Conventional marketing theory suggests that the maturity phase of the product life cycle is usually followed by a decline. Right? "Not always. Not for us," calmly counters the team at Birla Cellulose. For those of us who have avidly pored over Philip K Kotler's weighty books on Marketing Management, this departure from convention is intriguing. Let's meet the team that ducked the trend and showed how foresight, unflagging commitment and great customer management can revive an aging product. Over to Mr. Shailendra K. Jain, Mr. Thomas Varghese and the tenacious team at Birla Cellulose.

Growth pangs
"Ironically, although we are the world leaders, the VSF market globally is up against the wall. By 1996, rising raw material (wood pulp) costs and structural changes in the market had made viscose the costliest fibre. Cotton prices, on the other hand, had skidded to touch an all-time low in 2002. Along with the growing popularity of polyester, cotton made a forceful comeback. Moreover, cotton had gained a reputation for both comfort and style especially with the backing and promotion by Cotton Incorporated. Viscose, on the other hand, had come to be regarded as a commodity and a filler fibre. In India, the going was even tougher due to the fragmented and complex nature of the textile value chain. Moreover, there was little consumer awareness about viscose, partly due to lax labelling laws where it is not mandatory to specify the ingredient of the entire garment. As a result, global production of viscose has been declining at a CAGR of between 1.5 to 2.0 per cent ever since the mid-1970s."

Braving the odds
Despite the odds, Birla Cellulose had steadily expanded its market share. In 1999, it even increased production, but found it was not able to fully utilise the increased capacities by 2002. Another unwelcome change in the viscose landscape was the shift in capacities from US and Europe to Asia. Global competition was waiting to strike at the lucrative and vulnerable Indian market. "We were clear that we should not merely defend, but grow our position. Our strategy: To retain and grow customers for full utilisation of capacity and to grow our global market share. To achieve this, we evaluated several approaches — should we increase our direct exports, target all our customers, or target just our top domestic customers?"

Data diligence
"It is a capital mistake to theorise before one has all the data," advised the inimitable Sherlock Holmes. Heeding this advice, the Birla Cellulose team decided to first thoroughly analyse all customer-related data. Re-living the exhaustive process, the team says: "We analysed lifting trends for the past five years, field reports, shipping bills which detailed our customers' export profile, and textile committee reports. We noticed that though we had 311 active customers, it was the top 29 who contributed to 55 per cent of lifting/sales. From this pool of 29 top customers, we did a further assessment analysing among other things, their marketing capability and developmental mindset. We finally zeroed in on 24 customers. These formed our key accounts. The objectives of our key accounts strategy were:

	Achieving higher sales from key accounts as a percentage of total sales.
	Reduce chances of substitution by competing fibres.
	Grow percentage of viscose in customer's fibre basket.
	Ensure maximum customer satisfaction resulting in higher customer retention.

We set clear time-bound targets: To increase the share from key accounts from 240 tpd in FY 2001-02 to 297 tpd in FY 2003-04; to generate additional revenue of Rs. 147 crore and additional profit of Rs. 38 crore.

Teaming up
Given the enormity of the challenge, we decided to form a separate team comprising members from varied levels and departments, including senior management, sales, application development and supply chain management. A core 5-member team was formed. The team underwent a tailor-made training module at Gyanodaya, our group's Management Training Centre. We then customised the training with the help of an external consultant. A 'train the trainer' programme was run for the rest of the 17 team members. We appointed four key account management champions for each of our four zones. This kind of close proximity of a viscose club champion who was stationed close to our key customers proved to be our greatest strength.

Viscose club
To re-coin an old cliché, "Customers don't care how much you know (even about them) until they know how much you care." We realised that we must first understand what customers are thinking and feeling, and then work with those thoughts and feelings to build relationships. We identified why they continue to come back and why they may drift away. This understanding of the major drivers which bonds relationships of buyers with suppliers led to the creation of "Viscose Club" — an informal forum of major viscose consumers of Birla Cellulose. Viscose Club was both, a way of specially catering to the specific needs of our key customers, and an attempt to be a complete solutions provider for their fibre-related needs.

Value drivers
Through the Viscose Club, we offered our key accounts value creation services that are first in the commodity inclined viscose industry. These services were — technical care, new product development, pricing, supply chain management and marketing support. Each of these initiatives comprised a complete chain of activities. The customer technical care process, for instance, began with data collection and ended with updation of data and feedback from the mills. This initiative was a resounding success with our key accounts reporting 40 per cent improvement in quality, 15 per cent improvement in spinning productivity, and 1 per cent improvement in fibre to yarn recovery. In overall terms, our key accounts experienced 18 per cent improvement in productivity leading to savings of Rs. 6.27 crore. So far, we had looked upon only at spinners as our customers. We now redefined our customers, forging bonds not only with spinners, but with the entire textile value chain which included weavers, processors and consumers. To this chain, we provided design and development support, logistics support, information and technical support.

Designs on growth
World over, viscose has not experienced any major metamorphosis in product development unlike competing fibres where radically different new generation of fibres has flooded the market. At Birla Cellulose, we have tried to change this by spearheading new product development at two levels: Proactive — internally (R&D innovation) and Proactive — externally (customer-led). At the customer's end, due to the fragmented nature of the textile chain, even producing a new sample can take few months. We can do so in a fraction of the time, thanks to our R&D Centre at Kharach in Gujarat. The efforts by our application development teams have generated revenues of Rs. 171 crore per annum for our key customers.

Stairway to stability
The fibre market is associated with frequent price fluctuations. We brought in an element of predictability by introducing quarterly pricing. Done in consultation with the key accounts, this sharpened their competitiveness globally. Apart from this, we have implemented segmental pricing, where prices are fixed after a detailed study of our customers' profitability and contribution. Another initiative was strengthening supply chain management processes for key accounts. This included online order processing and quality line mapping, where fibre production lines were allocated to our key accounts for the year. This ensured stable production schedules and minimized changes in machine settings. Naturally, an exercise of this nature could never have been successfully implemented but for the unstinting support from all plants.

Market movers
While helping our key accounts boost productivity, we went a step further and tried to create marketing pull, which would help them promote their yarns and value-added products. To make our customers' products more acceptable and ensure certain quality checks, we opted for an accreditation programme where we took on the onus of testing and certifying their products. The Aditya Birla brand gave them the necessary edge in this commodity market. We have helped arrange several marketing tie-ups for our key accounts — with both Indian and international buyers. We regularly organise one-to-one interactions for our key accounts, bringing them onto the same platform. Moreover, when we participate in international exhibitions we promote our key account customers' products as also those of their customers. Viscose Naturally, our newsletter promotes key accounts through its pages.

Deep impact
Overall domestic sales have risen from 520 tpd in FY 2002 to 599 tpd in FY 2003. Our growth has been driven largely by the increase in sales to key accounts, which have moved up from 240 tpd in FY 2002 to 309 tpd in FY 2003. The increase continues in the current year. And, from a 46 per cent share of total domestic sales, share of key accounts has risen to 52 per cent in two years. Whilst the domestic market sales grew at a rate of 15 per cent in the last two years, the growth of key accounts was almost double at 29 per cent. Non-key accounts, on the other hand, grew by 4 per cent. Importantly, our key accounts strategy has helped us in our war against substitute fibres — we have increased the share of VSF in total fibres consumed by key accounts from 33 per cent to 38 per cent. Backing these numbers are the findings of the customer satisfaction survey conducted by TNS India. In essence, while there has been an increase in customer satisfaction in all categories of customers, in the case of key accounts, the increase has been much sharper — from 82 per cent to 87 per cent. Finally, the key accounts strategy has helped in achieving greater capacity utilisation. We are well on our way to fully utilising our capacity. In fact, in the next phase we plan to sweat assets.

Brand-width
We are scaling up our key accounts management initiative and have identified additional customers to be brought into the key accounts fold. Apart from this, our composite Textile Research and Application Development Centre (TRADC) will help us spearhead demand not just in India but in the Asia as well. At this centre, we are currently testing new generation cellulose fibres — Modal and Lyocell under our freshly-minted brand identity, Birla Cellulose — fibres from nature. Through our key accounts initiative, we have succeeded in stretching the market for viscose — in India, the share of viscose has risen from 4 per cent to 5 per cent of the total Indian fibre market which is at 4.56 million tpa. Globally too, the share of viscose has gone up from 4.5 to 5.5 per cent. On a base of 55 million tpa globally in just two years, this is no mean achievement!"