Omar Al Balushi, the senior executive of ACT Technology
Company, was saying to himself, "One more year has gone without
making a good profit and if it continues at this pace, so soon the
company will go bankrupt". He added, "profit has decreased by 15%
in a market of 20% of growth per annum."
Omar Al Balushi, who has been a senior executive at ACT
Technology company, witnessed a decrease in sales and profit for
the last three years. ACT Technology, which is based in Muscat,
manufactures sophisticated electromechanical control devices for
factory production lines, more specifically, ACT Technology is
specialized in producing control devices only for chemical
manufacturing facilities. The products suit to chemical processing
plan which provides safety and cut-out mechanisms.
ACT Technology products are sold across all the GCC counties
and middle east though salesforces based in the capitals of these
countries; 12 salesforces based in Riyadh, Abu-Dhabi, Dubai, Kuwait
city, Manamah, Doha, Beruit, Amman, Muscat, Jeddah and Tehran. As
can be seen from the previous geographic distribution the focus is
on the major cities in the region and all of the sales
representatives are qualified, mechanical engineers. Despite the
fact that 95% of ACT Technology sales come from the chemical
industry, the electrochemical control device has many applications
in a wide variety of industries.
For the reason to do with the history of the company, the
owner (Mr Bala Bathichara) of the company, who happened to be an
engineer, found an opportunity in such a device. His father in law
who was a rich man doing business in the detergent industry
supported him by being one of his first customers and a generous
financer of Bala's project. However, nowadays, Mr Bala is not
anymore in the executive position, but he still maintains the
company financial affairs. Mr Bala's philosophy on business felt
among the company's executive team.
The excellence in products and production is the essence of Mr
Bala's Philosophy which is backed by strong technical sales
support. He believed that if products are well designed and
produced in high-quality, there will always be a market. It is
self-evident that such type of products required for salespeople to
push the products by showing the consequences of not buying the
safety mechanisms which may result in damage to the clients
manufacturing process. Therefore, the technical salespeople used to
emphasize the negative aspect (of not having such device) rather
than the positive aspects (of how good, they were, time-saving in
the case of plant breakdown, etc). This technique of sales was
pivotal to the success of ACT Technology sales strategy, according
to Mr Bala. The embedment of the philosophy in salespeople is still
clear in their behaviour, decision-making process and sales
approaches unless most of customers' show no interest in updating
their control equipment.
Few thousands of Rials spent on advertisement and sales
promotion, however, from time to time, whenever there was a surplus
of cash, Mr Bala would have spent on advertising in the local
magazine " Y-Magazine". Due to the associated expenses, the company
follows a cost-plus pricing structure basis, fixed prices by the
accounting department. In other words, the company salespeople
given no room to negotiate the price with clients. Hence, a
disappointment has prevailed among the salespeople for not being
able to negotiate with clients over price and delivery terms as per
the customers' requirement because Bala's philosophy prevails, " If
they wanted the product badly enough, they will wait for it, and
Why offer a discount for large quantities - if they did not want
that many they would not order them".
During the last few years, many competitors from the GCC
countries entered the market. In plain English, the market became
so competitive and thus, the ACT Technology market share dropped
sharply. ACT Technology used to be the traditional supplier of the
device across the GCC countries. However, the new competitors
introduced updated and innovative devices based on the new
advancement in electronics. However, ACT Technology management
believed in the superiority of their products/device, therefore
believing once the trend of novelty is worn off, the customers will
revert to ACT.
Unlike many of his colleagues, Al Balushi was worried by
developments over the past five years and felt there was a need for
many changes. He was aware that the more successful new entrants to
the industry had introduced a marketing philosophy into their
operations. Compared with ten years ago in this type of business,
it was now common practice for companies to appoint marketing
managers. Furthermore, he knew from talking to other people in the
industry that such companies considered sales to be an integral
part of marketing. At a recent meeting with his senior staff, he
mentioned to the sales manager the possibility of appointing a
marketing director. The sales manager, who was shortly expecting to
be made sales director, was scathing about the idea. His view was
that marketing was suitable for a baked beans manufacturer but not
for a company engaged in the manufacture and sale of sophisticated
control devices for the chemicals industry. He argued that ACT
Technology customers would not be swayed by superficial advertising
and marketing ploys.
Now, Mr Omar Al Balushi is intending to appoint a marketing
manager based on the recent figures which strongly indicate that a
change must be brought in the management philosophy and the way
sales are functioned at ACT technology; he needed a marketing
manager has marketing experience but has come from the chemical
industry. The person appointed would have equal status to the sales
manager, and ultimately either the new appointee or the existing
sales manager would be promoted to the board of directors.
Question:
Make a critical analysis of ACT Technology product approach to
sales and marketing