Question
Hi there! can you help me with this case study please? Cater Inc.: Targeting the buying centre Case Study Catering is usually one of the
Hi there! can you help me with this case study please?
Cater Inc.:
Targeting the
buying centre Case Study
Catering is usually one of the first processes that is outsourced to partners. Running a
company cafeteria is not a core activity and increasing competition forces companies
to outsource everything that is not considered core. Cater Inc. is a Stockholm-based
firm specialising in managing catering processes from start to finish for all kinds of
organisations in the Scandinavian countries. Cater Inc. has 7,500 employees and
1,285 contracts for 1,740 locations, where catering services are offered to almost
500,000 individuals. Its annual sales are approximately %450 million.
Cater Inc. distinguishes between three types of customer: companies,
institutions and government agencies. Companies represent by far the largest part
of annual sales, but there is no longer much growth potential in this market segment.
All companies that want to outsource their catering have already done so by now.
In contrast, many institutions have never considered outsourcing their catering,
while increasing privatisation of government agencies also represents a potential for
growth. The composition and size of the buying centre varies significantly between
the three customer groups:
In companies, the composition of the buying centre can sometimes be deduced
from the number of tender copies requested. When a prospect only asks for two
copies of a tender, Cater Inc. probably deals directly with the key decisionmakers.
But when four or more copies are requested, the buying centre and
decision-making process may be quite complex. It is often difficult for Cater Inc.
to get a good grip on such complex decision-making processes, because it
usually deals with just one contact person (a facility manager or someone from
the management team or from human resources). The job description of the
contact person is an indicator of their role in the decision-making process.
In institutions, the size and composition of the buying centre depends on the
nature of the institution. In hospitals, someone from the management team
usually conducts the negotiations, while in prisons Cater Inc. has to deal with
a facility manager and a representative from the government.
In government agencies different decision-making processes are also used. Some
agencies purchase their catering services directly, while others use a central
purchasing organisation. In the latter case, price is usually the most important
buying motive (second to the quality of the catering service).
Negotiations with a prospect usually start when Cater Inc. is invited for an initial
meeting, where the discussion focuses on the customer's wishes and requirements,
such as the desired service level, pricing level, service personnel and free meals.
Based on this discussion, Cater Inc. writes a catering proposal that details the service
offered and its financial consequences. Most prospects invite several catering fi rms
for an initial briefing. Two or three of them are invited to present their proposal to
several employees of the prospect. Usually, the prospect will also demand a visit to
one of Cater Inc.'s customers to experience its catering service in a real-life situation
that matches the prospect's situation as closely as possible. When several catering
fi rms are still in the running, such a customer visit may determine the eventual
decision. After a caterer has been selected, negotiations focus on the details of
the contract and the operational issues. This decision-making process takes
approximately four to six months, while in extreme situations it may last
as long as two years or just one week. The key buying motives are:
effective management of personnel
improved cost control
improved quality.
Cater Inc. uses long-term contracts; its customers tend to be very loyal (the
average length of a customer relationship is nine years). This is very different from
some other countries, such as the US, where customers switch caterers on average
once every three years. Scandinavian customers tend to be more forgiving towards
their caterers; even when mistakes have been made, caterers usually get a chance
to restore the relationship. This means that in 90 per cent of cases, the proposal is
for a new customer, outsourcing its catering for the fi rst time (rather than a customer
switching caterers). When Cater Inc. is asked to write a proposal for a customer that
considers switching caterers, the customer's current caterer usually goes to great
lengths to keep its customer. In such situations, the customer frequently decides to
give its current caterer a second chance. All this implies that the loss of a customer
is taken very seriously.
Cater Inc.'s service offering, and personal selling are its most important marketing
instruments. Telemarketing does not work in this business; a personal approach is
essential to acquire new customers. Prospects are only visited when an appointment
has been made in advance; cold calling is not appreciated. Personal selling is
supported by direct mail and participation in networks of facility managers.
Ultimately, everything revolves around the effective management of personal
relationships. This is also reflected in the emotional buying motives that often play
a role in the final buying decision ('which caterer would I like to award the contract
to?'). Services marketing is a matter of trust and trust is built through effective
personal relationships.
Questions
1 Cater Inc. distinguishes between three market segments: companies, institutions
and government agencies. Are these three market segments independent from
each other? Describe the (potential) relationships that may exist between these
three groups of customers.
2 When problems have occurred, the customer's caterer is usually given a second
chance. What should Cater Inc. do when a serious problem has occurred with one
of its customers to prevent a competitor from stealing this customer. What can
Cater Inc. do to poach a customer from a competitor when that competitor has
experienced a serious problem with that customer?
3 A key marketing instrument to win new customers is a persuasive catering
proposal. List all elements that you would include in such a proposal. Describe
for each of these elements whether you would offer them as fixed elements or
whether their content can be negotiated.
4 The marketing of catering services strongly depends on effective relationship
management. This means that Cater Inc. must invest in developing personal
relationships with its customers. But the majority of sales efforts concern new
customers. How can Cater Inc. use relationship management to win new
customers?
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