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KATHMANDU UNIVERSITY SCHOOL OF MANAGEMENT

Sales Strategy Competition


Bio-Stoves and Bio pellets

Name of participants 1) Nabin Poudel Ph no: 9843231820 E: mail: 12323_nabin@kusom.edu.np 2) Shivshankar Yadav Ph no: 9843141528 E: mail: 12336_shivashankar@kusom.edu.np 3) Murary Prasad Roy Ph no: 9842378330 E: mail: 12325_murary@kusom.edu.np

Target customer profile and prospect segmentation Energy crisis is a burning issue in Nepal, especially in the LPG sector. Nepal has imported about 207038 MT of LPG by 2069/2070 according to the NOC. The imports are consumed by the general consumer for household purpose(cooking), room heating, college, hospital etc. and by the Commercial sectors like Safa tampo, Restaurants (both small and large), Bar, Hotel and Industries etc. Nepal LP Gas industry association (NLPGIA) confirms that 845070 cylinders/month are consumed in valley out of which 50% are consumed by hotels, restaurants and factories. (Sharma, 2010). So, as a Bio-stove company we are mainly targeting the small and the large scale restaurants and hotels spread around the valley. Some of them are KFC, NAGLO, GERMAN BAKERY, ANNAPURNA HOTEL, THE EVEREST HOTEL etc. in the big restaurants and hotels and places like THAKALI HOUSE, SEKWA HOUSE etc. in small restaurants. Managers were found to be responsible for the purchase decision in small scale restaurants (using 1 LPG gas per 3 days or more) while for the large scale hotel and restaurants (using one or more of LPG gas) purchase department managers were responsible for the purchase. So, we will try to convince our prospective buyers that Biostove and their pellets are of comparative price to the LPG and are readily available. It is eco-friendly and relatively easy to use. The size of energy consumers are increasing but there is a constant shortage of the LPG, so the alternative fuel industry is expected to grow by about 15% (assumed) and hence it is worthwhile in entering into the industry. Promotional activities Since the Bio stoves is highly differentiated and high involving product consumer response will go through the learn-feel and do sequence. They will actively participate in the process of information gathering and active learning. So very detailed ad with information that can be used to evaluate the brand i.e. comparative ad should be provided. The rational buyer can be provided with specific information in the form of broachers and pamphlets. The message of the print should be very clear indicating that Bios-stoves are stoves and Bio-pellets are the fuel for the Biostoves. The tag line of the print ad would be Biostoves are ecofriendly, so lets use this and save the mother earth. It would be accompanied by the message that Lets get rid of traditional fuel, and use agricultural products for fuel, Bio-pellets. Direct selling approach should be adopted for wholesalers and telephone call should be handled by expert for any inquiries. Official website of the company should provide detail information on the product and forum is to be established to spread positive word of mouth. Customer should be involved in the trial to feel the product for themselves for higher recall and retention. We will face challenge to shift the consumer attitude from using the LPG to Bio-stoves. So, great deal of elaboration, involvement and individuals need arousal level is necessary for motivation and breaking the dogmatism of traditional stoves user. If the customer is active learner we go with strong argument and logical reasoning about the benefit of bio-stove but if the customer is a passive learner we go with cues like pictures of Bio-stoves and phrases like Bio-stoves to protect environment.

Sales / Distribution Model: Sales and distribution model will determine the commercialization of Biostoves. So, there would be wholesalers but no retailers in distribution of these Biostoves. The wholesalers would sell the Biostoves to institutional buyers. All the product would contain an information brochure on how to use the product and the trained sales staff would demonstrate the process of using the Biostoves. The company will provide training to sales team every month and they will be responsible for installation of the Biostove. The sales team will give demonstration on how to handle bio-stoves and provide necessary instruction to the customers. Free home delivery service will be there and on call maintenance unit will always be ready for any customer quires and repair request. Possible types of queries and their solutions will be posted in the companys website. Briefing about the aftersales services like free services for one year and 5 years warranty are to be mentioned at the point of sales to avoid the pre-purchase dissonance. Any request to buy the product and repair will be made to the wholesaler and response should be within 3 hrs of the request made. Sales process (cycle) definition and sales funnel calculation The sales process or cycle encompasses contacting the prospective buyers and the establishment of consumers interest in the product by highlighting the benefits and importance of the Biostoves. Then demo would be shown by the trained sales person and then enquiry can be made that if the consumers are interested in the Biostoves or not. If the consumers are interested, then question would be asked whether he will like to order one and negotiate the price. If he orders then home delivery/ institutional delivery would be made. Accordingly the client would be briefed with the process and necessary guidelines of using the Biostoves. Finally the contract for the exchange of goods and services would be signed and accordingly the payment would be received. The calculation for the sales funnel is shown below in Annex 1. Customer Training and Support policies Significant amount of customer training would be required as Biostoves is a new product. The main advantages of customer training is that it reduces complaints and complaints handling resources and cost. Also the customers training will help the customers to know closely about the product. Different kinds of program are devised for aftersales and customer support activities. 1) Provide a 5 year warranty on the Bio stoves with 1 year free aftersales services and minimum charge on maintenance. 2) Provide free home delivery and installation facility. 3) Provide free training session on effective use and maintenance of bio-stoves on monthly basis to customer. 4) Loan up to 60% of purchase price at 10% interest rate. 5) Toll free number where you can make the enquiry and receive the free counselling service. 6) Exchange offer for Big with small stoves or vice versa and old with the new one.

7) Bulk purchase discount on the pellets.

References
sharma, M. m. (2010, july 7). My Republica. Retrieved from www.myrepublica.com: http://www.myrepublica.com/

Annex 1: Table for funnel calculation


For Big Stove: Target sales revenues is Rs 6855000 per month Q1 Accounts Contacted Interest Established / Initial Info Sent (90%) Onsite Product Demo (80%) Sales Cycle Proposal for purchase (76%) Account Orders (76%) New Account Units Ordered (90%) Unit Sales Existing Account Units Re-Orders (10%) Units Ordered of Big Stoves Cumulative Totals For Small Stove: Target sales revenues is Rs4336000 per month Q1 Accounts Contacted Interest Established / Initial Info Sent (80%) Onsite Product Demo (75%) Sales Cycle Proposal for purchase (75%) Account Orders (74%) New Account Units Ordered (90%) Existing Account Units Re-Orders (10%) Units Ordered of Small Stoves Cumulative Totals 45 36 27 20 15 9 6 15 Q2 60 48 36 27 20 12 8 20 Q3 90 72 54 41 30 18 12 30 Q4 105 84 63 47 35 32 4 35 Sales Cycle Totals Monthly 300 240 180 135 100 90 10 100 100 $3,902,400 $433,600 $4,336,000 $4,336,000 27 24 19 15 11 7 5 11 Q2 36 32 26 20 15 9 6 15 Q3 54 49 39 30 23 14 9 23 Q4 63 57 45 35 26 24 3 26 180 162 130 99 75 68 8 75 75 Total Units in a month $6,169,500 $685,500 $6,855,000 $6,855,000 Total Revenue Totals Monthly units in each sales cycle Total Units in a month Total Revenue

Unit sales

Target sales revenue include both fix and variable cost, where variable cost consists of total price of pallets consumed 2. In the first month each consumer purchase only one stove and use its full capacity for the month 3. Sales will increase each quarter for the month Assumptions 4. Re-order from exixting customers accounts make up 10% of sales for the month 5. Price for big stove is 50000 fixed cost plus 41400 variable cost for pallets used per month. For Small Stove fixed price is Rs. 36000 plus Rs7360 variable cost of pallets used. 6. Total target hotels (deals) are 180 for big stove and 300 for small stove.