1. Problem Overview
When Sport-Trax was given the opportunity to bid a new 400 metre running track of Loughborough University, it had become one of the three main players in the field with its particular marketing strategy. And during the past six months, Sport-Trax had put much effort as possible to win the bid.
By analyzing its marketing strategy, product service and competitors in the same market sector, it seemed that Sport-Trax was likely to get the contract with several advantages and good opportunities.
Priorities identified such as key managers' backgrounds in Sales and Marketing department and new technical product as having longer life expectancy of the running surface which has been tested in the laboratory. Furthermore, the company paid more attention to running track installation and high-quality support service instead of price as a vital tactic to compete against the other opponents
However, Sport-Trax has failed to win the tender.
Problems overviewed through the case can be sorted out as influences came from external competitive opponents and internal company's marketing strategy. To illustrate this, pricing and the absence of in-depth understanding about the buyer were crucial factors. Moreover, Sport-Trax gauged wrong on requirements of the University beneath the lack of survey and inherent marketing strategy, which also led to incorrect direction to follow the bidding and communication with the buyer.
On the other hand, what Sport-Trax has promoted did not appeal to Loughborough University. New technology without proven result in real conditions could not persuade the belief in traditional management system. And it was difficult to differentiate the products from competing installers as they all use similar suppliers.
2. Situation Analysis
2.1 Sport -Trax Ltd.
2.1.1 Organization Structure
The total workforce in the company was 23 employees then, in which five of them came from the Sales and Marketing department. Among the five ones, George Truman played the role of Managing Director, following Peter Taylor as Sales and Marketing Manager, John Webb as Installation Manager, John Collins as Commercial Manager and Philip Blake as Contracts Office Manager.
2.1.2 Financial Condition
The market sector in all synthetic surfaces was growing. Most of the competitions including Sport-Trax were relatively new companies. All competitors could be listed as Balsam, Charles Lawrence, Mastersport, Polysport Surfaces and Recreational Surfaces and some new local suppliers. In the running track market, Polysport and Balsam have approximately the same market share as Sport-Trax, together accounting for 75-80 per cent in the UK market.
2.1.3 Company Culture
Sport-Trax Company Limited, formed in 1987, has specialized in synthetic running tracks unlike some competitors in the industries which also supply and lay additional synthetic sports such as football, tennis, and hockey.
Apart from high quality of workforce in the organization, their particular marketing strategies also played important roles in the company's growing process. Two of them are worthy to be mentioned, namely product and pricing strategy.
Considering product service, one of the key elements of marketing mix which Sport-Trax has focused on, the company believed that customers' concentration can be led to good track installation and support service, which was used as a special method to compete with other players in this market. Price Premium over its competitors was also used as its priority to reflect its value to potential customers. They usually could succeed to make their customers to believe the service they offered was worthy of their price.
Although there were unavoidable shortcomings in both two strategies, they did help the company to win many buyers. However, the company was always hesitating in changing their strategies even when they met strong challenges to their blind faith, which has led to the failure of winning the tender with Loughborough University.
2.2 SWOT Analysis
Certainly, product itself cannot be sold. Relationship building is important as well. Salespeople should learn as much as possible about the organization and its buyer before any communication begins. In current situation, customer satisfaction and profit are more concerned than just product quality. The more customers are aware of company's product value and its tangible benefit, the better opportunities increase in company's sales.
Moreover, salesperson who owns well-trained skills must be able to explain product value to customers and present its field-based evidence that estimate of cost saving and revenue increase will occur in practice.
On the other hand, high price offer compared to the competition is often be questioned by customers. Therefore, salespeople should be supported by those who can provide detail technical information such as Managing Director, Engineer, Installation Manager, and Commercial Manager in this transaction.
According to the above claims, internal and external analysis, composing of Strengths, Weaknesses, Opportunities and Weaknesses (SWOT) should be audited by the Sport-Trax in this case, which may help the company get more clear understanding and be able to anticipate important development both in current and future market situation. By analyzing the Sport-Trax's bidding, it could be assayed by the following factors:
Background access to the insider -- Gordon Walker
Concerning about new technology --new running track feature with longer life expectancy
Focusing on competitive advantage by differentiating the product into "augmented product" feature eg. Service Reliability and Warranty Provision.
Product can meet the beat of tolerance and standards laid down by governing bodies of athletics (AAA and IAAF).
Representative customers including universities and some of the most prestigious in the country.
Number two/ three in the rank of sport market sector.
Relatively new company comparing to Balsam.
Concentrate only on synthetic running tracks; not supply to other sports.
Neglect understanding and interpreting competitors' strategy.
New running track feature "Sport-Trax W S" is less convinced about the improvement and risk as the surface has not actually been tested in real condition.
Pricing strategy is not noticeable and valuable to customers.
Deficiency in in-depth university information.
Lack of previous work experience and relationship with Loughborough University
Competitors' vantages in good relationship with Loughborough University-- Both Balsam and Charles Lawrence have ever worked for the University.
UK market for running track is the largest in Europe; approximately 25-30 installations per year.
Few competitors in the market.
Increasing trend towards sport recreation in the organization especially in academic institution.
New form of product appeals to customers who concern life expectancy of track increase.
Difficult to differentiate the products from competing installers as they all use similar suppliers.
Most of the academic institutions predictably are more concern about protecting their money value than product service.
New technology with unproven result in real conditions cannot persuade the belief in traditional management system in the University.
The main possibility why Sport-Trax could not make the bid for the running track contract lay in some misunderstanding about the organization behaviour. In our point of view, Loughborough University is a non-profit organization which differs from another organization in its sponsors and in its objectives. Many institutional markets are characterized by low budgets and captive patrons. (Kotler, 2001)
3.1 Process of decision making
An operating process of institutional organization like Loughborough University is always formalization and specialization. Many departments are expected to participate in any decision making process. As we had analysed this case, the process of bidding running track contract was presented as the chart below.
3.2 Decision Making Unit
As one observer notes, "Managers do not wear tags that say 'decision maker' or 'unimportant person'". (Loudon, 1993) This could be priceless information if the company could know the key players in the Decision Making Unit (DMU). Not only can the company influence the key players but also give the right information to the right person. According to Loughborough University DMU, the key players are described as the following
The person who strongly commenced the idea of maintaining the running track was Nick Emmet as an athletics coach. He perceived that the good quality running track could enhance the new-coming undergraduates' satisfaction. On the other hand, as a user of the track, he believed that the new running track could be a means to improve the ability of talented athletes.
In the end, when the renovation of the running track was finished, it was no doubt that Nick Emmet and Richard Ellison would get the highest benefits as the main users of the track.
Richard Ellison, who pushed this project through the committee, also used his professional perspective from the sport side for helping Gordon Walker particularly form the detailed specification. As a result of that Gordon himself did not have enough knowledge to deal with drawing the running track requirements, most ideas were influenced by Richard, especially during product specification stage.
Another influencer was Paul Murray who was Gordon's grounds super intender. He played as a potential influencer in the DMU. Paul could strongly influence Gordon in the final decision because Gordon devolved his responsibilities for the running track to him.
First of all, there were many steps in decision-making process and each rung of the committee ladder had different deciders. For example, at the first stage of problem recognition, Professor Jones was the only decider who had the rights to approve or reject any proposal initiated by PESS&RM Department. It was obvious that the most important decision was made at the final stage of the process.
At this stage, there was not only one decider but a group of expert in various fields. This committee were consisted of Professor Derwyn Jones, Gordon Walker and Mr. Reason, the bursar. Individual deciders have different background knowledge. Professor Jones was an expert in sports science, Gordon could give the committee a great insight in terms of estate while Mr. Reason made a decision based on his finance aspect. At last, all viewpoint given was put together in order to select a potential supplier.
Gordon, head of the estates section, was directly responsible to all building and ground in the university. He was in charge of commissioning architects, choosing a builder, inspecting progress and protecting the university's interest till the end of the project. Meanwhile, a product specification was conducted by Gordon. He collected most information for this project from various sources. With his estates experience and knowledge, he was undoubtedly a buyer in this project.
Irene Daley, the bursar's secretary, played as a gatekeeper in the DMU. All useful information was passed from her to Peter Taylor such as competitors' detail, updated movement of the DMU and so forth. Reversely, she passed messages form Sport-Trax to the other members in the DMU. As we could see when Taylor asked to send copies of customers' references to Paul and Professor Jones and she did so.
In contrast, Janet, who is Professor Jones's secretary, had brought him some difficulties. She did not let Taylor reach the member of DMU easily and it was difficult indeed for him to get any information about the bid from her.
In this case, when the Sports-Trax's product and competitors' product were more or less the same the university had a few criteria for rational choice. It was believed that every company had an opportunity to reach minimum requirements. Therefore, buyers can allow personal factors to play a larger role in their decision. (Kotler and Armstrong, 2001) According to Maslow's Hierarchy of needs, they are physiological needs, safety needs, social needs, esteem needs, and self-actualization needs. A person tries to satisfy the most important need first. When that need is satisfied, it will stop being a motivator and the person will the try to satisfy the next most important need. (Kotler and Armstrong, 2001, p.187) In order to deliver perfectly the company's message to buyers, it would be better to know what their benefits behind the purchasing of the running track were.
In Nick's point of view, his concern is to improve the potential of the University's athletes and the quality of teaching sports. He might make use of the track in order to achieve his purpose. [Esteem needs: self-esteem]
A director of the centre for coaching and recreation Management, Richard could get a good reputation for bringing the University the new track which attracts a large number of new undergraduate students. In addition, restoring the track could also raise satisfaction of the existing coaches and athletes who used the track. The accumulation of successful projects might help him get a move to more important position in the organization. [Esteem needs: recognition and status]
Gordon devolved most responsibility to Paul Murray. Paul did his best to satisfy Gordon because it could directly affect his job as a grounds superintendent. Another reason was that he did his MBA at that moment. Being in the real business situation could make him have better understanding about a process and he could use this knowledge to form his final year project. [Self-actualization needs: self development]
This project was originally belonged to the PESS&RM Department in which Professor Jones was the leader. Professor Jones's benefit was quite similar to Richard's. If the project was successful, he could have gained a good reputation and also a chance to achieve a higher position in the organization. [Esteem needs: recognition and status]
The refurbishment of running track implied that Gordon highly paid attention to his job and intended to make everything the best for everyone in the University. By the way, after the track was finished, his responsibility for the new running track would be less. He could have more time to deal with something else in the University. [Esteem needs: recognition and status]
Mr. Reason was concerned about a tight budget of this project. He tended to cut the budget deficit. In case there was another important project emerged, he still had the budget to proceed. [Esteem needs: recognition and status]
Irene Daley (the bursar's secretary) and Janet (Professor Jones's secretary) both wanted to satisfy their boss. [Esteem needs: recognition and status]
3.3 Problems Analysis
There is no doubt that Sport-Trax regarded the bid highly not only for the crucial profit but the reputation of Loughborough University. Although Sport-Trax had pointed Peter Taylor, the manager of Sales and Marketing department, to follow this case, it still failed in its bid. Lots of influential factors can be identified. Most of them could be related to the deficiencies in the contact with the DMU members of this case.
Before the beginning of the tender, investigation of the structure of the University organization was necessary and vital. Benefits could be obtained in this stage, in which the prominent one was to help Taylor plan an efficient negotiation project and arrange appropriate resource, such as time arrangement, priority, product and technical information, price component and so on, to particular member in DMU. In addition, the information about their main competitors is also worthy to be collected.
However, the company failed to give Peter support in this stage. Peter began his job with litter blurry information about university sport facilities and did not get more from his colleagues after that. If works had been done well, Peter would know that University had already built a close relationship with other providers after the first two projects. Furthermore, he may get some sense about what University was considering by studying the former two projects.
4. Solution Scenarios
As mentioned above, the members of the DMU except initiator, all could be helpful for Taylor to achieve his aim. After deep consideration on documents, we could find there were three people occupied the most important roles in decision-making process, Mr. Reason, Professor Jones and Paul Murray who was the representative of Gordon Walker in this case. They took the responsibilities of Buyers, Users, Influencers and Deciders respectively.
When the DMU members were identified, their interests and benefits limited with identities should also be studied. It was helpful for Taylor to prepare suitable information and strategy to meet their needs in the communications with them.
In the following, we analyzed what had happened during the procedure of Taylor's negotiation with DMU members and how can they be improved.
4.1 Wrong person to contact
The first person in the DMU that Taylor contacted was Paul Murray, who was a main influencer. However, Gordon walker should be an influencer in DMU, but Taylor was told that Gordon walker's role would be handed over to Paul in his first meeting with Gordon. After that, Taylor should adjust his emphasis on how to communicate with this person. But Taylor actually dreamt to take advantage from his relationship with Gordon. Furthermore, within further communication with Paul, Taylor found his interest was not their product but his MBA thesis. Therefore, Taylor should realize he needed to pay more attention to other DMU members rather than on Paul based on the fact that he was less interested on their product features.
4.2 Inefficiency of Information
Professor Jones and bursar Reason became vital in winning the bid. Professor Jones, as the head of PESS&RM department, was firstly introduced to Taylor by Paul. Apart from user and influencer, Professor Jones was also an expert in product technology, and the right person for Taylor to talk with about their outstanding product. Taylor was right to offer detailed information about the product to Professor Jones and discussed with him on track's features. Nevertheless, Taylor could go further if he prepared price information Jones wanted. Moreover, if he got an engineer accompany him to communicate with Jones, it would be easier to find out what particular demands University wanted. Thus, they could adjust their product standard to meet the University's needs and got more chance to make precise price.
Likewise, Janet, Irene and Daley worked as Gatekeepers, who controlled information flow to the key roles. The object of contact with them was to insure the communication with key roles was in time and expedite. Apart from telephone, email and mail also could be used to develop communication with them. Some useful information could be get from them accidentally, which were helpful to analyze what DMU members were considering. For instance, Reason's secretary told Taylor Reason's trouble with variable price, which maybe useful but ignored by Taylor.
4.3 Realization of customers' real needs
Taylor always tried to persuade his potential customer to accept his new, well supported product. However, he forgot to inquire customers' real needs. Before the bidding, his marketing strategies did help him to sell his products. But market is not made up of only one type customer. He should adjust his marketing strategy on customer-led business. One of the stages is the marketing audit, "collecting information to permit a detailed analysis of the current situation and to assess what needs to be done" . Customer audit is the most important. Therefore, Sport-Trax should do customer audit analysis first to know what the real value Loughborough University was chasing for.
4.4 High Price
Bursar Reason, who played the most important role in DMU, as buyer, influencer and decider as well, whose responsibility was to choose most suitable provider under the permit of budget. To restrict the bid of providers' in the region of budget was his precondition to accept one scheme. However, although Bursar emphasized the charge of Sport-Trax was too high and "only a significant reduction will help you I'm afraid of", Taylor and Sport-Trax still didn't get the point of what was the appropriate price for tender. Taylor once got the specifications for the new track from Paul's secretary, and he knew the minimum technical standards requested were easy to meet. So the key point was to offer a competitive price in the fulfillment of the technical standards.
By this point, Sport-Trax should use competitive strategy to communicate with Reason, namely competitor-orientated pricing, which means "a major focus for suppliers is likely bid prices of competitors." So compared with its competitors' bidding price, Sport-Trax should decrease the unnecessary fees, such as 'better service during the installation' and 'assurance of better after-sales service', to make their bid more competitive.
Consequently, when the company made the bidding price for the first time, it should use 'competitive bidding' method to calculate. Moreover, it should keep the consistency of price strategy during Sport-Trax's bidding. Suddenly changing the price with big distinguish may lead to a bad impression on the company.