pgdm-im (b2b service case) may 2014

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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

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[email protected] +9821046013

Vacuum

Cleaners

Water

Purifiers

1980 1985 1990 1995 2000 2005 2010

Industrial

Cleaners

Industrial

Water

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

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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

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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


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FFS

FFS

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

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2

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10

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12


Aggregation Stage :

Customers in the Rs 4500 Crore

8


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

12

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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

JCB

General Motors

Infosys

Etc …


Company Entry

Year

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

[email protected]


Developed a range of services

For the Selected Customers

Using machines & methods as primary

[email protected]


Created a work system

for selected Customers

[email protected]


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 !

[email protected]


Not Janitor ! Not Bhangi !

Internal Branding is important in service business


Pride in Uniform

Introduced training, certification, link to promotions


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

Business

visit http

big rs

crores solutions rs

cr actual rs

pa growth rs

cr consumer water purifiers

cr consumer vacuum cleaning

big difference