Leading like a Leader Case

Study
Ramesh had joined Pidilite as a MT with Fevicol. He had just completed his final
Sales Stint at Patna and had been placed as an ASM at Kolhapur branch. Patna
was a market where Fevicol had a market share in excess of 90%. During his
stint he had observed how carpenters at Patna swore by FevicolSH and did not
even touch any other brand. The dealers however kept complaining that there
was very thin profit margin in Fevicol SH. While initially he thought that the
solution was to give more schemes, over a period Ramesh had matured to learn
that because of fast shelf movement (Velocity) of Fevicol SH, even with thin
margin dealers actually earn a healthy ROI (Return on Investment = Velocity x
Margin). Ramesh had also observed that the sales of the premium Fevicol
Variants like Fevicol Marine and rubber based premium adhesive, Fevicol Heatx
was very low at Patna. As he analysed the reason for this, he realized that
enough promotion work was not done to develop the sales of these brands.
There were simply not enough resources to connect with carpenters and
contractors so that the products benefit stories could be communicated. He had
also observed at Patna that majority of the woodworking contractors took up jobs
including labour and material. The contractor had to buy the plywood,
laminate, accessories and adhesive etc, deploy carpenters and get the job done
against a lump sum payment. Also in Patna, in more than 90% of the projects,
the design was chosen by customers from Fevicol Furniture Design books that
the contractors carried along. Only in 10% cases, there was a professional
Interior designer who created the designs of homes, that too only with affluent
customers.
As Ramesh started taking over the Kolhapur Branch area, he found it a
completely different market. The Fevicol Market Share here was less than 60%.
Rest of the market is dominated by a local company Sabcol (MS - ~30%) (Sab
ka col Sabcol) and other international brands who were trying to enter the
market like Faraldite and 5M had a combined market share of 10%.As he
analysed the reason for why the competition brand was successful, he realized
that the carpenters here were lured by Sabcolvia cash incentives in the form of
tokens inside containers e.g. As much as Rs 1000/- for carpenters inside 50kg
drum and also a Silver Coin worth Rs 500 for the Contractor. It also offereda hefty
rebateof uptoRs 1500 per drum to a few influential dealers. Compare this with a
margin of Rs 300/- to Rs 500/- on Fevicol SH 50kg. Fevicolofcourse also had a
relationship initiatives with the Contractors, where they formed Fevicol
Champions Club (FCC) and a loyalty rewards programme, which gave points on
every container. These points needed to be scanned and redeemed at the branch
office, against a variety of gifts. The perceived value of the points on a 50kg
drum was Rs 100/- only. The loyalty program is a long term initiative where the
contractors need to accumulate points and then redeem gifts while the tokens
offered by competition brands offer instant cash redemption.Fevicol also held

social programmes e.gVishwakarmapooja

contractors, through its FCC clubs.

and

training

programmes

for

Sabcolobviously was spending a lot of money, and it was funding this, by selling
their products at a price which is Rs 20 / Kg premium to Fevicol SH. Obviously
while their quality was acceptable on basic task of sticking wood to laminate, it
was significantly inferior to Fevicol SH, and technical persons had shown this via
a simple test. But who cared? The dealers and carpenters / contractorswho sold
Sabcolwere all more happy making money. It was amazing that Fevicol still was
holding a majority market share here, felt Ramesh. The involvement of Interior
decorators is also fairy high at Kolhapur. Approximately 60% projects involved
Interior Designers, however none of them really cared to prescribe any specific
adhesive. Contractors here undertook projects on the basis of labour as a % of
material contracts only. i.e. The cost of plywood, laminate, accessories and
adhesive etc. are borne by the home owner while they charged ~40% of the
material cost towards the cost of labour for executing the project. However, the
materials purchased by home owners are as prescribed by the contractors, and
while the home owners were aware that contractors prescribed expensive
materials, they felt that it is better to incentivise contractors to use good quality
material than to have him cut corners to save cost.
Hence Rameshs team had also found it easier to sell some of the upgraded
variants like Fevicol Marine and FevicolHiper. FevicolHeatx, which was based on a
premium rubber based technology was also doing well at Kolhapur, and there
was no equivalent product in the market. However the application techniques are
different and many carpenters dont really know how to apply it. Because of that
the carpenters often face complains related to de-bonding and bubbles. But
wherever the carpenters were trained by Fevicol Promotion team, the contractors
bought into the idea. The company had in fact put in a team of 4 promoters for
FevicolHeatX and FevicolHiper, and the feedback from them was that the trained
contractors were finding the product beneficial, as it sticks laminates in 30
minutes as compared to 8 hrs that any of the white adhesive takes.
Ramesh was now given a project charter to increase Fevicol Market share by
10%, within a year. He had to present the Strategy for the same to the Managing
Director in another 3 days. The MD had personally called him to impress the
importance of the project. If his strategies worked, these would then be
employed in similar other affected markets. These were the kind of challenges
that Ramesh thrived on. He immediately got around to putting his thoughts in
order.
1. Current Sales and MS trends.
Brand

Fevicol SH
Fevicol
Marine
FevicolHipe
r

Dealer
Price/Kg

Sales 201415

MS 2014-15

Sales
2015-16

MS 201516

150
172

33.0
14.0

37%
16%

34.5
17.0

32%
16%

195

9.0

10%

13.0

12%

Sabcol
FevicolHeat
x
Other

192
350.00*

24.0
2.0

27%
2%

190
8.0
9%
Total
90
100%
All Sales numbers are Volume in Tons.HeatXfigs are in KiloLts

31.0
4.0

28%
4%

9.5
109

9%
100%

2. Discount & carpenter offer:

Brand

Trade
Rebate
(Rs/Kg)

Market
Operating
Price (Rs)

Fevicol SH
Rs 15.00
Rs 140.00
Fevicol
Rs 15.00
Rs 165.00
Marine
Fevicol Hiper
Rs 15.00
Rs 200.00
Sabcol
Rs 40.00
Rs 180.00
Others
Rs 38.00
Rs 180.00
FevicolHeatx
Rs 0.00
Rs 400.00
*1 loyalty point is approx. value Rs 2/- on the gift table.

Carpenter/Contracto
r Offer

1 Loyalty point / Kg
1 Loyalty point / Kg
3 Loyalty point / Kg
Rs 35 / Kg
Rs 20/Kg
2 points / Kg

Answer Sheet
Name:

Roll No:

Institute:

Course:

1) What are the critical factors in the Kolhapur market that should be considered
while devising a strategy for Fevicol?

2) Who do you think should be the primary TG for improving Fevicol MS and
why?
a. Contractors
b. Dealers
c. Consumers

3) What should be the Strategy for Pidilite as a company for improving its
market share and why?

4) What is the total money / resources that Ramesh should ask from the
Managing Director, and how should he justify it?