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CASE ANALYSIS

SPECTRUM BRANDS INC. – THE


SALES FORCE DILEMMA

Submitted By: GROUP 2


Avik Sen (u313008)
Biswajit Bhuyan (u313010)
Jyoti Ranjan Rout (u313018)
Paritosh Mishra (u313033)
Rasmiranjan Mallick (u313042)
Soobhraj Purohit (u313050)

QUESTION 1:- Make an assessment of the Spectrum organisation and each of the
markets it operates, what are the key elements that Mr. Falconi must be worried or
concerned about? (A tabular representation of the same would be useful, (5marks)
Ans. In 2005 Spectrum brand was created when Rayovoc Corporation acquired United
Industries Corporation, Nu-Gro corporation and Tetra Holdings .Spectrum brands is a global
consumer products company. Formerly known as Rayovac Corporation, had made a lot of
acquisitions to diversify its product and brand portfolio. The company has growing owing to
the strategic acquisitions. Its range of brands portfolio has expanded. The company now has
global presence and a wide retailer reach. But at the same time, total liabilities of the
company (from exhibit 2) had become threefold which was majorly contributed long term
debt, net current maturity and deferred income tax. Although the net sales has increased, but
the Net income has decreased that shows that the expenses has increased.

Brand Annual Competitors Channel partners Market Selling Period Factors


markets Growth Share by Affecting
Competitio the
rs segment
Battery 1-2% Duracell (P&G) & Wholesalers, 80% Months Brand
market Energizer (Energizer Distributors, Leading upto Recognitio
Holding INC) Professional Christmas & n,
& OEMs, following Relationsh
Retailers (mass Chirstmas ip with
merchandisers, sales : Upto Channel
home and garden 70% partners
centres, niche
electronic stores)
Shaving 3 – 4% Norelco (Koninklijke Traditional Retail Gift giving Quality,
& Philips Electronics) , channels (Mass seasons (like price &
Groomi Braun & Remington Merchandiser, father’s day Brand
ng (P&G) Speciality mother’s day, Awareness
products Retailers) Christmas )
market

Lawn & 4-5% Scotts (market Mass 50 – 60 % Demand peaks Dependen


Garden leader) S.C. Jonson Merchandisers,Ho during first 6 ce on
market & Son Inc., CGPC me Centers, months of the weather,
(united was independent year starting to drive
acquired) Nurseries & from march, sales
hardware Stores seasonal

Case 1- Spectrum Brands INC. - The Sales Force Dilemma 2|Page


Specialit 6-8% CGPC (market Pet Supply Store, Highly Sales is stable Growth in
y pet leader) , Hartz National fragmented throughout the sector
supply Mountain retailers : petsMat market year attributed
Market Corporation % PetCo share to
(united was increasing
acquired) levels of
pet
ownership
The Key elements Mr Falconi should be worried about is

 How to Best utilize the sales force keeping in mind the strengths of each brand
 How to leverage synergies and reduce the cost
 Make sure that the consumers receive service in the same fashion if not better
 How sales will not be affected
 To make the sales force work individually for each product line or make the sales
force work together

QUESTION 2:- What are the internal problems (employee reactions) that Mr. Falconi
and team may have to deal with? , what could be the concerns which could slow down
the process of sales force integration ( 10 marks)

Ans. The reasons that can push Mr. Bob Falconi for a sales-force integration are:
1. Synergy across the various product lines which was the motive of all acquisitions and
mergers.
2. Gain of bargaining power with retailers who enjoyed authority due to high of shelf
space and were responsible for about 60% of sales
3. Scope to reduce salaries and bonuses expenses of the sales force
4. Reduced sales cost provide a scope for retail discounts and promotional activities
5. Grooming the sales force to efficiently combat the seasonality issues

In case, Mr. Falconi goes ahead with the merger of the sales force among different product
lines, the possible reactions of the employee that can be seen and has to be dealt with can be
1. A change in the sales structure may cause potential disturbance in the current
momentum of operations
2. A merged sales force would be highly unfocused as sufficient knowledge base about
all the product line might not be possible for all.
3. It would be costly on the part of distributers to reach out to large number of small
retailers for all the product lines. Eventually it will put pressure on sales
representatives.
4. Job insecurity among employees.
5. The employees may resist the change in the organisational structure
6. Possible inertia in undergoing training about other product lines and possible loss of
productive employees particularly to competitors who employ a separate sales force
strategy. This can cost dearly as Spectrum might end up losing retailers’ base.

The possible concerns that might slow down the sales force integration can be:
1. Due to diversified product lines, identifying the best people to handle them and
providing training can be time consuming, as they most likely, would be having
expertise on only one product.

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2. Identifying resources and channels to fit into the calendar year to balance out sales
cycle to address seasonality issues.
3. Assuaging the insecurity among employees due to structural changes to hold onto its
name as preferred employer. Hence all the changes have to be gradual.
4. A plan for optimization of distribution of Nu-Gro as the product has low value by
weight ratio and time-consuming compared to other product lines. Also this line was
handled by an exclusive team. Similarly, another plan must be devised for the merged
team to handle Tetra in the highly fragmented Canadian market.
5. Formation of “platform teams” can be time consuming as well since it would done for
the first time in the organisation.

QUESTION 3: What are the major problems with external stakeholder (customers) as
the company makes this sales force transition? What could be the possible adverse
reactions? ( 10 marks)
Ans. Due to the sales force transition in Spectrum brand, there will be problems and adverse
reaction involving the customers. This is because customer loyalty will be tested since the
adaptability of loyal customers to change is very rare.
In the context of sales force options the possible adverse reactions are:
Separate sales forces:

 Provided expert sales force for the product line, it might affect the purchase, because a
customer has to deal with different sales personnel for each product under same brand
- which may discourage the buyer.
 The time taken will increase as the customer has to deal with more than one sales
personnel.
 Sales personnel handling seasonal products will face a time gap which will affect the
customer and sales person relationship and also future purchases. For example as
shaving and grooming products were purchased during gift giving seasons like
Chirstmas, father’s day, mother’s day etc., the sales person dealing with this kind of
product may lose his relationship with customer which may affect future purchase.
Merged sales force:

 Since one representative will be in charge of all product line, he may be incapable of
attaining a sufficient knowledge base about all product line. The representative may
fail to solve all the queries of customers which might affect buying decision of
customer.
 Due to unfocussed sales force, the relationship between the brand and customer might
get diluted and the gap between them increase which may lead to kill of the existing
momentum of the brands
Distributor sales force:

 The relationship of company will be indirect with retail customers and the relationship
will hugely depend on distributor. In case of any disturbance arise between the
distributor and company; the company may lose its large consumer base.
Combination of Merged sales force and distributor:

Case 1- Spectrum Brands INC. - The Sales Force Dilemma 4|Page


 This will increase the gap between sales personnel and customer. Due to seasonality
factor there will be indirect relationship with customer and the company may miss out
existing customer base.
Platform Teams:

 In this model the business manager is the key person or, interface between company
and retailers. So if he leaves the company, the company may lose out retailers those of
are dealing with the business manager. So selection of the business manager will be a
very risky decision for the company because it may back fire in a huge way by
deflecting the existing customer base to another company that he goes in future.
QUESTION 4: What should be some key questions that Mr. Falconi must ask himself to
make this process a success? ( 5 marks)
Ans. The basic questions that Mr Falconi should ask himself are:

1. Is the existing sales force structure the best way to handle the job?
2. Or should he follow competitor’s sales framework?
3. Should he have region based sales reps or product based?
i.e. should he consider having one sales representative dealing with all the
products with a particular retail chain or in an area or should he retain the old
style?
4. What should be the sales force size?
Should he cut some jobs or should he alternate people with different positions
so as to get the best without increasing the costs?
5. How he could synergize the effect of the mergers, so as to consolidate the expenses
and get more out of the sales representatives?
6. Should he go for a mix of both the strategies so as to reap the benefits of both the
systems??
7. If yes what should be the ideal way??
Like:- Should he have an area head of sales representatives who deals in all
products and under him different sales representatives working on different
product lines?
This way he won’t have to spend much on training as he will have to
train a fewer people and these people can in turn synergize the efforts
of the sales reps.
In deciding the entire structure, Mr Falconi has to consider some of the following points:
 He has limited time and resources with him to spend on the rearrangement of the
structure.
 The extended brand portfolio means that some of his sales reps will have to have
knowledge about all the products offered and this could hamper their focus on selling
the products.
 Maintaining relationships with the existing channel partners or retailers.
 Creating synergies between the different divisions without boosting costs.
 Training the sales reps on the various products could increase the costs drastically in
the short run.

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