Page 221 - DMGT408DMGT203_Marketing Management

Marketing Management/Essentials of Marketing

Notes As scheduled, Ajay Suri arrived at the appointed time. He said he had heard about
Woodstock Acoustic Systems from a friend of a friend. He wanted to have a first-hand
experience of his stereo speakers. Arvind took him to his garage office and played couple
of Indian classical music tapes. Ajay Suri afterwards asked Arvind if he was interested in
selling these two pairs of speakers, and how much is the price for each pair. Arvind said,
“These are the latest that I have designed and are of very high-quality. I have not decided
about the price yet but might sell, but it depends on how much you are prepared to pay for
a pair.” Arvind put his hand in his trouser pocket and touched a 10-Rupee note. He was
thinking if Suri says he would buy a pair for ` 1500, he would sell. He thought, “I need
some money.” Suri was silent and thinking. Arvind was feeling nervous and stared at
something that was not there on the floor.
Suri spoke, “I will buy both the sets for ` 8000 each, cash. But there is a condition.” “And
what is that condition?” asked Arvind reflexively, not really believing his ears. His heart
seemed to be racing at 100 km per hour.
“Well, every month you will sell me five such pairs at this price for six months. You will
not sing contract with anyone else during this period in Delhi market. I might ask for
more number of pairs, but that we will see later.” “Further, I will give an advance for the
next two pairs that I will pick up in about two weeks, or may be earlier. So, keep them
ready by the end of the next week.” He paused for a moment then said, “If it suits you.” “In
fact, I will call you after about ten days to learn when should I really come to collect the
pieces.” That was the evening, three years ago.
For the first year, he sold his speakers only to Suri, who had a music equipment showroom
in South Extension. After the first two months, Arvind employed two qualified workers
and his supply of speakers to Suri’s showroom had climbed to 120 pairs per month in six
months time. He learnt that Suri was also attracting customers to his showroom from
adjoining areas of Delhi.

In two years Arvind had established his manufacturing unit in Okhla Industrial Area and
had 30 full time workers. He personally tested each pair of speakers produced and was
stickler to quality. Now Woodstock Acoustic Systems was supplying to six music
showrooms in Delhi and sold to trade customers approaching directly from other states.
So far he had not established system of distribution in any market, except for six regular
showrooms of Delhi.
Arvind had been for some time, thinking about establishing some streamlined distribution
system. He knew that most manufacturers distribute their equipment primarily through
stereo dealers. Whatever little experience he had gained, Arvind did not think much of
this, he felt that the dealers too often played hardball with producers, and forced them to
accept thin margins. In general, the dealers concentrated on a handful of well-known
manufacturers who provided mass produced models. This kept those firms that offered
high quality customised products from gaining access to the market. Perhaps most
disturbing, Arvind felt that the established dealers often sold not what was best for
customers, but whatever they had in inventory in a given period.

Arvind’s dream was to provide high-end stereo speakers directly to audio-obsessed, and
device a method of bypassing the established dealer network. It was clear that he wanted
to go directly to end customers, thereby avoiding dealer mark-ups and offer top quality
products and service at reasonable price.
Arvind was now 28 years of age and set out to turn his dream into reality. Some customers
who know about Arvind’s work and Woodstock Acoustic Systems had become enthusiastic
supporters and invested ` 4.5 million in Woodstock.
Contd...

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