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Marketing Mgt case study
HATV ELECTRONICS COMPANY HATV Electronics Co. is one of only ten distributors in Alaba for the major electronics producers Sony, Daewoo, and LG Electronics. HATV also distributes for a number of smaller electronics companies such as Toshiba. The company distributes these products to wholesalers and stores, and it operates a retail shop of its own in central Alaba Market. A leading electronics company offered a promotional opportunity to all its Alaba distributors in November 1999. If they sold at least N250million worth of merchandise during the month of January 2010, they would receive 3.8 percent of that turnover (i.e.)., a minimum of N9,500,000. When Mr. Emeka, the general director of HATV, received this promotional offer from the electronics company, he did some calculations and decided that he would be able to reach this sales target, even though it was 25 percent higher than his previous December sales of N200 million for the high-volume pre-Christmas season. Mr. Emeka believed that he could make that 25 percent jump in sales force. He considered several ideas before deciding on a combined approach of new advertising and providing gifts and rewards to customers, wholesalers, and salespeople. He felt that he could reach the additional sales target if he planned carefully and set incentives for his sales force and wholesalers. He wanted to raise his profile in the mind of the buying public so that they would think of HATV as the best source for their electronics needs. Many Nigerians buy televisions, CD stereos, and other machines for the Christmas holiday, and he wanted to attract more of these customers to his business. He decided on television advertising, with a total of ten commercials to be aired on the weekends when his target audience would most likely be watching television. He normally aired his commercials only a few times in the Christmas period, and he felt that the increased exposure would help boost sales. He decided to ask customers how they chose HATV and to keep track of how many mentioned the TV ads in their answers. He mentioned the electronics company that was offering the promotion prominently in his advertising, and also the fact that there would be free gifts, such as knapsacks, T-shirts, power banks, and digital clocks for all who purchased their electronics from HATV. He had received all of these gifts from electronics producers during various promotion campaigns, and he still had a large stock left to give away. He thought that these small gifts might make his customers choose to buy the promoted products from HATV rather than at any of the other shops in the Alaba electronics sales area. Mr. Emeka felt that motivating his agents and sales staff to sell was even more important than increasing his advertising and offering small gifts to his customers. If his sales staff felt the urgency to reach the sales goal and were rewarded for their efforts, he felt they could easily reach his target sales figures. He came up with a commission scheme for his wholesale agents, offering a 0.5 percent commission on turnover to all agents who exceeded an agreed figure per month. He thought he could easily pay the commission out of the 3.8 percent turnover bonus that he would get from the promoter if the sales campaign succeeded. He was correct in his estimates of what his agents would be able to sell, and most agents exceeded their sales targets and collected the 0.5 percent commission. He chose random days as “hot sales” days and set sales targets for his retail sales force; those who met the targets would receive N200,000. He used this strategy only occasionally, because he thought that his sales force could concentrate on exceptional sales only at certain times, and if he used this tactic too often they might “burn out” before the N250million target was reached at the end of January. He did, however meet with his sales staff regularly to review their targets and how they were achieving them. His strategy turned out to be successful. He exceeded the electronics company’s sales target and collected his substantial 3.8 percent bonus. He also learned a few ways to motivate his sales force to reach difficult sales targets when necessary.