Symphony Room Coolers

A Marketing Planning Implementation

Case Study Presentation

Presented by :
Section D | Group 6

Rajul Jain 14P199

Radhika Udgirkar 14P216
Chirag Mahajan 14P195
Suchet Shetty 14P231
Shiven Gupta 14P227
Atul Mishra 14P192

INTRODUCTION
a) Sanskrut Comfort Sytems Pvt. Ltd. manufactures Symphony room coolers since March 1988 as
an advancement over portable or table fans.
b) Also known that the demand for room coolers has been continuously increasing
c) Customers are price sensitive and it is an oligopolistic market
d) Organized sector offer high price cooler due to manufacturing taxes and other expenses.
Therefore, their market share is eaten up by the unorganized sector.
e) Symphony room cooler was priced between unorganized sector prices and the air conditioner
prices which range from 20-30k.
f)

The Symphony room cooler was known for innovative design and was promotes as alias for AC .

g) It proposes two different products :

Harmonica (high-end)
Koolers (low-end)
h) SCSPL sells 25% of it products to other brands such as A, B and C.
i)

Different fixed cost and direct cost incurred are also given in the case.

2. Assumptions
1. We assume that we are able to sell the quantity we produce for Harmonica and Coolers category.
2. We are taking the average price given in the case as no specific price given for the Kooler category.

PROBLEM ANALYSIS
1. PROBLEM STATEMENT
a) What should be the price of SCSPL products i.e Koolers , Symphony and Harmonica
b) Whether the different line of products be launched or not?
2. OBJECTIVE
To calculate the break even point and the profit volume analysis to decide the pricing strategy of SCSPL
products.

DECISION ANALYSIS
CURRENT PRODUCTS COST ANALYSIS
A. Retailers
Given: Selling Price

= Rs 5000

Less : 10% Tax

= Rs 500

Less: Dealers Margin

= 20% of 4500
= Rs 900

Realized Price

= Rs 3600

Sales

= Number of units * price per unit

= 20000 * 3600
= Rs 7,20,00,000

B. Other Marketers (A,B,C)

Given : Selling Price

= Rs 2100

Markup

= 15%

Realized Price

= Rs 2415

Sales

= Number of units * price per unit

= 10000 * 2415
= Rs 2,41,50,000

Total Sales

= 7,20,00,000 + 2,41,50,000
= Rs 9,61,50,000

Now ,
Profit

= Total Sales Total Expenses

10% of Sales

= Total Sales Total Expenses

Total expenses = 110% of Total Sales

= 1.1 * 9,61,50,000 = Rs 105,765,000

Total expenses = Direct Cost + Fixed cost + PME

105,765,000

= (30000*2100) +

+ 0.25((30000*2100) +x)
[given PME = 25%total cost of production]

X(fixed cost )

= Rs 62,28,000

PME

= Rs 1,73,07,000

C. Pricing Method
1)Koolers
a) Going-rate pricing
b) Price is based on the competitors pricing as Oligopolistic industry
This is because of the fierce competition in the low-segment market. Too low a price would damage the
image of the KOOLERS, fearing it to be a low quality product; a higher price than market would not
attract many customers.
2) Harmonica
a) Price based on customers perceived value
b) Price premium extracted for products superior quality features. Also, there is no
competition in the segment, so a first movers advantage needs to be
capitalized.

D. Cost Analysis of new product line i.e Harmonica and Koolers

a) Koolers
Given: Selling Price

= Rs 3500

Less : 10% Tax

= Rs 350

Less: Dealers Margin

= 20% of 3150
= Rs 630

Realized Price

= Rs 2520

Now ,
1.25*(F.C. + D.C. * BEP) = Price*BEP

where 25% of Production cost is PME

BEP = 2083 units
Harmonica
Given : Selling Price

= Rs 5500

Less : 10% Tax

= Rs 550

Less: Dealers Margin

= 20% of 4950
= Rs 990

Realized Price

= Rs 3960

Now ,
1.25*(F.C. + D.C. * BEP) = Price*BEP
where 25% of Production cost is PME
BEP = 634 units

COST ANALYSIS after the launch of new products

60% of the visitors to exhibitions reported HARMONICA to be a better product than SYMPHONY, so on
an assumption that atleast 50% of those customers would switch to Harmonica from Symphony
Assumptions:
Units of Symphony produced = 14,000
Units of Harmonica produced = 6,000
Units of Koolers produced = 10,000 (Instead of selling the left over products to competitors, SCSPL
would focus on bringing those products under the Brand name of Koolers)
100% units produced are sold out in the market
Prices: Harmonica Rs. 5500; Koolers, Rs. 3500, Symphony Rs. 5000
Calaculations:
Fixed cost = Rs. 72,28,000 (62,28,000+4,50,000+5,50,000)
Direct cost = 2300*6000 + 2100*14000 + 1800*10000 = Rs. 6,12,00,000

Total Expenses/Cost = Rs. 1.25 * (Fixed cost + Direct cost)

= Rs. 1.25*68428000
= Rs. 8,55,35,000
Total sales = 14,000*3,600+6,000*3,960+10,000*2,520
= Rs. 9,93,60,000
Profit = Total sales Total cost = Rs. 1,38,25,000
25% Post Manufacturing Expenses
100% of the units are sold

PROPOSED DECISION
In the assumed scenario, profits have increased significantly from Rs. 96,15,000 to Rs.
1,38,25,000 so SCSPL should launch Harmonica and Koolers
So,

Harmonica will be positioned as a High end product so it can be priced between Rs.
5500 to Rs. 6000

Koolers will be launched to give head-on competition to the unorganized sector so it can
be priced lower i.e. at Rs. 3500 to boost sales

POTENTIAL RISKS WITH LAUNCH OF HARMONICA AND KOOLERS

1. CANNIBALIZATION
With the introduction of Harmonica with basically enhanced looks and probably not much change in
cooling effect the customers who can pay for symphony might also go for Harmonica as there is not
much of a price difference between symphony and Harmonica
2. PRICE WAR IN UNROGANIZED MARKET
It is quite possible that the makers of the cheap coolers in the unorganized sector may reduce their
prices drastically in order to compete with the KOOLERS of SSCPL. They can easily do that as the
margins in case of products of unorganised sector is high.
3. BRAND DILUTION
The core product and competency of SSCPL is symphony coolers. It is the symphony cooler for the
company is known for in the market. The introduction of products like low end Koolers for lower
segment as well Harmonica in the higher segment would result in the brand dilution.
4. COMPETION FROM B
One of the marketers B, which was selling Symphony under its own brand name, is now planning to
start its own production plant. Being second to the market the Marketer B is definitely well
equipped with better knowledge when it comes to designing the product and could learn from the
mistakes of Symphony. They would go for process innovations and would try to offer many Points
of Difference in the product they are going to come up with. Already since they are able to sell the
coolers, this suggests that they too have a good market presence and share and it not difficult for
them to displace SSCPL Symphony coolers.

PROs and CONs of Going Rate Pricing

Profit and
market share
is less
easy to set
prices

Cons of
Going
Rate
Pricing

Pros of
Going Rate
Pricing
Reflect
idustry's
collective
wisdom

easy to
track
competition

Dependent
on market
leader

Uncertainity
of market

PROs and CONs of Perceived Value Pricing

Pros

Cons
Higher Profit
margin

Loss of price
sensitive
customer

Increased Brand
value

Not applicable
in market where
quantity doesn't
matter