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Septa Goes Sporting The Digital Way*

CASE STUDY, CUSTOMER RELATIONSHIP MANAGEMENT
ET Cases, 15 Pages
AUTHOR(S) : Harjot Singh - Assistant Professor, LM Thapar School of Management, Thapar University

Case Preview

Septa Goes Sporting The Digital Way

 

As Sachin Berganza (Sachin), CEO of Septa Sports Ltd. (Septa), looked out of the window of his plush office, facing the morning sun over the small hills in one window in the east, and watching the blue-green waves of the Arabian Sea in the western window, situated in coastal South Goa, on the third day of September 2016, he was able to feel the gentle sea-breeze and the small trickle of rain-drops dripping all over his face. The tide in the sea was neither rising nor falling, as if reminding him about his venture which was growing at a slow pace, much unlike the speed at which he and the board members of Septa wanted it to move.

Septa, his ‘baby’, was conceived in the year 1989. Sachin had always excelled in sports and his dream was to make India one of the best sporting nations, in the world. With this end in mind, in 1992, he set up a private limited company, headquartered in Goa, which he named as Septa Sports. Septa, or the number seven, as a name was close to his heart because his date of birth was seven and he believed it had always been his lucky number. Also, like the seven colors of rainbow and the proverbial seven seas, he believed the charm of the number would take him places. He also felt his luck in number seven would rub off on the business and its customers and other stakeholders.......

Septa Sports and its Product Mix

Septa Sports was conceived as a transnational entity, specializing in sports goods, by Sachin Berganza (Sachin), a Goa-based entrepreneur in 1989. It started operations as a private limited company in 1992, with headquarters in Goa, and had a turnover of INR70 lakhs in the first year of its operations. It expanded over the years and became a national sports brand by early part of the twenty-first century........

Changes in the Business Environment

The Indian government had started taking many initiatives towards liberalization and globalization since the year 1991. Customs duties of many inputs for the business had begun to fall. Excise duty had been rationalized. Setting up and expanding business seemed to be getting simpler............

Expansion of Septa

Encouraged by the policies of the Indian government and state government of Goa (Goa had achieved state hood in May, 1987), and also those of other western, central and southern states, namely, Maharahtra, Gujarat, Madhya Pradesh, Karnataka, Tamil Nadu, Andhra Pradesh, Sachin had expanded operations of the company in the early nineties. In the later part of the decade, Septa had spread its tentacles over north and east India as well............

Competitive Scenario: Septa Versus Octagon

In the beginning of financial year 2016-17, the sports goods market space was dominated by around 10 prominent brands, both national and international, including Octagon, the potential market leader. Septa’s competitors in North India were based mainly in Jalandhar. However, most of them were small regional players.

Octagon, the multinational giant, with deep pockets, had been virtually ruling the Indian market since its entry in the year 1997. It had its head-office in Europe. It also had access to better technology and a long experience which was more than that of Septa’s by one and a half decade...............

Octagon and its Promotion-mix

Octagon was more savvy in terms of marketing itself to both fresh and existing customers. It had hired an agency in digital marketing space called Digimark. If the sports enthusiasts and its customers who had bought sports goods from Octagon in the last five years accessed sites like Facebook, linked-in and other similar sites, they would invariably find advertisements related to Octagon in their log-in. Digimark ensured that the brand was always visible online to prospective customers of sports goods...........

Septa’s Approach to Brand-Building and Promotion

Septa had not yet taken to electronic media like television because of its prohibitive airtime costs and the spillage factor. Sachin had always wanted to make his brand be seen in programs meant for children in the age-group of 7-13, teenagers and also young adults, especially the student community, on television. But his revenues and advertisement budget did not allow him to take this step. He could only manage in creating awareness about Septa brand through slots on the FM channel in local radio broadcasts..........

Touch Points and Pricing

Septa had built its business model on brick-and-mortar approach. It distributed mainly through company-owned and franchised outlets which were called as Septa Sports Showrooms or SSS. All the showrooms were characteristically illuminated by a light green falling on the sports goods, which produced a radiating effect, adding to the shine of the displayed material. The color of the light also was in consonance with the sea-green color in Septa logo, which had its link to the Goan seas which Sachin was very fond of, where the brand name Septa took birth in 1992............

Perspectives of Stakeholders

Sachin had asked Geetanjali, Marketing Head of Septa, to collect feedback from customers – both existing and prospective, franchisees, employees, agencies and other stakeholders..............

Existing Customers and Prospects

According to Parvatiyar and Sheth (2000) and Anubav (2010), maintaining existing customers is ever more important than the ability to capture new ones for any organization. Some reactions of customers, captured as the voice of the customer, have been collated in this section.

Montu, a student of a college in south Goa, praised Septa products, “The colors of Septa products are bright and cater to tastes of students...however, their designs are not as trendy as those of some competing products”..............

Channel Partners and Competitors

Septa operated through company-owned stores till it went public. It adopted the franchisee route to grow in 2006 as its brand begun to attract potential entrepreneurs.

Geetanjali met around 30% of the franchisees spread across different parts of the country. Most of them gave the feedback that Octagon not only offered a greater ROI to their franchisees, but also offered them visits to the company plants in Europe as a part of a package of incentives. Septa’s pre-sales and after-sales support were also lacking as compared to those of octagon...................

Employees and Marketing Agencies

Geetanjali also decided to meet some employees in key showrooms of Septa. Henna, one of the young employees, aged 20, had joined the organization only a year back. She recalled, “In our college, we were exposed to Octagon products because our institution bought them online. The sports in charge, Rishu, was my friend. He used to tell us that they could look at all the options online, compare them with other brands and get the selected ones delivered right in the premises of the institution. They never needed to go out to search for suitable sports goods.”.................

Concern Areas and the Predicament

According to Anton et al. (2013)3, in today’s fast moving and highly competitive market, products come and products go. For companies large and small, the most important real asset, with measurable long-term value, is loyal, one-to-one customer relationships. Every company should strive to meet a consumer’s expectations for transparency and trust (Smith, 2012)..............

The Path Ahead

Septa had many challenges ahead…that much was very clear to Sachin. Though its turnover had increased by 50% from that of last year, Octagon was moving at a scorching pace. It had doubled its turnover in the last one year, continuing on the path of a trend it had established in the past many years. It was fast catching up, and was on the way to become a market leader if it continued with its present rate of growth. There seemed to be no reason to believe otherwise............

Assignment Questions

I. Explain the terms ‘brick-and-mortar’ and ‘click-and-portal’ models.
II. What examples of the types of customer bonds, as suggested by Berry and Parasuraman (1991), can be seen in the case?
III. Do you think the lack of online presence was hampering growth of Septa Sports? Do you think a combination of brick-and-mortar and click-and-portal models would work in its favor? What digital marketing techniques do you come across in the case?
IV. ..................

Exhibits

Exhibit I: Comparison of Financial Aspects for Septa and Octagon (2014-15 and 2015-16)

Exhibit II: Comparison of CRM Investments for Septa and Octagon (in INR crore)

Exhibit III: Historical Comparison of Daily Footfall: Septa and Octagon

Exhibit IV: Comparison of Parameters of Septa and Octagon for FY 15-16

Teaching Note Preview

Septa Goes Sporting The Digital Way

 

Synopsis

The premise of this case study is to enable a discussion on the engagement in developing and sustaining relationships with retail consumers by two companies, namely, Septa Sports and Octagon. The backdrop is sports goods industry in India.

Comparison of CRM practices and marketing approaches, including digital marketing techniques, as prevalent in two organizations, forms the theoretical anchor (main concept) in the case. The central problem in the case is that of increasing the marketing effectiveness and relationship equity of Septa Sports around which most of the discussion in the class can revolve. The discussion can highlight how and what kinds of relationship bonds can be formed by companies using targeted online marketing approaches and relationship practices. Other issues in the case are related to empowerment of employees leading to on-the-spot resolution of problems. Reasons for low morale of employees and lack of an innovative culture in Septa can also be discussed as they are also linked to the central question.

The students can look at the case from a fresh perspective and generate innovative ideas. They can suggest the ways by which the brand in question can be made more vibrant and the approaches through which relationships with existing customers can be deepened.......


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Abstract

Septa Sports was conceived as a transnational entity, specializing in sports goods, by Sachin Berganza (Sachin), a Goa-based entrepreneur in 1989. It started operations as a private limited company in 1992, with headquarters in Goa. It expanded operations over the years and became a national sports brand by early part of the twenty-first century. Sachin assumed the role of CEO, after the company went public in 2006. The challenge in the last decade had been to build the brand equity. It also involved focusing on the customer relationship as well as customer equity.

Sachin had been given the mandate by shareholders to take the business to the next orbit. He had been wondering how to go about the task. Though turnover had been increasing by 10-15% each year, it was a far cry from the way he, and the board, wanted to make it grow exponentially. There were about 10 brands, national and international, in the market in sports category, including Octagon which was the market leader.

The CEO had been looking for fresh perspectives and innovative ideas. He had been offered consultancy by many start up marketing agencies who had been claiming that they could make inroads through digital initiatives and other relationship-building approaches. The company had not invested much in Customer Relationship Management (CRM) systems yet, because the scale of operations had not justified the expenditure so far.

The target market of products of Septa Sports had traditionally been the student community. The company operated through a company-owned retail format as well as franchisees. It also sold through multi-branded showrooms and smaller retail outlets to ensure wider availability.

Sachin had asked his core team to make a presentation to him based on inputs from company’s existing customers and marketing agencies.


Pedagogical Objectives

  • To analyze Customer Relationship Management (CRM) practices and marketing approaches, including digital marketing initiatives, of Septa Sports
  • To compare the practices and approaches of Septa Sports with those of Octagon
  • To suggest ways of enhancing relationship equity to Septa Sports

Case Positioning and Setting
This case study can be used for teaching students of marketing specialization in post-graduate courses in management, like MBA, Executive MBA , or Executive Development Programs. It can be used in courses on Customer Relationship Management, Digital Marketing or Retail Marketing to sensitize the participants regarding the importance of relationship marketing and digital initiatives.


* GSMC 2017, IIM Raipur

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