TV Manufacturer

Case Statement:

I was having lunch with the CEO of a TV manufacturer, and he mentioned that their sales have been declining but they don’t know why. Can you help him identify a way to reverse this trend?

BCG

Profitability

Manufacturing

Hard

C: Sure. When you mention sales, I assume you’re referring to the revenue of the company. Am I right?

I: Yes.

C: Great! I would like to know a bit more about the company and the type of TVs they manufacture. For starters. Where are they based and which market are they witnessing this decline in sales in?

I: They’re based in India, and they are witnessing a decline in sales in their Indian market only.

C: This decline in sales is recent, or is it part of a wider trend?

I: It has been observed only in the last six months.

C: I see. And what about the type of TVs the client manufactures? What are their price ranges and are they sold under the clients own brand name?

I: The client sells mid-range TVs, not high end and not low end. They sell it under their own brand name. Additionally, our client’s offerings are the most advanced while also being priced competitively in the mid-range segment.

C: And also what is the state of the economy and the wider market? Should I take into consideration the Covid-19 induced economic condition? What is the state of my competitors? Are they experiencing a similar decline?

I: This is happening in the pre-Covid-19 days. The decline in sales is specific to the client’s company. In fact their market share has decreased and that of their clients has increased.

C: The decline in market share is in terms of value or volume?

I: Both.

C: Decline in revenue can be broken down into a function of price and number of units sold. As there has been a decline in market share in terms of volume, it might mean that there is decline in the number of units sold, Would that be right assumption? Other than that, have there been any changes in price of our

client’s offerings?

I: You’re right. There’s been a decline in the number of units sold. There hasn’t been any changes in prices.

C: I’d like to delve deeper into this decline in units sold by exploring the supply and demand factors. I would first like to begin by the demand side and analysing if there are changes in the buying behaviour of customers. Beginning from customer awareness, was there any change in the marketing and advertising of the client 6 months ago? Conversely, did any of our client’s competitors launch a new campaign or marketing strategy at that time?

I: No, there haven’t been any changes in the clients marketing and advertising changes, nor has there been any shift in the marketing strategies of the competition.

C: Moving on to customer consideration, since you mentioned that our client’s TV provide the most advanced technology while being competitively priced, would it be fair to assume that our client’s products offer the best value for money in the market and there is no reason for our customer’s to prefer out competitor’s products over ours?

I: That’s a fair assumption to make.

C: Then I would like to move onto the customer purchase decision. Here I would first try to consider the accessibility of the product to the customer. Which distribution channels does the client use?

I: The client sees most of its sales happening through retail channels. It has its own stores and also sells its products via general consumer electronic stores. It has an online channel as well, but for now you can consider its contribution to be negligible. Currently, the decline in sales is limited only to sales through the general consumer electronic stores.

C: In the general consumer electronic stores, there are a couple of factors I see influencing the consumer decision making process. First is the in-store

promotions, the physical positioning of products within the store, and lastly the guidance provided by salespeople for customers.

I: So it seems that our competitors have begun offering incentives to the in-store salespeople for every unit of their product sold. Now I would like to quickly offer some ways in which the client can tackle this. Our client has smaller margins and hence can offer incentives to salespeople at the same level as our competitors.

C: There are a couple of ways our client could approach this. In the short term, while they can’t offer incentives on every unit like their competitors, perhaps they could reward the top performing salespeople in a particular district or region. Additionally, they could create an advertising campaign specifically aimed at getting consumers to view our products within these general electronic stores. In the long term, the client can expand its own retail stores and reduce reliance on general consumer electronic stores.

I: I think that covers it. Thank you.

Background Information:

Trend for the decline: 6 months

Company details:
Pan-India presence

Product: Mid-range TVs; most advanced being competitively priced

Customer: Middle income customers

Competitor: Only the client has been affected

Case recommendations:

Short term: Provide incentives to top performing employees || Advertisement campaign aimed at getting people to general
retail stores.

Long term: Expand its own retail stores and reduce reliance on general consumer electronic stores.

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