Mr. Vora has started a company without much research. His brand of “Blossom, Quick Cooking Oats” is faring very badly in the market. Its only competition is Ganesh Mill’s Champion Oats. Both these companies started production after the exit of Quaker oats of America. However, they have not been able to capture the market as they expected. Mr. Vora approached the SSI consultants to find out the next best thing to be done. Question that needs to be asked is, what are Mr. Vora, plan? It has been identified from careful analysis of the facts presents to us that his short term plan is to make profits and stop the immediate loss of money.
We the group of LM11 have found 2 ways for Mr. Vora to make his short term and long term plans achievable. Mr. Vora has a break even point in terms of number of crates he needs to sell in order to stop losses and start making profits. This has been calculated to be 167 crates of blossoms quick cooking oats. From the demographic information available through the census bureau of India, the population of India in1961 was reported to be: 439. 2 million. Out of this population, the percentage of rural and urban split was found to be: 78.
94 million. This was approximately 17% of the total Indian population. Also, 6. 69Million people were below the poverty line in urban areas in 1961. This leaves us with a total of 72. 25Million. From the facts provided to us, it was clear that there was a very large untapped market segment. This segment can be contributed to the upper class urban population, a market segment which is beginning to feel the burden of shortage of time on their hands, and need a breakfast cereal to save cooking time and money.
This is the target audience of Blossom quick cooking oats. From the information provided, MR. Vora, has to INCREASE HIS SALES from 83 crates a month to 167 crates a month at least. This can be achieved by what is called “Spider effect”. Spread out, and like a spider, gain stability from your far spread legs. It has been given that he has sales representatives in 8 regions of the country. That means 167 cases at least in 8 regions. If we break up the number even smaller, we get 21 cases in each region.
This works out to about 756 cans in each region. This is a very reasonable number as the population of urban India was around 72. 25 million. Currently Mr. Vora’s setup is such that his subagents are the people doing the actual direct selling. This does not ensure that Mr. Vora’s interests are met properly as the subagents have nothing to loose. They get a commission of 20% on the product. As they do not have any commercial interests in the product since they stock non competitive goods, Mr.
Vora should instill marketing people directly, who will be responsible for the actual sale. As we have seen that the numbers required are NOT such large numbers given the facts, this is one option of making money. The increase in sale from 83 crates to 250 crates can be done in a matter of 5 months. Taking to account, the increase in sale, it has been increased by a mere 40% every month. Which are just 34 extra crates in every month. This works out to about 4 extra crates in every region every month. This is NOT a very large increase in terms of numbers.