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4. What changes would you make to its current structures and plans, and plans for growth?

total mercy of the buying company. Thus, it is up to the sales reps to discern the custom ers' needs before the sales cycle starts, so that these needs can be worked into production plans 63 of 215 Changing yerde The cases in this chapter focus on these and some other new changes affecting sales managers as a result of changing customer needs and expectations. The s e on selling and selling strategy in a me d how this ferent. Next Case 32 focuses on a trend that is not new, but is gaining new prominence in organi tions as they sack to become more analytical and in tune with buyer s . This trend is never logistics. Case focuses on the growth in power of cute and how wome times, when a buyer becomes to powerful they may not be a perder wanted buyer anymore. Many other changing needs not discussed in chapter och as inter national change will be focused on the chout the reader this book CASE 3. SMITH ALVAREZ SELLING IN AN INDUSTRY WITH DIVERSE AND DEMANDING BUYERS Smith & Alvarex is a world leader in the design, manufacture and service of aircraft engines, industrial gas turbines, and space propulsion systems Smith & Alvares reported an operating profit of over $2.11 billion in 2010 on revenue S125 . The com pany's 36,000 employees support more than 11.000 customers in 195 countries around the world Smith & Alvarez was founded in Raleigh North Carolina, in 1925 by William Smith Smith & Alvarez's first aircraft engine was the 410 horsepower-cooled Wasp, which delivered unprecedented performance and reliability for the time and transformed the aviation industry. Smith & Alvarez has been leading change ever since. Now, Smith & Alvarez's large commercial engines power more than 10 percent of the world's passen ger aircraft fleet. Smith & Alvarez Rocketmotion has been the power behind over 1.600 launches and has been a key engine provider to the US. space program since its inception. That service continues today with the Space Shuttle Main Engines and the engines for the current Delta and Atlas lunch vehicles. The US. return to the Moon and innovative missile defense products will also be powered by Smith & Alan Racketmotion engines The current strategy of the company is twofold it hopes to expanderts in the man ufacture of engines via new, innovative technologies and hopes to expand its current Service capacities. Smith & Alvarez has the capability to and repair not only its own engine brands but also other manufacturers engines tw o grow this area of the business because of the far smaller necessary capital aprendie ndo involved. Its customer portfolio is somewhat mixed as el Customer s can be found along with financial information in Tale 31 Because of the unique nature of each customer Smith & A h as chosen to organise its les force by customer account. Each ma c e rcator, as indicated in Table 1, ha a Vice President of Sales of the disc r ed Each vice prident has a full staff to assist with each segmentindeding a les force, les analysts.cus tomer services and materials macement plannen The vice prents who have government respos t es also have additional staff to them with complex crnment buying procedures such as red tape and other necessary forms that must be filled out for every sale. They also have additional legal to help them deciphere changing government guidelines and laws for each of the product categories The sale of product to the government has been getting more and more difficult over the past few decades. Most of the product Smith & Alvaresells needs to go through the 64 of 215 Table 11 Smith & A financial information by categories in thousands Commercial Commercial Commercial Total Government Government Government Government and Private and Private and Private Military Space Maintenance Services in Maintenance Services Aircraft Equipment Net les $2.560.000 1.160.000 $90,000 $450,000 $3,200,000 $2,300,000 $1.430,000 $12.500.000 the past few decades. Most of the product Smith & Alvarez sells needs to go through the The sale of product to the government has been getting more and more difficult over 5510.400 7200 599.000 $1.443.000 405.000 $271.700 57700 Select Total sales expe c tomer group $1.07.200 includes compensation) Total RM per SL.152.000 All other Inconely customer group $144000 $19.00 147.000 23.000 14.0 SOSTO 3.194.500 $313.200 $112.00 17.30 Changing Buyer Needs - 19 65 of 215 Changing yer Needs - 19 Defense Logistics Agency (DLA), which is the arm of the US government that handles purchases for the military services. While the DLA used to wait for multiple bids for every purchase, now nearly 20% of all government contracts are awarded on the basis of only one bid. Most purchases are made by either negotiated contracts or open bids, and the award usually goes to the lowest-cost qualified bidder. The government basically wants no service during the sale and views purchases as transactional in nature. Add to this mounting red tape and legal changes, and these accounts are seen as less and less profitable to Smith & Alvarez. However, there is significant brand awareness and "bracing rights for those com- panies that are awarded these contracts. Sales to the US government significantly enhance sales to other product groups, although this number cannot be quantified. Also, there is a lot of leeway in terms of the negotiated price. The government will increase the allowable price if the supplier is seen as a preferred supplier. The government has what essentially amounts to a good, better and best system. If a supplier can convince the government that it is better or best, the allowable bid price can be increased. These are not easy sales. The sales rep must get themselves in front of much higher level deci sion makers than those who typically make themselves available to sales reps It is important to note that for some of these sales Smith & Alvare needs to go directly through the government, and for some sales Smith & Alvare is a supplier to the aircraft and spaceship companies, which then deal with the government. However, the rules and procedures affect Smith & Alvarez no matter who their climate consumer is. The big exception to this is that aircraft and spaceship manufacturers have very different buying needs. They need consistency, reliability, and near perfect quality. They are typically considered at fault when something goes wrong. not the suppliers An example of this in another industry was the oil leak disaster in the Gulf of Mexico by BP in summer 2010. BP seemed to get all the blame in the media and its stock price subse quently dropped by over 100%. However, almost no one ever heard about companies like Halliburton or Transocean, which were the contractors responsible for staffing and inspect ing the oil rig that exploded. Likewise, Cameron International was the actual manufacturer of the blowout prevention valve that failed, causing the disastrousleak Likewise, in 2010 Toyota took a huge hit to its reputation and finally had to halt sales of all Toyota vehicles for a few weeks because of faulty acceleration pedals CTS was the supplier of the sticky Toyota accelerator pedals that led the Japanese automaker to make the recall. However, as with BP, the public scarcely heard of CTS. The blame was placed on Toyota. The manufacturer typically gets the Name, so when Smith & Alvarez is selling to aircraft makers, their buyers are extremely demanding Things are just as challenging when selling in the commercial sector. Commercial airline companies have been hit extremely hand over and over again in the past few decades. They will not purchase new aircraft until these are badly needed or if they are looking to achieve a competitive advantage by having innovative planes such as smaller, fuel-efficient aircraft or the much larger supericts. Thus, there are two markets for Smith & Alvarez's engines in the commercial aircraft industry Companies making new air craft, such as Boeing, want the absolute best-quality, most high-tech products on the market Commercial airliners are frequently buying new engines and engine compo- nents to repair or replace existing aircraft and engines. Smith & Alvarez executives have been pushing all the Vice Presidents of Sales of Go. ernment Services and the Vice President of Sales of Commercial and Private Services to 50 - Changing Buyer Needs grow sales in the divisio hip icularly chal 50 Changing Buyer Needs grow sales in their divisions. The vice presidents concerned in this particularly chal lenging request for a few reasons. First, they feel that they do not get the appropriate "facetime with high-level buyers to make these sales The wees who sell theorg nal equipment are the ones who have well-established with the buyersThe service vice presidents feel that if they went out on the own and started setting up appointments with buyers, the buyers would fed confused as to why they are being Visited by multiple Smith & Alvarez sales reps. Al e the recent recesso, most buyers have already said that they cannot have weddy meeting with reps anymore Because of recent layoffs and restructurings, most a w that they make themselves available by email and will only schedule an in-persistence a month. The service vice presidents do not want to take this precies w ho the rest of the organization Additionally, the Vice President of Sales of Government Services and the Vice Presi dent of Sales of Commercial and Private Services have been extr a cc i a finding new buyers for their services who do not have Smith & Alvare engines. The sales reps find this an easy sale to make. While not being the c o n the sales reps very indirectly imply to the buyer that the engines are fang because they bought a non Smith & Alvarea product to begin with and if they enter and arrangement with Smith & Alvares, they will not then own a Smith & Ala i n, but it will neverthe less be maintained at Smith & Alvarer's extremely high level of It will be a very different sale as compared with going to current owners of Smith & Alvare engines and inquiring whether they are failing and what they can do that The Vice President of Manufacturing also has some qualms about current organiza tional objectives and goals. He has always felt that the organisation's structure is set up for a sales organization, not a top-notch, high-tech innovative manufacturing firm. He feels that the organization should support his division, given that the business's key capability is extremely high-quality and innovative products. He would prefer an orga nizational structure built by product, not by customer. He feels the current structure makes his division somewhat at the back and call of the customer. While the Vice Presi dent of Manufacturing does totally believe in a customer-centri organization, he feels that he gets product information back from the other sales divisions in bits and pieces instead of hearing all at once about his products. This extremely difficult inven tory management issues. He also feels that this puts him at a disadvantage in aiding the service vice presidents in their quest to grow Case Ostos 1. How common is it for companies to have such diverse customers? List all the unique issues and needs of the customers mentioned in this case Be specific there are quite a few things mentioned. How c a n the cross all industries 2. Does Smith & Alvares have the appropriate organizational state for its cap abilities and the needs of its custome? Why why ? Whether you answer yesore, make sure you provide suggestions for improvement in your answer Does Smith & Alvares have the appropriate salesforce to structure for its capabilities and the needs of its customers who who ? Whether you awer yes or me, make sure you provide fo m ent in your Changing Buyer Needs 51 4. What changes would you make to its current structures and plans, and plans for growth? 5. Very specifically, how would you implement your plan? 6. Should companies restructure their sales forces to accommodate changing buyers needs? If so, how