Electric Generator Corporation The Electric Generator Corporation was founded in the early 1970s to develop and...

Electric Generator Corporation

The Electric Generator Corporation was founded in the early 1970s to develop and market electrical products for industrial and commercial markets. Recently, the company has developed a new electric generator, the EGI, with a revolutionary design. Although its initial cost is $2,000 higher than any competing generator, reduced maintenance costs will offset the higher purchase price within 18 months. The Electric Generator sales force has been instructed to concentrate all effort on selling this new generator, as the company believes it has a sales potential of $500 million.

Sandy Hart, the company's South Texas salesperson, has as her main customer the E. H. Zachary Construction Company of San Antonio, which is the largest nonunion construction firm in the world. Because of the importance of potential Zachary purchases of the EGI (estimated at $1 million), Sandy's boss asks her to take two days off and develop a plan for contacting and selling to Zachary. Monday morning, she is expected at the Houston regional sales office to present this plan to her boss, the regional sales manager, and the divisional sales manager. These two people will critique the presentation, and then the four of them will finalize a sales plan that Sandy will present to Zachary's buying committee.

Questions

1-What could Sandy have done differently?

2- What do you think about the current price?

Expert Solution

1. Based on the information given in the case, Sandy has 2 days to work and prepare a plan for selling the product to E.H. Zachary Construction. They are the largest non-union constructions firm in the world and the selling the new product to them would mean the company would earn significant short and long term benefits. Few things that Sandy can do in the time she has been given are:
• Prelate the presentation outline with details that is needed for the customer
• Enhance the presentation to ensure to customer will be comfortable with the presentation
• Practice the details well and prepare for any questions the team and manager might ask
• Be ready to accept any mistakes or enhancements suggested during the review meeting
• Understand the product details, specifications and features well and ensure all the minor benefits are also captured
• Ensure she knows the advantages of having the new product over existing product line
• Sandy could also take help from other sales team members who can guide her in identifying the best sales pitch and converting them.
• She can also study the customer`s details and insights from market well so that they are ready and aware of customers’ requirements
These are few things that Sandy could do before the meeting differently.

2. The new product designed by Electric Generator Corporation is significantly different from other products they have designed so far. This is also reflecting in the prices, the product is costing $2000 more than other products in the industry. For any product there are two major kind of costs associated with it. The fixed cost price and the hidden associated prices. The cost price can be negotiated by the buyer based on the volume, payment terms and other benefits. But the hidden costs cannot be changed. There will always be significant changes needed in the product over period of time for maintenance and other activities which cannot be predicted while buying the product. But based on historical data this can be obtained up to a certain extent. As already mentioned the product can give significant benefits in the long term and the additional cost that will be offset within 18 months from purchase. This would mean there is long term sustainability and less requirement of maintenance as the product will be rigid and good enough to stand up for a long time. Based on this the company sees long term benefits for the customer and if they can be effectively promoted to the customer, there can be significant long term benefits for customers. This is the basis on which they have charged the product at a premium price. The price can be justified if they have features which can outrun other products in the market for long term. Based on my opinion, the price is fitting for the product.

keosha answered 1 year ago

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