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Submitted by Faizan Khalid Gul Abbas Muaz Sheikh Zaigham Gondal Zunair Ahmed MBA II-Section III Date: 24th March 2014
Introduction
Mediquip was a subsidiary of a French company named Technologie Universalle. However, the subsidiary dealt in production of CT scanner, X-ray, ultrasound and nuclear diagnostic equipment. The company adapted to technology rapidly and was known for its good after sale services. The company competed usually with European competitors, however, its most serious and intense rival was Dutch based company Sigma. On the other hand, the second organization involved in the case is a Stuttgart based Lohmann University hospital. It was a general teaching facility and possessed a number of X-ray equipment. The case generally revolves around the relationship between the buyer center and the selling center relationship of execution of a sale. The selling center which is Mediquip had a series of time related activities to execute a sale but eventually lost a potential client and in the end the ineffective communication leads to the loss of sales to the competitors. The following analysis includes all the relative information, problems and recommendation of the case study.
The company product line included in addition to CT scanners, X-ray, Ultrasonic and nuclear diagnostic equipment. Mediquip enjoyed a worldwide reputation for advanced technology and competent sales service. The radiology department of Lohmann University Hospital had 5 staff members headed by senior and nationally known radiologist, Professor Steinborn. The company Mediquip sold products in the upper price range. The order of CT scan machine ,if obtained, would have meant a sale of 2,370,000 for a sales engineer Mediquip executives estimated the European market for CT scanners to be around 200 units per year. The price of each unit ranges from DM 1.5 Million to DM 3.0 Million Mediquips sakes organization in Europe included 8 country sales subsidiaries On June 1st, when asked about the price, DM 2,850,000 was given On July 30th, the quotation was reduced to DM 2,610,000 if the equipment is ordered before the year end The final offer of DM 2,370,000 was agreed of September 25th
Qualitative Statement
LUH radiology department had a wide range of X-ray equipment from a number of European manufacturers including sigma and FNC. Our competitors are mostly from other European countries (commented Mediquips Sales Director for Europe). In some markets our competitors have been there longer than us, and they are better decision makers than us. Commenting on the advantages of the CT scanners, a product specialist with Mediquip said: The end product looks very much like an X-ray image, the only difference is that with scanners you can see sections of the body that were never seen before on screenpancreas. A radiologist, for example can diagnose cancer of the pancreas in less than two weeks after it develops. This was not possible before CT scanners.
Mediquip had state of the art equipment as the case also mentioned that they were: two years ahead of the competition. However, the equipment of Mediquip was expensive in comparison to the industry. They were new in the industry and had not sold to Lohmann in the past. LUH had always bought equipment from Sigma and other manufacturers in the past.
A sales executive at Mediquip described Buyers of CT scanners as: Most of our sales are to what we call the public sector; health agencies that are either government owned or belong to non-profit support organizations such as universities and philanthropic institutions.
Our Clients are sort of buyers that buy through formal tenders and have to budget their purchases at least one year in advance. Once the budget is allotted it must then be spend before the end of the year. Only a minor share of our CT scanner sales go to private sector, profit oriented organizations such as private hospitals or private radiologists. Public sector is complex. There are at least 4 groups that are involved in the purchase decision: radiologists, physicists, administrators and people from supporting agency, usually, the one who approve the budget for purchasing a CT scanner.
Professor Steinborn, who informed about a recent decision by university director to set aside funds next year for purchase of hospitals first CT scanner. The specs given to Mediquip were directly copied by some technical manual.
Buying Centre
1. Influencers: these were the physicists and they wrote the technical specifications which had to be met by the CT scanner. In this case it was Dr. Rufer Hospitals Physicist. 2. Users: these were the radiologists, the doctors whose service was sort by other doctors. In this case was Professor Steinborn- Head of Radiology Department. 3. Decision makers: these are the administrators who have the financial responsibilities for the Hospital. In this case was Carl Hartmann- Hospitals General Director. 4. Buyers: these were the supporting agencies and they approved the expenditures. 5. Gatekeepers: these were the secretaries who informed Thaldorf about the decisions and existence of other players.
makers and influencers involved, the Mediquip, before quoting the sales deal must have the information about each of the buyer center individual and despite calling them one by one team Thaldorf should have a comprehensive meeting where they would have shown the presentation and on spot queries should be put up and resolved in a decent and professional way.
2. Mediquip failed to differentiate its product in terms of unique selling proposition from the scanners provided by the competitors and not able to communicate the value of the product.
As discussed earlier, what new was Mediquip giving to its clients, all the competitors were same in the technology (Mediquip says that they have a better technology though), moreover there mistake that Mediquip made was that despite of having well established competitors in the market the sales initiation was extremely overpriced, because in the end of the case the sales quotation dropped by approximately 500000 DM.
Core Problem
Improper role definition, no usp and lack of preparation for sales proposal and a poor price estimates because of absence of proper customer relationship dimensions
Solutions and Recommendations
1. Proactive Approach
The proactive approach rather than the reactive approach should have been acquired. The foremost principle of sales management is to gather the information about the buyer center and buyer organization and if its a government organization even the complex information like the informal groups, pressure groups, selling dynamics information should be taken into account before making the quotation. The proper homework in terms of who is the influencer and who is the decision maker etc. should be found out. The advantage of this is that your frequency of sales call will decline and the buyer will get an impression that you are keen about them and you recognize them as the key account in present and future perspectives also. Moreover before selling you have to have information about your own products and policies and standard operating procedures too. The delivery time, the credit terms etc.
3. Joint Meetings with the selling and buying centers 4. Trainings in term of delivery of good sales pitch 5. Proper CRM software