent of the Counters or even less. Focus should only be

towards those counters rather than wasting energy looking for every counter.

Housewire market should not be compared to the FMCG market. Number of countersshould not be the concern anyways. The main things a company should keep in mind to

set up our targets should be :

number of important counters in a region their shares in the market

Credit system is important for this industry. Hence, Havells and Anchor themselvesare giving more credit time : Havells= 30 days credit period, Anchor = 25 days


18/20

Representatives of Anchor and Havells visit all their dealers in every area in every 3-4days to ensure any help needed/ feedback/ take order, etc.

Push Factor: Havells has the best PUSH force in the Rohtak region. The salesperson triesto find the big projects in the area and tries to convert them. Banners , posters, etc of

Havells are much more than of any other company.

As per the retailers, the support of brands other than Havells in communicating thePrice List and other concerns has been weak. It has to be improved to an extent that

Dealers are aware of the current prices and product range. There seems to be a huge

communication gap from Anchors side till date. The visits from RR and Anchors

representatives should be more frequent.

ATL/ BTL

Promotion for the distributors

Havells and RR give the targets (quarterly and yearly) to all the distributors and whomsoever

completes the targets, it gives TOD and other promotions e.g trip to places like Dubai,

Switzerland (the place is decided on the sales/ target). Anchor has limited itself to small

promotions (giving TOD/ discounts) to the dealers which are signed up with the company.


19/20

Promotion for the electricians

Coupon System for the electricians

Coupons

Havells Anchor RR Plaza

Yes(SMS & point

addition system)No

Yes : on the

spot Rs

10 coupon

in the box

Yes : on the spot-

Rs 10 coupon in

the box

Findings:

As per our survey with the electricians, coupons act as good driving factor for them to buy a

particular brand. Moreover, the SMS system seems to be de-motivating as electricians find itdifficult and boring.

28 out of 37 electricians (75.67 %) surveyed feel that on-the-spot exchange of Coupons with

money (Rs 10/20) with the retailer is the best choice. SMS / addition of point system dont

seem to be much interesting to them.

Electricians Meet

Only Havells and RR hold the the Electricians meet in the areas visited (once in an average 2-3

months). Anchor and other brands are very weak in the same.

Promotion Suggestions

Hoardings/ Visiting Cards/ Pamphlets : Havells have given big Hoardings with thecounter name at major counters in every good distributor and dealer. No hoarding of

Anchor was found anywhere. RR had small hoardings in many shops.

Advertisement in other ways : In districts like Rohtak, Jhajjar and Hisar, dealers seemto be very much excited by the fact that some company is making hoarding/ wall-

painted advertisement with their names mentioned on the district highway or at


20/20

famous points. These companies can exploit the same to attract the dealers. Moreover,

it would increase the visibility of our brands too. So, advertisement methods like

painting on the walls should not be ignored. As per our movements, we could not locate

any of the wall paintings anywhere on any of the highways.

Pamphlets can be made for the big distributors and which they can forward to the localnewspapers or in-hand distribution.

Attractive visiting cards can be made for the big distributors and dealers. Timely delivery of rewards (gold/ silver coins/ any other schemes) is very important for

dealers. They respect things on time. Respect need to be given to dealers and hence,

companies should have strict process for the same.

Counters in the visited areas feel honored to have a relation with a brand. They dorespect Certificates and display it with proud.

Posters/ Advertisement on TV/ FM : Only Havells has advertisements on TV. Anchorsfrequency is quite low. RR has no TV ads these days being shown on the TV/FM. Havells

is mainly concentrating towards the brand building , the housewires and cable products

are not being shown in the advertisements.

sdm project overview_group 2_havells housewires

Documents