Subject : Marketing or Sales Management. (If they have options for Sales Management )

PRACTICAL EXERCISE Microcom When the buyer moves on does the relationship end? Relationship marketing plays a significant role in modern sales management Compa- nies have for some time realised the benefits of practising a relational approach to sell- ing rather than a transactional one. Nevertheless, many markets are volatile or else have long product life-cycles, which make the practice of relationship selling challenging. Microcom is a UK firm supplying high-quality broadcasting equipment used by national networks such as the BBC, ITV and their equivalents abroad. The product is chiefly customised to customers' specific requirements and has a 1015 year lifespan. Senior management are troubled by the fact that at present the firm practises a largely transactional approach to selling. They are keen to adopt a relational selling approach, but are uncertain how this might be achieved. The Marketing Director has explained the meaning of relationship marketing and stressed that a relationship is between people. One of the problems Microcom have in this respect is that when a company they have previously sold to requires new equipment the original buyer has often left to go to another job, been promoted away from the buying function, retired, or in some circumstances may even have died. Although the company is keen to adopt a relational selling approach, another major reservation is the long time between repurchases. One senior manager expressed this issue as follows: Relationship marketing cannot work because you can guarantee the places we sold to this year won't be in the market to buy again for 15-20 years. Typically Microcom will design and install the equipment (a process that can last anywhere between two months for small projects and up to three years for larger ones) and will then maintain contact with the customer for a time afterwards to en- sure that the system is effective. These systems typically last for anywhere between 15 and 20 years before they must be replaced. There are generally a number of small orders that may crop up in the interim, but Microcom often does not bother with such minor orders as it typically needs a minimum of 20 million worth of business a year, which means that it usually only bids for the large orders. At present, how- ever, Microcom has a poor retention record, with a rate of around 30 per cent, despite the fact that customers claim to be highly satisfied with the equipment and level of service provided by the firm. Source: Written by Andrew Pressey, Lecturer in Marketing, University of East Anglia and Neville Hunt, Lecturer in Marketing, University of Luton. Discussion questions 1 Advise senior management on the appropriateness of adopting a relational approach to selling 2 Suggest and justify tactics that could be used