Case Study - 2007

Environment:

A&WComputing is a value added reseller of a myriad of computer related products and services. In this case you are acting as a key account representative working within a U. S. sales region. Some of the most notable of the products A&W sells are brand name computers, software, printers and personal data assistants. In addition, the company packages a variety of services for customers including warranties and operational service plans. This company is a sales driven organization operating in an extremely competitive environment where margins are continuously pressured by competition. A&W sells products direct to consumers, but their major source of volume is realized by servicing the needs of businesses and government accounts, using direct and indirect sales organizations. The direct sales force has two groups, field sales and inside telephone sales representatives. While inside telephone sales services the bulk of consumers and mid to small businesses, the key account sales group services major businesses as well as federal, state and government agencies. A&W has a competitive advantage in servicing their customers because they maintain an organization of 100 company trained field service professionals. These professionals handle service assignments for customer on a guaranteed next day basis. The service group also has relationships with in-market service professionals that are also company trained and authorized. The approach that A&W takes to servicing their business leads to a slightly higher cost structure and ultimately slightly higher pricing.

Competition:

A&Woperates in an extremely competitive environment. For this case, we will consider that they compete with two other major companies. One competitor, B&BComputers, is a national manufacturer of custom computer products and their products are sold via a limited sales organization, the telephone and internet. The other major competitor to A&W is C&C Computing,and is similar to A&W in selling organization and also in the breadth of their product and service offerings. A&W is better known today based on its national advertising; they outspend all other value added resellers but fall far short of manufacturers advertising levels. C&C Computing is an organization that relies on an aggressive sales force and lower pricing to provide competitive advantage.

B&B Computing

B&B is a manufacturer of a limited assortment of proprietary computer products. A&W sells nationally branded alternatives to B&B products with a variety of pricing comparisons. Let’s consider the key areas of competition between B&B and A&W Computing.When you explore the computing space you find that customization of computers for the consumer market is typically done through configuration and software loaded on the machine. This is not always as important in B2B applications where software licensing and IT support are in place.

  • Pricing

For this case, we are going to be working in an environment where B&B and A&W compete with base computers with similar processor speeds, RAM and ancillary products including service agreements and shipping programs. B&B sells only B&Bbranded products. The following are the price points listed for their most popular products:

  • Laptops$1800.00
  • Desktops $ 800.00
  • Printers$ 700.00
  • Sales Strategy

B&Bsells by maintaining relationships with large corporate customers through a national but relatively small sales organization (20 key account managers) and offering low price points for competitive items. Unlike most manufacturers, B&B has always sold direct to customers. The vast majority of their business is conducted with individual consumers via telephone. They produce their equipment modularly to provide for easy servicing of equipment. Their products typically are not know for innovation, but rather as lower priced alternatives to national brands. B&B is a polarizing brand, customers love them or hate them based on experience. They are far stronger in the consumer channel than B2B. Their equipment is reputed to have more downtime than nationally branded computers. They are always a lower priced alternative. B&B equipment offers limited warranties. B&B sells limited service agreements. They service all equipment via UPS and FedEx overnight by sending replacement modules, after tech support has determined the problem. The cost of these service or warranty plans is:

  • 1 Yr $ 100.00 plus shipping
  • 2 Yr $ 150.00 plus shipping
  • 3 Yr $ 200.00 plus shipping

C&C Computing

C&C Computing is a full line competitor to A&W. They sell in the same channels and their sales organization has both an inside telephone sales group and an external sales organization that calls on key account and government organizations. This company works with the same national brands as A&W but usually with different model numbers to confuse direct price comparisons. C&C offers quality products and full service warranty options. C&C has had difficulty in performing product servicing in the same manner as A&W because their service is done through contract suppliers in local markets.

C&C’s pricing for products and services are as follows:

  • Laptops $ 1990.00
  • Desktops$ 995.00
  • Printers $ 795.00
  • PDAs$ 395.00
  • Warranties

-1 Yr$ 190.00

-2 Yr$ 275.00

-3 Yr $ 350.00

C&C sells high quality products but has an extremely aggressive sales organization. The aggressive nature of the sales and customer service teams has resulted in a number of instances of customer dissatisfaction relating to the arrogance of sales people.

•Pricing:

To determine A&W product and service pricing for particular items you will have to navigate SFDC to review the product price books.

  • In developing pricing for presentation to your buyers you may choose to reduce price on your products. Due to margin pressure your senior management has dictated that you may not reduce price to customers more than:

-2% on laptops

-3% on desk tops

-3% on printers

-5% on PDAs

-10 % on Warranties

-10% on Service

  • Your choice of pricing will affect your margin and commission.
  • The ability to achieve your sales objective will come from demonstrating value rather than discounting price.
  • Margin-Commission on products:

-Lap Tops Margin 25% - Commission 10%

-Desk Tops Margin 15- Commission 6%

-Printers Margin 30%- Commission 5%

-PDAs Margin 15%- Commission 10%

-Service Plans Margin 50%- Commission 25%

-Warranties Margin 50%- Commission 25%

•Advertising

Advertising Budgets for the 3 competitors are as follows:

  • A&W Computing $ 35,000,000 - Top 30 markets (image focused)rely on coop dollars from manufacturers to fund their advertising program
  • B&B Computing $ 80,000,000 – National advertising (company focused)
  • C&C Computing $20,000,000 – Top 10 markets (product focused) rely on coop dollars from manufacturers to fund their advertising program

Your Position & Assignment:

You are a sales representative in a region and responsible to reach meet the current quarters quota. In order to accomplish this task you will have to take advantage of identified opportunities and programs, link products to opportunities, forecast primary and secondary opportunities, use price books and develop, organize and present a key opportunity to your buyer.

•SFDC Training

You are all individually responsible to complete the following training in salesforce.com(SFDC)

  • Salesforce fundamentals
  • Sales representative fundamentals
  • Reporting fundamentals
  • Products and price books

It will take you about 40 minutes to complete each module. Remember you must complete the knowledge test and take the survey to receive credit for completing the course.

  • SFDC Case

In this case you will be responsible for two major accounts and for 4 opportunities. Please note that your quota ($1,200,000) exceeds the opportunities presently entered in SFDC. You must evaluate the case and develop a plan to make your current quarter’s objective. Do not be concerned with opportunities outside the current quarter. Please note: given the profit in warranties and service plans all accounts should be considered interested in these service offerings, even if the opportunity has not been entered into the system.

  1. Assignment 1

Your first assignment is to review your quota versus your current quarter’s opportunities and send your regional manger an e-mail indicating your sales plan. You must use the e-mail resource within SFDC to communicate with your manager.Everyone has a quota of $ 1,200, 000 which is visible under the forecast tab in SFDC.

This assignment requires you the sales representative to accomplish the following tasks:

  • Currently your opportunity has been entered in to the system but no pricing or volume has been associated for forecasting, therefore your first task is to associate the product with pricing.
  • Add warranty and service plan to your current opportunities.
  • The next task is to create a new opportunity for the ongoing business that you have secured, at great personal effort, with each of your accounts. You must create an opportunity for business technology supplies. These supplies are listed in the price book under the term “quarterly supply pack” and you must enter 5 units for each account under your control for the current quarter. The close dates for these supply packs should be the last day of the quarter. You should recognize this opportunity as “closed won”. This volume also counts against your quarterly quota.
  1. Assignment 2

You are now prepared to send your manager an e-mail describing your plan to attain quota.

  1. Assignment 3

Your next assignment is to send an e-mail communication to inform the buyer of your top prospect account of the opportunity that you, the representative at A&W, would like to present an opportunity to them. Consider in developing this opportunity your personal stake (commission) in the sale and the likelihood of a positive outcome.

  1. Assignment 4

Finally, you must develop a sales presentation for this account using an appropriate sales model. To develop this presentation you must use the PowerPoint template in SFDC which can be found under the documents tab under the corporate graphics pick list.

Please refer to the following partial company organization chart to find your place in the organization:

Organization Chart

© Daniel P Strunk 2007, all rights reserved