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Lahore School of Economics

Sales force management


Mediquip S.A

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.

Facts and Quantitative Statements


Lohmann University Hospital was a large general hospital serving Stuttgart , a city of 1 million residents Lohmann University Hospital radiology department had a wide range of X-ray equipment from a number of European manufacturers. Computer tomography was first introduced in late 1960s and was considered to be a major technological breakthrough by radiologists. Mediquip was a subsidiary of Technological Universelle, a French conglomerate. Sigma, the subsidiary of a diversified Dutch company under the same name, was the companys most serious competitor. Other competitors in CT scanners market included FNC, Eldora, Magna and Piper. Mediquips sales organization in Europe included eight country sales subsidiaries, each headed by a managing director. Within each country sales engineers reported to regional sales managers who, in turn reported to managing director.

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.

Problems and Issues


1. Mediquip didnt do their homework (core problem)
When Thaldorf meet professor Steinborn, they didnt have the price estimates and this eventually resulted in having very bad impression infornt of the clients. Moreover Thaldorf clients did not work on the finding the history and transactions of the company, when asked about the delivery time, the selling center individual was unable to impress client. The government organizations are complex because of the fact that there are various decision

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.

3. Too much for nothing


Kurt Thaldorf had been trying to deal with a number of people at the same time. He did try to do everything but he could possibly divide the tasks and do well whatever he did. He lacked assistance in technological aspects and in regards of interpersonal communication . Moreover, the keys mistakes had been avoidance of the business trip for hospital representatives. Probably, the reason behind it was low budget or no match between timing and availability of hospital crew. Kurt had also been somewhat overconfident and taking the sale as granted. He thought the sale was secure but it was not. Moreover, Thaldorf was poor at communicating, he communicated excessively with the secretary of Harmann. The secretary gave improper information and Thaldorf perceive the information in his manner and do not exactly hit the point that what actually Lohmann wants. Moreover the time horizon between the sales call was too lengthy that the frequency of communication cuts off.

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.

2. Relationship selling rather than the transactional selling


The B2B selling is generally the relationship selling. What Thanfold was doing was he was thinking about the short horizons, he didnt perceive the future benefits of making such an important deals. Because there was couple of more head on competitors in the market, if this deal would have done in a good manner, it might beautify the relation with Lohman University hospital and could acquire more sales.

3. Joint Meetings with the selling and buying centers 4. Trainings in term of delivery of good sales pitch 5. Proper CRM software

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