B2B Marketing

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Session 16

Key Account Management

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Case – Ajanta Packaging: Key
Account Management
(Ivey Business School)

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 Ajanta Packaging’s Motto

• Offer quality products at a reasonable cost and

provide exceptional service, and the customers will
remain loyal.

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 Ajanta Packaging

• Started in – 1981 with initial investment of $500 & 3 employees

• Revenue in 2016 - Rs 604 million (21.3% increase from 2015)
• Employees in 2016 – More than 100
• Products manufactured - Glass bottles, vials and jars
• First company to become fully computerized
• After 2005, started offering PET bottles, crown caps and glass
bottle printing services
• Warehouses – Multiple locations
• Marketing offices – 4 in Northern India
• Payment terms with their suppliers – 30 days

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 Management

• Pushpak Agarwal – Managing Director

• Deepanker Agarwal – Director (Joined company in

2005 after completing MBA)

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 Packaging Industry

• Global market - $550bn in 2015

• Indian market - $16.5bn (projected $32bn by 2020)

• Global glass packaging - $57.22bn (2017)

• Global glass packaging - $108.3bn (By 2025; CAGR 4.5%)

• Glass packaging in Asia-Pacific region – 33.7% (2015)

• Glass packaging market share in Europe – 28.5% (2015)

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 • Cheaper transportation

Glass Bottle because of thinner glass

Packaging used

• Recyclable, non-corrosive,
non-permeability and zero
rate of chemical reaction

• Seasonal demand

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 Projected Growth for Packaging
(Between 2016-21 for Indian market)

• CAGR (India) – 9.2% (Expected to grow between 2016-21)

• Soft drinks – 3.4%
• Food industry – 1.3%
• Demand for glass packaging – 0.7%
• Demand for rigid plastic packaging – 0.6%

• Growth factors – Rapid urbanization, Surge in middle-class

customers, organized retail sector and e-commerce, lighter
packaging material with better barrier properties

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 Customers

• Pharmaceutical companies
• FMCG manufacturers
• Liquor and wine companies
• SF Foods – Biggest client (15% contribution to Ajanta’s sales)
• 10 other customers – 50% contribution
• Repeat customers – 80%
• Customer base – 1700
• Focus shifted in 2014 from big clients (400) to increasing
contribution from smaller clients
• Churn rate – 4.5% (2016)

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 • 15% contribution to Ajanta’s
sales
• SF Foods leading manufacturer
& exporter, growing @ 23%
• Purchase decision by committee
comprising of marketing, QA,
SF Foods finance & procurement
• Placed their glass bottles
(Biggest Client)
requirement – 60% to Ajanta
• Customer since – 2001 (16yrs)
• Delivery required – 45 days
• Payment terms – 60 to 90 days

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 • Food – 40%

• Pharmaceuticals – 50%

• Others – 10%
Ajanta’s Business • Backlog - Rs 90 million with
(% share in 2017)
profit margin more than 10%
and delivery by 15 December
2017

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 Challenges

• SF Foods offered a rate quotation for Rs 50 million order

and delivery by 1 December 2017 with payment in 60
days. This order will accrue less than 7% profit.

• Rising prices of raw materials

• Smaller buyers looking for plastic and tetra packaging
• Price wars in the industry
• Increased use of PET bottles

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 Questions

1. What is your understanding of glass bottle industry in India?

2. Discuss the strengths and weaknesses of Ajanta Packaging
and also assess opportunities and threats confronting the
company.
3. Conduct Porter’s 5 forces analysis to understand the
competition and the glass bottle packaging industry.
4. What strategic objectives should Ajanta packaging consider in
the present scenario?
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 Questions

5. On perusal of the case, suggest the appropriate

segmentation, targeting and positioning for Ajanta
Packaging.

6. If you were Deepanker Agarwal, how would you

overcome the dilemma of handling SF Foods? How
would you preclude such as a situation in the future?

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Is selling more and maximizing
revenue a good idea?

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Is your best customer the one who
brings in the most money?

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How do you determine customer
profitability?

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Measuring Customer Profitability

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 What would happen if some
profitable customers defected?

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 Reasons for retaining
Unprofitable Customers

 Reference customer provides access to market of

strategic importance

 Customer helps co-create some products or services

 Not able to determine unprofitable customers

 Acquisition costs of a new customer not fully

absorbed; customer likely to buy more

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 Characteristics of High- versus Low-Cost to serve
Customers
High cost to serve customers
Order custom products
Order small quantities
Unpredictable order arrivals
Customized delivery
Frequent changes in delivery
requirements
Large amount of pre-sales
support
Large amount of post-sales
support
Require company to hold
inventory
High accounts receivable
Low cost to serve customers
Order standard products
Order large quantities
Predictable order arrivals
Standard delivery
No changes in delivery
requirements
Little or no pre-sales support
Little or no post-sales support
Replenish as produced
Pay on time
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 Strategies for
maintaining
Customer Relationship

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Strategies for maintaining
Customer Relationships
• Consider CRM technologies
• Collect feedback regularly
• Improve customer experiences
• Implement target market
campaigns
• Monitor and stay connected with
customers
• Recognise customers are
companies
• Stay patient
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