This outlines the sales strategy for a Caterpillar Diesel Generator 4.4MW 2009 QX4400 to be sold to Del Monte Inc. Over the last 5 years, I have been involved in procuring Diesel generators to major companies and this was the major reason that led me to be included in the sales process. Efforts to procure a Diesel generator for the company have been futile despite involving experienced sales representatives and key management officials. In this report, theoretical approaches proposed by Derek Gatehouse are used to outline the sales process and other strategic sales tools as employed in the sales process. The three approaches are based on the behavior analysis of factors that make individuals to behave in a certain way. Such can be attributed to consequences of their actions, antecedents that stimulate and trigger their actions among other motivating factors that alter their behavior. The three approaches positive of negative consequences of the sales process, the use of the product in terms of immediate of future, and the level of certainty or uncertainty of the consequences. Finally, the report offers a recommendation and a conclusion based on the analysis of these factors.
Background for Sale
Caterpillar Diesel Generator 4.4MW 2009 QX4400 designed and distributed by Caterpillar Engineering Company is one of the few Diesel powered generators that can deliver enormous power of 4.4MW. This one of the limited edition generators manufactured in 2009 with features such as low attenuated sound enclosure, CAT 9345D Diesel Engine, PMEP LED control panel, 720 V 1600 rpm, 5000 AMP main circuit breaker, Quadruple axle chassis, 16 D batteries, Battery charger, and 24 Volt System. It also has a 3000.00gal fuel tank and it can operate continuously for 300 hours with miniscule or no maintenance. Such generators are sold to high power consumption industries and power generating plants. Only one companies in the region are capable of delivering a generator of equal power to the Caterpillar Diesel Generator 4.4MW 2009 QX4400. The other company, Diel Holdings, imports the generator from the European Union thereby making it to be sold at high costs because the generator is imported on demand of the customer. By purchasing the generator from Caterpillar Engineering Company, Del Monte Inc. discovered that it could save nearly 30% of the costs compared to having purchased its equivalent from generator from Diel Holdings.
The Sales Department of Caterpillar Engineering Company are aware of the Generators’ enormous power coupled with fuel efficiencies and strong features and hence, they want to strike the best deal out of its sale. By nature of its limited edition and the technicalities associated with its production, no other similar Diesel Powered generators will be produced by the company. Another factor that has contributed for the delay in reaching a sales agreement are purchase interests from another industrial plant. However, the bid from the other company was considered too low from the asking price requested by Caterpillar Engineering Company. This issue has generated a plethora of heated debates and several interests from the sales representatives of Caterpillar Engineering Company, each willing to benefit from the commission associated with the sale of the generator. Having understood the demand of their generator and the availability of willing sellers, the Vice President of Sales at Caterpillar Engineering Company intends to capitalize on this deal because the demand for the generator and purchase interests have demonstrated that the Generator is a product of superior quality. With Del Monte Inc. hoping to save 30% and the sales representatives of Caterpillar Engineering Company hoping to strike the best deal, the sale process of the diesel generator was not progressing.
Del Monte Inc. are eager to purchase the generator but they are reluctant to pay a higher price for the generator. This can be in part due to the lack of previous experience with a large generator and in part due to the fear of purchasing spare parts, which are not only costly but also hard to find. Equally, the sales representatives of Caterpillar Engineering Company perceive the deal as the highest opportunity for earning high commissions (Connor, 2003).
Consideration of Approaches
Several considerations had to be considered in order to facilitate the sale of the Caterpillar diesel generator. This includes but not limited to selling the product at a cost that will enable Caterpillar Engineering Company to generate the highest price, suggesting a deal that will attract the interests from Del Monte Inc. sales representatives, and convincing the buyers on matters regarding the proven record of the product. This last issue will enable Del Monte Inc. to agree that the generator has an extended life duration and that the generator will require less maintenance costs. Del Monte Inc. had to be assured that Caterpillar Engineering Company would provide links to aspects regarding spare parts including undertaking to manufacture specific parts on demand provided the purchaser covers for the cost of materials.
According to Gatehouse (2007), achieving success in a sales process calls for the need to establish exceptional communication links and encourage factors that will motivate the sales team and the buying team to strike a sales deal. However, understanding parameters that guide such a sales process requires a thorough understanding of the behavior of the participants. Undeniable, several factors makes individuals to behave in a certain way and this can be attributed to consequences of their actions, antecedents that stimulate and trigger their actions among other motivating factors that alter their behavior. For instance, sales representatives for Caterpillar Engineering Company were driven by the desired to obtain a huge bonus from the sale of the generator and hence, this antecedent will most likely influence their behavior during the sales process. Equally, the sales representatives from Del Monte Inc. are driven by the consequences of their purchase. These sales representatives are keen on ensuring that their company saves costs by purchasing the generator while at the same time ensuring that they procure a generator of the highest quality possible.
Gatehouse (2007) proposes that examination of three motivating factors that guide the sales process. These includes the examination of positive of negative consequences of the sales process, the use of the product in terms of immediate of future, and the level of certainty or uncertainty of the consequences. Therefore, all sales approaches employed in the facilitation of this sales process should consider the behavior of the participants in both situations. In applications to this study, three sales strategies will be considered in the sales process for the generator.
The first strategy involves pay and quota strategy whereby focus is placed on the commission earned by members of the sales team. This strategy suggests that sales representatives will be offered a strong commission plan, incentives, and bonuses that will encourage them to work towards the realization of aspirations of the sales department. The sales entails pegging their earnings to the outcome of the sales process, with the failure to sell the product meaning that they will earn no income. Such a strategy is made up of both positive and negative motivators that influences their behavior to sell. Positive motivators consists of the strong commission plan, bonuses, and incentives. On the other hand, negative motivators include the idea of no payment for failure to generate sales.
The second strategy, according to Gatehouse (2007), involves giving quotas to the sales people. Concerning the sale of the generator, Caterpillar Engineering Company could have set quotas whereby its sales people must fulfil concerning the sales process in the sale of the generator. In this sense, the results or progress of the deal can be measured in terms of the effort undertaken into the sales process. The efforts include understanding the behavior of the competitors and purchasing team, sitting or negotiating with the actual representatives, Del Monte Inc., arranging appointments for the sales negotiation, and making up follow-ups to ascertain the progress that has been made so far.
The third strategy entails making changes using both positive and negative motivators on the pay plan of the sales representatives, and as well outlining the procedure that will be followed by the client in case of negative consequences for their product. This could facilitate the sale of the Diesel Generator because strategies for repair and access to spare parts will be proposed to the customer.
The fundamental issue during the sales meant that the sale of the generator should be finalized if the deal offered by purchase representatives from Del Monte Inc. matches the deal proposed by sales representatives from Caterpillar Engineering Company. However, the sales representatives from Caterpillar Engineering Company should not be rigid in their decisions to make any changes to their asking price given that the purchase representatives have been strictly instructed that the company aim at cost saving during the purchase process. In situations where the asking price and the offered price show a significant difference, sales representatives should consider reducing the price slightly believing that this move will trigger purchase representatives to increase their offer price. Since the sales representatives are privy to this buying behavior where buyers love to negotiate for a better deal, it is advisable that they quote a higher price than what the sales department considers as the best deal for the Caterpillar Diesel Generator 4.4MW 2009 QX4400. The tendency to negotiate for the price to be lowered and the strategy of not being rigid will guide the negotiation process to the desired price (Keith, Touchstone, & Timothy, 2005).
This sales strategy is certain to enable Caterpillar Engineering company to achieve major milestones as far as the sale of the generator is concerned having in consideration several failed attempts in the sale of the generators. The Caterpillar Diesel Generator 4.4MW 2009 QX4400 is one of its kind in features and the fact that it is a limited edition adds to its value. Other than the unique and distinct features, the selling factor for the Caterpillar Diesel Generator 4.4MW 2009 QX4400 should revolve around the nature of competition from the other interested company, which happens to be Del Monte Inc.’s greatest competitor. Other than generating enormous power and fuel saving capabilities, the Caterpillar Diesel Generator 4.4MW 2009 QX4400 stores power thereby increasing the image of the Del Monte Inc. while at the same time expanding the chances of Caterpillar Engineering Company for striking a huge deal.
Second, improving the aftersales services of Caterpillar Diesel Generator 4.4MW 2009 QX4400 is more likely to encourage purchase representatives from Del Monte Inc. to enter into the purchase agreement. Their greatest worry was the rarebility and high costs of spare parts for the Caterpillar Diesel Generator 4.4MW 2009 QX4400. Considering the strengths, durability, and quality of materials employed in the development of the limited edition of the Caterpillar Diesel Generator 4.4MW 2009 QX4400, sales representatives from Caterpillar Engineering Company can agree entering into an agreement for offering after sales services (Colin & Graham, 1991). They can also consider adding a clause in the aftersales agreement that specifies the terms and conditions for manufacturing the spare parts in case of wear and tear.
Closely related to the issue of entering into an after sales agreement is the concept of communication the side negative aspects of the power generator. Virtually, every company has an environmental concern policy, and therefore engaging in clean environment practices should be one of the objectives. As a diesel generator, pollution is one of the shortcomings of Caterpillar Diesel Generator 4.4MW 2009 QX4400 and therefore, Caterpillar Engineering Company ought to communicate this concern to Del Monte Inc. Second, Caterpillar Engineering Company should communicate the certainty of their product as far as maintenance and replacement of parts if concerned. The buyer will purchase the product having in mind the expected duration and the period their product becomes defect-free. This point serves to minimize the level of doubt from the buying team in addition to enabling them to make informed decisions. On another level, it minimizes the level of risk to the buyer because no buyer intends to purchase a product associated with higher risks.
According to Piercy, Cravens, and Morgan (1997), sales compensation strategies plays a fundamental role in influencing the achievements of sales representatives and the outcomes of the sales process. Understanding the underlying compensation factors that cause sales representatives to perform at their best is essential in order to determine the right pay plan or commission plan for the sales representatives. The amount earned from the sales process should not compromise the compensation package but the sales representatives should could also be made aware that their compensation package is dependent on the outcome of the sales process. Keith, Touchstone, & Timothy, (2005) argues that less effective organizations are associated less significant payment incentives.
I recommend that Caterpillar Engineering Company should consider a mixture of the above strategies in the sales process for the Caterpillar Diesel Generator 4.4MW 2009 QX4400. The strategies will not only be beneficial to the company’s objectives but it will also help in increasing the value of the product sold to the client. Furthermore, the behavior analysis strategy ensures that all the influential factors to the sales process are put into consideration and aid in the process of making informed decisions to both the buyer and the seller. Finally yet important, it increases the chances of striking a deal by minimizing the factors that will make the deal to hit a stalemate.
Despite the sale process of the limited edition Caterpillar Diesel Generator 4.4MW 2009 QX4400 having failed to generate a substantial deal for the company, the application of the behavior analysis approach increases the chances of the buyer and seller being satisfied in the negotiation process. Not only are sales representatives capable of convincing the buyer to purchase the product but they are also capable of influencing the position of purchase representatives. Caterpillar Diesel Generator 4.4MW 2009 QX4400 is a limited edition generator that has been designed to outdo any generator of equal capacity. Coupled with its unique features and fuel efficiency capabilities, this generator is certain to add additional benefits to the consumer. Besides, the idea of allowing buyers to be engaged in the price negotiation process and agreeing to offer after sales services for the unique generator increases the chances of realizing success in the purchase process. The execution of the strategy identified in this case ensures that the client is subjected to minimal risk levels due to the increased certainty in the product.
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