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Case Study Distribution And Sales Operations Marketing Essay

Case Research Distribution And Sales Management Marketing Essay

The Bajaj Group is certainly amongst the most notable 10 business homes in India. Its footprint stretches over a variety of sectors, spanning automobiles (two-wheelers and three-wheelers), home appliances, lighting, iron and metal, insurance, travel and financing.

Bajaj Auto

The group’s flagship provider, Bajaj Auto, is rated as the world’s fourth largest two- and three- wheeler producer and the Bajaj brand is well-known across several countries in Latin America, Africa, Middle East, South and South East Asia. Today’s Chairman of the group, Rahul Bajaj, took charge of the business in 1965. Under his leadership, the turnover of the Bajaj Automobile the flagship company has gone up from Rs.72 million to Rs.46.16 billion (USD 936 million), its merchandise portfolio has expanded and the company has found a worldwide market. In this record, we will consider simply the two wheeler division of Bajaj Automobile.

Bajaj Auto – Merchandise Portfolio (Two Wheeler Segment)

Sub Brand

Products

Bajaj Avenger

Avenger 200 DTS-i

Bajaj Pulsar

Pulsar 150 DTS-i

Pulsar 180 DTS-i

Pulsar 220 DTS-i

Pulsar 135 LS

Baja Discover

Discover 135 DTS-i

Discover DTS-Si

Bajaj Platina

Platina 125 DTS-Si

Platina 100

Bajaj XCD

XCD 135 DTS-Si

Bajaj Kristal

Kristal DTS-i

Kawasaki Ninja

Ninja 250R

Bajaj Auto – Product sales and Distribution Structure (2 Wheelers)

Bajaj Vehicle has two sales and distribution channels because of its two wheeler products (Fig. 1) -

Sales through direct provider operated retailers like Bajaj Probiking and some wholly company managed dealerships existing in a few spots around the country like Pune (Business dealership in Wakdevadi)

Sales through dealer franchises

Bajaj Probiking

Bajaj has identified a segment of buyers ‘Probikers’, who are educated, appreciative of modern-day technology, they happen to be trendsetters and very choosy

about what they ride. Hence, Probikers must be resolved in a meaningful method that goes beyond the product. Bajaj Auto has setup a chain of retail stores in the united states exclusively for high-end, efficiency bikes. These stores are named ” Bajaj Probiking”. Twenty-two such stores have already been opened over the India. These stores specifically sell powerful vehicles such as Bajaj Avenger, Pulsar 220 DTS-I and the Kawasaki Ninja 250R.

Bajaj Dealer Franchises

Bajaj Auto has a network of 498 dealers and over 1,500 authorized support centers spread in the united states. Around 1,400 rural outlets have been made in towns with inhabitants of 25,000 and below. The existing dealer network is certainly servicing these outlets.

Bajaj Auto

Dealer

Authorized Service centre (ASC)

Customer

Customer

Customer

Probike

Figure 1: Distribution Channel for Bajaj Auto (2 Wheelers)

Shakthi Bajaj

Bajaj Auto has 8 dealerships in Chennai as displayed below -

Dealership

Area

Jai Automobiles

Tambaram

Jai Autos

West Mambalam

Khivraj Automobiles Ltd.

Mount Road

KLN Automobiles Pvt. Ltd.

Anna Nagar East

Malinisri Motors

New Washermanpet

Shakthi Motors

Poonamallee High Road

Sri Jai Autos Pvt. Ltd.

Adyar

Vishaka Auto

Saligramam

In this statement, we will look at the sales and distribution network of 1 of the most significant dealerships in Chennai – Shakthi Bajaj. Shakthi Bajaj offers twelve-monthly sales of around 4000 motorcycles in ’09 2009. The product revenue portfolio for Shakthi Bajaj for 2009 is as shown below -

Product

Annual sales quantity

On Road Cost (Rs)

Dealer Margin per vehicle (Rs)

Pulsar 150 DTS-i

1400

67967

2890

Pulsar 180 DTS-i

600

72133

3060

Discover DTS-Si

600

47831

2030

Discover 135 DTS-i

800

59145

2510

Platina 100

300

40682

1730

Platina 125 DTS-Si

75

46260

1970

XCD 135 DTS-Si

200

54629

2320

Kristal

25

42322

1800

Out of the 4000 units sold in 2009 2009, about 1 / 3 of the sales are from the showroom while the remaining is normally from the authorized services centers of Shakthi Bajaj.

Customer Profile

Out of 100 people who go to the store, around 60% actually end up buying bicycles at Shakthi Bajaj. 50% who visit the store are young people, 30% happen to be middle aged (30-45 years) and another 20% will be 40+ who normally shop for motorcycles for his or her sons. The customers generally come to the stores with their members of the family and it is the older members of the family who make the ultimate decision of whether to buy the motorcycles as they are the ones who usually make the payments for his or her families. The customers as well arrive to the showrooms along with a friend or a mechanic who possesses knowledge about the various motorcycles and who acts as the influencer for these consumers. Usually 70% of the customers require the finance option while the remaining employ the money and carry mode.

Shakthi Bajaj – Showroom

Shakthi Bajaj is situated on the outer elements of Chennai on Poonamallee Great Road and serves customers in the nearby parts of Egmore, Purasawakkam, Kilpauk and various other localities. The showroom is definitely 3000 sq.ft in size and comes with an adjoining workshop (6000 sq.ft) which services motorcycles. The showroom provides various departments within it such as sales, spare parts and the accounts section. In this article we will focus simply on the product sales division of Shakthi Bajaj.

The entire showroom can be blue themed good Bajaj brand symbol. There is normally one vehicle on screen from its different sub brands. The cars on display are often black in color as they are the colors which are usually preferred by nearly all customers. If the customers wish to see vehicles of additional colors they are taken to the automobile holding area which is present on the first flooring of the showroom.

Showroom Sales Team

Function

Number

Sales Executive

3

Sales Manager

1

ASC Sales Manager

1

Financiers (Bajaj Auto Financing)

3

Pre Delivery Inspectors

3

RTO Managers

3

Selling Process in Showroom

When a person enters the showroom, the showroom sales executive meets the prospective buyer, interacts with him, identifies his requirements and shows him the many models of bikes. Normally he persuades the client to have a test trip of the bikes of his interests.

After the customer decides on the motorcycle the revenue executive queries as to whether the customer will probably pay by cash or whether he’d require a financing scheme.

Cash Payment

If the customer is to make cash payment, the sales executive discusses about the pricing and if the customer requires further features just like a helmet. The prices are generally fixed unless there exists a promotional offer for that one period. If you have intense pressure on the sales executive with regards to the pricing he takes the client to the sales supervisor who is similarly firm with the client and gets him to understand on the concept of fixed prices from Bajaj. Once the customer is satisfied with the costs, he pays the cash amount to the product sales executive, gets a receipt, picks out his car or truck from the holding location on the first flooring. The vehicle is after that inspected by the pre delivery inspectors and is sent to the RTO staff to obtain it registered with the neighborhood RTO office. The automobile is then inspected

once again by the pre delivery inspectors and is then found by the client from the showroom at his time of choice.

Financing

If the client prefers a financing alternative, the product sales executive transfers him to one of the three financiers from Bajaj Automobile Financing Ltd. The representative discusses the mortgage loan details with the customers like funding period which normally differs between 12 to thirty six months and the required identification and cash flow proofs which he’d need to service the loan. When a sale is made, the invoice is offered to the Bajaj Auto Finance Ltd. hq, and the showroom gets the money within 2-3 days and nights for the sales made.

The ex showroom prices are fixed by Bajaj Auto and the on highway prices are fixed to come to be the same across all dealerships by mutual consent of the 8 dealers in Chennai. The clients spend on typically about 45 minutes in the showroom for a purchase.

Authorized Service Centers (ASC) – Sub sellers of Shakthi Bajaj

Shakthi Bajaj also markets motorcycles through its certified service centers which act as sub dealers of Shakthi Bajaj. During this article, Shakthi Bajaj has 11 ASCs under its order as shown -

ASC Name

Area

Shree Balaji Motors

Moolakadai

Shree Motors

Perambur

Kamakshi Bikes

Peravalur

Deepa Shakthi Motors

Govardanagiri

Raj Shakthi Motors

Pudupet

PV Motors

Puzhal

Sree Shakthi Motors

Avadi

ASV Motors

Madhavaram

Karan Bikes

Moolakadai

Ram Motors

Kilpauk

Annai Motors

Choolaimedu

Each ASC has 2 persons caring for the sales, the owner and a revenue executive.

Relationship between ASC and Shakthi Bajaj

These 11 ASCc donate to about two thirds of the revenue of Shakthi Bajaj. A number of the terms which exist between Shakthi Bajaj and the ASC will be as follows -

The ASC get to preserve 70% of the dealer margin on a car.

They hold vehicles only for screen at their centres in addition to a one month demand stock of cars at their premises

Their repayment schemes are completely on credit. The business regulated repayment schemes are 15 days of credit but in reality they take about thirty days of credit.

All promotions are carried out by Shakthi Bajaj and the ASCs do not make any advertising schemes on their own.

The vehicles are transported from the main dealership to the premises of the ASC using small trucks with the price borne by the ASC.

Suppliers – Bajaj Auto

Bajaj Auto’s has in all three plant life, two at Waluj and Chakan in Maharashtra and one plant at Pant Nagar in Uttranchal.

Plant

Product Manufactured

Waluj

Motorcycles and three wheelers

Chakan

Motorcycles

Pant Nagar

Motorcycles

Physical distribution to Shakthi Bajaj

Shakthi Bajaj gets the bikes from the Manufacturing vegetation in trucks. Each vehicle carries 50-70 bikes. It requires from 6 – 17 times for the vehicles to reach Shakthi Bajaj after the time of putting an order.

Promotions

Promotion schemes from Bajaj Auto are in the form of joint publicity and so are given simultaneously to all the Bajaj dealers in Chennai. It is generally in the form of full page newspaper advertisements both in English and the neighborhood Tamil newspapers. For many sales promotion schemes and melas, the sellers combine with financiers such as for example Bajaj Auto Finance for the promotional schemes and earnings sharing is done predicated on sales revenues and the quantity of business that your financier gets. This joint advertising clearly depicts one case of the incentive incompatibility between your seller and the financier as the incentive scheme for the financier is founded on the business which he gets which constrains the dealer to push for financing backed obligations to his customers.

Information Flow

The dealers are normally informed of the marketing strategies of Bajaj through meetings held at the Regional Business office along with National meetings held with the top performing dealers. The local changes in the on road rates of the motorcycles due to changes in road tax and RTO costs etc. happen to be communicated to the dealers through meetings at the Regional Office buildings. The information about the status of the dispatch of the cars from the manufacturing facility is certainly conveyed to the sellers by the Regional business office.

Relationship between Shakthi Bajaj and Bajaj Auto

The following are some of the aspects of the relationship between Shakthi Bajaj and the suppliers (Bajaj Automobile) -

There are no credit rating terms between Bajaj Vehicle and a dealer for the order of vehicles. All purchases are through cash repayments.

The on road rates are fixed by Bajaj Automobile and the dealers have no leverage in changing the prices.

Bajaj Car expects the dealers to hold about 21 days of stock in its inventory. Even so, in reality Shakthi Bajaj is pressured to hold 60 days of inventory in its inventory.

Problems

Dealer inventory

The Company regulation claims that every dealer must hold 21 days of share as his inventory. This corresponds to around 330 bikes in share for Shakthi Bajaj. On the other hand, the truth is Shakthi Bajaj is pressured to carry 60 days of share in its inventory which corresponds to around 650 vehicles. This along with the lack of credit payment schemes for sale from Bajaj Auto results in tangled up working capital excessively inventory.

Varying demand in colour

Customers have specific color preferences with dark-colored being the most desired colour. However, there exists a shortage in dark-colored motorcycles with Shakthi Bajaj despite john j legere having an excess share as the Regional Business office and Bajaj Auto make an effort to push slow moving stock to the many dealers. This is a huge problem especially during the festive season as demand is high for calorimeter lab black motorcycles while the high transit period from the manufacturing plant means lack of sale to competition.

Action Plan

While better information flow between your dealership and the Regional Business office would help to reduce the inventory to a particular extent, any strong action plan to reduce the excess inventory would need the Regional Office to abate the pushing of vehicles onto the dealers showing favourable sales to the Head Office that will not occur any time soon. Any try to bypass the Regional Workplace and interact straight with the Head office could be harmful to the dealership. Again that is an example of the main agent concern and the incentive incompatibility in a distribution program.

For the varying demand in color for Bajaj bikes specifically during festive periods, Shakthi Bajaj could adopt the practise of shopping for spare dark petrol tanks and black chassis extra parts and changing those of another colour with these dark chassis. This may be a brief term solution till a new stock of black vehicles arrives at the dealership.

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