PGDM-IM (B2B Service Case) May 2014

skpalekar@hotmail.com +9821046013
skpalekar@hotmail.com +9821046013skpalekar@hotmail.com +9821046013
PGDM-IM : May 2014
Example of Services Marketing
S K Palekar
Professor – Marketing and Chairperson – Executive Education Center
S P Jain Institute of Management & Research, Mumbai
skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com+91 98210 46013

skpalekar@hotmail.com +9821046013
Vacuum
Cleaners
Water
Purifiers
1980 1985 1990 1995 2000 2005 2010
Industrial
Cleaners
Industrial
Water
Purifiers
Forbes
Facilities
Product 
Performance
Market Size of Industrial Cleaning
-Products Rs 90 Crores
-Solutions Rs 4500 Crores
2004
Industrial cleaning products Rs 70 Cr
Industrial water purifiers Rs 30 Cr
Consumer Vacuum cleaning Rs 120 Cr
Consumer Water Purifiers Rs 280 Cr

skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com+91 98210 46013skpalekar@spjimr.org Visit http://marketing-eye.blogspot.comsk.palekar@spjimr.org
Background
 Entry Logic
Market is big Rs 4500 Crores !
With full backing of Eureka Forbes we can take 5% share = Rs 200 + Crores
 Dismal Performance
Year 1 : Sale Planned Rs 10 Cr – Actual Rs 1.8 Cr. Loss : Rs 0.90 Cr.
Wiped out the capital
Year 2 : Sale Planned Rs 20 Cr – Actual Rs 4.5 Cr. Loss : Rs 1.5 Cr.
This cannot continue … need for change
 SYMPTOM : Inability To Charge Required Price
Competitor’s : Rs 6000 per person per month
We : Rs 8000 per person per month and were still unprofitable !!
Both took the labor from the same contractor

skpalekar@spjimr.org Visit http://marketing-eye.blogspot.comsk.palekar@spjimr.org
Results Achieved within 2 years
Without changing product, with an increased price!
SFL became profitable
Price realization increased to Rs 9800
Margins doubled
All customer expansion came to us

skpalekar@hotmail.com Visit http://marketing-eye.blogspot.com+91 98210 46013sk.palekar@spjimr.org
FFS
FFS
Primary Offering
S K Palekar : Draft June 4, 2008 with inputs from Vinay
Housekeeping Service

Knowing What Matters to Customer and Why
1. Who is the customer ?
– First customer : Administration / Maintenance
– End customer : Employees/ Management / Production
2. Behavior of “First Customer” was driven by
– Downtime of Products
– Policy of not hiring permanent staff for low skill jobs
– More international visitors
3. Behavior of “End Customers”
– Competitive pressures from increased globalization
– Buyers aware of international standards of cleanliness
4. Need for companies that provide a solution

Poor Business Development
Only 1 in 12 calls successful
1
2
3
4
5
6
7
8
9
10
11
12

Aggregation Stage :
Customers in the Rs 4500 Crore
8

Selected Customers
to whom we can make a difference
Large uninterrupted surfaces
(Mechanization makes a difference )
(Metal scrap & grease affects production / quality)
(Training and Methods make a difference)

Where can we make a difference
Demanding and critical applications.
Making a big difference with machines + training
Demanding applications.
Making a difference with machines
Run of the mill applications.
We could not make much difference.
We will compete based on price.
Rs 75 Crores
26% pa Growth
Rs 575 Crores
20% pa Growth
Rs 3900 Crores
12% pa Growth
Market Aggregation showed
“Our” Market = Only Rs 75 Crores

Began choosing customers
by “Prospecting Questionnaire”
Turnover : Medium / large industries ?
Floor plate : Large uninterrupted areas ?
Cleaning needs : mission-critical ?
Does scrap reduce productivity & material movement ?
Is management enlightened ?
 Export oriented plants
 GMP and ISO orientation
Global Influence : Do foreigners visit often ?
Outsourcing : Management wants to outsource ?

Alignment with the selected customers
12

Stopped selling manpower
and began selling results
We surveyed the work and signed an SLA
took responsibility for delivering service as agreed in the SLA
And began charging on per square foot basis

Customer Satisfaction Measurement
Our shift-in charge asked the client’s shift-in-charge
In every shift

We got the type of clients we wanted
Bharat Forge
Videocon
JCB
General Motors
Infosys
Etc …

Company
Entry
Year
Industrial ( Commercial ) Rs
Crores
IPMSL ( M&M ) 1992 10 ( 90 Commercial )
Knight Frank 1995 0 ( 60 Commercial )
C B Richard Ellis 1997 0 ( 80 Commercial )
Bharat Vikas 1997 40 ( 10 Commercial )
ISS Clean Tech 1998 5 ( 25 Commercial )
Sodexo 2001 3 ( 47 Commercial )
John Lange Lassale 2001 5 ( 25 Commercial )
Borfus facilities 2005 7 ( 0 Commercial )
Everyone was not our competitor
Quickly duplicated good practices of Bharat Vikas

Primary Market : Export oriented factories
PRIMARY : 75 Crores
For Profits

Secondary Market : Malls
SECONDARY : 525 Crores
PRIMARY : 75 Crores
For Training

Began Getting The Prices We Wanted
Due to our positioning
Secondary Market = Rs 7000 per person per month
By focusing on Manpower + Machines
Primary Market = Rs 10000 per person per month
By focusing on Training + Machines

Selected Customers Used to Thinking
in terms of manpower
sk.palekar@spjimr.org

Developed a range of services
For the Selected Customers
Using machines & methods as primary

Created a work system
for selected Customers

Address Internal Customers

DEVELOPED PEOPLE
FOR DELIVERING THE SERVICES
CHALLENGE
Our machines were better and our knowledge was better
But our people came from the same contractors !

Not Janitor ! Not Bhangi !
Internal Branding is important in service business

Pride in Uniform
Introduced training, certification, link to promotions

Introduced training, certification, link to promotions

Made Customer Satisfaction
As a major criterion
In everything we did.
Did not let people forget
Who is important,
Knowing the customer,
Talking to him,
Making it easy to complain
Easy to suggest
Mandatory to give feedback

Created Pride

Effect
1. Higher price realization > Rs 11000
2. Over 90% customer satisfaction
3. Most business expansion came to us.
4. Customers brought other customers
5. We became profitable
6. Our price realization increased
7. Our employees grew in capabilities : we could expand

Thank You

PGDM-IM (B2B Service Case) May 2014

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PGDM-IM (B2B Service Case) May 2014