Stepsmart Case Study

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- AN IRATE DISTRIBUTOR

Executive Summary

The case deals with a distribution issue between the profitability of a distributor and the demand for increasing investment by the company. The problem identified is increasing the market share equivalent to the Competitors in Jalgaon Market. There exist three alternatives which are as - Mr. Kumar should leave the situation as it is, Mr. Kumar should disallow the distributorship of Sachin Agency, Mr. Kumar should convince Mr. Sachin Mandore for further investments, and continue with the agency. The decision is to go with the third alternative as it is mutually beneficial to both the parties.

Problem statement-

Increasing the market share equivalent to the Competitors in Jalgaon Market.

Evaluation of Alternatives-

- Mr. Kumar should leave the situation as it is

Pros – This would not hamper the relationship between Nutripack and Sachin Agency. As this relation has been going on for long, it would allow the relationship to stay intact.

Cons – Nutripack could not tap the potential market share, also this would lead to decline in the market share in the future.

- Mr. Kumar should disallow the distributorship of Sachin Agency –

Pros – Disallowing the current distributor would give Mr. Kumar to look out for new distributors who are willing to work extra and invest more.

Cons – Searching for new distributor would take time. Moreover, the relationship with Sachin Agency has been long so breaking it might not be a suitable idea. Sachin Agency has been the biggest distributor in the Central Maharashtra.

- Mr. Kumar should convince Mr. Sachin Mandore for further investments, and continue with the agency –

Pros – This alternative would allow Mr. Kumar to maintain relationship with the current distributor as well as increase the investment of the same.

Cons – In future, Mr. Sachin Mandore can have similar issues with Nutripack.

Decision-

The third alternative that is “Mr. Kumar should convince Mr. Sachin Mandore for further investments, and continue with the agency” is the most proffered alternative.

Reasons –

If we consider Mr. Kumar’s Perspective –

- Low Margins High Volumes

- Have a wide reach so as to cover as many villages as possible

- 2nd most populous district in Central Maharashtra

- 16% volume share but 8% contribution

- Interior markets need to be serviced well in terms of-

- Extending the credit

- Uniform discounts and schemes

- Regular market visits

Considering Mr. Sachin Mandore’s Perspective –

- Largest distributor in Central Maharashtra

- Veteran in the FMCG distribution business

- Content to meet company’s targets

- Maintains good relationship with major retailers

- Would like certain issues to be addressed before making further investments-

- Pending secondary claims

- Low distributor margin

Convincing Mr. Mandore can be done by the below table –

Monthly Expenses

Particulars

Nos

Unit Price

Total

Motor Vehicle

2

18000

36000

Salesman Salary

3

4000

12000

Salesman Bonus

3

1000

3000

Driver

2

3000

6000

Delivery boy

2

3000

6000

Godown Keeper

1

3000

3000

Helper

1

3000

3000

Operator

1

7000

7000

Computer

1

500

500

Printer

2

1000

1000

Internet

1

450

450

Telephone

1

500

500

Admin