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............
Deepak’s Distribution Distress
Sagar’s new headquarters Satara had only two distributors M/s. Satyam (at Satara) and M/s. Sunil medicals (at Karad) clocking a revenue of INR40,000 per month. Deepak covered Satara’s local markets for fifteen days and outstation markets for ten days. M/s. Satyam, the lone distributor at local Satara city, had good market coverage. Its founder Mr. Satyam maintained a good relationship with chemists, delivered goods on time and used to keep a good inventory of the product range. He was always supportive of sales people. He had good market coverage except for Phaltan, Lonand, Wai, Panchgani and Mahabaleshwar as these territories were catered more by Pune-based distributors.............
Deepak’s Expansion Plan for HQ Satara
Later in1997 Deepak approached SDCDA to get permission to appoint fourth distributors at Phaltan. The SDCDA rejected the application giving reason that the company’s district sales do not fulfill the minimum monthly sales criteria. Deepak was upset when SDCDA rejected permission for another distributor because he was losing sales of Phaltan, Lonand and Wai to Pune-based distributors. During joint work, he requested his area manager, Mr. Kalpesh to allow him to cover Baramati from Satara (Exhibit III). Mr. Kalpesh was happy to hear this but asked Deepak to not get into additional outstation touring since Deepak was doing well in his current territory and advised him to continue the good work here. Deepak did not agree and convinced Mr. Kalpesh to get Baramati in order to not loose sales, incentives and increments by protecting Phaltan, Lonand and Wai territory.............
Assignment Questions
I. Can you justify the title of the case?
II. Do you think Deepak was an aggressive salesman? Justify.
III. .................
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