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5.8.1 Mediquip Case Study: Navigating the B2B Sales Process

Background: MediQuip

  • A subsidiary of Universal, a French conglomerate.
  • Product lines: CT scanners, X-rays, ultrasonic, and nuclear diagnostic equipment.
  • Renowned for:
  • Advanced technology.
  • Competent after-sales service.

European Market Context

Market Size & Dynamics

  • Estimated market: 200 units/year.
  • Price range: €850,000 to €1.7 million/unit.
  • MediQuip's CT scanners:
  • Positioned in the upper price range (above €1 million).
  • Justification: Superior technology, ~2 years ahead of competitors.

Competitors

  1. Sigma (Dutch company, major competitor).
  2. Other competitors: FNC, Eldora, Magna, Piper.

Organizational Structure

  • Country-specific sales subsidiaries.
  • Hierarchy:
  • Sales engineers → Regional sales managers → Managing directors.
  • Product specialists provide technical support.

B2B Buyer Characteristics

Buyer Types

  1. Public Sector Health Agencies (major buyers):
  2. Government hospitals and non-profits.
  3. Use formal tender processes.
  4. Budget allocation often happens 1 year in advance.

  5. Budget must be spent by year-end.

  6. Private Sector Buyers:

  7. Private hospitals and radiologists.
  8. Smaller share of purchases.

Buying Decision Process

Stakeholders in Public Sector

The purchase decision involves multiple groups (Buying Center): 1. Radiologists: - Users of the equipment. - Value professional image enhancement through advanced technology. 2. Physicists: - Set technical specifications. - Ensure patient safety by regulating radiation levels. 3. Administrators: - Responsible for financial aspects. - Focused on costs, revenue potential, and maintenance expenses. - Concerned about obsolescence. 4. Supporting Agencies: - Finance or CEO/MD offices that approve expenditures. - Play an indirect role in decision-making.

Complex Dynamics

  • Power and influence vary by hospital.
  • Administrators may either lead the decision or act as mere buyers.
  • Sales engineers must identify the decision hierarchy and formulate strategies accordingly.

Sales Insights and Challenges

Sales Engineer's Role

  1. Account Analysis:
  2. Identify key decision-makers.
  3. Understand the power dynamics among stakeholders.
  4. Sales Strategy:
  5. Prioritize efforts based on stakeholder influence.
  6. Align technical and financial benefits to stakeholders' concerns.

Common Challenges

  • Radiologists' expectations:
  • Want cutting-edge technology but may not influence budgets.
  • Physicists' specifications:
  • Can create stringent requirements favoring certain brands.
  • Administrators' skepticism:
  • Fear of overspending on soon-to-be-obsolete technology.
  • Supporting agencies' role:
  • Often disengaged yet critical for budget approvals.

Case Analysis: MediQuip’s Lost CT Scanner Order at Lowman University Hospital

1. Who is Responsible for Losing the Deal?

The failure to secure the order for MediQuip's CT scanner can be attributed to multiple factors and individuals:

Key Individuals

  1. Kurt Thaldorf (Sales Engineer):
  2. Strengths:
    • Persistent and engaged consistently with the hospital over eight months.
    • Highlighted the technological superiority of MediQuip’s CT scanner.

  3. Weaknesses:

    • Mismanagement of relationships:
    • He allowed administrative instructions (from Hartmann) to prevent discussions about pricing with Steinborn, the key influencer.
    • Failed to build trust or rapport with Hartmann, the final decision-maker.
    • Reactive rather than proactive:
    • Relied heavily on brochures and technical materials without engaging more creatively or meaningfully with stakeholders like Ruffer and Hartmann.
    • Missed opportunities to directly address pricing concerns or involve stakeholders more deeply (e.g., rejected the idea of a headquarters visit in September).
    • Delayed price adjustments:
    • The initial quote of €1.6M set a negative tone, creating a perception of high cost without immediate justification.
    • The final offer of €1.3M came too late and may not have been communicated effectively to the decision-makers.

  4. Carl Hartmann (Hospital General Director):

  5. Strengths:
    • Practical decision-maker focused on price and value for the hospital.

  6. Weaknesses:

    • Lack of transparency:
    • Evaded questions about the decision-making process and the weightage of factors like price versus technology.
    • Possibly biased toward Sigma:
    • May have favored Sigma due to existing relationships or a preference for lower-cost solutions, regardless of technological superiority.

  7. Professor Steinborn (Radiologist and Key Influencer):

  8. Strengths:
    • Advocated for the best technological solution.
    • Appreciated MediQuip’s technical features and upgrading schemes.

  9. Weaknesses:

    • Limited influence over pricing:
    • His inability to influence Hartmann or overcome administrative instructions weakened his position as a champion for MediQuip.

  10. Dr. Ruffer (Physicist):

  11. Played a minimal role in advocating for MediQuip or providing substantial feedback, reflecting disengagement.

Conclusion:

The primary responsibility lies with Thaldorf, as he failed to manage relationships, address pricing concerns early, and adequately involve or persuade key stakeholders like Hartmann. Secondary responsibility falls on Hartmann for his fixation on price and lack of clarity in the decision-making process.

2. Key Day When the Order Was Lost

The pivotal moment occurred on June 23rd.

Key Issues on June 23rd:

  1. Hartmann’s Administrative Instructions:
  2. Prohibited Thaldorf from discussing pricing with Steinborn.

  3. Steinborn, a key influencer, became frustrated as he was unable to make a compelling case for MediQuip internally due to the lack of price clarity.

  4. Competitor’s Pricing Visibility:

  5. Sigma had already provided a quote of €1.2M.
  6. Thaldorf’s inability to offer a competitive or clear price on the spot further weakened MediQuip’s position.

Impact:

This day marked the moment when MediQuip lost Steinborn’s full support, which was crucial for influencing the committee’s decision.

3. What Could Have Been Done Differently?

Key Improvements:

  1. Proactive Pricing Strategy:
  2. Provide a competitive price earlier in the process, ideally by the first week of June.

  3. Justify the premium price with a clear cost-benefit analysis showing long-term savings from technological superiority.

  4. Stakeholder Engagement:

  5. Build a stronger relationship with Hartmann:
    • Address his concerns directly through a series of structured meetings.
    • Leverage testimonials or case studies from other hospitals using MediQuip’s system.

  6. Involve Steinborn more effectively:

    • Seek his advice on presenting the value proposition to the hospital administration.
    • Encourage his advocacy by sharing specific examples of how MediQuip’s technology benefits radiologists.

  7. Enhance Communication:

  8. Reject or revise the administrative instruction that prevented price discussions with Steinborn.

  9. Propose the Paris headquarters visit in June or July to demonstrate the product's capabilities and build credibility.

  10. Timely Decision-Making:

  11. Offer the final price of €1.3M earlier (e.g., by July 15th) to ensure the hospital’s committee had sufficient time to consider it.

  12. Cross-functional Collaboration:

  13. Involve the regional manager and product specialists in meetings with Hartmann and the committee to address technical and financial concerns comprehensively.
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