SIZE DOES MATTER1

In the consumables market, you need to get everything right the first time. The competition
is intense, margins are pathetic and products keep changing very fast. A single mistake from
your side, you are dead and buried without any chance of coming back” said Suresh Saxena
to Vikram Gokhale who, with a glass of chilled beer in his hand, was all ears to what his
counterpart from Mumbai was saying on a Saturday evening in a up-market pub somewhere
in north Mumbai.

Vikram Gokhale who was the Area Manager of OfficePro Private Limited (henceforth
referred as OPPL) at Pune had been recently promoted as the Regional Manager for South
India. Till now he was reporting to Suresh Saxena, the Regional Manager for Western India.
OPPL had recently entered the South Indian market and Vikram Gokhale as the Regional
Manager had the task of building everything from scratch.

OPPL was established in 1996 to market a variety of consumables required for business
houses. It began its operations in Mumbai by selling computer related products such as
floppy diskettes, printer ribbons, inkjet printer cartridges, toner cartridges, magnetic tapes
and printer paper. Later in 1998 they added other products such as ordinary & bond paper,
files , folders etc. OPPL sourced these products directly from the manufacturer or from large
distributors.

By 2003, the company had a turnover of Rs.20 crores which came from Maharashtra ,
Gujarat , Madhya Pradesh & Goa. The company had Offices in three locations - Mumbai
headed by Suresh Saxena who was the Regional Manager , Pune and Ahmedabad headed
by Area Managers Vikram Gokhale and Paresh Shah respectively. The whole of Madhya
Pradesh was covered by sales executives out of Mumbai. OPPL was a regional company
operating only in the western part of India and 80% of its sales came from Maharashtra and
Gujarat

In December 2003, OPPL planned to expand its operations to South India. It was decided to
have an office at Bangalore as it is the IT hub of India and cover the four southern states –
Karnataka, Kerala, Tamil Nadu and Andhra Pradesh – from here. Hence in January 2004 a
1000 sq.ft office space was procured on lease in a commercial complex on the Cunningham
Road and application for state sales tax registration had been filed. These initial tasks were
carried out by the admin/legal departments of OPPL.
…2

1
Hypothetical case prepared by Gururaj Kidiyoor , Asst.Professor for classroom discussion. © 2004 T A Pai
Management Institute, Manipal
 (2)

By early February 2004, Vikram Gokhale was identified to be the head of the newly
identified Southern Region. He had done well at Pune as Area Manager and he was pretty
happy with this promotion as the regional head. However he knew that the task ahead of
him was not at all smooth sailing. He was to start operating from Bangalore office by April
2004 and before that he had to be ready with the Operating Plan for the new region
consisting of four states. One of the very important aspects of the Operating Plan was to
decide on the number of sales executives required for the new region. Vikram Gokhale had
taken over a fully set functional office as Area Manager and hence he did not have much
experience in starting a new office. He needed help and it was in this connection that he
was sitting with Suresh Saxena over a drink at a pub in Mumbai.

OPPL always sold direct to customer accounts through its own sales force. The entire
Mumbai Region had 5 sales executives. Two were based at Mumbai reporting to Suresh
Saxena. One each at Pune and Ahmedabad reported to Vikram Gokhale and Paresh Shah
respectively. The Pune sales executive covered Goa as well. The fifth sales executive based
out of Mumbai, handled Madhya Pradesh alone. He had some accounts to handle at
Mumbai as well. Vikram knew that the variables of coverage and customer behaviour would
be different in south.

Each year OPPL planned its customer account strategies based on analysis of gathered
information. An account list of existing and potential was prepared where each customer
account was categorized as class ‘A’ , ‘B’ or ‘C’ depending on the size, current potential ,
competition, future growth etc. The current potential was calculated on the basis of account
size and level of computerization. Number of calls per year for every account was also
decided in advance. This depended on the status or equity enjoyed by OPPL in an account.
Normally the sales executives stuck to the identified accounts through the year. Regional
Managers and Area Managers mainly played a supervisory and supporting role. They did not
have any accounts directly under them and hence they did not make any calls on their own.
Whenever occasion demanded they went for joint calls with sales executives to their
accounts.

“Salesman productivity is very important” said Suresh Saxena pouring his whisky on the
rocks “Unlike other IT firms which work 5 days a week, ours is a 6 day week company and it
gives one day extra for my salesmen on the field. However out of the 8 hours available in a
day 45% of the time is spent by the sales executive on travel, paper work and administrative
work. Only the balance is left for customer calls. You will face the same problem in south
also.” Vikram was aware of this. He had also guessed that a sales executive will be off work
for 4 weeks in a year on account of vacation, sick leave etc.

…3
 (3)

Vikram had done some ground work in South. He had made a list of 150 accounts for south
India and had estimated the business possible for OPPL ( see annexure 1 ). He had a rough
estimate of call durations required for each of these 150 accounts. This was based on a one
time visit to these accounts by two market research executives in four southern states.
These executives were hired in January on temporary basis to carry out a market study for
OPPL in south.

Vikram Gokhale took a huge swig of beer wondering how will he use all this data to decide
on the number of sales executives required for southern region.

Annexure 1 is given on the next page. Please note

1. ABC classification is based on order of importance with A being the most important
and C being the least important
2. Expected Sales is the account wise opportunity available in Rs.lakhs to OPPL in
southern region for 2004-2005
3. Call duration is time taken in minutes for one call at each customer account
4. Planned calls is the number of calls planned for the year at that account by a sales
executive

In the table columns are numbered. The numbers stand for –

1. Customer Category
2. Expected Sales in Rs.Lakhs
3. Call Duration in minutes
4. Planned Calls

…5
1 2 3 4 1 2 3 4 1 2 3 4
A 7.30 20 100 B 8.50 27 100 C 3.10 14 105
A 12.00 25 150 B 8.00 28 100 C 6.50 16 140
A 12.00 22 150 B 8.50 26 180 C 7.00 18 200
A 9.50 20 125 B 8.00 23 100 C 7.00 17 260
A 8.80 36 115 B 8.50 26 100 C 4.50 17 120
A 8.20 25 100 B 6.00 18 120 C 4.50 14 120
A 11.00 23 140 B 8.00 23 160 C 5.90 18 135
A 7.40 28 100 B 8.50 26 150 C 5.70 15 130
A 6.50 20 95 B 8.20 19 170 C 5.70 22 130
A 9.50 30 125 B 8.50 30 100 C 5.90 14 135
A 10.00 25 130 B 8.00 28 100 C 4.40 22 120
A 10.00 38 130 B 7.80 31 160 C 5.00 22 125
A 10.70 28 135 B 8.00 33 100 C 6.00 26 135
A 11.00 30 140 B 7.50 29 100 C 6.20 25 140
A 10.50 30 135 B 7.10 29 170 C 5.50 28 130
A 9.70 20 125 B 8.20 28 180 C 6.50 26 140
A 10.00 37 130 B 8.60 28 160 C 7.20 26 150
A 9.50 35 125 B 7.20 30 170 C 4.70 19 125
A 11.00 35 140 B 7.20 27 170 C 5.20 23 125
A 10.00 38 130 B 7.10 33 150 C 6.20 23 140
A 8.00 30 110 B 7.50 32 170 C 6.00 26 135
A 9.20 35 120 B 7.50 30 150 C 4.50 18 120
A 9.50 40 125 B 7.70 24 170 C 6.50 28 170
A 12.00 40 150 B 7.70 32 170 C 6.10 24 170
A 12.50 35 155 B 8.20 26 180 C 5.60 22 130
A 9.00 35 120 B 8.00 29 170 C 6.90 26 145
A 9.00 35 110 B 8.20 30 180 C 6.50 28 140
A 6.10 25 90 B 8.60 26 185 C 3.70 14 150
A 11.00 35 140 B 8.70 28 140 C 4.10 21 120
A 11.20 30 140 B 8.00 30 100 C 2.60 18 50
A 8.00 25 110 B 8.30 30 180 C 4.20 16 120
A 9.00 36 120 B 8.00 32 100 C 5.20 17 170
A 9.20 22 120 B 8.40 31 135 C 5.40 24 130
A 9.20 32 120 C 5.10 13 150 C 7.10 24 200
B 8.00 23 140 C 3.90 13 60 C 5.50 19 130
B 7.30 20 175 C 4.00 16 65 C 6.50 22 140
B 8.80 25 180 C 3.60 12 30 C 5.50 30 130
B 8.80 26 175 C 6.80 16 93 C 3.70 26 50
B 7.20 20 170 C 4.40 14 120 C 3.80 12 70
B 7.40 26 175 C 6.80 28 105 C 5.00 26 125
B 7.20 20 170 C 5.10 15 200 C 6.20 21 150
B 7.20 24 170 C 4.70 16 125 C 4.70 23 125
B 7.50 29 129 C 4.90 24 125 C 4.60 23 55
B 8.20 25 175 C 5.00 16 125 C 4.80 18 160
B 8.20 28 175 C 3.50 10 110 C 6.50 24 160
B 8.00 18 118 C 7.40 26 150 C 6.60 28 140
B 7.00 18 118 C 4.90 14 125 C 7.70 25 170
B 8.00 25 170 C 4.90 19 125 C 3.20 19 55
B 7.00 26 126 C 5.20 17 130 C 4.60 16 120
B 8.00 30 130 C 2.90 11 105 C 6.30 19 77