Hiltis Product: Market and Channel Management Strategies - Essay Example

Report based on a case study in Marketing B2B Hilti’s product, market and channel management strategies Success isdetermined more by better product strategy even than better product. To achieve a better product management strategy, careful and inspired analysis of market is necessary. According to Anderson et al (2012), it is essential to clearly understand customer needs, wants, unmet or latent needs in order to take into account the competitive positions in the market. Without this, a company is most likely to be wasting time, a valuable utility, and attention and money resources while developing undifferentiated products that are out of step with market needs. According to Anderson et al (2012) Strategic thinking is vital but however many companies think that the task of strategy is the responsibility of the executive level. This is not the case. It is only the product managers who are capable of tabling strategies and are the champions of outside-in thinking. They possess an outstanding knowledge about the market and the customer needs along with product uses and applications. Ellis (2010) states that the information on product and market that is compiled by product managers should be followed to help shape and lead strategic thinking in the corporate. Establishing good marketing channels improves the speed of the market expansion of the product and also helps enterprise to attain strategic goals of marketing and at the same time improve enterprise competitiveness. Webster (2007) states that there are fundamentally 4 types of marketing channels Direct selling - involves selling and marketing of products directly to consumers away from the retail location. Selling through intermediaries - a third party that offers intermediation services between two trading parties. Dual distribution - illustrates various marketing arrangements by which the manufacturer or wholesalers adopt more than a single channel to reach the end user simultaneously. Reverse channels - may go from consumer to intermediary to beneficiary. Hilti Corporation is a company based in Liechtenstein that produces, manufactures, develops and markets construction products, building maintenance as well as mining industries to professional end users. It focuses much on anchoring systems, fire stops, hammer drills, installation services heavy drill machines, power saws, and electric drills among others. It provides global leading-edge technology to global constructional firms and professionals. Hilti products, systems, channels and services offer creative and innovative solutions with exceptional added value to customers in building and construction maintenance industries. The Hilti product, market and channel management strategies are derived from the Hilti business model as well as the corporate goal and intention of attaining sustainable and profitable growth based on the Hilti corporate strategy, customer, employee and society requirements. The main bases for these strategies are: Satisfaction of customers Employee satisfaction Friendly and professional partnerships with suppliers Positive influence of the organization’s activities on the environment and the society According to Webster (2007), within the scope of these strategies, product, market and supply management provides decisive contributions in the available areas of product leadership and supply. The success of Hilti products depends much to a great extent on the work done by our suppliers, employees and third parties. Hilti therefore works together with suppliers who meet the following requirements. Quality Innovation Costs Availability Hilti works together with suppliers on partnership basis and makes it an integral part of the whole channel process. Supply management for the products and material produced by Hilti from allied manufacturers and suppliers is incorporated in the Hilti business units. According to Ellis (2010), channels and supply management takes the first and leading role in the growth and development of new international material and product group strategies and sourcing concepts in the make and buy decisions. In the make or buy decisions, Hilti manufacturing plants tend to compete directly with the sourcing markets. Thus, Hilti has a strategy of employing a team that is concerned with the process of making sound and informed decisions on whether to buy materials from outside suppliers or to make the materials by themselves depending on factors like costs, time taken and other decisive factors. Market and supply management for productive materials is combined with the finance section of the company and is solely responsible for general overheads (operating materials), services and investments. Hilti’s product, market and channel management strategies focus much on the marketing strategy. Hilti offers customers with innovative, creative, effective and long term marketing strategies. According to Ford (2012), marketing offers a key strategic role. Hilti marketing team members are totally responsible for defining where the company plays and wins. The team offers a wide range of functions within the marketing units and other channels. According to Ford (2012), the concentration is much on strategic marketing, products, and markets and brands all of this at local, regional, national and global levels. The team is given the responsibilities of identifying, inspiring as well as retaining current and potential customers. Cespedes (2010) states that, a good and strong brand represents a competitive advantage when compared with competitors. Hilti’s communication is aimed at both short term and long term reinforcements and cementing the brand while at the same time highlighting what is offered by the company. The team ensures that customers recognize Hilti once they meet it and stand for it. Sales Hilti shows enthusiasm to professionals in construction with technologically-leading products, systems and services which last for long with good performance. Two thirds of their team have direct customer contact that result to about two hundred thousand contacts daily. This figure translates to the same number of moments that they use to prove customer orientation. The goal is the same for all staff in the company of passionately creating enthuastic customers whether one is a field salesperson, member of ProShop team, in the company center or the customer service. According to Ellis (2010), the sales of the company focus on the applications and needs presented by the customers .A customer is always welcomed by professionals in construction as the company portfolio of products and services is now and then setting up new standards in the industry of construction. According to Zoltners et al (2004), to enthuse customers, a breakthrough in technological innovations has to be embraced in order to anticipate improved production in the sites of construction. In Hilti, there are legendary electro pneumatic rotary hammers and breakers, direct fastening technology and measuring technology that serve a good example for innovation in technology. Managing risks in marketing Defining Expectations Hilti asks their buyers about their expectations with regards to delivery, billing, ordering, and payment, quality of products, size and volume as well. They engage the customers to find what interests them and how much they need to be produced. This enables the company to make realistic projections before making commitments. Price Discounts Price is a vital topic for the company of Hilti. List price is the price that is normally quoted for the end user. List price is usually discounted for distribution for the members of distribution channel and some end users. HILTI generally pursues a Price premium strategy and the customers are not reluctant in paying higher prices due to the company’s approach of directly deploying direct customer support by over fourteen thousand employees of the company globally, with two thirds of the number having a direct contact with the customers. They demonstrate to them as well as savor the support offered to them by the Engineering team. The strength of their brands empirically correlates with price premium. HILTI’s fair pricing concept The pricing concept of Hilti Company is fair and focuses mainly on the potential of the customer relative to the volume of sales. Both the main centers and the online centers of the Company offer an ultimate transparency in the pricing of the commodities that they sale. The company is divided into three potential categories, base, middle and top. According to Ellis (2010), the base level potential also known as the basis template is where one price of the product is offered for all industries. The mid level potential is associated with a complicated industry template. Special agreements for the prices are only for the best third of the mid level customers. Special agreements are offered for the best two-third of the customers on the top level potential. There is usually a special agreement every year to align these potential levels. HILTIs value proposition Brennan et al (2010) states that the value proposition takes into consideration the ownership total cost. Actual tests done to the products of the company showed that the products have the ability to operate five times longer than the best tool of their competitor. The premium quality of the company is legitimized by the products and service that are of high quality as well as the support that is remarkable. Dual Distribution The distribution and communication of Hilti to the customer is done directly through a worldwide sales network. The sales representatives of the company are accessible either as a person, through telephoning, or at the nearby center of the company. In case of technical support, the customers can try to reach the E-Business platforms that are available in most countries around the globe. The concept of Shop-in-Shop facilitates the contact between the company and the customers that tallies to about 100,000 contacts daily. According to Corey et al (2010), the model of direct sales of the company comprises of 5 direct sales channels as; 1) HILTI Center – these are dedicated outlets that offer stationary sales for the Company’s products along with added service center. 2) E-business channel – this is an online internet platform that can be accessed everywhere globally and offers personalized online order forms for customers to place an order and make inquiries. 3) HILTI Pro Shop – these are the same as the centers above but are outlets within partner distribution. 4) Territory salesperson – this is a conventional channel that has an outstanding competence in technology and applications as key differentiators. 5) Customer Service – there are national call centers that establish a personalized link with the customers HILTI focuses on the core trades in order to understand the individual needs of their customers globally. These are; Building Construction (BC) Steel and Meta (SM) Civil Engineering (Civil) Electrical Installation (E) Mechanical Installation (M) Interior Finishing (IF) Targeting different customer segments through applying a mix of different direct channels improves the overall turnover as well as results of operatins. Market segmentation Products The products of Hilti differentiate themselves from the ones of their competitors in that they are continuously innovated. An increasing effort and funds are invested in R&D to enlarge the number of products and to improve them. Hilti only continues making a product if it is confirmed that it matches the needs of the customers and critically gain a competitive advantage over that of their rivals. These products are of high quality and are highly reliable. This is crucial for the company since it is dealing with deadlines and at the same time maintaining its reputation. The products last for long and are efficient at construction site. Price The pricing concept of Hilti Company is fair and focuses mainly on the potential of the customer relative to the volume of sales. Both the main centers and the online centers of the Company offer an ultimate transparency in the pricing of the commodities that they sale. The company is divided into three potential categories, base, middle and top. According to Ellis (2010), the base level potential also known as the basis template is where one price of the product is offered for all industries. The mid level potential is associated with a complicated industry template. Special agreements for the prices are only for the best third of the mid level customers. Special agreements are offered for the best two-third of the customers on the top level potential. There is usually a special agreement every year to align these potential levels. Place The availability of the products of the company is solely at its centers or a customer can contact one out of many salesmen that operate everywhere globally. According to Brennan (2010), when one cannot find the products at the local centers, he/she can look up at the shops or various whole salers. Many shop-in-shop locations do exist, which are completely run by the company itself. There are about 20 Hilti centers in Netherlands. Many products are also available at Hilti’s website. One can order products, make inquiries about the services offered, access technical data, and engage into contact with the advisors of the company. Online registration is obligatory to ensure that services are customer oriented. Promotion The main objective of Hilti in promotion is to accentuate the quality of service provision. It achieves this by offering lifetime warranty on their products. The slogan of the company also portrays its advantage, “outperform, outlast” Because Hilti operates a business to business strategy, it has adopted different channels than any other company to reach more customers. It is rare to find the company making advertisements in the newspapers since the people reading the newspapers are simply not part of the target group for their products. Brennan et al (2010) states that customer satisfaction is a main issue for Hilti and more specifically the repair service the company offers. The company provides a fleet management where customers have the responsibility to lease their machinery to contractors. This is an important venture as; There is no upfront investment theft is insured it is a modern tool fleet unexpected expenses are not there one instantly accesses his/her complete tool inventory Tools are freely replaced during repara­tion Hilti has an established special team that mainly attends to all construction trade fairs to ensure that the company is represented at necessary. Candidates and customers usually attend the ‘Hilti-days’ that are organized in the centers of Hilti to offer special services to them. According to Corey et al (2010) demonstrations are organized where people get the chance to test their products and have the opportunity to talk to other users of Hilti products while having a barbecue. The company also conducts numerous campaigns like that of price reduction that stipulates you buy more, you get more. There are little dolls that come along with the products and customers usually collect them and also take part in contests where they can win tools. Customers receive emails frequently with the current news and information or a newsletter. ‘Hilti Impulse’ is also a magazine, a periodic publication that is released regularly to customers and is produced by a team of Engineers to cover the technological advancements that concern the products. Brand Importance in B2B Markets ‘Hilti’ is the only registered brand under the Corporation of Hilti that makes the company to have a one direction outlook as well as think big in operations. The outstanding red logo of the company gives it the distinctive feature as a brand with angular lettering, a logo that stipulates the simplicity of the Company. Hilti does not use resellers to sell their products to customers. According to Mark et al (2012), a man dressed in the red case usually feels at home in the site of construction. All the products of the company stay consistent with the red logo of the company Hilti spends a subtle amount in visual advertisements. The imagery portrayed in their website clearly emphasizes their products and their respective uses. Instead, by focusing on the product’s function­ality, the company achieves a brand image with a great equivalence to their corporate strategy and mission statement. Once more, uniformity is the issue here. Branding drives the success and growth of the company as the company can take advantage of premium pricing, and invoke emotional connections with customers through which it can generate loyal customers. Reference List Mark S. Glynn, Arch G. Woodside. 2012. Business-to-business Marketing Management: Strategies, Cases and Solutions: Emerald Group Publishing, Business & Economics Anderson, J.C., Narus, J.A, & Narayandas .2012. Understanding, Creating, and Delivering Value, Pearson Education: Business Market Management Brennan, R., Canning, L., and McDowell, R. 2010. Business-to-Business Marketing: Sage Publications. Ellis, N. 2010. Business to Business Marketing: Relationships, Networks and Strategies: Oxford University Press. Ford, D. 2012. Understanding Business Marketing and Purchasing: Thomson Learning. Webster, F. 2007. Industrial Marketing Strategy: John Wiley and Sons. Corey, E.R., Cespedes, F.V & Rangan, V.K. 2010. Going to Market: Distribution Systems for Industrial Products: Harvard Business School Press Cespedes, F.2010. Concurrent Marketing: Integrating Product, Sales, and Service: Harvard Business School Press. Zoltners, A.A., Sinha, P., & Lorimer, S.E. 2004. Sales Force Design for Strategic Advantage: Palgrave Macmillan, Houndmills. Read More