SVKM’S NMIMS
School of Business Management
Program: MASTER OF BUSINESS ADMINISTRATION
Year: II, Trimester: IV
Academic Year: 2021-22
Course: Sales Management
Marks: 40
Duration: 3 hrs.
Term-End Examination (2020-2022 Batch)
Instructions: Candidates should carefully read the instructions printed on the question paper.
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This question paper has one case and three questions. Some of the questions have two
sections – (A) and (B). Please read the question paper carefully. The marks assigned to
each question are mentioned next to the question number.
The time allowed for answering this question paper is three hours.
Case : ‘Startrek Tiles’
Startrek Tiles is a leading company in the country manufacturing and marketing tiles, which are
widely used in constructing floors of flats, offices, shops, etc. These tiles are also used on portions of
walls in certain areas, such as bathrooms, balconies, and kitchens.
Startrek Tiles has a sales office in Hyderabad city, where it sells tiles through a network of dealers.
(Please note that the term ‘dealer’ in this case refers to retail outlets selling tiles).
Startrek Tiles is the leading tile company in Hyderabad, with a market share of 35%. However, in the
recent past, the company’s growth rate has severely slowed in Hyderabad city, and the company is
experiencing a steady drop in its market share.
1) Details of the product:
There are several types and variants of tiles, ranging from basic tiles to those with different finishes,
effects, and appeal. In addition to basic tiles, there are several premium and specialty products.
Leading companies sell a very wide range of tiles and constantly introduce new variants and designs.
Tiles are available in a wide range of sizes as well.
The selling price of tiles can range from Rs. 75 per sq ft to as much as Rs.500 per sq ft. for the more
premium varieties.
2) Consumers and users briefly explained:
Tiling of floors is undertaken when new premises are constructed as well as when renovation of
premises is undertaken. Flooring or tiling contractors are important intermediaries in tile-selection
and usage. They are engaged by customers to undertake flooring and tiling work, by laying the floor
with concrete and cement and fixing the tiles.
Consumers get involved in understanding the brands and the product during construction or
renovation, through the contractors and dealers. In some cases, tiling or construction contractors
themselves select and purchase the brands.
3) The characteristics of tile-dealers (i.e., the retail outlets selling tiles):
There are different types of retail outlets that sell tiles.
Specialized Tile Outlets:
The specialized tile outlets sell a full range of tiles - typically along with a range of sanitaryware.
Many of these are multi-brand outlets, while some are single brand outlets. These types of
specialized outlets account for a large part of the potential for tiles. (‘potential’ or ‘sales potential’ in
this note refers to the total sales of all brands of tiles in a shop or geography).
The larger of these retail outlets are built in the form of showrooms, with attractive displays of the
product range and varieties, along with information on these.
A certain number of these specialized tile outlets also get a sizeable proportion of their business
from the larger institutional or project customers (for e.g., from builders, new hotels, educational
institutions etc.). Servicing such outlets requires additional efforts from the TSE’s (Territory Sales
Executives).
Not all such specialized tile outlets (i.e., typically selling tiles and sanitaryware brands) are very large
– there are several that are medium-sized outlets.
In addition to the specialized tile outlets, there are general-purpose building material retail outlets
that sell tiles along with other building materials such as cement, glass, etc. While such outlets are
large in number, their contribution to the total tile sales potential is lower than that of the
specialized tile-outlets mentioned above. These outlets have differing sales potential, with some
selling a wider range of tiles, and some selling only a few, standard variants.
Startrek Tiles deals with many of these outlets, with its share of business varying from outlet to
outlet. Some of these outlets are single brand outlets, while most are multi-brand shops
Hyderabad is a growing city, with new construction activity visible in the suburbs, and several new
tile outlets regularly commencing business.
4) Startrek Tiles and its current sales operations and market position in Hyderabad city:
As mentioned, Startrek is the market leader in the city with a market share in the tiles category of
35%. The two competitors who are next-in-line have a market-share of 20% and 12% each
respectively. The rest of market includes 3-4 national companies and other regional and local
companies.
Tiles are sold directly from the company depots to dealers by the company (i.e., there are no
distributors).
The Startrek Area Sales Manager for Hyderabad manages sales through 8 retail TSE’s (Territory Sales
Executives) who are responsible for managing sales and collections through dealers in their
geography-based territories.
There are 3 Field Marketing Executives (FME’s) who are responsible for popularizing and promoting
Startrek’s brands and products among the flooring and tiling contractors. These personnel undertake
trials and demonstration of products and run loyalty programs and promotions for the contractors
assigned to them. The retail TSE’s work closely with the FME’s in managing business with their
dealers.
There is one Institutional and Project Sales Executive at Hyderabad. This executive is responsible for
getting business from large projects and institutions (for e.g., large projects of builders’ similar to
Hiranandani or Unitech, 5-star hotels etc.)
The market growth rate for tiles in Hyderabad has been around 10% per annum in the last 3 years.
However, Startrek Tiles’ growth in sales has only been 5% per annum in this period. Thus, Startrek
tiles, in spite of being a market leader, has consistently lost market share in the last three years.
Startrek offers its dealers discounts and schemes to promote sales, while these are lower than those
of competitors. The company offers higher discounts and schemes ( and hence lower prices) to some
of its larger, single-brand dealers who have higher business potential. Its discounts and schemes to
other dealers vary based on the quantity purchased by them.
The Tile business is competitive across dealers as the quantum of each order is large. Dealers (i.e.,
the retail outlets) vie with each other to get business, as contractors and customers approach
different shops looking for the best quotations and credit terms for purchase. At the same time,
these customers and contractors want reputed brands and good quality products.
Dealers of Startrek Tiles like the company’s strong brand image (top of mind recall – 80%-85%). But
they are unhappy with the company due to low and unpredictable selling margins in selling its
brands. They complain that certain dealers vary selling prices to customers virtually on a case-tocase basis to grab business. (No effort can be made to arrive at a common selling price to customers
as this could be violative of the Competition Act).
There are wholesalers in the city who re-sell tiles procured from the company to smaller dealers at
low prices, along with other products.
Startrek has been operating with flexible credit terms for its dealers, with the credit period varying
based on the potential of the dealer for growth.
Startrek Tiles spends around 70% of its scheme and promotional expense budget on dealer
discounts and schemes, 20% on programs and promotions for contractors, and 10% on visibility and
below the line brand-building. Its competitors have started popularizing and promoting their
products more and more through contractors.
Servicing of dealers is very important for retaining customers. Startrek has traditionally provided the
best service to dealers; however, the two principal competitors have now caught up.
The Area Sales Manager of Hyderabad city has had preliminary discussions with his Regional Sales
Manager and the Marketing Managers from HO, as well as meetings with his team of TSE’s (Territory
Sales Executives) and FME’s (Field Marketing Executives).
Question 1 – (14 marks)
Ref. the above case including relevant details in Point 4 above : Startrek Tiles and its current sales
operations and current market position in the city of Hyderabad.
What could be the problems with the current approach to sales of Startrek Tiles? Explain and justify
the sales strategies and approaches that Startrek Tiles should adopt in Hyderabad city to start
gaining market share and sustain these gains over time. (14 Marks)
Question 2 : (14 marks)
Ref. the above case including relevant details in Point 3 above: The characteristics of tile-dealers
(i.e., the retail outlets selling tiles):
The Area Sales Manager of Hyderabad of Startrek is in the process of re-assessing the requirement
of the number of TSE’s in his sales area. While he already has a certain no. of TSE’s working in the
area, he needs to reassess whether this no. is in line with requirements worked out from first
principles based on the number of customers in the area, and the time required to service them,
among others.
Describe the sizing model that is appropriate for the ASM to use for this purpose. Explain how this
model can be used for arriving at the required no. of TSE’s – please follow the points mentioned
below to help provide a structure to the answer:
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Explain and justify the basis on which the customers (i.e., the retail outlets) should be
categorized so that the desired time for visits can be worked out in a reasonably valid and
well-planned manner for each category.
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Explain and describe the elements of work that will need to be undertaken by the TSE’s
during their visits to dealers (i.e., the tile retailer outlets). How do some of these work
elements differ across different, important categories of customers?
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Mention the allocation of time per visit for the elements of work identified for each
customer category. Explain how this information can be used along with other information
such as the no. of customers in each category and the planned visit frequency, to work out
the no. of TSE’s required in the sales area.
(14 marks for Question 2 above)
Question 3A : (6 Marks)
Consider a person working as a TSE in Startrek Tiles. This salesperson is 27 years old, with 2 years’
experience in Startrek. With reference to the case of Startrek Tiles, and based on the model for sales
force performance, describe two each of personal factors, organizational factors and environmental
factors that can influence this salesperson’s performance. Explain how each of these identified
factors can be resolved (or leveraged/managed) by the salesperson and the ASM. (6 marks)
Question 3B : (6 Marks)
The Area Sales Manager of Hyderabad is 29 years old. He has 5 years’ experience in managing
frontline sales, and completed his post-graduation in a prominent business school before joining
Startrek Tiles. With specific reference to the Startrek case and context, explain one major case each
of possible Role Inaccuracy , Role Conflict and Role Ambiguity that the ASM may face. Explain how
the ASM can resolve each of the three cases. (6 marks)