Page 103 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes Self Assessment
State whether the following statements are true or false:
14. The teachers say that they require good quality markers and store manager considers it.
Here teacher is the influencer.
15. The secretary to purchasing manager doesn’t allow the vendor to meet him. She is acting
as a gatekeeper.

Case Study Excel Mounts
xcel Mounts is a 30-year old company manufacturing shock absorbers catering to
the requirements of OEM in the automobile industry, and replacement markets.
EThe company has technical collaboration with a renowned German firm. The
company is known for its superior quality product.
The company had a little over 55% market share in the OEM segment and had many of the
major auto manufacturers (both four and two wheelers) as its customers. The company
had only two major competitors, Roamers and Filco besides some small and medium
sized firms.
Within the last two years the situation in the replacement market has been gradually changing
because of the price cuts introduced by Excel Mount’s competitors. Price sensitivity in the
replacement market is significant and resellers as well as final consumers have increasingly
opted for cheaper alternatives. Most companies in the industry offered margins to dealers
and retailers in excess of 30%. As a result of this range of margin, it were the resellers who
actually controlled the pricing in the replacement market. For the last six months, the
competition had become more intense not only in the replacement segment but also in OEM
segment. The price-cuts made by others and also the two major competitors, Roamers and
Filco, due to recession had made these two competitors’ an attractive option for the OEM
segment and Excel Mounts had lost some of its orders to these two competitors. Recently the
situation had acquired grave dimensions. A major OEM buyer, with whom the company
had been doing business for quite a long time and had good relations, had threatened to stop
procuring from Excel Mounts if the company did not reduce its prices. If this were to happen,
Excel Mounts would suffer a severe blow to its sales.
Excel Mounts had announced a reduction in its prices by just 1%, which was negligible
compared to reductions by competitors. The CEO, Bhagwat Shinde was against
compromising on quality by using material of lower gauge, make appropriate reductions
in price, and retain its market share. He believed the compromise on quality would
tarnish the company image, which would be detrimental to long-term business interests.
There was one option. Excel Mounts could buy raw materials from suppliers who were
ready to offer heavy discounts provided the entire material was sourced through them.
Such an action, though, would result in the closure of the ancillary units which were
totally dependent on Excel Mounts for their survival.
Question
You are the marketing director of Excel Mounts. What suggestions would you present in
the meeting? Keeping in view the threat by the large buyer, how would you negotiate the
matter?
Source: Consumer Behaviour – Text and Cases, Batra and Kazmi, Excel Books

96 LOVELY PROFESSIONAL UNIVERSITY