Mediquip S.A., a subsidiary of Technologie Universelle, is a manufacturer of CT scanners, X-Rays, ultrasonic, and nuclear diagnostic equipment. Their competitors consist of other European companies such as Sigma FNC, Eldora, Magna, and Piper. Even though Mediquip is a fairly new player in the medical equipment market compared to their competitors, they hold a global reputation for having advanced technology and proficient after sales service. Mediquip's sales organization consisted of eight country sales subsidiaries, each headed by a managing director. Within each of these areas sales engineers reported to their regional sales managers, who are responsible for reporting to the regional managing director.
This case focuses on the sales for computer tomography (CT) scanners, developed in the 1960's. CT scanners are medical devices that allow examination of cross sections of the human body through a display of images for diagnostic purposes. The end result of a CT scan is much like an X-ray image, differentiated by the ability to see sections of the body that could not be seen before on screen, such as an organ. CT scanners are generally priced around 1.5 to 3.0 million per unit. Due to technological superiority Mediquip's CT scanners tend to be in the higher price range compared to their immediate competition.
The European market for CT scanners is estimated to at around 200 units per year. The typical clientele for CT scanners consists of private and public sectors. The public sectors are government owned or non-profit organizations such as universities or charitable institutions. The public sector buying format tends to be budgeted a year in advance, and involves many different people in the buying decision, which makes it more complex. The public sector represents a much higher percentage of CT scanner sales compared to the private sector. The private sector consists of profit oriented organizations such as private hospitals or private radiologists. The supplier market of CT scanners consisted of European companies such as Mediquip, Sigma FNC, Eldora, Magna, and Piper.
Kurt Thaldorf, a sales engineer for a German sales subsidiary of Mediquip, S.A., learned on May 5th, of a potential prospect for a CT scanner at Lohmann University Hospital (LUH) in Stuttgart. LUH, a public sector hospital, and a part of the universities medical school. The key groups in the purchase of a CT scanner are radiologist, administrator, physicists, and supporting agency. In this particular case the key decision makers are Professor Steinborn, Radiologist; Carl Hartman, Hospitals General Director; and Dr. Rufer, the hospitals physicists. Hartman's secretary played an important indirect role in the buying decision of the CT scanner. On December 18th Kurt Thaldorf, was notified about the LUH deal being lost to Sigma, a direct competitor of Mediquip. The loss of the deal centered on the price structure of the product in comparison to the competitors offers to LUH.
Mediquip's prime and most simple problem was the failure to acquire a contract with LUH. One reason for this failure was that Mediquip's CT Scanners were higher priced than their competitors. Kurt did a poor job in justifying the higher price bundled with their "superior technology", and how it would benefit LUH. Thaldorf failed to convey his products features and reason for high price to LUH. He was not responsive enough to LUH's several comments about price sensitivity, failing to initiate any type of adaptive selling. His one attempt to possibly demonstrate its superior technology, to invite LUH personnel for a three day trip to Mediquip's facility, was refused by management, only to be accepted by Thaldorf without second thought. He should have tried harder to get managements approval. He also did not thoroughly investigate his prospective customer enough, leaving too much...
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