Case study: “KyataPlus”

CASE STUDY: KYATAPLUS1

1st November 2014- Nyari Headquarters

It’s Monday morning and Sarah, the general manager of Nyari, meets Martin, the sales
manager. The sales forecast for Kyataplus is to grow 7% however is growing only 2%.
Sarah is worried because there are only two months left to close the fiscal year.

“So, Martin!” Sarah calls, “How are we doing? Are we making our number?”
Martin looks Sarah in the eyes, “No, Sarah. We’re not”, Martin answers.
“But we set the target based on your forecast data. We all agreeded to the plan”.
“Yes. But that was raw data. It contained anomalies”.
“How far off are we?”
“We’ll do well to grow sales by 3%.”
“I hear this every quarter,” she thinks. “And every quarter we make the number”.
Martin anticipates Sarah’s thoughts. “We’re doing everything we can. We’re offering
discounts and flexible terms. We’ve got some good display ideas. We’re trying to crack
some new accounts. We even agreed to Sunday delivery for Walfour”.
Sarah nods. “Great. And we’ve still got a few weeks.”
“But, look, Sarah”, says Martin, almost plaintively. “There’s really only one way to make
the number. And I thought we had agreed to stop loading.”
“We have agreed. And we will, when timing is right” says Sarah.
“The timing will never be right” says Martin.
“What we need right now is a lift in the share price. To get that, we need some good news.
And the best news is strong sales. Once we have good news, then we can take the hit and
clean things up” states Sarah.
As soon as Sarah leaves, Martin approves the sales team to offer a deeper discount of 8%
in KyataPlus.

15th November 2014

Martin meets all the Key Accounts managers in order to analyze all the opportunities to
increase sales and make the forecast. Walfour is the market leader with the 25% market
share.

Martin asks Anna, the key account manager of Walfour: “How much will Walfour buy if
we offer a deeper discount?”
Ana sighs “Not much more, two weeks ago we sent them 16 full tracks with 8% discount. I
think they should have at least 10 or 12 of them in their warehouse, I’m not sure.”
“If we go with deeper discounts,” says a veteran sales manager, “we’ll move more product.
Duh! But it’s not going to sell through. It’ll end up in their warehouse.”

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Copyright © 2015.
Case study written by Susana Valdés. This case has been prepared as a basis for class discussion and not as example of
adequate and correct management behavior in a specific situation. This material cannot be reproduced without prior written
authorization .

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Case study: “KyataPlus”

“Could I just ask a question? Do we still need to make a profit?” asks Fred, another
manager, with a fine tinge of sarcasm. “We used to have this thing called margin. It was
really nice. I’d like to have that again.”
Martin almost laughs. “We still make a margin at the deeper discount.”
“Even after you figure in the cost of display and sampling?” asks a younger manager, with
a frown.
“Not sure,” Martin admits. “But we do before the cost of sales.”
“Would an order for 40,000 new-account cases help?”
All eyes turn to Ballas, responsible for the wholesalers.
“Who’s the account?” Martin asks.
“Strong Brands. It’s an overseas trading company. They sell into Eastern Europe, Jiangsu
province in China, and other markets where we have no organization or trading reps.”
“What price did you quote?”
“Deepest discount: 15%. If we receive payment within five days.”
Martin doesn’t argue.
“What do we know about this company?” asks the young manager.
“We know they’re willing to sign the deal in time for it to count for this quarter.”
“Well,” says Martin. “Let’s do our due diligence on them.”
“How are they going to pay?” asks the veteran.
“Letter of credit. London bank. That I’ve already checked out.”
Martin looks at the faces of his team members. Forty thousand cases would not make the
quarter, but it certainly would help. It would buy time. Take some pressure off.

25th November 2014

Daniel, the operations manager at Frankfurt factory, calls Sarah. They have received a
40,000 cases order of the Kyataplus, but there are some issues in the production line and in
the last five days it hasn’t been working at full capacity. It’s not possible to deliver the
order on time.

1st December 2014

The production line is working again. So they will run three shifts at full capacity instead
of two shifts, in order to fill the orders and fulfill the demand.

9th December 2014

Strong Brand receives the 40,000 cases order of Kyataplus.

10th of December 2014 – Walfour Headquarters

The Walfour purchasing manager receives a call from a small wholesaler (Strong Brands)
offering three full tracks of Kyataplus with a 11% discount over tariff price.

15th of December 2014 – Walfour market

Andrea goes to the supermarket to do the shopping, is a Walfour store close to her office.
“I’m searching for a package of Kyataplus”, she says. “There are none on display.”
“I know,” replies the manager. “We have none at all.”
“When will you have them?”

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Case study: “KyataPlus”

“We’ll have plenty on Monday,” the manager says helpfully. “Special price.”
“I'm sorry but I can not wait until Monday”
“Well, we’ve got other brands to choose from. The Fortex product is a little cheaper,
anyway.”
“What about the quality?”
“It’s just as good.”
“I’ll try it,” says Andrea.