Question

Case: Following the fundamentalist revolution in Iran, the new Islamic government nationalized all major companies. Among them was a razor manufacturing firm operating with a British license. The company had been using the brand name "Tiz," which means "Sharp" in the local language.

The brand name had enjoyed good customer service acceptance in Iran with its sharp image. In the mid-1980s, in response to the government's foreign currency deficit - a consequence of the war in Iraq - the company was encouraged to mount an export drive. It targeted the most obvious market, the nearest and the richest one, Qatar.

The first shipments of Tiz were made after an agency and distribution agreement was finalized with a local importer. Soon after the product launch in Quatar however, the distributor realized that the Persian brand name Tiz was creating some serious problems with customers. It was discovered that the brand name's connotation in Arabic slang referred to "buttocks" resulting in significantly low sales.

Answer the following 2 questions in paragraph form with DETAIL and EXPLANATION:

1. What would you do as the account manager in this situation? (the account manager is the person that is the middle person between the company and the distributor)

2. What would you suggest the company do to avoid problems like this again in the future?

Answer 1

1. What would you do as the account manager in this situation? (the account manager is the person that is the middle person between the company and the distributor)

The responsibility of an account manager is to create a smooth flow of information between the company and the distributor and thereby managing the relationship between the both. In this case both the parties are facing certain problems in their local market. Initial sales of the product made it clear that the brand name is not suited for the Qatar market. If the company continues to sell the product there in the same name, they will never achieve a profit. Same I the case of the distributor. Each party has invested certain amount in the operation. So, the most tactical move at hand right now will be retrieve all the products from Qatar. But this will create a huge loss for the company. But the fault is with both the company and the distributor. The company failed to conduct thorough market research in Qatar and the distributor failed to assume the negative effect of the brand name which was expected of him because he was a local. How ever as the account manager it is my responsibility to maintain positive relationship between them and the agency and distribution agreement was already signed and also it will be difficult to find any alternate distributor soon. Considering these facts, I would suggest taking back all the products from Qatar and expenditure for the same will be dealt by the contribution of both the company and the distributor. It will be difficult, but I’m sure that there will be causes in the agreement for such a provision.

2. What would you suggest the company do to avoid problems like this again in the future?

For starters the company should conduct thorough market research on the country and city they are trying to launch their product into. It is very important to know the local customers, linguistic uncertainties, tradition and culture of the market they are entering. Most customers are sensitive on these issues. It is the duty of the company to understand it and plan their launch and penetration appropriately.

In any case where such problems can arise, like in the case of Tiz, it will be better to change the name of the brand which suit the local market. A lot of companies like Coca Cola, McDonalds etc. has adopted thee same method in the past.

Third one will be creating clauses in the agreement which gives instruction on how deal with such situations where the fault is from both the parties and in which monetary loss is involved.