Case Study Presentation---BAGRI MARKET

Assignment Brief: Case study Presentation

Students are required to present the case study in group and identify the problem,
make a PPT of the same containing: The ppt should be uploaded in the ERP with due submission
date of 25th April 2020( with group no, name of the team members, class no Duly mention in the 1st slide
of PPT)
1) Problem of the case study 2) Data Interpretation 3) Challenges faced 4) Solutions proposed.
2) Roll out Date: April 17th Presentation: April 28th onwards through ZOOM

Learning Outcome:
The student will be able to understand the Indian luggage market and its challenges in the industry and will be
able to do:
1) Critical Analysis 2) Data inferences 3) provide Solution by enhancing his problem-solving skills 4)
presentation skills developed

Visi
Bulk Deal in Bagri Market
on 15(4)
369–377
Jaydeep Mukherjee © 2011 MDI
SAGE
Publications
Los Angeles,
London, New
Delhi,
Singapore,
Washington
DC
DOI:
10.1177/097226291101500406
http://vision.sagepub.com

Abstract
The case highlights the challenges of using the wholesalers as an element of distribution network. The case discusses the
evolution of distribution channel of luggage, primarily following selective distribution strategy. The decision-making focus
is about the nature of actions the Branch Manager could take to control the very powerful dealers located in major
wholesale market.
These wholesale dealers had high turnover from retail and wholesale business. They traditionally enjoyed high discounts
and credit which was used by them for price cutting. Their activities disturbed the rest of distribution channel of
Aristocrat as well as all other competitors and prevented growth of the rest of the distribution channel. These dealers
enjoyed enormous bargaining power and were knownto throwtantrum andholdthe branch sales to ransom bynot
giving order till the end of the month and then negotiating hard. The situation had reached such an impasse that the
Branch Manager and sales officers were rendered ineffective in managing the sales.
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Key Words
Wholesale Distributor Management, Distribution Network Correction, Bargaining Power in Distribution Channel,
Channel Man- agreement, Dealer Negotiations, Distribution Channel Expansion

In March 2008, Sumitra Dasgupta, the Branch region as well as a key luggage market in entire India.
Manager, Kolkata, of Aristocrat Lug gages, had come He realized that he had inherited the problem.
back from a meeting with the Bagri market dealers However, it was also clear that this situation was
unacceptable and he had to change the state of
to do the annual planning for the year 2008–09.1 He
affairs. He wanted to understand the situation fully
was exasperated. The dealers were not ready to
and put in place a plan before making any changes in
discuss with him about the annual plan and the
the distribution structure of his branch.
incentives. They wanted the Regional Manager and
The more he thought, the more worried he
the General Manager to be present for the deal. They
became. There were compelling reasons to maintain
had told him clearly that the offer that he could offer
status quo, but somehow, he felt that inaction would
could never be as lucrative as his bosses would. Thus,
be akin to laying down arms in front of the enemy.
there was no point in discussing such deals with him.
He also felt that a really
Kolkata is the capital city of the state of West
Bengal in India. Sumitra had just moved in to Kolkata
branch from a much smaller branch of Aristocrat
where he was not used to be treated with such scant
respect. He knew that Bagri was the most important
market in his branch, the Eastern

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competent professional like him should be able to
find out an innovative solution and started mulling
over some question which he felt would help him
arrive at a conclusion. What were the sources of
power for the luggage dealers in Bagri? What were
the reasons which helped Bagri market to dictate
terms to luggage companies? What were the options
available to him? What could be the negative
consequences of any network correction decision
which he should guard against? What type of support
would he require from his Branch, Regional Office
and Head Office?

Background to the Problem

Bagri market had been the most important luggage

market in the Eastern India for the last 35 years. Over
time, the luggage market has increased in volume as
well as distribution spread, but relative importance
of Bagri in the total luggage business had possibly
increased over time. Bagri market attracted
customers from more than 200 smaller markets
spread over the states of West Bengal, Orissa and
Jharkhand. All these markets were connected to
Kolkata with multiple and regular train services and
the business community had tradition of coming to
Kolkata for their procurement.

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370 Bulk Deal in Bagri Market

There were only four major brands in the Indian introduced the Plastic Molded (PM) luggage in India in
lug- gage industry—VIP, Aristocrat, Safari and the 1967. Before the introduction of the molded luggage, tin
new entrant Samsonite. There was intense trunks and cardboard suitcases were used. These tin trunks
competition in the industry, the sales strategies were and card- board suitcases were manufactured and
characterized by its focus on dis- counts and credit. marketed by the small-scale industries, which were
In fact, there had been a takeover of Aristocrat by VIP typically located in the major wholesale markets like Bagri
in 2007–08 and the actual integration at the field in Kolkata. The distribution of PM luggage in India was
force level was likely to happen in the near future. initially through the introduction of these lug gages in the
All the luggage companies accepted that Bagri traditional tin trunk and cardboard suitcase channels, way
market was a major hindrance in the effective back in 1972.
development of the distribution channel. Much of
the blame could be because of the lack of foresight
of the sales team which handled the initial stages of
the channel management. However, they were in a
hopeless situation as far as taking any corrective
steps were concerned, and all of their past efforts
were ineffective. All the companies were doing their
bit in wooing and pampering the handful of dealersin
Bagri market. The tradition of rivalry had been so
entrenched in the industry that the possibility of
cooperation between the different marketers and for
that matter among the different dealers could be
virtually ruled out.
The dealers of the Bagri market felt that they had
all
along supported the luggage companies. Right at the
intro- duction phase, they were the ones who helped
push sell these luggages while the consumers were
in favor of the tin trunk and other traditional options.
During the growth phase of the product, they had
supported by seeding the materials to the smaller
markets using their own network of retailers who
came to them for different products. They
acknowledged that they had taken the support of the
lug- gage companies to build their domination in
Eastern India. On their part, they had been in the
business for generations, used their presence in the
Burra Bazaar to tap into the regular base of
customers, passed on their hard earned discounts
and facilitated market penetration. Now also they
were helping the companies by managing such a
huge turnover and selling at wafer thin margins. It
was the companies which were enjoying the sales
without the effort necessary for such huge sales.

Industry Background
History of Molded Luggage: Mr Jaal Engineer
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 Initially, the sales and marketing efforts by
the marketers were focused on generating
awareness, communicating the generic
benefits of PM luggage and ensuring
availability. There was a considerable amount
of advertising to upgrade the traditional
luggage consumers to the PM luggage. Over
time, the acceptance of these products grew
and the consumers graduated from tin trunks
to molded luggage. The popularity grew
because the consumers accepted the benefit
of lightness, durability and attractive colors of
these products. Subsequently, the soft
luggages were also introduced, which were
targeted at the higher income segment but
sold through the same distribution channel.
Slowly, with the increase in the popularity of
the product, the distribution reach of PM
luggage increased to specialty luggage
showrooms and departmental stores also
(apart from the traditional luggage counters).
However, in some of the traditional markets,
large concentration of PM luggage shops
continued and they remained an important
part of the distribution channel. This trend
could be seen all over India, like Chandni
Chowk in Delhi, Parel in Mumbai, Bagri Market
in Kolkata, etc. These markets adapted to the
fall in their net margins by diversifying into
school bags, purses, raincoats and other travel
accessories, which had higher margins for
them (the gross margin is approximately 15 per
cent).
Buying Motives: Luggage was normally associated
with travel but almost 80 per cent of the suitcase
purchases (retail level) are directly or indirectly
linked to marriages. Normally it was a standard item
of gift in the marriages, and in every marriage.
Though no specific research data were collected, but
industry experts were sure that it would be safe to
assume that around half a dozen new luggages were
bought for every marriage solemnized. The luggage
sales clearly showed seasonality and it coincided
with the marriage season of the area. The only
exceptions were the big cities like Delhi, Mumbai,
Kolkata, etc., where the pronounced seasonality was
not observed.
Product: Product-wise, the luggage market could be
segmented into the organized sector and
unorganized sector (these were also called Delhi
Luggage as most of the unorganized luggage
manufacturers were located in and around Delhi).
The unorganized sector used recycled plastics, pro-
duce poor quality luggage in terms of durability,
aesthetics, etc. These manufacturers did not make
much investment in manufacturing technology or
marketing. The products sold in large numbers
because of the price. The organized sector products
were costlier and can be considered to have an
entirely different customer segment. The normal 22-
inch (IML) suitcase of organized sector is
approximately `400 per unit while that of
unorganized sector is approximately
`175. The marketing channels used by the organized sector

Vision, 15, 4 (2011): 369–377

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Jaydeep Mukherjee 371
on MRP, then Aristocrat was expected to be
and unorganized sector are entirely different and somewhere from 18–20 per cent and Safari from 23
have very different dynamics. to 25 per cent, while even a 10 per cent discount on
Luggage could also be classified broadly as Framed Samsonite was comparable.
Luggage (FL), Integrated Molded Luggage (IML) and In the last 10 years, the average price of luggage
Soft Luggage. Framed luggage had Aluminum Frames has remained in the range of `350 per unit of IML
and they required greater labour input and suitcases,
processing for production; thus, they were costlier to `850 per unit of FL and `1100 per unit of Soft
produce. Integrated Molded Luggages were Luggage. The product differentiation in the industry
frameless, required lesser processing time and labor; is very low. Products of all the brands were priced
thus, they are economical. The Soft Luggage similarly, looked very similar, matched each other on
normally required entirely different manufacturing almost all features and the brand names only
competence like stitching, which is labor intensive differentiated them.
and are thus costlier.
The companies normally had higher gross margin
in Soft Luggage, than in FL and the lowest in IML. The
logic was that the IML consumers were normally
more economy conscious; thus, the IML prices had to
be low to penetrate the market effectively. Thus, the
discounts offered on FL were generally more than
that on IML. Organized sector predominantly
targeted their soft luggage to the upper end of the
market where discounts were lower.
Brands: The brand awareness and image of VIP was
the strongest in the overall West Bengal market. In
fact ‘VIP’ was used a generic name for all PM luggage
by almost 70 per cent of the population. However,
Samsonite was popular and well known as premium,
international brand by its own target audience
(which would be possibly the top 20 per cent of the
entire population). Aristocrat was considered as
rugged brand but did not enjoy the quality and status
perceptions associated with VIP. Safari had a very
brand loyal segment of consumers but as far as
aware- ness was concerned, it was not much.
Samsonite and VIP predominantly relied on brand
pull as a marketing strategy while Aristocrat and
Safari depended on dealer push.
Price: Most of the competitive products in the market
were compared on the size and features. All the
marketers had similar Maximum Retail Price (MRP)
for comparative products, only they had different
Net Landed Cost (NLC) for the dealers. Most
consumers did not only consider the net purchase
price as an important element of buying decisions,
but also used the discounts on MRP as a decision-
making variable (more discounts the better). For
example, if VIP was selling at say 15 per cent discount
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 region and even the country.
Distribution: The distribution strategy of all the The organized sector luggage market of Kolkata
luggage manufactures was similar. They had their (and for that matter entire Eastern India) had been
own branch offices with full-fledged sales team and virtually gov- erned by the Bagri market from early
warehouse in the capital city of the state. The 1980s. Even before PM luggages were introduced,
companies supplied materials directly to some of the Bagri market had tradition- ally been the wholesale
big retail shops who were ready to do business, they market of luggages. It had custom- ers coming from
were called dealers. They also had a small number of all of Bengal (Up to Siliguri, which was 500 kilometres
distributors for upcountry markets. These dis- away) and even some from neighbouring states like
tributors supplied to smaller retail outlets, which did Orissa and Jharkhand. Seventy per cent of Bagri
not have the sales to be economically viable for the
manufac- turers to service directly. The regional Vision, 15, 4 (2011): 369–377
organizational struc- ture of Aristocrat is given in
Exhibit 1.
The direct distribution reach of the organized
sector lug- gage was essentially in the cities and the
town level in West Bengal. Selective distribution was
followed by all the companies, as there was price
comparison by the consumers and intermediary had
considerable ability to influence the brand choice of
the consumers (this influencing power was more so
for the rural consumers than for the urban ones, who
were more aware consumers).The map of West Bengal
is given in Exhibit 2.
The trade had (traditionally) been notorious for the
dis- counts and credits offered to the intermediaries.
There was a tradition of special deals which were
handled on case-to- case basis by each company and
depended on the relative bargaining power of the
parties involved at that point in time. Mostly the
dealers were also passing on these add- itional
discounts given, to their consumers (retail as well as
wholesale), thus their gross margin for the retailers
almost remained at the level of 5–7 per cent of the
sales, irrespec- tive of their NLC.

The West Bengal Luggage Market

Bagri market was located in the main wholesale
market of Kolkata, called the Burra Bazzar, which had
been the main wholesale market of Eastern India for
centuries. Everyday a large number of wholesale and
retail customers came to make their purchases and
business had always been brisk. Over time, the inflow
of retail consumers to Burra Bazar had possibly
declined due to growth of smaller markets across the
region and consumers becoming convenience
oriented rather than price. However, the wholesale
custom- ers had grown steadily. One of the key
reasons was that it was within walking distance of
Howrah Railway station, the major railway hub of the
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372 Bulk Deal in Bagri Market

Exhibit 1. Organizational Chart of AML along with Salary Grades (Annual Salary in Indian Rupees)

30 Lacs

M4 and M3 15 Lacs

M1 and M2 6–8 Lacs

Branch Regional
Manager

2.5–4 Lacs Branch

Sales Officer
Officer
Officer

Godown
Officer Officer
JO 1 and 2
Lacs
Service

Lacs Peon Packaging and Delivery Man

Source: Company archives.

Note: M5 is the topmost Management Grade and M1 is the junior-most.
SO is senior officer and O is Officer.
JO stands for Junior Officer (one is lower
than two). P stands for Peon grade.

market’s sale was wholesale, while 30 per cent of who nor- mally sold a large number of other products
their sale was to retail customers. Exhibit 3 gives (variety store items, even grocery) and luggages would
some insight on the town-wise sales of the luggage comprise only about 10–15 per cent of their turnover.
companies. Interestingly, the product mix of Bagri These counters also had significant sales of accessories like
remained unchanged for whole- sale as well as retail, ladies purse, file bag, umbrella, etc. Bagri market had
though there were significant differ- ences among been selling these
the urban and rural consumers.
The rural West Bengal luggage market was a
predom- inantly a lower end market and extremely
value conscious market. The state was ranked quite
low in the per capita income (as compared to other
states of India), but was second ranked as far as
literacy and education. The broad level of price
consciousness was high across all luggage markets in
West Bengal.
The rural markets normally did not have exclusive
luggage selling counters. Eighty per cent of sales of
PM luggages in rural areas happened from dealers
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accessories also to give a one-stop solution for
these whole- sale customers needs.
Most of the rural markets had a handful of
shops who also sold luggage as part of their
assortment. The shops typically kept one
brand of luggages or at the most two. The
stocking was quite limited and only the most
popular sizes were available ex-stock. In case
some consumers asked for some particular
model which was not available, sometimes the
shopkeepers offered to procure the same
against some token advance. The products did
Vision, 15, 4 (2011): 369–377
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not sell at very high discounts because competition
was quite high even in these small markets. Also, the
price comparison could occur post the purchase, and
customer could be lost and a chain of unfavourable
word of mouth could be trig- gered. Thus, the
shopkeepers typically did not overcharge in fear of
losing a regular customer.
Discount Structure: All organized sector companies
fol- lowed the same structure (though the
percentages varied). Always the percentages were
calculated on DP for ease of operation.
Jaydeep Mukherjee 373

Exhibit 2. District Map of West Bengal

Note: This map is not to scale.

Exhibit 3. Luggage Sales Figures of TOP Five Towns of West Bengal in 2007–08 (Fig. in ` Lacs)

Name of Dealer VIP Aristocrat Safari Samsonite Other Total

s
KOLKATA 400 14 160 10 80 790
0 0
MEDINIPUR EAST & 100 80 80 5 50 315
WEST
BARDHAMAN 150 10 40 15 100 405
0
MURSHIDABAD 60 30 15 5 40 150
JALPAIGURI 120 40 30 50 80 320
Rest of Bengal 420 16 25 45 125 865
0
Entire West Bengal 1,250 55 350 22 475 2,845
0 0
Number of active dealers/distributors in top five Towns in 2007–08 (Fig. in ` Lacs)
Name of Dealer VIP Aristocrat Safari Samsonite Other Total
s
KOLKATA 15 18 6 6 36 45
MEDINIPUR EAST & 6 5 3 1 15 30
WEST
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BARDHAMAN 9 12 2 1 20 44
MURSHIDABAD 3 5 2 1 10 21
JALPAIGURI 6 8 2 3 10 29
Rest of Bengal 51 57 25 8 54 111
Entire West Bengal 90 10 40 20 145 280
5
Source: Discussion with the sales executives and dealers.

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374 Bulk Deal in Bagri Market

1. Dealer was billed at DP (Dealer Price).
2. There was a fixed trade discount available to
all the dealers/distributors.
3. The payment discount (normal range of 1–3
per cent of DP) depending on payment date.
4. Monthly and quarterly scheme (0–5 per cent)
based on lifting (monthly/quarterly turnover).
5. Annual Special deal (0–3 per cent) based on
achieve- ment and volume of business.
negotiate from the manufactures based on their bulk lifting
and bargaining power. For their whole- sale customers,
they were selling on cost price (after deducting monthly
schemes) and the profit was earned by selling the cartons 2
and the quarterly and annual deals struck by them.
Each dealer in the Bagri market was giving rock-bottom
prices to their wholesale customers for keeping them from
going to the other counters. The dealers individually

The industry had a peculiar tradition. The discount

struc- ture of the distributors was exactly the same as
dealers, and they were not given any additional
benefits. Thus, the volume of business was the sole
criteria to get the discounts apart from the payment
discounts. The logic for not giving any distribution
allowance was manifold. The practical reason was
that, since the sales were normally in small quantities
and if any realistic distribution allowance was to be
given, it would be very high discounts, which could
be used by the distributor to undercut on prices. A lot
of small shopkeepers also preferred to come to the
distributor’s warehouse to lift the stocks and thus
distributor did not necessarily have to distribute to
get the business. The big- gest reason was that the
distributor was likely to have higher sales and hence
would be eligible for the bulk dis- counts which
would make the business proposition com- mercially
viable.

Bagri Market
Bagri market had highest sale in the entire state. The
prices offered in this market to the wholesale
customers (small shop owners from rural areas) were
much lesser than the company would provide for
similar purchases on direct billing. For rural
shopkeepers with limited sales, the NLC offered by
Bagri were cheaper even after inclusion of trans-
portation cost from Bagri to their shops.
The interesting thing about the Bagri market was
that these dealers had no distribution infrastructure;
they were pure retail shops selling in wholesale rates
to wholesale consumers. Even to their retail
consumers they offered very good prices. They were
able to offer the low prices based on their payment,
monthly and annual discounts, which they could
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were not satisfied with the low margins they
were earning but were resorting to
discounting in the fear of losing sale. However,
the dealers were bitter rivals and would not sit
down together and fix the minimum retail
prices or margins. 3
Each one was hell bent to outgun the other.
Since the NLC of the dealers directly affected
the market operating price, the only way to be
competitive in the market was to have the
lower NLC as compared to other dealers selling
the brand.
Another important component of Bagri
market sales had been imported soft luggage.
These were also sold in very competitive prices
by Bagri to retail as well as whole- sale
consumers. The average gross margin in this
business was slightly higher for Bagri Dealers
(9–10 per cent of sell- ing price) as compared
to PM luggage, as these were sold mostly in
retail. However, the organized sector soft lug-
gage showed the same pattern as organized
sector luggage.
All the luggage manufacturing companies
relied very heavily on Bagri market to meet
their sales targets in West Bengal (and even all
India), and a strong presence in this market
was virtually indispensable. The trend was that
the dealers would not give orders till the
closing day of the month and when the
Vision, 15, 4 (2011): 369–377
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pressure on the sales team was the highest, they
would negotiate. The situation had reached to such
an extreme that the dealers were not negotiating
with the sales officer or the branch manager, but
were insisting on talking to the regional managers.
They were well known in the Head offices of the
companies, to the extent that they were known by
their first name to the tele- phone operators also,
apart from the General Managers of the companies.
One of the implications for the month-end billing
was that the cash flow of the companies was also
concentrated at a particular time. The sales
infrastructure was under severe workload during the
last week of month, and idled for the rest of the
month. The more critical implication was that the NLC
of the direct dealers of the company was more than
the small counters who bought from Bagri market.
Hence, there was no motivation for these medium-
sized counters to sell the luggage, resulting in
inadequate devel- opment of luggage distribution
network. The customers were also aware that huge
discounts were available in luggage, and thus they
were always bargaining with the shopkeepers. They
were also comparing the prices of the products at
different counters before buying, and which led them
to Bagri market.
The monthly schemes offered at Bagri market had
a well defined pattern. Typically, the monthly
discounts were in the region of 4 per cent for VIP and
Samsonite, 8 per cent in the case of Aristocrat and
10–12 per cent for
Jaydeep Mukherjee 375

the Safari. A quarterly and annual component of upto
5 per cent (combined effect) was also given
additionally. The monthly and annual discounts were
very volatile and in- tensely negotiated. However the
payment norms and case discounts were not
negotiated. VIP and Safari were able to implement
their sales policies better than others in the mar- ket,
but there were a few deviations (exceptions were
granted on case-to-case basis). It was, however,
common for Aristocrat and Safari to offer the
immediate payment discount even on payment
within one month and monthly
payment norm if the payment was made within 45
days. The typical brand-wise discount structure
prevalent in the market is given in Exhibit 4, dealer-
wise sales figures are given in Exhibit 5 and the
dealer-wise dependence on lug- gage are given in
Exhibit 6.
Still Bagri market made a lot of sense for the
manufac- turers as a large sale was ensured and the
major part of the market share was determined in
this market only. The dealers were financially sound,
though there was consider- able credit, but the
credit risk was low. Plus this market

Exhibit 4. Typical Discount Structure for Bagri Dealers (Fig. in INR)

VIP Aristocrat Safari Samsonit

e
DP 1,000 1,00 1,000 1,000
0
Trade Discount 50 60 70 40
Immediate Payment Discount 20 30 40 10
Payment within 30 days 0 15 25 0
Monthly Scheme 40 80 110 40
Quarterly Dcheme 10 20 30 10
Annual Discount 15 40 60 15
Market Operating Price 920 820 740 930
Source: Discussion with dealers.

Exhibit 5. Luggage Sales Figures of the Bagri Market Dealers in 2005–06 (Fig. in ` Lacs)

Name of Dealer VIP Aristocrat Safari Samsonite Others Total

DIPAK CORPORATION 90 45 75 40 28 278
CALCUTTA BELT HOUSE 50 20 50 5 18 143
ROYAL TRADING 20 10 0 5 15 50
GARG LUGGAGE 30 8 0 0 12 50
MANJUSHREE 15 5 0 0 13 33
S.N. ENTERPRISE 15 0 15 0 15 45
Total Bagri Market 220 88 140 50 101 599
Entire West Bengal 1,100 46 300 10 400 2,360
0 0
Luggage Sales Figures of the Bagri Market Dealers in 2006–07 (Fig. in ` Lacs)
Name of Dealer VIP Aristocrat Safari Samsonite Others Total
DIPAK CORPORATION 70 41 100 33 35 279
CALCUTTA BELT HOUSE 74 13 35 12 15 149
ROYAL TRADING 30 10 0 0 17 57
GARG LUGGAGE 36 11 0 0 16 63
MANJUSHREE 12 4 0 0 7 23
S.N. ENTERPRISE 32 0 0 0 5 37
Total Bagri Market 254 79 135 45 95 608
Entire West Bengal 1,200 50 325 18 450 2,655
0 0
Luggage Sales Figures of the Bagri Market Dealers in 2007–08 (Fig. in ` Lacs)
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Name of Dealer VIP Aristocrat Safari Samsonite Others Total
DIPAK CORPORATION 74 52 118 40 40 324
CALCUTTA BELT HOUSE 79 21 33 0 25 158
ROYAL TRADING 35 10 0 0 22 67
GARG LUGGAGE 38 18 0 0 7 63
MANJUSHREE 0 7 0 0 18 25
S.N. ENTERPRISE 40 0 0 0 5 45
Total Bagri Market 266 10 151 40 117 682
8
Entire West Bengal 1,250 55 350 22 475 2,845
0 0
Source: Dealers of Bagri
Market.

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376 Bulk Deal in Bagri Market

Exhibit 6. Approximate Sales Turnover of the Bagri Market Dealers in 2007–08 in Value Terms (` Lacs)

Fram IML Soft Travel Importe Other Non

Name of Dealer e Luggag Luggage Accessories d Luggage Items Total
Luggag e Luggag
e e
DIPAK CORPORATION 227 18 39 12 28 102 426
CALCUTTA BELT HOUSE 93 30 10 8 17 54 212
ROYAL TRADING 29 10 6 5 17 33 100
GARG LUGGAGE 31 18 7 4 3 40 103
MANJUSHREE 6 1 0 1 17 15 40
S.N. ENTERPRISE 27 8 5 1 4 10 55
Total 413 85 67 31 86 254 936
Source: Dealers of Bagri .
Market

was able to influence the dealers of other markets as been successful by any of the luggage companies,
Bagri market was the trendsetter for the rest of essentially because the companies gave up the plan in the
Bengal. Any prod- uct which did well in Bagri was middle.
likely to do well in the rest of the state and region He also reminded that risk and returns went hand in
also. Thus, the vicious cycle went on and kept hand. There was a trade-off, the faster the change in distri-
spiralling up in terms of more schemes, more credit bution network, the less durable the changes were. So, he
to Bagri dealers and more pressure on sales team and recommended a stepwise plan. But he also felt that too
the companies. slow a progress would not generate the momentum
required to overcome the problem of the magnitude of
Challenge of Managing Bagri Bagri.
Market
Soumitra thought about the situation in depth and
felt that there was a very clear need to get away from
the vicious cycle and clutches of the big, bad dealers.
But the problem was, how? The accumulated market
wisdom in the trade was that: ‘Before you take any
step in Bagri market, think twice. For every possible
positive result there are at least ten equally probable
negative consequences’. The thought was haunting
Mr Soumitra. He discussed the problem with all the
stakeholders and the following is the summary of
their discussion.

The General Manager’s Perspective: Bagri market is a

problem. There are similar instances in other
markets of India, like the Parel Market in Mumbai,
Chandni Chowk in Delhi. Soumitra could expect all
support from the head office.
He suggested that the problem would most likely
require a very careful strategy formulation,
implementation plan and a conviction at the branch
level that they would win and most importantly an
inherent will to win. The past experiences had not
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 His final comments were:
The regional office and the branch had to be
working as a unit to take up the challenge. I
would be able to provide some sup- port
from the head office, given my own
constraints of meet- ing sales, collection
and profit targets on a month to month
basis. I have the confidence that the Kolkata
team was capable of coming up with a
viable strategy and implementing it in the
market.
The Regional Manager’s Perspective: Bagri
market was very important not only for
Kolkata, but also for the entire region. He
would be in a position to accommodate any
temporary drop in sales for a couple of months
by pushing other branches, but the Kolkata
branch would have to achieve the overall
annual budgets for 2008–09.
He also highlighted the initiative may
involve career risk for the employees. Risk of
such an activity was highest for the Sales
Officer, then Branch Manager and finally
Vision, 15, 4 (2011): 369–377
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Regional Manager. His long years in sales has taught
him not to depend on resources beyond what is due
to the branch in the normal course as seniors tend to
back out when you need the support the most.
He also suggested that any action on Bagri would
be sure of facing retaliation, which could (and most
probably would) lead to a full-fledged war as Bagri
had been trad- itionally very hard on retaliation. So,
the preparation should be not for a battle but a war.
Also, he substantiated the war logic by mentioning
that wars have their own logic, normal analytical
thinking is useful but not adequate in such situa-
tions. Contingency planning had to be meticulous. He
felt that this could be an opportunity for everyone
involved to go up in the organizational ladder but was
only 50 per cent sure of pulling it off. Worth a try!
The Sales Officer’s Perspective: The sales officer of
Bagri market was a dashing young man who had
worked in the extremely competitive paint market of
India and had a very successful track record. He was
very comfortable with handling big dealers as the
trade pattern in his earlier job was similar. He had
joined Aristocrat just six months back
Jaydeep Mukherjee
and felt that Bagri market was possibly best handled
by careful nurturing rather than aggressive
strategies.
He felt that the big numbers came only from big
dealers. Once the big dealers were against you, you
could expand the network but can never get the
same sales. The network expansion as strategy was a
costly strategy as it involved more hidden expenses
like sales officer time, effort as well as expenses. The
competition was the only winner, and the biggest
loser was the sales officer and Branch Manager. He
also said that if the structure of the market was such
where even a strong brand like VIP was not able to
overcome the dependence on Bagri, it might be quite
stupid on the part of Aristocrat to even think of it.
The Branch Commercial Officer’s Perspective: He had
been in accounts function of Aristocrat for the last 20
years. He could recount three past instances in which
war was declared on Bagri market by Aristocrat’s
Kolkata branch. All the three times it was
unsuccessful.
In the first instance, the attempt to be strict with
dis- counts and credit was started in peak season—
the reason was that, in peak season the consumer
demand was high, thus the negotiating power of the
company was possibly the highest. However, within
a month, the regional man- ager had to go and
appease the dealers of Bagri as the marriage season
sales were severely affected. The second time the
sales executive had resigned even before the plan
was implemented. The third instance was five years
back and was possibly the most successful one. The
head office had given tremendous support in terms
of promotional budgets and readiness to take a hit in
sales. There was a temporary fall in the scheme
payout to dealers, control on outstanding, etc., but
within three months the situation had
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377
gone back to as was in the beginning of the
initiative. So, the action was unsustainable and
ineffective.
Soumitra needed to decide about his plans with
respect to Bagri. He knew that a part of the problem
could be attributed to the history of the channel
management prac- tices followed in the company.
But he also knew that he had to do what was the
right course of action for him. His heart was in favour
of taking strong action and his mind was in favour of
restraint. He needed to consider all the possibilities
as it was not for any particular reason that even the
market leader like VIP was also trapped under similar
circumstances. He was confident of his own abili- ties
and the urge to take action was tremendous. He
decided to take a pause, analyse each element of the
problem and their possible remedies.
Notes
1. The accounting year was from April 2008 to March
2009.
2. The suitcases were supplied by manufactures to
dealers in cartons which contained four suitcases
normally. The resale value in the market was `20–
25 per carton for most of the year. The prices of
the cartons reached `50 per piece during the rainy
season of July–August. The retail customers were
not given the cartons but the wholesale
consumers needed the cartons for transportation.
3. Indian law prevents the retailers from selling at
prices more than the MRP printed; however, it
allows the retailer to sell at any price below the
MRP.
Jaydeep Mukherjee (jmukherjee@mdi.ac.in) is
currently an Associate Professor at the Management
Development Institute in Gurgaon, Haryana, India.