SDM

Case Study
Of
Videocon International Ltd.
Presented by:Piyush Kumar
PGDM1400078
Sec-B
CASE FACTS
* In this case Mr. Sanjay Nigam has been recently appointed as area sales manager in Videocon
International Ltd.
* Mr Nigam has to allocate quota among his five divisional managers. He has to decide equitable
allocation of that quota. His incentives are also dependent on achievement of the allocated quota.
* Mr. Sanjay was heading the refrigerator business for Videocon and then he was given the
responsibly of managing the sales in the area covering different states in south India.
* Videocon ltd. is the manufacturer of consumer electronic products like Colour TV, Refrigerators.
Fired by a passion of innovation, Videocon has kept pace with changing phase of technology. With the
development of Zero waste technology Videocon has curb cost of production.
* Mr. Sanjay has to look after southern state of India and has been allocated with Rs.268.52 crore for
his quota.
* Allocation should be based on various factors like historical allocations, economic outlooks, Tax
structure of the state, market potential, geographic size, purchasing power of customers.
* Previously quota allocation has been done according to a policy document which consists:
1. Project current sales to the end of the year.
2. Preliminary allocation by simply adding the budgeted percentages increase to the year-end
estimates for each division.

3. City-wise retail outlet analysis.

4. Gather more information at the macro level.
DISTRIBUTION CHANNELS IN THE INDUSTRY
The Refrigerator companies in the industry use different distribution channels to reach the customer.
These are as follows:
1. In this type of channel the company uses its sales representatives to deal with the dealers directly.
The dealers place the order through the sales representatives who visit them periodically, and the
products are delivered directly from the company.
Some companies appoint Direct Dealers who act as their Franchisee Outlets or their Exclusive
showroom.
Figure 10: DISTRIBUTION CHANNELS
2. In this channel of distribution the company appoints distributors on the basis of District/ Population
/No of Dealers to be handled by one distributor. The area of operation and its potential is also taken
into consideration.
Some of the companies make the distributor totally responsible from appointing the dealers to
providing after sales service.
Figure 11: DISTRIBUTION CHANNELS
3. In this channel of distribution the company appoints Distributors as well as Direct Dealers. The
company appoints distributors to deal with small dealers who order small quantities. With the dealers
who have good potential and sales the company deals directly. The Korean Multinational follow this
channel where they appoint Distributors for upcountry towns and direct dealers for big cities and major
towns e.g. Ahmadabad.
Figure 12: DISTRIBUTION CHANNELS
4.

In this channel the company appoints a C&F agent who acts on behalf of the company. The C&F

agent is totally responsible for appointment of Distributors and Direct Dealers. He sells to both the
Distributors and the Direct Dealers at the same rates.
Figure 13: DISTRIBUTION CHANNELS

Q- How should he proceed?

Ans: - Looking at the present scenario of Videocon Ltd., He should look at the previous year
documents related to allocation and their output. A comparative study should be done to find the gap
between allocation and achieved target. Insights from old employees and he should follow the basics
what is mentioned in policy document. Since, he is well versed with sales, he should focus on these
markets and customers interest and purchasing power to estimate and forecast the demands from
each region and then according to his results he should go for allocation.
Q- What More information does he need?
* Demand from each region
* Customer purchasing power
* Market research to identify the need of customers
* Future projection Report
* Region-wise growth potential data.
Q- How should he use quota allocation process to motivate his sales force?
* Incentives & rewards for achieving targets.
* More quotas for high performers.
* Transparent appraisals.
* Variable incentives for achieving more sales than the target

Case study on Videocon

Case Facts:
* Mr Sanjay Nigam recently got promoted as the area sales manager.
* His main work is to allocate quota among his five divisional sales
managers.
* A portion of Mr. Sanjays compensation is dependent on, how the
divisional sales managers would reach their given quotas.
* He was heading the refrigerator business for Videocon, later he was
given the responsibility of the sales of the region.
* 1985, via technical tie up with Toshiba; Videocon launched Indias first
world class colour television.
* Videocon has almost zero waste technology which help reduce cost by
optimizing the production process.
* The company now produces both colour as well as black and white
televisions.
* At its modern plant, the company produces all critical and important
components with backward integration technology.
* It also produces sophisticated products ranging from audio systems,
radio, recorders and personal stereos.
* Videocon was the first company to introduce the picture-in-picture,
turbo sound, surround sound and large screens.
* It is the first the first Indian company to win the prestigious CE approval
for exporting their television to Europe.
* Along with high completion, there is also high opportunity in the Indian
market.

* Their major competitors are Onida, BPL, LG and Samsung.

* In the refrigerator sector their major competition is with Sony,
Kelvinator and Electrolux.
* They are one of the leading companies in sales budgeting process as
there has emerged as the key player in many countries.
* Videocon does their budgeting by taking into account the changing
profile of the consumers, the shifts in the marketing shares and the
profitability of the new products.
* The budgeting takes place in the month of June every year.
* The management take into account the economic trends, industry
forecast, competitors activity, population and growth rate .
* The appliance division is considered as the investment and grow
sector of the company. The company expects a healthy growth in this
department independent fo the market condition.
* The sales team of Videocon are basically drawn from 2nd level b
school with aptitude and knowledge about the local market.
* They are trained so that they can take higher responsible positions
after few years.
* Videocon also hires experienced sales executives who can contribute
by managing local advertising campaigns and local sales promotion.
* The total sales budget allocated for the year 2010 is 5000crore, which
is 15% more than the previous year.
* Mr Sanjay heads a large part of South India covering Tamil Nadu,
Karnataka, kerala and Goa.
* His first work is to project current sales based on the previous years
sales.
* Next step is to examine the sales data compiled by the weekly sales
from all division that is saved the warehouse.

* Account analysis was also done based on the size of the large
institutional buyers.
* City wise allocation was also done to find out the contribution of each
city in the total sales.
* The salespersons are consulted to ensure all the potential areas and
troubling issues.
* Mr Sanjay is facing a more difficult situation as he feels he lacks the
experience that is required for the allocation of budget.
* The general economic condition was good and the middle class was
happier due to the allocation of dearness allowance.
* Growth in rural India has also been forecasted.
* Mr. Sanjay is facing a problem with his sales teams as some of the
experienced sales persons has shifted to different brands and he has to
allocate more budget to regions having less experienced sales persons.
PEST analysis
Political Condition: The political scenario in India is more or less stable.
The government of India has been concentrating towards betterment of
citizens. As there is more political stability in south India, it is better to the
do business there. Hence, big brands in India are able to grow without
much hassle.
Economic Condition: India is a growing country. For the past decade,
India is projected to be the fastest growing country in the world. As, a
result the economic condition has improved tremendously. Majority of
the population of India are middle class. Most among them are from
farming background. This, major population is getting dearness
allowance which in turn has improved the economic condition. As a
result the per capita expenditure of India has increased. It is expected
that India will grow at a rate of 8.5% p.a. The rural population is also
expecting growth due to above-average monsoon in the last few years.
Social Condition: India a land of culture and heritage. Music and
entertainment are integral part of individuals in India. This helps

consumer durable like T.Vs, radios, music systems to be in demand

continuously.
Technology Condition: India being an emerging market and developing
nation is lacking in technology sector. Even though there is a problem
with latest technology, big companies like Videocon have improved their
technology to world class. Introduction of the various International
companies and various R&D departments will result in the betterment of
the technology sector.
SWOT analysis:
Strength Analysis: Videocon is an international brand. This brand image
helps them in capturing the market easily. They even have the best of
technologies that is present in the world for all their products. This
strengthens their product portfolio and help in market capture. Videocon
launched Indias first world class television. This helped them create a
brand image in India. They are even the first Indian company to get the
prestigious CE approval for exporting their colour TV. They follow lean
practices which result in Zero wastage of material; which in turn has
resulted in optimizing there production process. Hence they have been
able to provide the best of products at affordable cost. Videocon also
has one of the best budgeting processes. Videocon markets wide variety
of products in the Indian market.
Weakness Analysis: Videocon is a brand that is known in India. They
have recently entered the world market, thus they have very less
exposure to the world market. They had to take help of Toshiba to be
able to introduce the first colour T.V in India.
Opportunity Analysis: As they were the pioneers in colour T.V., they had
the opportunity to capture and retain the customers in India. By getting
the C.E approval, Videocon has been able to expand in international
market. They have a full range of products for the middle end of the
market, so they have the opportunity to expand in the higher range of
the market.
Threat Analysis: As Indian market is an ever growing market, there is
always a threat of rivalry among the major brands. There major
competitors are LG, Samsung, BPL, Onida. With technological
advancement, Black and white T.Vs is replaced with colour T.Vs.

Videocon has a unit for manufacturing black and white television picture
tubes which is against the market trend.
Answers to the questions:
1) Mr Sanjay should first consider the increase in sales in the various
areas. According to the previous year sales data, Karnataka and Kerala
has shown a reduction in the sales; where-as Goa, Tamil Nadu and
Andhra Pradesh has shown an increase in sales. Thus, Mr. Sanjay
needs to allocate more percent of the quota for Goa and lesser percent
for Karnataka and Kerala. He even needs to allocate better percentage
to Tamil Nadu and Andhra Pradesh as these areas have also shown an
increase in the sales. This way he will be able to reach his 15% increase
in the budget allocation.
2) He needs to find out the reason behind the decrease or increase of
sales in the respective areas. This would help him in allocating proper
quota to his sales force. He should also find out the prominence of the
competitors in the regions. This way he will also be able to properly
allocate his sales force.
3) Mr. Sanjay can motivate his sales force to achieve the additional
commitment that is required by providing them with higher incentive for
achieving the goal. He can also cover their travelling expenditure for
capturing new clients. Year end special bonus would be provided to that
sales team who will be able to achieve the desired goal.