Hilti: Business to Business Marketing - Essay Example

Business to Business marketing report Contents Q1. Hilti’s product/ market/ channel management strategies and comparison with competitors 3 Background of the company 3 Management strategies 3 Comparison with the competitors 4 Implementation of the strategy 4 Q2. Potential risk involved in the strategy and approaches for risk minimization 5 Risk involved in the Strategy 5 Ways to reduce risk 5 Competitive advantage 5 Q3. Industrial market segmentation and its application in Hilti’s strategies 6 Industrial market segmentation 6 Application in the market 7 Q4. Hilti’s brand strategy and communication 8 Brand Strategy 8 Brand communication 8 Q1. Hilti’s product/ market/ channel management strategies and comparison with competitors Background of the company Hilti is a family company of two brothers founded in 1941 in the middle of Europe. It is an industry leader in building maintenance and construction field. The company is an international corporation with 20,000 employees and has operations in above 120 countries. The main aim of this company is to be customer-oriented by offering equipment which has a high quality and to prepare tools for particular jobs to make sure that the customer’s get added value from their products and services. They have a turnover of about US $4434 million, operating profits to US $318 million, net profit of US $205 million. This figure shows how the company is progressing and has a good position in the market (Ellis, 2010). Management strategies Hilti believes more on innovation rather on corporate acquisitions or of technology. Hilti follows “Champion 3C” strategy which means Customer, Competence and Concentration. They believe that customers are the key word for profitability and growth. In order to satisfy the customers, they have to fight with different competences. Companies’ model states that culture and people are the main element for the company. They say that product can be copied at any time but people and culture are always unique. Hilti’s product, market and channel management strategies are the “Product Portfolio Management”, “Market Research” and “Operational Excellence”. Hilti like other companies wants their product to lead the market (Ellis, 2010). A lot of market research is been done by the company so that products can be designed according to customer needs. Starting from research and development to after sale service is the motive of the company. The way Hilti design its market research program clearly defines that they only want customer benefits and value added products and services for them. To improve their internal employee’s efficiency and increase customer satisfaction level, they are operating their business function on a world wide area. Hilti has a leading position in most of their markets like power tools, fastening devices, construction related equipments and many related services. To grow faster than the market, the company increased their sales in 2012 (Ellis, 2010). Comparison with the competitors Hilti has competitors like Black & Decker, Illinois Tool Works, Stanley Tools, Techtronic Industries, Bosch, Makita, Hitachi Power Tools, Wiirth, ITW Red head and Fischer (Ellis, 2010). Hilti was different from its competitors in customer groups, product categories and distribution systems. Hilti deliver their products through direct channel whereas, ITW distribute it through distributors. Black and Decker’s major amount of sales are through DIY i.e., Do it yourself. They also serve their products with a particular brand name through the authorized dealers. Black and Decker differ from Hilti in terms of their location, distribution system, revenue, End user group, no. of employees, per year sales growth and net income. But Hilti is giving high competition to them because they are still behind Hilti. Competitors are only concerned about their profits but Hilti believe in customer satisfaction and that is the reason they are holding a very strong position in the market. Hilti spends most its me to reach tradesmen and professionals involved in the same construction tools. This acts as a good bonding between the companies and enlarges the business circle (Ellis, 2010). Implementation of the strategy Hilti targets to reach to everyone in this sector like decision makers in the construction companies, building owners, architects, tradesmen and foremen in building sites just to ensure that whenever there is a discussion about the materials, Hilti will be the central importance. Since there are various construction materials required by different companies, Hilti has divided all these according to their common requirement. An even specific condition in different country plays a major role. Every country has different regulations and practices for the construction plus the need for tools raw materials are also different (Ellis, 2010). Hilti deals with each customer differently according to the turnover and requirement. If customers are different, their needs will also differ. For example, a site manager will look after the quality of the raw materials more specifically because he has the deeper knowledge about the trade. Tradesmen in the building sites will see if the working has been done safely and carefully and for that reason will use tools which are safe, robust and practical. The owner of the building will keep a watch if his money is being used in an efficient way in short term or long term projects and will obviously favour less costing raw products (Ellis, 2010). Q2. Potential risk involved in the strategy and approaches for risk minimization Risk involved in the Strategy It is known worldwide that Hilti is the company which has attracted customer for the main reason i.e., innovation. This has become a big risk for the company to maintain this innovation all the time to meet the competition, to satisfy customers and to defeat the new ideas by other companies. It has become necessary for Hilti to realize innovations rapidly and to keep bringing new products and techniques of service to meet customer needs more effectively. Hilti tools have been used for constructing various number of site applications, depending firmly on the applications of fixing, processing, measuring and exposing (Anderson, Narus and Narayandas, 2009). Hilti has a big product range to face competition that is Planning & Specifying, Distance Measuring, Drilling & Demolition, Fastening & Installation, Insulation & protection and Professional services. To differentiate from customers, Hilti uses laser applications and metal detectors which help in measuring and positioning work. Drills are used which are diamond coated for making very hard materials. To survive in this competitive environment, Hilti offers a series of product range solutions (Anderson, Narus and Narayandas, 2009). Ways to reduce risk Hilti has created variety of products for different construction process which helps customers to select the appropriate equipments according to their professional requirement. The use of tools in variety of product categories varies in accordance to the new techniques used and what company can offer in terms of productivity and performance. For instance, hammer drills which are available to use for cordless version as well as normal power sockets. These drills also vary in techniques and their features depending upon how big or small work it is. Drills have range from 600 Watt for the TE2 rotary hammer up to 1400 Watt for the TE 76-P combi hammer and both of them use power sockets, which are operated by batteries but are less powerful. Though Hilti has a good variety of product range, Hilti has one thing in common in chemical, tools and consumables which is the value added products and services which they offer to the customers (Anderson, Narus and Narayandas, 2009). Competitive advantage Hilti’s main competition lies in the capability of its products to offer their customers a quality added value and not price benefit products. In fact, Hilti’s product price always falls in the high price category. Hilti believes that there is always someone cheaper in the market which always keeps Hilti motivated to bring continuous innovation in the country, because they believe that if Hilti doesn’t bring innovation, customers will shift to other brands and to avoid this situation they keep upgrading their techniques (Anderson, Narus and Narayandas, 2009). The main aim of this strategy which has brought success for so many years is to always be in the situation where even if other brands are not able to supply products, Hilti will always be there to supply it in the market. This strategy is also seen in Hilti’s added value philosophy. These were the strategies which Hilti adopted to stay in this competitive scenario and to be loyal towards its customers by giving them good quality products plus the new techniques to attract them. In case of distribution system, Hilti has always kept a blue water concept that is total transparent deal between the customers and the company. Hilti sell its products directly they don’t have any dealers in between. The employees stay in touch with the customers daily. Two third of the employees call customers on a regular basis which means around 2, 00,000 contacts are in touch daily. Hilti has also set call centres and online transactions for the customers (Anderson, Narus and Narayandas, 2009). Q3. Industrial market segmentation and its application in Hilti’s strategies Industrial market segmentation Industrial market segmentation is a plan for dividing industries and business customers to help in tactical and strategic decision making mainly in marketing and sales. Like industry associations and government agencies use a particular segment schemes for their statistical surveys, in the same way to do business more fluently, businesses form their own scheme to meet their business goals. Consumer market segmentation is less complicated than industrial market segmentation since in this, the task is more challenging because of greater complexity in the buying criteria, buying process and the complexion in industry service and products (Webster, 1984). A lot of complication is their further like in contracting, financing and various complementary products and services. A high quality product needs to come with a high quality service. Hilti product comes with a lifetime service which means there is no after service cost for two years. After two years, there is a period which they call “repair cost limit” which says that repair costs which will be 30 percent of the same new price list will only be charged but below 30 percent will not be charged. This offer is something which makes Hilti different and unique from other brands and its competitors. As a different way to buy a product, Hilti offered a service called fleet management service. This idea came out in 1999, from a study which stated that customers stick to their old products too long, as they spend too much of money on repair rather than buying a new product which is cheaper than investing in constant repair. Now, Hilti spreads 15 percent of its products through its new innovative fleet service and not by sale through retail. It has a service package which contains delivery of various new developed repairs, maintenance, products and financing (Webster, 1984). Application in the market Hilti has formed three different service package and customers can choose from these three named as “FM classic”, “FM premium” and “FM Classic Plus” (with financing through leasing). These FM packages have a standard free pick up services for all the defective devices which is also followed with a free delivery and repairing service. There is lot of time and effort is saved in this whole process which can be actually utilised in production management. Constantly thinking about the customers and their requirements and putting them in the product development analysis, there is no chance left to say that product will not be liked. It becomes very obvious that product will reach at a higher level and will satisfy customers. There is a concept called “Time to Money” which asks customers to get involved in every development process of the products. While involving customers, Hilti was actually able to reduce the 54 months development process in nineties to a recent 24 months of process. This was a big achievement for the company and it was possible only through time management and the interdisciplinary team of employees (Webster, 1984). Hilti also developed a leader concept to reach the concept of a customer needs. Leaders form a group and talk to customers about their problems and shortcomings of the product. Teams which develop products not only get idea for product innovation but they also get a chance to get in touch with the customers directly. Customer’s satisfaction by using fleet management service is much more beneficial than the idea of not using this offering. There is a reason for this fleet management service, first is customers don’t think to migrate to other company and only small amount of migration takes place which can be avoided. Second is customers buy more products than they use to buy previously (Webster, 1984). Internal product demand for new product can be assumed and at the same time market calculation shows clearly that the customers who take fleet management service doesn’t compare their service with other business segments. Hilti has to face the competition with the service company who keeps on building new services for the customers. Service competency has always been a challenge for Hilti and it became necessary for Hilti to put service at a high note. So far Hilti build its reputation and market in fleet management services. Hilt’s competitor, Bosch even tried to follow the same service but it they failed (Webster, 1984). Q4. Hilti’s brand strategy and communication Brand Strategy A brand is a term, design which differentiates one company’s product from the other. Hilti has made his brand very unique and that is the reason it is remembered over the years. Hilti’s brand has lot of awareness almost about 94 percent of the business population.That is why it is necessary for Hilti to maintain its brand all the time especially in competition with US and Japanese market. A high brand has product quality above average. Hilti is famous for the line that is they know how and when to innovate. Hilti always keep touch with the professionals for high branding and high quality materials (Zoltners, Sinha and Lorimer, 2004). The colour which makes Hilti unique is the Hilti Red. The brand logo and the colour have remained same since many years and are found on every tool boxes and equipment and even on the free tools. They also give their mark on the building site which makes tradesmen proud that they have used Hilti products which is of high quality equipment which shows red cases. In the same way, to show their high standard work and their abilities, companies which are building are very eager to show that they have used Hilti equipment. Hilti was able to develop this reputation and competitive edge because they always had a clear communication with the customers and had a very clear brand concept. Hilti’s brand believes in performance, innovation and service partner. Brand value is maintained all the time plus they play a very decisive role (Zoltners, Sinha and Lorimer, 2004). Brand communication Hilti’s employees who are in direct touch with their customers develop a good experience which makes the employees to understand the customers much better and on which part company needs to innovate since they are very close to customers requirement. Hilti also ask employees to keep in touch with the employees and visiting customers’ place which Hilti motivates all the time. A senior manager also spends time on site to ensure that work is going in a proper way. This attentive behaviour for the customers makes Hilti known for its innovation and high quality products everywhere. Hilti’s aim is to be a most important brand for all the customers and that is why their message is conveyed in the brand strategy itself. Hilti was able to achieve this goal by bringing customers attention towards its company in terms of added value products and one more way is to make its brand unique from other competitors and therefore creating a vital position in the industry. Hilti believes that to maintain customers trust, they should take care of customers on both emotional and rational part (Zoltners, Sinha and Lorimer, 2004). Reference List Anderson, J.C., Narus, J.A. and Narayandas, D., 2009. Business market management: Understanding, creating, and delivering value. New York: Pearson Education. Ellis, N., 2010. Business to business marketing: Relationships, networks and strategies. Oxford: Oxford University Press. Webster, F.E., 1984. Industrial marketing strategy. New York: Wiley. Zoltners, A., Sinha, P. and Lorimer, S., 2004. Sales force design for strategic advantage. Basingstoke: Palgrave Macmillan. Read More