NMIMS
Global Access
School for Continuing Education (NGA-SCE)
Course: Sales Management
Internal Assignment Applicable for April 2022 Examination
1. You
are a Start-up selling GPS connected Helmets for Bikers. You have set the
business
5 years back and current have a revenue of Rs 1 crore. You are based in Mumbai
andNMIMS Global Access
would now want to expand across India in FY 22-23. What will be your Sales
organization structure and types of sales person for this expansion? (10 Marks)
2. You
are Head of International Sales selling GPS connected Helmets for Bikers. You
have
been asked to expand in Sri Lanka. The company has never operated in Sri Lanka.
What
would be the Sales process that you will adopt for this expansion? (10 Marks)
3.
There’s another one!” Cameron Burke’s son said, pointing to a darkened
streetlight across
the park. “But it’s out too!” Cameron regretted having started this game with
his fouryear-
old. His company, Lumiscape, produced smart, connected streetlights, which had
been installed in cities throughout the United States— including Cleveland,
where they
were now, visiting his parents. He and Graham had decided to squeeze in a walk
to Forest
Hill Park before bedtime, and he’d challenged the boy to count all the lights
he could
find. But they’d already seen three that weren’t working properly. Even my
hometown
can’t get our products right, Cameron thought as he chased Graham over to the
playground. He always vowed to stop obsessing about work when he was with his
son,
but it was a losing battle.
Lumiscape was six years old. Cameron had founded it with the idea of building
an LED
streetlight that would use a mobile signal to notify public works departments
when the
bulb needed to be replaced. He’d been an aide to the mayor of Philadelphia at
the time—
his first job after graduating from Villanova— and knew well how much time city
workers spent documenting and following up on complaints about broken lights.
But Cameron also had a bigger vision: Lumiscape’s products were designed to
gather all
sorts of data, including humidity, motion, and seismic activity, and—most
important—
UVA, UVB, and ambient light so that they could save electricity by dimming when
appropriate. The innovative system promised to reduce local governments’ energy
consumption and maintenance costs and improve their image with constituents.
Headquartered in Philly, Lumiscape now had customers in nearly every U.S. state
and a
few European countries. Cameron felt contented about how well the system worked
in
some cities. But not here, he thought. And he’d seen and heard about similar
cases of
misuse elsewhere. Some localities had bought lights but failed to fully utilize
the
accompanying technology, which meant they couldn’t service them properly or
achieve
the hoped-for energy saving. Others had used their existing supplies of
high-pressure
sodium bulbs, rather than the smart LED ones, in the new lights. Some customers
had
failed to even install all the lamps they’d bought. Cameron hadn’t realized how
difficult
it would be for local governments to change the way they did business, even
when they
had the best of intentions.
The year before, prompted by all this, Lumiscape’s leadership had decided to
pivot from
a sales model to a subscription model. Instead of selling the streetlights and
leaving the
cities to manage them, the company would rent them out for a monthly fee with
installation, maintenance, and monitoring software all included. In three sites
Lumiscape
had also piloted a program to add Wi-Fi connectivity to the lights, allowing
those cities
to offer internet service in public spaces.
The board had unanimously approved the proposal from Cameron and his COO, Stacy
Hamiko, to shift to a subscription strategy. It would position Lumiscape’s
technology
platform for growth as the smart-cities movement began to take off. And it
would give
the company more control over its product and brand and a more stable cash
flow, which
would translate into higher multiples from would-be investors. “Higher!” Graham
shouted. As Cameron pushed the swing, he felt his phone buzz. Assuming that it
was his
wife, who was at a conference on the West Coast, he looked at the text. It was
from Stacy:
“Houston’s live again. They want to buy 5,000 streetlights.” “Houston?!” he
said aloud.
“Texas!” Graham yelled. Cameron smiled and said, “That’s right, bud.”
Houston had been one of Lumiscape’s first customers, six years earlier. The
city manager
had originally wanted 6,000 lamps but had cut the order back to 1,000 for
budgetary
reasons. Neil Hart, Cameron’s head of sales, had kept in touch, hoping that the
larger deal
could be resurrected at some stage. And now, according to Stacy’s text, it
would be. There
was just one problem: Lumiscape didn’t sell streetlights anymore. They’re Back
Later
that night, after Cameron had put Graham to bed, he called Stacy. She explained
that
she’d been copied on an e‑mail to Neil from Houston’s manager, who said that
he’d
finally gotten approval to buy the additional 5,000 lights. “He mentioned
something about
surplus in their public works budget and some federal money they needed to
spend,” she
said.
“It’s just horrible timing,” Cameron said, shaking his head. “Do we know
whether Neil
has talked to them about subscriptions?” “Not yet,” she said. “We all assumed
the deal
was dead. They were on our list but pretty far down it, to be honest.” “Would
they
consider it?” “Neil says not a chance. Even though this new pricing model would
probably be better for them— a lower procurement threshold and all—Neil thinks
that if
it took the city manager this long to get approval for a purchase, there’s no
way he’ll go
back and say, ‘Never mind. Could we rent instead?’” Cameron was torn. The
mental math
was easy: 5,000 lights at $600 apiece meant $3 million. It would be the largest
sale to
date for Lumiscape, which had taken in $30 million in revenue the year before.
But the company had committed to this new subscription strategy, and with good
reason.
In fact, he and Stacy had used Houston as one example of why selling the
streetlights
didn’t give customers enough benefits or Lumiscape enough control. It had taken
the city
several years to install its initial order—and it hadn’t even installed all
1,000 lights.
Worse, it apparently hadn’t hired or trained anyone to use the software tools.
“I should
tell you that Andrew is already talking about drawing up the purchase
agreement,” Stacy
said.
Cameron sighed. “Of course he is.” Andrew Lowell, Lumiscape’s CFO, had thought
it
was a mistake to move exclusively to contracts. He felt that the company’s engineers
should be held responsible for making a product that customers could use
correctly and
that Cameron should push them harder before changing the model. Andrew had
wanted
to both sell and rent the streetlights, preserving all sources of revenue and converting
customers to the subscription model over time if need be. Stacy and Cameron had
disagreed.
Too many customers weren’t using the lights to their full potential. The
straight sales
model simply wasn’t working. And given the budgeting process in most city
halls, it was
far easier to go to market with only one type of offering. Even with just two
options on
the table, officials would feel obligated to run both to the ground with all
the agencies
involved. “I’ll e‑mail Andrew and tell him to hold off,” Stacy said. “Good
idea. But let’s
call a meeting for first thing tomorrow morning and figure out our strategy.”
“You’re
going to fly back?” she asked, concerned. “No, but I don’t think this can
wait.Let’s do a
video call. We don’t want to lose Houston’s attention.”
The Next Morning Cameron sat at his parents’ kitchen table and adjusted his
laptop
screen so that he could see Andrew, Neil, and Stacy sitting in the small
conference room
at their Philadelphia office. “Sorry I can’t be there in person,” he said. “Is
the picture
okay?” Andrew spoke up. “Yes, except for that grim look on your face, Cam.
Remember:
This is good news.” “I completely agree,” Neil said. “We’ve got their
attention.” “We’ve
got their business, it seems,” Andrew said. “Not so fast,” Cameron said. “We
can’t sell
them 5,000 lights—not after all the work we’ve put into the new strategy. Not
with all
Internal Assignment Applicable for April 2022 Examination
the potential.” “Moving to subscriptions is a long term strategy,” Andrew said.
“We knew
it wasn’t going to be a clean break from the product model. Lots of cities
still own their
lights, and we aren’t going to buy them back. It will take years before we can
convert our
existing customers to subscriptions, so there’s no reason we can’t just
grandfather
Houston in.”
“He has a point,” agreed Neil. “But don’t you think it will be confusing to
talk with
potential customers about the subscription product when they know that we just
sold
Houston 5,000 lights?” Cameron asked. “I think we can explain the rationale,”
Neil
replied. “We’ll look like we don’t have a strategy—like we’re being
opportunistic,” Stacy
chimed in. “This is a moment to test the new model. If we can convert Houston
to
subscriptions, we’ve got a great story to tell, not only to other potential
customers but to
investors.”
“I’ve already floated the idea, and it’s not going to fly,” Neil replied. “He
said they have
the $3 million to spend this year. How can we leave that money on the table?”
“Exactly,”
Andrew said. He clearly had a strong opinion on this, as any good CFO would.
But
Cameron was reluctant to go back on their strategy decision so soon.
Andrew seemed to have read his mind. “I know I promised to support your
decision on
the model,” he said. “But I still don’t understand why we can’t do both. If
different
customers want different things, shouldn’t we meet them where they are?”
“Not if where they are is taking a pass on the best aspects of our product once
it’s in the
field,” Stacy said. “And failing to take advantage of the upgrades we’re going
to continue
to offer. We have to consider the brand.” Cameron sat back and watched the
three of them
continue to debate. He knew it was on him to make the call, but he was still
uncertain.
Lights Out That night he went to Forest Hill Park on his own. He needed the
fresh air,
and his parents were happy entertaining Graham. He sat on a bench and looked
across
the park at a flickering streetlight. He could tell from the way it was going
on and off that
it was using the wrong kind of bulb. This meant that it was not only creating
an unpleasant
experience (who wants to walk through a streetlight?) but also pulling more
energy from
the grid.
He got up to walk home and noticed that someone had spray painted lights out on
the
base of one of the broken streetlamps his son had noticed before. It was as if
the universe
was telling him that Lumiscape had to take better control over its product. If
cities
couldn’t maintain the lights on their own, the company could help them by
bundling the
software in the subscription, installing the units, fixing broken hardware,
upgrading the
lights as new features became available, and making the package affordable.
Cameron had felt sure that subscriptions were the way to go. They provided more
value
to customers, relied less on them and their workers to make the product
succeed, and
guaranteed more sustainable income for Lumiscape. It was a better model and
would help
him raise the valuation before the company went out for the next round of
funding.
But could the team really afford to say no to a $3 million bird in the hand?
Was Andrew
right to suggest a hybrid model? Or could they make this final sale and then
shift their
strategy once and for all?
a.
According to you, was it appropriate for Lumiscape to change their business
model for
sale to subscription model? (5 Marks)
b.
Having changed the model, should they now shift their strategy for one customer
(5 Marks)
