Question 1

Continue Business: NO
1.
2.
3.

Mr. Vora is incurring a loss. Moreover the advertising expenses have contributed significantly to the losses and have not
been able to generate enough sales.
The commission of 10% paid to the agents is above the industry standard of 7.5% and the discount of 10% given to the
retailers is also above the industry standard of 7.5%
Excess capacity than what can be sold. Production/month=500; Sales/month=83

Question 2
The major problems faced by the company are as follows:

It is paying a higher commission to the agents and is still not getting the desired sales. The agents in the south, where
the market is large, are new. The company appointed other agents for the remaining states on the same terms as that
of R.C. Ramanathan. Paying a commission more than that of a competitor to an agent not exclusively in the industry
and similarly giving same commissions to a new agent.
Excess production: No knowledge of the market demand and poor forecasting. Only 16% of production capacity is sold
leading to excessive overhead costs.
Mr. Vora did not visit his selling agents but only communicated via mails. Due to this Mr. Vora could not identify the
correct seller in the area where the market was large and he could charge a premium for the product. Visiting the agents
could have given Mr. Vora a greater bargaining power as well as opened opportunities for finding new sellers and
knowing their credibility.
The competitor- Champion, was selling its product at Rs.93 while the Blossom brand was offering the product at Rs.8185.Vora & Co was finding it difficult to compete even with a lower price mainly due to a less developed distribution
network. Also the product being offered and its quality was very similar to that of the competitor. Maintaining the same
quality at a lower price was difficult.
Not serious about advertising. Started advertising because the agents asked him and stopped after spending Rs.4000.

Question 3
i.

ii.

iii.

iv.

Product and packaging: Vora can offer the same product by using lighter tins which would be priced less thus reduce
direct costs. Wooden case waterproof material could be replaced with an alternative.
In a male dominated society in 1960s Vora should reconsider his decision of printing a girl on the tin instead of a boy as
done by the competitor. He could opt for printing neither or a generic cartoon (e.gPopoye) to communicate the
unbiasedness to make both the genders his consumer base. The font of Quick cooking can be increased to make it
more visible and it can be shifted above White Oats instead of it being on the right. He can introduce flavours to
differentiate his product. Survey to position the product as a premium product as to the colors to be used.
Reduce weight of the product by 50gms and keep the price same.
Ads and promotions: Vora can take to advertising in schools which is cheaper and oats being a high nutrition food
would be endorsed by parents whose children are a part of the school. Samples (Sachets) could be distributed with
newspapers to make the people aware about the product. This would let people have a firsthand experience of the
product. To tap the segment of young adults and middle aged people the high nutrition value should be communicated.
It could be done via pamphlets with newspaper or newspaper ads which is read by the common man. The excess
cashflow in the different instances can be utilized for advertising purpose and draw salary for self.
Pricing: Mr. Vora can consider increasing prices to levels near 90 as compared to Rs.93 of its competitor if the same
quality is being offered. Alternatively, he can keep the price same if he can reduce the cost of packaging by 15-20%.
The target was middle class people, not very sensitive to price. Differentiated product is the way out for him to increase
prices. Alternatively, production capacity can be reduced to save overhead costs.
Sales and distribution: Changing the supplier in the south and going and meeting agents would help them understand
the product and the product can then be better marketed. The agents do not have special incentives to push the sales.
Stocking with agents can be done to push the products. Negotiations on commissions and stocking of product can be
done with the agents and commission slabs can be set depending on the number of units sold. Instead of having only
one agent, the company can call bids for more agents to increase competition and thus reduce amount spent on
commissions. There is a need to eliminate a level of distribution as agents are getting a net of 7.5% only.

Way for Profitability= Competitive bidding for agency, effective advertising, reduction in material costs or increase in prices.
Assumptions:
1.
2.
3.

Bad sales in southern region is assumed to be 50% of total sales since the market is larger in South India
Conservatively when capacity is reduced by 80% costs go down by 50% only.
Sales increase by approximately 10% when advertising efforts are made and grow to 55% in South
4. As a part of strategy company provided 7.5% commission and 7.5% discount on list price throughout all cases