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Business to Business Marketing

Vinay Puthur Exec PGDM

Metal Products India Limited (MPIL)


Metal Products India Limited (MPIL) established in 1987 is one of the leading manufacturers of MS (mild steel) metal sections
MS is most commonly used in construction, furniture, rolling shutters and industrial sheds The factory is located at Whitefield, on the outskirts of Bangalore Set up by parent company Madhya Bharat Metal Sections Limited (MBMS) in Bhilai

Case Overview
MPIL was setup for improving the distribution in South MPIL is losing its market share in North Karnataka Solely dependent on Bangalore Metal Trader for distribution in Karnataka

New entrants operated with the sub dealers of MPIL

Metal Industry
Complete market size of 40,000 metric tones (MT) Annual growth rate of 6 percent Major Players
Karnataka Metal Sections (KMS) Adarsh Metals (AM) Mahavir Metal Sections (MMS)

Comparison with others


On the basis of product quality On basis of pricing & discounting On the basis of distribution & availability On the basis of brand name & reputation of the company

Characteristics Of Environment
Previously MPIL was market leader in south India Environment was favorable for MPIL Business was attractive New entrants increased the competition

Distribution Channel of MPIL


MPIL has dealers at all the important locations in the South For Karnataka, has only one dealer-Bangalore Metal Traders (BMT) based at Bangalore Appointed new dealers at Vijayawada, Calicut and Erode The price to dealers is decided by MPIL Depending on the volume discount offered varied between 3 to 7 % Dealers would further mark up prices by 7% to 8% Direct dealing with OEMs and Government Customers. Adds up to 20 per cent of total sales To support the dealers, MPIL opened depots (i.e. warehouses) at Chennai, Coimbatore, Ernakulam, and Hyderabad

Market Structure
Bangalore Metal Traders (BMT) was largest dealer in South India with off take of 2000 MT per annum BMT had more than 50% of market share in Karnataka Transactional Relationship/Mutual Understanding
MPIL didnt appoint dealers at other centers in Karnataka BMT didnt dealt with other manufacturers

Market Structure - Contd


Karnataka Metal Sections (KMS) operated Bangalore market through Kavery Agency

More than 80% of market was shared by MPIL & KMS

Strategy of new entrants


AM and MMS found it difficult to compete with BMT and Kavery Agencies, which were well-established in the market and had exclusive arrangements with their principals To penetrate the market, AM and MMS adopted a different strategy of offering material direct to customers in Bangalore The new entrants succeeded in attracting the hardware dealers at locations like Mysore, Mangalore, Hubli, and Belgaum Most of the upcountry hardware dealers were earlier sub-dealers of BMT To break the stronghold of BMT and Kavery Agencies, the new entrants started offering discounts of six per cent to seven per cent to upcountry sub-dealers

Present Problems for MPIL


Loosing sub dealers in north Karnataka Loss in market share new entrants captured more than 50% of the market in Hubli and Belgaum Strategies adopted by competitors i.e. new entrants Discount rate for the sub dealers Distribution network

Recommendation
MPIL should not solely depend on BMT
MPIL should promote their product through hardware dealers to capture the market of north Karnataka Restructuring of discount in interest of sub dealers Applying condition to deal only with MPIL products Assigning of new dealer in different areas of south India

Problems With Suggested Recommendations


Might lose business with BMT

Cant offer high margin as AM and MMS


Time constraint in appointing new sub dealers

Cost involved in studying market by new sub dealers

THANK YOU

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