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Efficient management strategy of Minnesota Micromotors Inc

Question:

Discuss about the Marketing Strategies of the B2B Companies.

The medical device market including orthopedic motors in the United States of America is the largest of its kind in the world with a worth of over $ 140 billion. The country’s market accounts for 40 percent of the global production and exports medical devices including motots worth $44 billion (trade.gov 2018). This medical device market is a business to business (B2B) market which attracts a lot of investment from the medical equipment manufacturing companies. The equipment making companies consequently manage their customers, financial resources, marketing mixes and competitive strategies to ensure high return on their immense investment. They have to make marketing strategies and manage their sales forces to achieve these objectives. The paper would delve into a simulated company called Minnesota Micromotors and its marketing strategy.

The overall management strategy of Minnesota Micromotors Inc: was extremely efficient and market centric. Efficient marketing management is extremely crucial for companies to ensure high profits on continuous basis. The ‘decision history’ statement of the firm shows that it had budget surplus at the end of every quarter except 2013 Q3. The budget surplus was earned in spite of allowing discounts to customer segments which add to the expenses. Thus, one can reinstate the fact that the overall market management strategy of Minnesota Micromotors Inc. was extremely powerful and efficient. Companies earn high profits by the virtue of their customer management besides allocating a whopping amount towards the strategy (Tadajewski 2016). As far as the customer management strategy of MM is concerned, one can point out that the company manufactures medical instruments which surgeons use for conducting operations and surgeries. The customers of the company are hospitals, pathological laboratories, nursing homes and distributors of medical equipments which in turn sell the equipments to the other customers. This means that the firm received bulk orders for these B2B goods which are expensive. The customer segments of the company consisted of four segments namely A, B, C and D, each with different expectations. The segment A customers were premium customers which ordered higher variants of the motors and required constant after-sales services. The segment B customers ordered motors with thermal resistance, thus forming a part of the niche marketing base of MM (Mencarelli. and Riviere 2015). They too required continuous sales support from the representatives of the company. The third segment of the customers was less price sensitive compared to the previous two segments and ordered thermal resistant and power-to-ration ration machines. The fourth segments of customers were syndicates which bought orthopedic tools at economic rates, thus acquiring high discounts from MM’s end. An analysis of the customer base of MM reveals that the market of the company was segmented into four broad categories while the company used niche marketing strategies to cater to the segment B. One can point out that niche marketing is a marketing strategy which is usually applied by established companies to earn supernormal profits and requires immense investment towards creating the differential attributes like extra heat resistance of the products. One can infer taking these facts into consideration that MM managed customers very efficiently and invested its resources towards manufacturing of these high-precision medical equipments (Jackson, Schuler and Jiang 2014). The fact also attested the competitive power of MM in the medical instruments markets which has over a hundred companies manufacturing similar products. The high market position of the company further testifies its capability of creating customers satisfaction to these business customers and retaining them, thus generating high revenue in the medical equipment market of the United States (Paluch 2014).

Customer management strategy of MM


A very powerful marketing and customer management technique which Minnesota Micromotors used was go-to-market approach. The approach embraced sales force deployment and distribution of channel strategy towards which the company allocated huge marketing funds. The go-to-market approach comprised of two channels which the company use to get access to its customers. Since medical equipments are B2B products, the company used its distributor chain to sell them to end customers like nursing homes and hospitals. The company also had a sales team which sold the products directly to the end customers and distributors (Paluch 2014). The success of the companies in attracting and retaining B2B customers is dependent on the capacity of the company to pay individual attention and offer discount to customers. The sales representatives of the company offered discounts to both distributors and premium end customers as high as 12 percent. Thus, go-to-market approach of the company was actually aligned to meet the needs of its target market segments (Kennedy 2015).

The Value of MM’s products to customers was immense and is evident from the high sales volume of the company and the revenue generated. Customer relationship is very important for the medical equipment companies to generate high revenue since they have to invest large amount of money towards manufacturing of the equipments. Strong relationship between customers and the companies ensure that the company enjoys high market goodwill and retain large proportion of their present clients, thus ensuring future revenue generation (Tadajewski 2016). MM maintained a strong relationship with the customers through dialogue and involvement of managers, medical engineers, procurement staff and dealers. This ensured that the company retained its customers and enjoyed continuous generation of revenue. However, the company should expand its product line to include household medical equipments like blood sugar measurement machines. These changes would enable the company to serve both business customers like hospitals and household customers who use these equipments (Paluch 2014). Moreover, MM would be able to outshine its competitor companies which are restricted within B2B orthopedic medical equipment manufacturing. This product policy would enable the company to strengthen its market goodwill and boost its revenue generation. It is evident from the present product line of MM that pricing of the products which the company sells are very high. The pricing policies of the company allow it to give discounts to its business customers and yet earn high profits (Jackson, Schuler and Jiang 2014). However, it can be pointed out that with the proposed expansion of product line into smaller medical equipment category the company would have to relax its pricing to make the new products appealing to both business and individual customers.


The product and price strategies of companies have deep impact on the market positioning of business organizations. The market position of MM was that of a tier 3 firm making motors for medical equipments. Strengthening of the market position is very essential to ensure long term market growth. Thus, company must expand its product line to give stiff competition to the other motor manufacturers (Ashok, Day and Narula 2017).

Niche marketing strategies employed by MM

Business channels have influences on pricing decision and revenue generation. The fact is especially pertinent in case of B2B products like medical equipment motors. The companies manufacturing motors have to depend on distributors in largely to distribute their finished products and generation of revenue.  Conflict between channel distributors and the representatives of companies can have disastrous impact on the pricing strategies and consequent revenue generation of companies. Channel conflict would lead to loss of business customers and force companies to lower their pricing, thus lowering of their profits (Tadajewski 2016). The B2B companies normally concentrate on acquiring distributors which sell their products to final customers. The sales representatives normally sell products to these distributors at discounts, thus ensuring bulk orders. However, sometimes sales representatives do sell directly to end customers to acquire premium clients for the companies to ensure future business generation. The distributors may view this strategy of the companies as invasion into their profit sharing like in case of MM and may terminate business contacts. The companies must not indulge into direct end customer acquisition to avoid conflict with their distribution channel. This would ensure profit sharing by both the companies and their distributors by fixing high prices for the products (Ashok, Day and Narula 2017). 

Customer loyalty, customer satisfaction and profit generation of companies are related directly to each other. The companies like MM should offer high quality products to their customers and facilities like discounts to enhance customer satisfaction. These customers as a result remain loyal to the companies and ensure that the latter generates high profit by selling products to them (Paluch 2014). This fact is more applicable in case of B2B sales where the products are expensive and are usually sold in bulk. Moreover, business customers rely on business performances and goodwill while purchasing equipments like motors for their surgical machinery. Companies like MM retain large base of financially strong customers which render them strong goodwill and provides them with references, thus ensuring future business expansion. Thus, profit generation in companies is directly related to customer satisfaction and customer loyalty (Jackson, Schuler and Jiang 2014).


MM Inc should use the short term short term expansion strategy of acquisition. This is because the tier 3 companies require expanding their product line to increase their competitive advantage and revenue generation. These companies can acquire smaller companies belonging to related industries to get access to their resources. They can use the resources of their subsidiaries to expand their product line. This would allow them to boost their revenue generation and drive their future long term strategies (Mencarelli. and Riviere 2015).

The business organizations can use promotion and product development as strategies to improve their profitability. Promotion is a powerful tool which B2B companies can use to boost their revenue generation. The first advantage of promotion is that it would allow these B2B companies promote their goods among a large numbers of business organizations, their prospective customers. The interested business organizations (like medical equipment dealers in case of MM) can then contact the manufacturers. The second advantage of promotion is that it enables companies to ensure huge profits (Tadajewski 2016). The business customers having the need and financial capacity to acquire B2B equipments can contact the manufacturers directly and buy from them. This guarantees revenue generation. However, promotion as profit maximization strategy has two disadvantages as well. The first disadvantage is that promoting business equipments requires advertising in the business magazines and internet websites, which attracts huge costs. This immense expenditure adds to the cost of production of these equipments, thus making them extremely expensive.  The second disadvantage of promotion is that in case B2B goods, reference plays more active role in acquiring customers. Thus, though promotion attracts huge expenditure, it may not ensure profits (Ashok, Day and Narula 2017).

Go-to-market approach of MM

The next strategy which B2B companies can use to enhance their profit generation is product line expansion. The first advantage of product line expansion is that it helps B2B firms in entering new markets and expand their present customer base, thus generating more revenue. The second advantage of product line expansion is that the new customer base enables the companies to diversify the immense expenditure and market risks they encounter while manufacturing B2B goods. Thus product line expansions increase the risk absorption capacity of the companies and ensure positive returns on their investments. However, product line expansion has two disadvantages as well. The strategy is extremely expensive as it requires companies to acquire new manufacturing facilities. The second disadvantage of product line expansion is that it exposes the companies to the risks of failed product line expansion and immense loss which is capable of devastating their capital bases (Okazaki et al., 2015).

The central aspects of strategic decision making are enhancement of profit generation and market position of the companies like MM Inc. The stiff competition often require companies to compromise on one business aspect to gain advantage in the other, which is known as trade-offs. The simulation reveals three strategic trade-offs companies often encounter while conducting business operations. The first trade-offs which companies, especially B2B companies encounter is to restrict their operations to maintaining present business customers like dealers. This trade off is important because the distributors often view the direct contacts of the sales representatives with the end customers as invasion into their profits which may give rise to future conflicts. Thus, the companies have to compromise on their new client acquisition to enjoy prolonged support of the distributors (Mencarelli. and Riviere 2015).

The second trade-offs which companies have to withstand is allow high employee turnover in order to ensure high profits. The B2B product companies often put a lot of stress on their sales staff to ensure high acquisition of clients (Saleh, Ebeid and Abdelhameed 2015).

The third trade-off which the companies suffer is restricting themselves to niche marketing and catering of spare parts like motors. This strategy of them helps them to avoid competition with bigger companies and sustain themselves in the market (Jackson, Schuler and Jiang 2014).

Conclusion:

One can conclude that B2B companies like MM should promote and expand their product line to boost their profit generation. They stress too much on profit generation and do not emphasize on retention of employees. This trade-off may earn financial benefits in the short term but would jeopardize the future operations of the companies. The companies should concentrate on forming policies to retain their employees and ensure acquisitions of new customers. The B2B companies, especially the ones in tier 3 can acquire some of their distributors to counteract the second trade off. This would allow them to get access to end customers directly and earn more profits.

References:

Ashok, M., Day, M. and Narula, R., 2017. Buyer (dis) satisfaction and process innovation: The case of information technology services provision. Industrial Marketing management.

International Trade Administration. 2018. Trans-Pacific Partnership. [online] Available at: https://www.trade.gov/topmarkets/medical-devices.asp [Accessed 9 Mar. 2018].

Jackson, S.E., Schuler, R.S. and Jiang, K., 2014. An aspirational framework for strategic human resource management. The Academy of Management Annals, 8(1), pp.1-56.

Kennedy, L.B., 2015. Using a cost benefit analysis to support the development of a comprehensive business model for a pre-filled, pre-labeled, pre-diluted, sterilely packaged, ready-to-use, syringe-based anesthesia delivery system. The University of Southern Mississippi.

Lilien, G.L., 2016. The B2B knowledge gap. International Journal of Research in Marketing, 33(3), pp.543-556.

Mencarelli, R. and Riviere, A., 2015. Perceived value in B2B and B2C: A comparative approach and cross-fertilization. Marketing Theory, 15(2), pp.201-220.

Okazaki, S., Díaz-Martín, A.M., Rozano, M. and Menéndez-Benito, H.D., 2015. Using Twitter to engage with customers: A data mining approach. Internet Research, 25(3), pp.416-434.

Paluch, S., 2014. Customer expectations of remote maintenance services in the medical equipment industry. Journal of Service Management, 25(5), pp.639-653.

Saleh, M.H., Ebeid, A.Y. and Abdelhameed, T.A., 2015. Customers’ perception of corporate social responsibility (CSR): its impact on word-of-mouth and retention’. Innovative Marketing, 11(2), pp.49-55.

Tadajewski, M., 2016. The alternative “Marketing Revolution” Infra-power, the compromising consumer and goodwill creation. Journal of Historical Research in Marketing, 8(2), pp.308-334.

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