pgdm-im (b2b service case) may 2014

skpalekar@hotmail.com +9821046013 skpalekar@hotmail.com +9821046013 skpalekar@hotmail.com +9821046013

PGDM-IM : May 2014

Example of Services Marketing

S K Palekar Professor – Marketing and Chairperson – Executive Education Center

S P Jain Institute of Management & Research, Mumbai

skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com +91 98210 46013

skpalekar@hotmail.com +9821046013

Vacuum

Cleaners

Purifiers

1980 1985 1990 1995 2000 2005 2010

Industrial

Cleaners

Industrial

Purifiers

Forbes

Facilities

Product

Performance

Market Size of Industrial Cleaning

-Products Rs 90 Crores

-Solutions Rs 4500 Crores

2004 Industrial cleaning products Rs 70 Cr

Industrial water purifiers Rs 30 Cr

Consumer Vacuum cleaning Rs 120 Cr

Consumer Water Purifiers Rs 280 Cr

skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com +91 98210 46013 skpalekar@spjimr.org Visit http://marketing-eye.blogspot.com sk.palekar@spjimr.org skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com +91 98210 46013

Background

Entry Logic

Market is big Rs 4500 Crores !

With full backing of Eureka Forbes we can take 5% share = Rs 200 + Crores

Dismal Performance

Year 1 : Sale Planned Rs 10 Cr – Actual Rs 1.8 Cr. Loss : Rs 0.90 Cr.

Wiped out the capital

Year 2 : Sale Planned Rs 20 Cr – Actual Rs 4.5 Cr. Loss : Rs 1.5 Cr.

This cannot continue … need for change

SYMPTOM : Inability To Charge Required Price

Competitor’s : Rs 6000 per person per month

We : Rs 8000 per person per month and were still unprofitable !!

Both took the labor from the same contractor

skpalekar@spjimr.org Visit http://marketing-eye.blogspot.com sk.palekar@spjimr.org

Results Achieved within 2 years

Without changing product, with an increased price!

SFL became profitable

Price realization increased to Rs 9800

Margins doubled

All customer expansion came to us

skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com +91 98210 46013 sk.palekar@spjimr.org

Primary Offering

S K Palekar : Draft June 4, 2008 with inputs from Vinay

Housekeeping Service

Knowing What Matters to Customer and Why

1. Who is the customer ? – First customer : Administration / Maintenance

– End customer : Employees/ Management / Production

2. Behavior of “First Customer” was driven by – Downtime of Products

– Policy of not hiring permanent staff for low skill jobs

– More international visitors

3. Behavior of “End Customers” – Competitive pressures from increased globalization

– Buyers aware of international standards of cleanliness

4. Need for companies that provide a solution

Poor Business Development Only 1 in 12 calls successful

Aggregation Stage :

Customers in the Rs 4500 Crore

Selected Customers

to whom we can make a difference

Large uninterrupted surfaces

(Mechanization makes a difference )

(Metal scrap & grease affects production / quality)

(Training and Methods make a difference)

Where can we make a difference

Demanding and critical applications.

Making a big difference with machines + training

Demanding applications.

Making a difference with machines

Run of the mill applications.

We could not make much difference.

We will compete based on price.

Rs 75 Crores

26% pa Growth

Rs 575 Crores

20% pa Growth

Rs 3900 Crores

12% pa Growth

Market Aggregation showed “Our” Market = Only Rs 75 Crores

Began choosing customers

by “Prospecting Questionnaire”

Turnover : Medium / large industries ?

Floor plate : Large uninterrupted areas ?

Cleaning needs : mission-critical ?

Does scrap reduce productivity & material movement ?

Is management enlightened ?

Export oriented plants

GMP and ISO orientation

Global Influence : Do foreigners visit often ?

Outsourcing : Management wants to outsource ?

Alignment with the selected customers

skpalekar@spjimr.org Visit http://marketing-eye.blogspot.com sk.palekar@spjimr.org skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com +91 98210 46013

Stopped selling manpower

and began selling results

We surveyed the work and signed an SLA

took responsibility for delivering service as agreed in the SLA

And began charging on per square foot basis

Customer Satisfaction Measurement

Our shift-in charge asked the client’s shift-in-charge

In every shift

We got the type of clients we wanted

Bharat Forge

Videocon

General Motors

Infosys

Etc …

Company Entry

Industrial ( Commercial ) Rs

Crores

IPMSL ( M&M ) 1992 10 ( 90 Commercial )

Knight Frank 1995 0 ( 60 Commercial )

C B Richard Ellis 1997 0 ( 80 Commercial )

Bharat Vikas 1997 40 ( 10 Commercial )

ISS Clean Tech 1998 5 ( 25 Commercial )

Sodexo 2001 3 ( 47 Commercial )

John Lange Lassale 2001 5 ( 25 Commercial )

Borfus facilities 2005 7 ( 0 Commercial )

Everyone was not our competitor

Quickly duplicated good practices of Bharat Vikas

Primary Market : Export oriented factories

PRIMARY : 75 Crores

For Profits

Secondary Market : Malls

SECONDARY : 525 Crores

PRIMARY : 75 Crores

For Training

Began Getting The Prices We Wanted

Due to our positioning

Secondary Market = Rs 7000 per person per month

By focusing on Manpower + Machines

Primary Market = Rs 10000 per person per month

By focusing on Training + Machines

Selected Customers Used to Thinking

in terms of manpower

sk.palekar@spjimr.org

Developed a range of services

For the Selected Customers

Using machines & methods as primary

Created a work system

for selected Customers

Address Internal Customers

DEVELOPED PEOPLE

FOR DELIVERING THE SERVICES

CHALLENGE

Our machines were better and our knowledge was better

But our people came from the same contractors !

Not Janitor ! Not Bhangi !

Internal Branding is important in service business

Pride in Uniform

Introduced training, certification, link to promotions

Made Customer Satisfaction

As a major criterion

In everything we did.

Did not let people forget

Who is important,

Knowing the customer,

Talking to him,

Making it easy to complain

Easy to suggest

Mandatory to give feedback

Created Pride

Effect

1. Higher price realization > Rs 11000

2. Over 90% customer satisfaction

3. Most business expansion came to us.

4. Customers brought other customers

5. We became profitable

6. Our price realization increased

7. Our employees grew in capabilities : we could expand

Thank You

pgdm-im (b2b service case) may 2014

visit http

big rs

crores solutions rs

cr actual rs

pa growth rs

cr consumer water purifiers

cr consumer vacuum cleaning

big difference

Business

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