AILERON LIGHTING: THE SALES PROMOTION QUESTION

CASE FACTS

 Sunil would be a Management Trainee for nearly one year and as part of his training,
 In 2011, the Indian lighting market size was 9.2 billion, with a growth of 16.2 percent
from 2010.
 The number of CFL manufacturers had also increased from 12 in 2005 to 52 in 2011.
 The sales success of any company in this market was largely dependent on the support
of the retailers.
 The distributors enjoyed a credit period of 21 days from ACLG but had to give at
least a month’s credit down the line.

PROBLEMS

 CFLs, which were produced in the form of bulbs or tubes, were highly commoditized.
Most shoppers asked for a particular power (wattage) of the lamp and walked off with
whatever brand the shopkeeper offered. Very rarely did shoppers actually seek a
specific brand by name.
 They said that if the material were dumped against the retailers’ wishes, retailers
would tend to delay payments which would affect the collection cycle.
 Out of the 280 so-called “clean” outlets, ACLG was present in only 32 outlets. The
company was relying too much on those 32 outlets.
 ACLG had been struggling with its lighting business in the Budhwar Peth market.

PROBLEM STATEMENT

How can Sunil motivate the distributors through rewards? Which reward strategy should
Sunil implement in ACLG?

CRITERIA

 Commoditised product
 Sales growth
 Distributor motivation
 Expansion
ALTERNATIVES

 The Honda Activa promotion, buy 2,500 pieces of CFLs, get 1 Honda Activa Free.
The caveat here was that the free 20-W CFLs were not to be given to these retailers.
Other schemes which he floated on lesser slabs were a trip to Goa, a trip to Thailand,
a digital camera, etc
 The lucky draw, main attraction of a lucky draw was that even the smallest buyer
could win the biggest prize. Lucky draws were favoured by most retailers in
Maharashtra because they strongly believed in the element of luck.
 Consumer promotion, distributors were local residents, most of whom had many years
of experience in the business. They also had strong local contacts with nearby
theatres, eateries, doctors, salons, beauty parlours and other retail outlets. So,
whenever a consumer bought a CFL, she would receive a set of coupons which would
have discount coupons for the local movie theatre, the local beauty salon, the local
fine dining restaurant, and the local garment store, among other offers.

DECISION

Implement the Honda Activa promotion strategy. Compared to other alternatives, this
strategy focuses on performance. In the lucky draw, the chance of winning does not depend
on the performance. Therefore, motivation can vary between individuals. But for the first
alternative, the distributor should achieve specific sales to be able to qualify for the rewards.
This can result in increased motivation and the offerings are also very relevant and tempting.
Since CFL is a commoditized product and consumers do not purchase them often, local
coupons may not work in favour of the objectives. Usually, consumers specify a wattage and
buy whatever brand is available in the shop, therefore, it is important that the distributor is
motivated and tries to sell ACLG products. The Honda Activa promotion strategy is a good
fit considering all the aspects mentioned above.