Product and value creation process

Silvio Napolis experience, detailed described in the following case, gives us opportunity to think about
real life situation, analyze incurred mistakes and find out better solutions then people in charge did.
India is the country, where all things are totally different, thats why I hope we will have pretty much
interesting discussion to do. Firstly, I will go through the given situation, identify some problems and
provide them with my solutions, at the end I will give some advices to Silvio Napoli.
In case to make birds eye view over the provided product, Id like to write products five levels
developed by Kotler
Core benefit was to provide Indian market with standardized low price but European Quality elevators.
Basic product for India market decided to be Schindlers S001 model- the product which developed in
the Swatch Projectand the Schindler 300P (S300P), a more sophisticated model being manufactured
in Southeast Asia. The plan is to use the S001 to win share in the low-rise segment as a primary target,
then pick up sales opportunistically in the mid-rise segment with the S300P.
Expected product- according to the information provided in the case study, main factors expected by
the Indian market is most importantly acceptable service and price of the product. By preference comes
reliability and technological development of the product. Brand image, delivery and safety are found
to be less demanded by the local market.
Augmented product- as augmented product it was planned that Schindler India would provide its
customers with the technical and maintenance services.
Potential product- things didnt go as it was planned, so from my point of view, Schindler India must
leave the market, or must make the following corrections which I will mention during the discussion.
In case of making situation better, future development can be entrance in high rise segment of market,
product diversification (single-speed, two-speed, variable frequency, and hydraulic elevators).
Now lets start discussion about the problems in provided product and service. Everything starts in
1987 from where Alfred N. Schindler transformed the companys culture from that of an engineeringbased manufacturing company to one of a customer-oriented service company. But in the following
case, Silvio provides Indian market with standardized product, for me its violation of the Schindlers
main strategy. One may think that this violation is harmless if it is backed by the firm arguments, but
Silvio had nothing but a S001 developed under the Swatch project, cheap and standard elevator that
would not be customized and has never been used before.
From my point of view penetrate rapidly with untested product in the market where company has
almost no experience, huge cultural contrast and fierce competition isnt the, lets say softly, good
solution. Meanwhile customized product could provide Napoli with greater opportunities to satisfy
needs and wants of variety of customers which is crucially important for new entrant companies.
Also, dont forget that the India is the place where visualization is very important, they are people who
can change pre constructed houses for Feng Sui or simply because of the looking. Elevators in
residential as well as commercial projects should also satisfy that inquire.
Standardized product will really harm the value creation process that has 7 distinct phases: engineering,
production, installation, service, repair, modernization, and replacement. Does Schindler India satisfy
them as it is desired?

Engineering is the phase where Schindler has advantage, or at least things arent very wrong, but started
from production things go wrong. Calculation about production was totally based on transfer pricing
and government regulations, which were outdated when production started. For any expatriate
assignment to be successful, Napoli should have kept himself tuned to the dynamic changes of the
emerging market, but things want out from his eye view, thats why production went wrong and prices
went high. Thats why Silvio outsourced components to local companies and import important
materials from Schindlers plants. Having engaged in local manufacturer network meant incurring
monitoring cost and the risk of less quality control which could have damaged companys image even
more. Neither it was profitable to import S300P elevators. There is not much that should be done to
somehow come over from the situation. Schindler India should have created joint ventures which
would help Schindler to control over quality, also, ventures like this would help them acquire
knowledge over local market.
The rest five phases: installation, service, repair, modernization, and replacement, besides the fact that
service is included in that list, are united for me as a big service for customers. Knowing from case
that traditional builders are becoming more sophisticated and professionalized, leading to an emphasis
on better services and facilities and on higher quality, safer, and more technologically advanced
elevators we clearly see that the value provided by the Schindler isnt enough to compete and keep up
the market development. Importance of quality service is backed by the surveys given in the case which
indicate that service is very important in the buying decision, as are the financial terms. Moreover,
when elevator installation gives company 20% of the profit, maintenance provides 80%, As a result,
annual maintenance contracts covering routine maintenance and breakdown service are vital, and
what is provided by Schindler? let me quote from the case: Napoli believed that, especially for a new
team, installing it (glass pod elevators) would be much more difficult than they expected- what we get
from here is that even Napoli believed that his team was not prepared for changeable market demand.
Moreover, having no maintenance portfolio, havent tested teams ability to serve customers after initial
installment makes everything even more complicated.
In connection with service, let me quote Silvios words about M.K: he had been on our customers
side. He would know how to make a difference in service., so even if Silvio trusted him their points
of views in connection with service were different, while M.K was customer oriented, Silvio with his
standardized product werent coming in compliance with him. That contrast would make difficulties,
and it made when M.K took an order of customized product when Silvio left the country for a while.
As we have seen the mistakes done by the Silvio, now I will make some recommendations to him.
Understand the heavy customer duties on import and unstable economic situation in India, I recommend
Napoli to maintain manufacturing contract of local suppliers who produce the S001 parts. Also, to ensure
the quality of customer service, I also suggest Schindler India to acquire a local company solely devoted
on maintenance service. This can decrease the response time and hence, improve the level of service
provided to customers. Silvio should take some cultural training to fully understand the situation in the
market he is operating in. while having the most of the team members think that slight modifications to
the standard product line will get more clients. Silvio should have asked his management team to prepare
a report on how allowing the slight modifications to standard product will help the business.
The bottom line is that, having wrong product proposed to market, having not taken into account the
economic condition and values demanded in market, can lead any company to failure. Any manager
should listen to customers and look beyond their business plan, if necessary they should make
corrections in it, because business plan isnt constitution not allowing to make adjustments.

Promotional mistakes in Schindler India

This case is all about the period when Schindler escalators and elevators Manufacturer Company made
a strategic decision to enter the Indian market without any partner but a fully owned subsidiary firm
under the management of Silvio Napoli. In the following essay I will focus on promotional part of the
entering strategy, describe current situation, identify mistakes and propose some solutions and at the
end, I will give some additional recommendations to Silvio Napoli.
So, lets primarily identify the importance of promotion for the given situation. As far as we can see
Schindler is new company in the fierce competitive market. Where some big players already have their
place found and have their own segments of customers. In addition, we need to take in mind that Silvio
chose frontal attack strategy for entering market, in that case having significant promotion is crucially
important.
When having understood the importance of promotion in the following case, its getting very
ambiguous why did Napoli gave sales, installation, and maintenance job, from my point of view very
different from each other, to one person- T.A.K. Matthews- who himself didnt have any primarily
education in selling or promotion. After that fact its not surprising that sales team didnt achieve their
goal, quoted in business plan.
Besides the T.A.K. Matthews, having observed the organizational chart of the Schindler India, I cannot
find anybody with the responsibility in PR (public relations). Why is it important? Let have a look at
book definition of PR (boring but necessary)- Public relations involve building good relations with the
companys various publics by obtaining favorable publicity, building up a good corporate image, and
handling or heading off unfavorable rumors, stories, and events. Lets highlight the important places:
obtaining favorable publicity, building corporate image and recognition, arent they important for the
company entering new market? - leaving answer up to you.
Having no PR department is very dangerous if we take in mind one more not easily identifiable fact,
let me quote: Although the first Schindler elevator in India was installed in 1925, it was not until 1958
that the company entered into a long-term distribution agreement with ECE, an Indian company.;
which was terminated, having that experience doesnt stop Schindler to terminate another contract
with new partner- BBL. Is that only me who thinks that that kind of terminations really hart the image
of company? After realizing that fact, quite interesting idea popped up in my mind.
Why didnt Schindler enter the market with different name? Although it was clear, as Schindler
himself said, that company was making experiments and outcome wasnt very clear from the current
perspective. In addition, Im not going to discuss the strategy of Schindler India, but from my point of
view, Schindler India wasnt similar to its European counterpart. This step would be beneficial as for
the fact that new name would cover the past reputation of Schindler, but it also would have protected
the image of Schindler if he failed in his, lets say, experiments.
Attached files on this case provided me with valuable information when thinking about what kind of
promotional strategy I should use. From my point of view, Schindler should engage in personal selling.
As far as I already said, Indian market is very competitive, in order to get product promoted and
recognized personal selling strategy is the one that Schindler really needs. Personal selling works in
the following way: Schindler will have a group of people who will work under the Schindler name and
try to sell and promote the product to various construction companies within India. Which will in turn
develop stronger relationship with this companies.

Its true that Personal Selling is very effective in India, I still think that Sale Promotion worth to be
mentioned here. Why? Lets recall that Silvio used attack strategy, from here its more logical to choose
Sale promotion approach for marketing strategy, because it provides short term sale boom, which is
very important for new firms in market. Its clear that that promotion costs more, but we know that at
the beginning firms must pay more on product promotion, thats kind an unwritten rule for success.
Having some cash refund technique because of damaged image, or trade shows would help Schindler
India to start selling product.
And at last but not at least, as far as Im observing the India as the market, its population, I think that
Buzz marketing is the one that really would work in here. It is country where word of friends, family,
colleagues still works, why not use word-of-mouth potential?
Bottom line is, that having inappropriate sale manager, enter in strange market without PR department
(when having not quite good prestige), being confuse in marketing strategies (sale promotion/personal
selling) will be fatal for any company, if it has big experience, financial support or not. Silvio Napolis
mistakes worth to be consider and we all should try not to make it again in our business life.