Issue 1: Consolidated Bearing Company (CBC) is Australia's largest distributor of Bearings, Power Transmission, Oil Seals and associated products. One of the company's major product groups is Oil-Seals and will be the focus of this analysis. Oil Seals are used in a variety of segments including automotive, industrial, agriculture, white goods, mining and trucking industries. Their purpose is to retain oil, grease, water, air, gas and exclude dirt, dust and other containments. CBC has aligned itself with the world's top three manufacturer's of Oil Seals as exclusive distributor for two and as the largest Australian distributor for the third.. The features of Oil Seals tend to differ across industries and competitor's products may differ in design and materials. The perceived performance and quality of products differentiate the competitive offerings in the market. Customers such as Ford, GMH, Onesteel, Alcoa etc tend to look to product quality, cost savings associated with product service life, engineering and after-sales service. CBC's aim is to satisfy these market sectors requirements by carrying the nation's largest range of inventory and distribution network, with over 600 staff in more than 65 branches Australia-wide. CBC staff are internationally trained and experienced, with specialised engineering personnel that best service the demands of these industries.
A privately owned company CBC began in 1954 with the aim to offer complete market coverage to every corner of Australian industry. As a result an updated anagram was created and the 'complete bearing coverage' slogan is used widely across the branch network and sales force to help drive the belief that CBC cover every customer requirement nationally with both product and service. In response to an increasingly competitive marketplace, CBC has diversified its product range to include a complete industrial package that covers the customers every need. CBC's ongoing commitment is to provide the customer with the highest quality service which is central to the companies marketing purpose and is outlined in the Corporate Mission Statement "To be a better distributor of bearings and power transmission than any other company in the world by providing superior products and innovative service."
Through Business to Business (B2B) transactions, CBC implements its market strategy with a marketing orientation where the sales staff are customer oriented and identify and provide the needs and wants of the customer and ensure they are delivered to the customer through promotion of brand and continual customer research (Marketing Management, MM 2010). For example, it is expected that each sales member forms a relationship and visits their entire customer base on a regular basis to service and discuss the advantages of the CBC product with each customer acknowledging the products core strengths over competition and to provide with a solution to their initial problem. This can be supported by the companies value proposition that states 'To reduce the customers total cost of operation by supplying a comprehensive range from the best manufacturers in the world, the right product on time , the right advice on cost effective applications and maintenance practices and proactive engineering solutions to improve reliability'. CBC also relies on global suppliers who employ a product orientation (MM 2010) where the brand drives product innovation and best in the world philosophy via performance, features and experience. CBC distributes a range of products including National, NOK Oil Seals and JM clipper. Not only does this product range cover the industries requirements, the industry recognises these brands as leaders in the field and can rely on the products performance. All of these suppliers strive to meet or exceed the customers' expectations with products, services and experience that are superior to the competition. This is promoted by advertising longer life, diverse product range, and largest inventory and by being the largest manufacturer in the world.
Issue 2: If we analyse CBC's marketing strategy development using the 5 C's (Company, Customers, Competitors, Collaborators, and Context - MM 2010), we can identify the basis of how the company aims to achieve its objectives.
Company- CBC's strengths lie in the ability of its key resource, its people. Experienced staff is relied upon to communicate the message of brand, service and the capability to diversify the range and adapt to changing customer demands and supply a complete product and solution package.
Customers- CBC customers can be classified into three segments which all demonstrate different buyer behavior and have different needs.
- OEM (original equipment manufactures) work on supply contracts that are based on 5 year forecasts and require significant R&D and negotiations that can take years to come to fruition.
- Mining customers require critical parts to be available at the right location to ensure down time is kept to a minimum, therefore expect their suppliers to have the resources to carry the right inventories at accessible locations.
- Aftermarket customers are more concerned with convenience and local availability of products and engineering advice.
Collaborators: To prove CBC's loyalty to its supplier partner and keeping the NOK technology within customers reach, CBC established a joint venture stock holding company NOK-CBC which illustrates CBC's commitment to NOK and its customers as the preferred brand of choice. Each supplier is a world leader and innovator who are envied by the competition and embraced by the customer. This is in line with CBC's objectives and is used to market the brand to the end user. The 'NOK' brand for example is known to the end user through experience, unique design and innovation and is influenced through global advertising where the logo can be found on the Honda Formula 1 racing team.
Competition: SKF and NSK are the two largest competitors for CBC and are both globally owned corporations with the ability to influence international promotion that is relevant to their own industry. These manufacturers also have financial backing from parent companies to fund local advertising and entertainment that allows customer relationships to be formed and strengthened.
Context: Political and Environmental factors influence our opportunities with customers. For example the carbon trading scheme has highlighted some opportunities for cleaner energy which CBC has focused on with a environmental package offering water & power saving opportunities to existing customers.
Issue 3: CBC conducts market research both external and internal. Externally we keep up with what our competitors are up to (through our sales force and distributor network) and conduct interviews with our customers who provide us with continual feedback re our position in the market. Internally we conduct employees surveys and act on results ensures we remain a focused workplace. Emphasis is placed on its people to receive customer feedback and information regarding what each customer wants and needs are, and what further value CBC can offer to completely satisfy the buyer. Market information is received by the sales representatives and presented through report submission on a CRM system. Years of sales, market and product information are accumulated and this predictive research is used by management to make specific marketing decisions and strategies regarding relevant segments and product mix. Ongoing management of industry change will assist where the company's marketing strategy needs to be reviewed to identify new opportunities. External information analysis of Australian industry and market strengths are reviewed by management and the marketing department regularly to provide a snapshot of the specific industry and what capital needs to be invested to target the business. Sales targets are then prepared and the required resources to achieve the targets are allocated. For example, with the decline in local automotive manufacturing and the increase in mining activity, a shift in focus has been placed on the mining sector. Staff and capital are allocated into the sector to promote the CBC brand as the company to turn to for all your mining needs.
One concern may be that management cannot guarantee the accuracy of the data submitted in the reports. Although we expect that the majority of the data entered is reliable, sales staff may fear management use this information as a performance indicator and consequently enter data that is positive. Also, the representatives may service the customer on an ongoing basis and there can be some apprehension by the buyer to offend the individual with any negative feedback. To overcome this management could introduce qualitative research and receive marketing information systems that analyse specific customer information over internal information alone, by measuring customer satisfaction through anonymous survey directly by customer and market segment. This may ensure what is offered to the customer is actually what they want and need rather than what we may think they need. Such marketing information systems can assist in gathering and analysing the information taken from the industry to improve marketing decisions more effectively. With this information strengths and weaknesses can be identified and strategies be reviewed accordingly with adjustment of resources.
Issue 4: Kotler (2001) defines the role of marketing as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. It is therefore essential that CBC focus on the customer and their underlying needs and wants which differs in each market segment and customer. An Automotive customer focuses on relationship, quality and price and will annually benchmark its incumbent supplier to ensure that they are competitive on a global scale. Original Equipment Manufacturers (OEM's) purchase goods to be used as part of their final product therefore quality and supply continuance is most important for the ongoing resale of their product. Quality and Environmental standards are an ongoing minimum accreditation with site audits conducted and renewed every 3 years. The ISO9001, TS16949 Quality Management Systems, ISO14001 environmental certification and OHSAS18001 Global health and safety management standards, do not necessarily guarantee the quality or type of product manufactured but advertises that the company operates to a global standard. It is now used more commonly as a marketing tool rather than quality assurance.
Industrial customers are more focused on response time and the affect of machine downtime over the cost of products. For example, a mine cannot afford to use a low quality oil seal in a remote location as the risk of failure and downtime could cost the company thousands of dollars. Therefore a higher price for premium brand would not be seen as a cost as in reality it could save the company in downtime dollars. It is common for CBC to measure the difference of a bearing & oil seal life and apply a figure to it and formally submit this to the customer as a cost saving and have it signed off as acknowledgement. With contracts renewals CBC target the cost saving figure to be 10%-15% of the annual sales volume and present this as a value add during negotiations, which the customer accepts as formal exchange of doing business.
While our aftermarket customers wants and needs differ greatly to the above segments. Predominately motor mechanics who value price and product availability as downtime is not a critical issue but local availability is. Therefore the 65 sales outlets give CBC the necessary coverage to meet the needs of this segment.
CBC recognises the different wants and needs of different segments and enables them to offer a different marketing mix when targeting these segments and adding value depending on the customer's expectations.
Issue 5: The 'CBC' brand communicates its reliability with both product and service which is conveyed predominately by its people. CBC is recognised in the industry by its logo with 3 diamonds which is an emblem of the company's values and people. It is expected that staff will go to any length to satisfy the customers' needs, supporting the companies' values which separates us from the competition. Internally CBC has implemented a motto 'Whatever it takes' which implies that staff will go to any length to solve the problem at hand. To ensure customer satisfaction is achieved through the sense of value, engineers are allocated to customers with technical requirements and sales staff to liaise with the commercial side of the business to target the complete package and offer cost savings which are reviewed by management weekly.
While the corporate image uses its suppliers as the global marketer, it is difficult for CBC (a privately owned Australian Company) to have any say in what is advertised and what resources are used to promote the brand specific to the Australian market. An example of this can be illustrated by the global supplier push for wind energy however this really only applies for a very small segment of the Australian market which is mostly imported product and as a result would not be advantageous for Australian end user advertising.
CBC's strengths are and always have been to relate with the customer as a partner to identify their wants and needs. Relationships are strengthened by recognition of problems before they occur and CBC is then identified as a solution provider. Such relationships assist with the influence of suppler selection and supplier performance review following the receipt of a formal order. The idea is to promote loyalty to CBC and voice positive scrutiny in the industry. Peter Drucker (1973) states "that marketing is the whole business seen from the point of view of its final result i.e. from the customer's point of view." CBC's international profitable success and abundance of global suppliers on offer is testimony of the positive influence of the marketing strategies implemented to achieve the company's goal of being the best distributor in the world by providing superior products and innovative service.
CBC's marketing strategy can be measured by the company's success within the industry over the last 64 years by achieving its objectives set out in the company's mission statement. By maintaining the title as the largest distributor in Australia, CBC is viewed as the leader in the industry which can be supported by annual growth of sales and profitability. With a marketing orientation, the sales employees are the best people to satisfy the customer's needs and wants. Achievable sales incentives drive the sales force to deliver the service required to achieve customer satisfaction. Through the implementation of marketing orientation, a company that has strong customer focus, continuously seeks relevant market information through research and has the drive from the whole organisation to make an impact at customer level will ultimately lead to customer satisfaction. As this satisfaction emerges it will lead to repeat business and customer loyalty (Kotler et al 2001). CBC was built on customer relationships and is still one of the facets of the company that is regarded most favourably over competitors. With the increasing import of Chinese low quality product, there needs to be ongoing analysis of the market segments that they are targeting and ensure that they do not conflict with CBC's strategies implemented. It is known that prices are extremely low therefore targeting industry that buys on price alone should not be considered. As delivering customer satisfaction through quality and service is the orientation, industries with high demands of these attributes such as mining should continue to be used as the key focus. CBC need to remain flexible as their future strategy can change and if market share increases are required pricing may need to be considered to compete with these Chinese manufacturers. CBC would need to adopt more of a selling orientation to target this segment.
Promotion of the CBC brand should be increased as it is heavily reliant on its supplier base to advertise innovative products. Distributors should be pressed to advertise the CBC name with heavy promotion of the business' strengths in inventory and service. The use of advertising using interactive marketing in industry magazines, trade shows and brochures can assist in showcasing the focus of CBC's range and service and also be used as an internal motivator. Further surveys can identify whether the investment is viable and can be as simple as asking new customers a question such as 'How did you find out about CBC?' The CBC website could use a complete overhaul as in many cases this is a first port of call of any new potential customer. First impressions are important and websites can portray professionalism and the size of the company. A user friendly website with links to suppliers and product can assist with increasing sales and be a great advertisement for the company.
CBC is striving to show it's customers that we are not just an Oil seal and bearing distributor but also a supplier of complete sealing solutions. We are highlighting the fact that we are capable of assisting customers from design to implementation stage allowing our customers to focus on their core competencies. Selling these solutions requires building relationships at many levels of customer business and continual revision of our marketing strategies to enable us to maintain a competitive edge and market share.
- Marketing Management 2010 - Units 1 - 4, AGSM MBA (Executive) Program.
- Kotler, P.Brown, L., Adam, S& Armstrong, G. 2004, Marketing, Edition 6 Pearson Prentice Hall.
- Porter, M.E. 1980, Competitive Strategy, New York, Free Press.
- Kotler, P. Adam, S., Brown, L. & Armstrong, G. 2001, Principles of marketing, Prentice Hall, Sydney p.p. 3,5.
- Drucker, P.F. 1973, Management: tasks responsibilities, practices, Harper and Row, New York, pp. 64-65.