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Deepak's Distribution Distress*

CASELET, MARKETING MANAGEMENT
ET Cases - FLAME, 6 Pages
AUTHOR(S) : Dr. Pradeep Sadarpatil, Assistant Professor, MIT School of Business, Pune

Case Preview

Deepak's Distribution Distress

 

Sagar India Ltd.

Sagar India Limited (Sagar), an affiliate of a multinational U.S.A. based pharmaceutical company, established in the year 1983 had its operations all over India and was known for their dermatological products like creams and ointments; general products like anti-allergics, injectable antibiotics, oral steroids, and painkillers. Deepak joined Sagar in December 1992, as a medical representative for the newly opened company Headquarters (HQ) at Satara. All products at Sagar were research-based and the prices were two to three times higher than its competitors. The company’s customers were predominantly dermatologists, general practitioners (GP), physicians, otolaryngologist (ENT specialists) and pediatricians. The new HQ at Satara covered markets like local Satara, Phaltan, Lonand, Wai, Koregaon, Vaduz and Mhaswad as ex-station markets and Karad, Patan, Dhebewadi and Umbraj as outstation markets (Exhibit I). Being a research-based company, Sagar used premium pricing strategy. Markets like Satara, Karad, Phaltan, Lonand and Wai were considered to have high potential............

Exhibits

Exhibit I: Satara District Map

Exhibit II: Pune District Map

Exhibit III: Distances by Road

Exhibit IV: Territory Covered

Exhibit V: Name of Distributor and Location

Exhibit VI: Distribution Channel Members

Exhibit VII: Hierarchies in Sagar (India) Ltd. Pharmaceutical Sales Department

Teaching Note Preview

Deepak's Distribution Distress

 

Synopsis

Deepak, a young pharmacy graduate was vibrant, a dynamic sales person and a consistent performer. Deepak started his career in 1992 at newly formed Headquarter (HQ) – Satara. He excelled new product performance and received many awards at Sagar India Limited (Sagar) for the same. Over the years as sales increased, the company faced problems with distribution due to which Deepak suffered setbacks in earning incentives and was also fighting with his own competencies to come off full potential. For the first four years, he was able to perform with the existing distribution system. As the sales base had grown since 1996, he started facing infiltration problems (goods purchased by chemists from nearby territory distributors for which sales credit were not given to Deepak). Distributors from HQ Pune used to send goods to Phaltan, Lonand and Wai which were the most potential market of his territory. Thus, most of the chemists started buying stock from the Pune distributors either while transiting to Pune or by placing an order against the demands. This was hampering the sales growth for HQ Satara. Deepak managed these back-breaking situations by appointing undercutting distributors (unauthorized distributor who work at low margins by buying goods from company authorized distributors) and then authorized them as company distributors. This strategy made Deepak win the star performance award twice........................

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Abstract

Deepak, a young pharmacy graduate was vibrant, a dynamic sales person and a consistent performer. Deepak started his career in 1992 at newly formed Headquarters (HQ) – Satara. He excelled new product performance and received many awards at Sagar India Ltd for the same. Over the years as sales increased, the company faced problems with distribution due to which Deepak suffered setbacks in earning incentives and was also fighting with his own competencies to come off full potential. For the first four years, he was able to perform with the existing distribution system. As the sales base had grown since 1996, he started facing infiltration problems (goods purchased by chemists from nearby territory distributors for which sales credit were not given to Deepak). Distributors from HQ Pune used to send goods to Phaltan, Lonand and Wai which were the most potential market of his territory. Thus, most of the chemists started buying stock from the Pune distributors either while transiting to Pune or by placing an order against the demands. This was hampering the sales growth for HQ Satara. Deepak managed these back-breaking situations by appointing undercutting distributors (unauthorized distributors who work at low margins by buying goods from company authorized distributors) and then authorized them as company distributors. This strategy made Deepak win the star performance award twice.



Pedagogical Objectives

  • To learn about territory management with special focus on distribution management
  • To learn about issues in distribution system
  • To learn the procedure of appointment of distributor

Case Positioning and Setting
This case is suitable for MBA students to understand the system and issues involved in distribution.
Courses: MBA-Marketing, MBA-General Management, MBA-Pharma Business, BBA, MBS and MMM (Masters in marketing management)


* FLAME INTERNATIONAL CASE CONFERENCE 2016

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- Teaching Note (**ONLY for Academicians)
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