Business Reports :
A.T. Salim Durrani,
16th May 2000
R.G. Nawaz Khan,
It is a fact that annual sales during 1999 has dropped down by 35% compared to the figures in the recent years. After intense study, I have reasoned out the causes for the downtrend. I give below the same.
(1) Our Recent Price Hike
You will agree with me that the company has increased the price of all the products ranging from 10% to 25% in the beginning of 1999. Surprisingly, our immediate competitors have reduced their prices ranging from 5% to 12%. In view of this, the gap between ours and these competitors has increased.
It is a known fact that our quality of product is quite good and everyone knows in the market that our competitors sell products of equally good quality. Under these circumstances, it is obvious that higher priced brand cannot expect to win in the rat race.
(2) Decline in Quality of After–Sales Service
In the past, our company was very popular for extending excellent after-sales service. For your information, the same has not been the case in the last two years. For technical products, servicing plays a major role in the acceptance by customers.
While I checked up with our Service Manager, the reasons for deterioration in quality of service, I am told that in the last two years, many service engineers have left the organisation to take up lucrative jobs in middle-east countries.
(3) Sales Incentive
Our management does not adopt the policy of giving incentives to sales people for overshooting the sales target. Our close competitors motivate the sales force by offering good sales incentives by cash.
Above three major factors have contributed to the decline of sales in our company during 1999. Unless immediate action is taken, we cannot hope to come out of the present crisis.
Following are my recommendations to win back our past glory.
(1) To change Discount Structure
While prices have been increased, the only way to match prices of competitors is to alter our discount structure. When volume of business is high, a good discount should be offered.
(2) Tuning up of After-Sales Service
Existing vacancies created by those who have resigned should be filled up soon. We should attract good talent from the competitors by offering good salaries. Some fresh engineers can be taken and given extensive factory training before sending to the field.
(3) Motivation by Sales Incentive
While annual sales target, is fixed, everyone in the sales force should be given attractive incentive for crossing the sales target for the year. This will motivate them well.
I have come out with my reasoning regarding the drop in sales and suggested suitable remedy. I request that the management can look into my recommendations and implement them so that we can take off.
(A.T. SALIM DURRANI)
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