Business to Business Marketing Management: of Kunst - Case Study Example

Kunst Case Study Executive Summary The case study focuses on the advantages of business to business marketing between the mother company, Atler GmbH which is headquartered in Germany and the United States –based Kunst Company. The Kunst Company is headed by Evan Stone. Business to business marketing focuses on determining the clients’ current needs. Based on the research conducted, Evan Stone sets out to produce a product to fill the needs of the clients. A survey conducted indicated that many repair technicians abhor changing the vacuum pump’s oil. Likewise, the owners of the shops are against the request of the repair technicians’ that the owners should be the ones changing the spent oil inside the vacuum pumps. The survey indicated that clients prefer lightweight vacuum pumps as compared to the normally heavy ones. With the advantages of being lightweight and oil free, the Kunst management is very optimistic that the company can easily penetrate into the current vacuum pump target market because the Kunst pump has far better features than the currently popular AirMaster pumps. Going back, Kunst’s business to business marketing strategy is supported by the marketing mix. The company produces a product of high quality. The company sells its products directly to the target markets – air conditioner repair shop owners and the refrigerator repair shop owners. The price of the Kunst vacuum pumps are slightly higher than the competitors’ prices to ensure that clients are paying for the quality and the advantages of the product aside from the product itself –vacuum pump. In terms of advertising, the Kunst Company directly advertises its products to the air conditioner repair shop owners and the refrigerator repair shop owners. It is highly recommended that Kunst Company should reduce its initial market price to the level of the competitors to increase its market share. Likewise, the company should increase its budget for advertising in the tri –media to increase revenues. The company should also continue its current business to business marketing strategy to ensure client loyalty. In addition, the company should continue to sell its products at its current weight. The Kunst Company should continue to advertise its vacuum pump as oil –free vacuum creation device. Lastly, the company should also enhance the features of the company’s products to increase its hold in the vacuum pump target market. INTRODUCTION In terms of brief introduction, the Kunst Company sells vacuum pumps to target markets. The vacuum pumps are used by air conditioner repair shops and refrigerator repair shops. The Kunst company is owned by the Germany –based company, Atler GMbH. In addition, the target markets are identified as the air conditioning repair shops and the refrigerator repair shops. The Kunst marketing strategy avoids the mistake of many marketers. Many marketers make the mistake of waiting until all the other steps in crafting a marketing campaign are accomplished before they begin to ponder specifically whom they will be mailing their sales pitch letter to (Geller 2002;44). In terms of price portion of the marketing mix, Kunst sells its products at a price that is higher than the nearest competitor. This is in line with its business to business marketing strategy to sell the product at a reasonable price (Anderson, J., Narus, J., & Narayandas, 2009). The average 3 CFM vacuum pump model sells at the competitors’ $250 while the 6 CFM vacuum pump models sell at the competitors’ $320 per unit. In terms of product, Kunst offers a product that is uniquely satisfying to the target markets’ tastes. The tastes include lowering maintenance costs – no need for oil change. Another client taste is convenience – the products weigh lighter than the competing brands because of its aluminum base. In terms of the place portion of the marketing mix, the company normally sells its products directly within its target markets. The target markets include the air conditioning repair market and the Refrigeration repair market. This way, there will be a higher percentage of making a sale as compared to simply displaying the Kunst vacuum pumps in its store outlets. If this happens, the clients would prefer to buy from the currently popular vacuum pump brands like the AirMaster Vacuum pumps. In terms of promotion, the company can easily increase demand for its products through advertising in the tri media and direct selling. However, the company implements the more profitable business to business marketing strategy to effectively increase its sales performance. Advertising through the tri –media is budgeted in order to supplement the more effective business to business marketing process (Geller 2002;44). Kunst Company’s History and Growth The Kunst Company is based in Minneapolis. The United States –based company has be acquired by the German firm, Atler GMbH. Prior to the acquisition by Atler GMbh, Kunst vacuum pump sales had skyrocketed to a 75 year revenue record of $120 million. Interest in the purchase of Kunst vacuum pumps grew because clients used the Kunst pumps to perform delicate tasks in the laboratory, industrial, and healthcare areas. For example, the engineers used the vacuum pumps for distillation, vacuum oven, and freeze –drying activities. Likewise, High tech organizations used the Kunst pumps to produce cathode ray tubes as well as computer chips. Prior to Atler GMbh’s acquisition of Kunst vacuum pumps company, the Kunst vacuum pumps had a strong foothold in 60 percent of the vacuum pump market place. Kunst had reshaped a 1.6 CFM compressor as a vacuum pump, and sold the product under the Kunst brand name to uncharted and unfamiliar market segments. Further, business to business marketing entails zeroing in on the prospective clients’ needs. Atler GMBH is a Germany –based manufacturing company. It has bought Kunst Pumps from an American company. The main goal of the Atler group is to ensure that the Kunst pumps will slowly but surely grab many of the competitors’ clients. The marketing team of Evan Stone had conducted a research to determine the data regarding vacuum pump purchases in three communities. The Kunst Company will use all media outlets to advertise the benefits of buying a Kunst vacuum pump. The main objective of Kunst Company is to create a strong demand for its vacuum pumps. The main goal is to grab 50 percent of the competitors’ current market. Kunst Company’s Strengths The Kunst 1600 Dry Piston Vacuum pump can run longer and cooler when compared to the competitors’ vacuum pumps. This allows the Kunst 1600 to operate more effectively at lower pressure levels as compared to the operating activities of the competitors’ products The Kunst 1600 Dry Piston Vacuum Pump is characterized as a fractional horsepower, injection-molded aluminum pump, with a pumping speed of 1.6 cubic feet per minute (CFM). The Kunst 1600 dry piston vacuum pump is lighter than the competitors’ products. Each Kunst pump weighs 16.5 pounds. Further, the Kunst 1600 dry piston vacuum pump saves oil money. Each pump does not use oil as compared to the oil –hungry competitors’ vacuum pumps. Likewise, the Kunst 1600 is a reconfigured compressor outfitted with a screen over its input nozzle to catch contaminants.The Kunst pump has fewer working parts when compared to the competitors’ vacuum products. This is the advantage of having an injection –molded vacuum pump (Mullin 2001; 41). In addition, the Kunst name adds to the quality of the Kunst vacuum pump. The Kunst company has come up with prior high quality and very reliable products. The Kunst vacuum pump is an addition to the long list of quality and efficient Kunst product lines. Specifically, the mere mention of the Kunst name brings out adjectives like precision, durability, and reliability. The company is strong in both marketing and product development. Evan Stone was right in making a feasibility study. The feasibility study entails testing the sales of Kunst vacuum pumps in three pilot areas. The success of the product in the selected market will create a strong probability that the product will be similarly successful when launched in all cities in the United States and even within the United Kingdom. Each Kunst can last up to six years. This is longer than the competitors’ average five year useful life span (Mullin 2001; 41). In addition, the Kunst vacuum pump offers three benefits. First, the Kunst vacuum pumps are used to dehydrate a refrigerator’s system when being repaired. The vacuum pumps eliminated damage by preventing the freezing of water droplets. Vacuum pumps eliminate the formation of hazardous acids. The acids form hydrochloric acid and hydroflouoric acids. Lastly, the vacuum pumps pinpoints the presence of leaks in the systems and designs. Evan Stone has been very serious in implementing the four P’s of marketing. The company sells a product that is unquestionably of higher quality than its competitors in the vacuum cleaning department. Further, Evan Stone is also pegging its products at a price that is slightly higher than the competitors’ products. This is possible because the Kunst brand name will easily become very popular in the vacuum pump target market environment. The company should also sell its products to friends, relatives, neighbors, and any drop –bye clients to increase its market share further. Atler GmbH is currently using the Kunst Company as one of the Atler GmbH’s company’s marketing arm to promote, and sell the products. The company offers its quality vacuum pump products with the added features of an oil free and lightweight product. The case study offers an oil –free product that saves time and money in terms of changing the oil from the vacuum pump offered by the product’s statement (Mullin 2001; 41). Kunst Company’s Weaknesses The Kunst vacuum pump has a weakness. The Kunst direct pump equipment is pegged at a higher selling price as compared to the selling prices of the competitors. Economic principles state that as the prices of goods and services increase, a corresponding decrease in the quantity of the finished products or services crops up (Jerrard 2002;37). Kunst Company’s Opportunities In terms of external environment, the Kunst vacuum pumps were acquired in order to help companies within the United States accomplish their tasks on time and with unquestionable quality service as well as products. The Kunst product lines and market segments are complementing the Atler Management products. The compressors and the pumps have similar technological functions. Initially, the Kunst management takes a 1.6 CFM compressor, reconfigure it as a vacuum pump, and market it under the Kunst brand name to previously untapped market segments. The company can stand to profitably gain when the residential air conditioner repair shops will decide to buy its vacuum pumps (Jerrard 2002;37). Kunst Company’s Threats The Kunst Company is threatened by a possible decline in the Kunst clients’ revenues. An increase in expense like electricity will reduce the Kunst Company’s net profits. A decline in the demand for air conditioner repairs and refrigerator repairs will entail a decline in the demand for the Kunst products and services. The smallness in the clients’ needs will entail a decline in the clients’ need for the Kunst vacuum. For example, the economic depression enveloping the United States may force the refrigerator repair shops and the air conditioner repair shops to reduce their need for the Kunst vacuum pumps. As a new entrant, the Kunst Company has to offer a product that has more advantages than the competitors to penetrate the saturated vacuum pump market segment (Jerrard 2002;37). Analysis of Findings – Kunst Pumps In terms of comparison, the strengths of the Kunst Company are enough to topple any threats that cross the Kunst marketing people’s path. In the same matter, the Kunst Company’s weaknesses can easily be squashed by the opportunities unfolding before the very eyes of the Kunst officers like Evan Stone. The Kunst company can continue its objective of penetrating an established market because its vacuum pump offers an oil free, lightweight and longer lasting vacuum pump product (Dibb 2004;136). Kunst’s Corporate Level Identity. The Kunst Company’s corporate identity is grounded on quality service. The company proudly sells its products with the unblemished assurance that all its products have been tested, tried, and proven to accomplish the tasks assigned. The Kunst vacuum pump is only one of the many products sold by the Kunst Company in busy stores and street corners (Dibb 2004;136). Identification of Business (Corporate) Level Strategy. Thus far, your case study analysis has identified the company’s corporate level strategy. To perform a complete analysis, you will need to identify the company’s business level strategy. (Note: if it is a single business, the corporate strategy and the business level strategy will be the same.) For this part of the case study analysis, you should identify and analyze each company’s competitive strategy, marketing strategy, costs, and general focus (Dibb 2004;136). Kunst Business level Activity The business level strategic challenge for Kunst and Evan Stone is to remain coherent while dealing with the increasingly specific demands of its multifarious stakeholders. In such a complex and demanding marketing environment, brand identity plays a critical role because it provides meaning, stability, and distinctiveness. Questions such as “Who are we?” is one of the most critical questions organizations and their executives need to address as they compete to the target market’s scarce money resources. Answering the identity question will bear on the positioning of the Kunst company, its structure, its culture, its communication strategy, as well as its human resource policies. In fact, answering the question will inform much of what the company does –sell a better vacuum pump. Executives are not, however, the only ones concerned with providing an answer: employees, air conditioner repair shop owners and refrigeration repair shop owners, and various external audiences also have vested interests and will make certain that their voices are also heard in the creation of the Kunst marketing strategy (Moingeon 2002;5). Further, Further, Evan Stone’s market analysis builds on customer and competitor analysis to allow strategic judgments to be crafted about the vacuum pump market and its dynamics. One of the primary objectives of Evan Stone’s market analysis is to assess its prospects for winning a huge chunk of the competitor –held vacuum pump market. Another key purpose of the Kunst market analysis is to understand the dynamics of the vacuum pump market. Evan Stone needs to pinpoint emerging key success factors, trends, threats and opportunities and to develop strategic questions that can guide information gathering and analysis with the end in mind of generating revenues from a captured market (Tomlinson 2004;286). Analysis of implementation of Kunst Company Measuring the size of the vacuum pump market segment, Evan Stone clearly picks out the vacuum pump buying trends and being able to predict how the same market is going to develop in the future. Evan stone knows that these are critical factors in understanding the state of strategic market place. Further, Kunst needs to have a strong hold of the methods of assessing market size and forecasting the size to which the vacuum pump market will grow. Evan stone is correctly employing both short- and long-term forecasts in his decision making strategy. Evan Stone’s long-term forecasts are most useful for medium- and long-term strategic planning purposes, whereas short-term forecasts enable organizations to monitor the effectiveness of earlier long-term forecasts. The vacuum pump market size and projected market growth rates are not the only important dimensions of a successful market analysis. Evan Stone also needs to comprehend the factors which influence the profitability of the same vacuum market segment during the market’s different development steps. Evan Stone correctly puts emphasis on comprehending the key factors which govern the continuing success of the Kunst firm’s vacuum pump market. Evan Stone is right in emphasizing that the clients can benefit from the purchase of the Kunst vacuum pumps by indicating the savings in the clients’ costs (savings in oil change costs and other related oil change costs). Evan Stone was right in reiterating that a manager should not only focus on profitability but also to offering the clients benefits in terms of cost savings as well as speed -time savings (Proctor 2000;82). Depth of research, analysis and application Based on interviews, the repair technicians will be more than happy to use the Kunst pumps because they can now avoid the dirty little job of oil change. The Kunst pumps will save 30 minutes of the repair technicians’ time each time an oil change is required; oil change is generally done after each job is finished. The repair technicians often do an average of 5 jobs each day. This translates to 150 minutes of oil changing time saved. In turn, the repair shop owners will no longer be irritated by the constant demands of the repair technicians to make the oil change a responsibility and activity of the owners. In addition, the use of the Kunst pumps will eliminate the cost of soap and paper towels used to clean up the mess of each oil change activity. Further, the Evan Stone research showed that the average size of the air conditioning repair firms sampled during the research study ranged from single owner-operators who worked out of the backs of their pick-up or panel trucks to operations that employed 25 technicians and maintain 15 trucks in the field. Using an average of each firm owing three trucks, contractors assigned one vacuum pump per truck, and possessing one or two extra pumps back at the office in case of pump failure, Kunst Company can smoothly encroach on fifty percent of the target market. With residential repair contractors owning vacuum pumps between 3 and 6 CFM in capacity, the company can easily pirate half of the 3 and 5 CFM vacuum pump clients. Furthermore, research indicated that air conditioning repair shops are used to a highly seasonal business. The season lasts for about 20 weeks between late April and early September. However, business in the Southern United States is longer. In comparison, repair business in the Northern part of the United States is shorter. On the average, an air conditioner repair technician accomplishes an estimated ten jobs per day. In a five –day work week, the average repair technician finishes an estimated 1000 jobs per season. Being seasonal, the peak part entails having to work for a longer seven days a week itinerary to fill the increased demand for air conditioner repair as well as refrigerator repair. With an average repair job cashing in $350, the net profit before taxes of $70 is generated for each job accomplished. With an average repair job taking an hour to finish, the air conditioner repair shop owners pay their repair technicians an average of $30 per hour. With the use of the Kunst vacuum pump, the repair shop owners will be able to save on maintenance costs. Consequently, the repair shop owners and refrigerator repair shop owners will increase their net profits. In terms of the competition, The Evan Stone research found that the sampling respondents chose Pump Wizard as the top brand in the vacuum pump industry for the past 40 years. The respondents intimated that the Pump Wizard marketing company had redesigned its vacuum pumps exclusively for the residential air condition repair shop target market. In addition, the respondents were completely satisfied with use of the Pump Wizard vacuum pumps. The sampling respondents emphasized that AirMaster and Vacuum Technologies continue selling their competitive models of similar high standards of quality. To encroach on this market, the Kunst Company correctly presents the oil –free and lightweight Kunst brand as a better alternative to the oil change –based Pump Wizard vacuum brands. This marketing strategy can easily topple staunch resistance from the diehard AirMaster and Vacuum Technologies clients. In addition, modern organizations, like Kunst, are faced with a series of unprecedented changes, such as large scale mergers and acquisitions, globalization, as well as the rise of virtual organizations made possible by new communication technologies. Accordingly, Evan Stone’s universe is marked by increased complexity and uncertainty (Baker 2007;93). Conclusion The Kunst Vacuum Pump successfully complies with the principles of marketing mix strategy. The Kunst vacuum pumps are priced higher than the competitors to present an atmosphere of unbridled quality. The Kunst vacuum pump prices are definitely higher than the competitor’s $250 3CFM vacuum pump as well as the $320 6 CFM vacuum pump. The Kunst product is characterized as oil –free and lightweight. Thus, the clients will save on oil and oil change costs. The product is lighter than the competitors because of its aluminum base. In terms of place, the Kunst vacuum pumps are sold directly to the air conditioner repair shops and the refrigeration repair shops. In terms of promotion, the company uses business to business direct selling approach to generate revenues. The company also complements the direct selling with advertising in the tri-media to increase its client base. More specifically, the company’s business to business marketing is focused on finding a client need and filling such needs with the right product. Kunst zeroes in on the clients’ criticisms of the competitors’ products as a springboard to creating a product that eliminates such client criticisms. Based on the survey results, the Kunst Company provides a product that lessens oil change costs. Specifically, the Kunst pumps will save 30 minutes of the repair technicians’ time each time an oil change is required (soap and paper towels and oil itself). Kunst Company can effortlessly encroach into fifty percent of the target market because of the many advantages of owning a Kunst vacuum pump as compared to the currently popular brands. Recommendations arising from analysis Based on the above conclusions, there are some recommendations arising from the target market analysis above. First, Kunst Company should reduce its initial market price to the level of the competitors. Many clients prefer to buy products that are lower priced as compared with other competitors. Likewise, the company should increase its budget for advertising in the tri –media. An increase in advertising expense can easily translate to higher revenues. An increase in revenues would translate to higher net profits. The company should advertise the advantages of buying its vacuum pumps. This would increase the current product demand from clients from the company’s two current target markets – air conditioner repair shop owners and refrigerator repair shop owners as well as other prospective clients. The company should also continue its current business to business marketing strategy. The strategy entails focusing on finding the clients’ pressing need and filling the need with reasonably priced high quality products. Lastly, the company should also enhance the features of the company’s products. Enhancement includes increasing the speed and performance of its vacuum products. REFERENCES Anderson, J., Narus, J., & Narayandas, D. , Business Market Management: Understanding, Creating, and Delivering Value, 3rd Edition, (Upper Saddle River, NJ: Pearson Education, 2009). Baker, M. The Marketing Book. London: Butterworth - Heinemann, 2007. Dibb, S. Marketing Briefs. London: Butterworth -Heinemann, 2004. Geller, L. Response: The Complete Guide to Profitable Direct Marketing. London: Oxford University Press, 2002. Jerrard, B. Design Management Case Studies. London: Routledge Press, 2002. Moingeon, B. Corporate and Organisational Identities: Integrating Strategy, Marketing, Communication, and Organistional Perspectives. Routledge Press: London, 2002. Mullin, R. Value for Money Marketing. London: Kogan Press, 2001. Parsons, E. Contemporary Issues in Marketing . London: Butterworth -Heinemann Press, 2009. Proctor, T. Strategic Marketing. London: Routledge Press, 2000. Reynolds, T. Understanding Consumer Decision Making. London: Mahwah Press, 2001. Tomlinson, H. Educational Management. London: Taylor & Francis Press, 2004. Read More