CASE STUDY No.

#1 Sales Management
Mephisto Products
Yet another poor year, refected the senior executive of Mephisto Products Ltd.
Profts down by 1 per cent, sa!es and turnover static in a "ar#et that was
rec#oned to be $rowin$ at a rate of so"e %& per cent per annu". 't cannot $o on.
(hese were the thou$hts of )i" *u!!ins, and he contended that the co"pany wou!d
be out of business if the next year turned out to be as bad.
)i" *u!!ins had been senior executive at Mephisto for the past three years. 'n each
of these years he had witnessed a dec!ine in sa!es and profts. (he co"pany
produced a ran$e of technica!!y sophisticated e!ectro"echanica! contro! devices for
industry. (he "a+or custo"ers of Mephisto were in the che"ica! processin$ industry.
(he products were ftted to the custo"er,s processin$ p!ant in order to provide
safety and cut-out "echanis"s, shou!d anythin$ untoward happen in the
"anufacturin$ process.
(he products were so!d throu$h a ./ sa!es force of so"e 1% peop!e. 0ach
represented a di1erent area of the country and a!! were technica!!y 2ua!ifed
"echanica! or e!ectrica! en$ineers. 3!thou$h so"e 4 per cent of Mephisto,s sa!es
were to the che"ica! industry, there were "any "ore app!ications for
e!ectro"echanica! contro! devices in a wide variety of industries.
(he reason that sa!es were concentrated in +ust the one industry was historica!, in
that the fr"s founder, )a"es 5at#inson, had so"e 6& years ear!ier "arried the
dau$hter of the owner of a "a+or deter$ent "anufacturer. 3s an en$ineer,
5at#inson had seen the potentia! for such devices in this type of "anufacture and,
with the aid of a s"a!! !oan fro" his father-in-!aw, had co""enced "anufacture of
such devices, initia!!y for his father-in-!aw,s co"pany and !ater for wider app!ication
in the che"ica! industry. 5at#inson had !on$ since resi$ned fro" active
participation in Mephisto Products, a!thou$h he sti!! he!d a fnancia! interest.
7owever, the phi!osophy 5at#inson had brou$ht to the business was one that sti!!
pervaded business thin#in$ at Mephisto.
(he essence of this phi!osophy was centered on product and production exce!!ence,
bac#ed by stron$ technica! sa!es support. 5at#inson had be!ieved that if the
product was ri$ht, i.e. we!! desi$ned and "anufactured to the hi$hest !eve! of
2ua!ity, there wou!d be a "ar#et. 8eed!ess to say, such a product then needed
se!!in$ 9because custo"ers were not necessari!y aware that they had a need for
such safety "echanis"s: and sa!espeop!e were encoura$ed to use what "ay be
described as hi$h-pressure sa!es"anship, pointin$ out the conse2uences of not
havin$ such "echanis"s in a "anufacturin$ p!ant. (hey therefore tended to
e"phasi;es the ne$ative aspects 9of not havin$ such devices: rather than the
positive aspects 9of how $ood they were, how ti"e-savin$ durin$ a p!ant
brea#down, etc.:.
8eed!ess to say, in 5at#inson,s day, such products then needed se!!in$ and, even
thou$h sa!es were to industria! purchasers, it was fe!t that such se!!in$ techni2ues
were +ustifed. (his phi!osophy sti!! pertained, and new sa!espeop!e were ur$ed to
re"e"ber that, un!ess they were pressed, "ost custo"ers wou!d not consider
updatin$ their contro! e2uip"ent.
Litt!e advertisin$ and sa!es pro"otion was carried out by the co"pany, a!thou$h
fro" ti"e to ti"e, when there was a !itt!e spare cash, the co"pany did purchase
advertisin$ space in (he <he"ica! Processors =uarter!y. Pricin$ was done on a cost-
p!us basis, with tota! costs bein$ ca!cu!ated and a fxed percenta$e added to
account for profts. Prices were thus fxed by the accounts depart"ent, and sa!es
had no say in how they were estab!ished. (his !ed to "uch dissent a"on$ the
sa!espeop!e, who constant!y ar$ued that prices were not co"petitive and that if
they were cut, sa!es cou!d be increased substantia!!y.
>e!ivery ti"es were s!ow co"pared with the industry avera$e, there were few
discounts for !ar$e order 2uantities, and a!! discounts had to be c!eared with
accounts before the sa!esperson cou!d a$ree the" with the custo"er. 3$ain,
5at#inson,s o!d phi!osophy sti!! prevai!ed? 'f they want the product bad!y enou$h,
they wi!! wait for it. 3nd why o1er discounts for !ar$e 2uantities@ 'f they did not want
that "any, they wou!d not order the".
>urin$ the previous fve years, fro" bein$ a re!ative!y successfu! co"pany, "ar#et
share for Mephisto Products dropped substantia!!y. (he "ar#et beca"e "uch "ore
co"petitive with "any new entrants, particu!ar!y fro" 0. countries co"in$ into the
./ "ar#et, which had traditiona!!y been supp!ied by ./ "anufacturers. Many of
these new entrants had introduced new and updated products to the "ar#et,
exp!oitin$ recent advances in e!ectronics. (hese new products were seen by the
"ar#et as bein$ technica!!y innovative, but the view ta#en by Mephisto
"ana$e"ent was that they were faddish and once the nove!ty had worn o1,
custo"ers wou!d co"e bac# to their superior products.
.n!i#e "any of his co!!ea$ues, )i" *u!!ins was worried by deve!op"ents over the
past fve years and fe!t there was a need for "any chan$es. 7e was aware that the
"ore successfu! new entrants to the industry had introduced a "ar#etin$
phi!osophy into their operations. <o"pared with ten years a$o in this type of
business, it was now co""on practice for co"panies to appoint "ar#etin$
"ana$ers.
Aurther"ore, he #new fro" ta!#in$ to other peop!e in the industry that such
co"panies considered sa!es to be an inte$ra! part of "ar#etin$. 3t a recent "eetin$
with his senior sta1, he "entioned to the sa!es "ana$er the possibi!ity of
appointin$ a "ar#etin$ director. (he sa!es "ana$er, who was short!y expectin$ to
be "ade sa!es director, was scathin$ about the idea. 7is view was that "ar#etin$
was suitab!e for a ba#ed bean "anufacturer but not for a co"pany en$a$ed in the
"anufacture and sa!e of sophisticated contro! devices for the che"ica!s industry. 7e
ar$ued that Mephisto,s custo"ers wou!d not be swayed by superfcia! advertisin$
and "ar#etin$ p!oys.
3!thou$h )i" *u!!ins a!ways too# heed of advice fro" his senior "ana$ers, recent
sa!es f$ures had convinced hi" that the ti"e had now co"e to "a#e so"e
chan$es. 7e wou!d start, he decided, by appointin$ a "ar#etin$ "ana$er in the frst
instance. (his person wou!d have "ar#etin$ experience and wou!d co"e, "ost
probab!y, fro" the che"ica! industry. (he person appointed wou!d have e2ua!
status to the sa!es "ana$er, and u!ti"ate!y either the new appointee or the existin$
sa!es "ana$er wou!d be pro"oted to the board of directors.
=uestions
1 <ritici;e Mephisto Products, approach to sa!es and "ar#etin$.
% <o""ent on the fo!!owin$ as they exist now at Mephisto Products? 9a: "ar#etin$
orientation, 9b: the "ar#etin$ "ix, 9c: the product !ife cyc!e.
6 5hat prob!e"s can you anticipate if )i" *u!!ins appoints a "ar#etin$ "ana$er@
B 'f appointed, what prob!e"s can you foresee for the new "ar#etin$ "ana$er@
5hat $enera! advice can you $ive to the co"pany to "a#e it "ore "ar#etin$
oriented@