Decision Sheet – A-One Starch Products Ltd.

ANKIT BHAGERIA (Section B)

Problem Statement:
A-One Starch Products Limited has not been able to face the varying product requirements from various market
segments for its liquid glucose product, Gluco-One. Customers have been complaining about product quality and
distribution mechanisms. The company needs to prioritize its target segments in order to provide value to the chosen
customers.

Issues:
The market for Gluco-One is divided primarily into confectionary sector which accounts for close to 90% of the demand
with the rest coming from the pharmaceutical sector. The confectionary sector can be further broken down into
organized sector which has a small number of players with high demands (100 customers with an average demand of
300 tonnes per year) as well as an unorganized sector (3000 customers with an average demand of 27 tonnes per year)
which has a split between quality conscious as well as price conscious customers. The product requirements in the
Pharma sector are more stringent in terms of product quality, packing, and delivery schedules.
In light of varying requirements and pressure on contributions as well as price, there have been slip ups in product
quality (haziness), customer communication (no communication about price rises and no enquiry about requirements)
and distribution mechanisms (delivery schedules not being adhered to and drum specifications and cleanliness being

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er as
compromised).
Options:

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a) Continue operating with the current customer list
b) Position the product as a low cost liquid glucose product

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c) Position the product as a superior quality superior price product
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Continue operating with the current customer list
The current market is divided into both price as well as quality conscious customers. A-One has been a market leader due
its superior technology and product quality. It currently holds a 12-13% market share and is the dominant player in
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Western India. Most of the customers in the confectionary as well as pharmaceutical sector are happy with the product
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quality. However, operating in a fragmented market, A-One has been experiencing problems in customer satisfactions
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due to slip-ups in sales at indirect channels, undesirable packaging and transportation services. A-One has been catering
to a large number (70%) of small customers who contribute only 26% of total sales. Also, 40% of sales are happening
through indirect channels. Serving these small customers has been affecting sales administration. Doing away with the
smaller customers and focusing on core competency of quality in product and distribution can eliminate some of the
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problems.
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Position the product as a low cost liquid glucose product

Growth in the confectionary segment is expected at 4-5%. With a 65,000 tonne demand in the unorganized
confectionary sector, Gluco-One can focus on price reduction with acceptable quality compromise. This can help serve
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these large number of price sensitive customers who have an elastic demand and will easily switch to Gluco-One if they
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perceive acceptable quality at lower price. However, this would mean compromising on A-One’s core competency of
product quality. Even within the unorganized sector, customers like ABC confectioners will always demand a minimum
product quality and be particular about delivery and communication requirements. There is an unutilized capacity of
4000-8000 tonnes with A-One which can be explored if lot of customers shift to Gluco-One after price reduction.
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Position the product as a superior quality superior price product

Quality has always been the core competency of A-One. There is a huge demand from the organized confectionary sector
for quality liquid glucose. Even though the customers are small in number, price contribution from them is much higher.
Even within the Pharma sector, quality is of utmost importance. With an expected growth of 8-9% in the next year, Gluco
One can be targeted as a superior quality product. Since these customers are not particular about price, increasing prices
to ensure better hygiene in tankers and drums, to improve distribution mechanism at indirect channels and to start
training programs to improve customer satisfaction would not lead to a drastic reduction in demand.
Recommendation:
A-One should let go of small invoice customers and focus on high contribution quality-conscious customers. The time
savings can be utilized to improve sales administration. Since there is already a brand loyalty towards A-One in a
segment which has inelastic demand, price rises can be explored to improve on delivery schedules, packing and hygiene.
This will also help regain lost customers in the Pharma sector.
https://www.coursehero.com/file/15830498/Decision-Sheet-A-One-Starch-Products-Ltd-Ankit-Bhageria-Section-B1/
It should also initiate customer satisfaction training programs for the retail agents to help them handle complaints.

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