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Marketing Myopia Bombardier and Amtrak Summary Summer 2008 XMBA 206.1 Ganesh Iyer 1 Amtrak and the N.E. corridor (The Situation) How important is Acela to Bombardier? Technological breakthrough – Hi-speed train that runs on lousy tracks » If Bombardier “pulls this off”, they have a “Silver Bullet” – Nobody in the world has a high speed train that runs on lousy tracks. – The world is full of countries with lousy tracks that wants faster service – Large potential global market Showcase account Establish relationship with Amtrak for future sales Strategic Implications Make it work, even if the project is not a money maker This as an “Investment in learning” about high speed trains. Showcase account - publicity must be managed. Ganesh Iyer 2 Amtrak and the N.E. corridor: (Situation Management) Has Bombardier’s handling of this project damaged its corporate image? » The reference account is “turned off” » Jeopardize not just high speed trains but the entire Amtrak business » The technology is great and passengers like it…but Bombardier’s conflict resolution process is terrible. Ganesh Iyer 3 Marketing Myopia Relationship Management for a “Relationship Product” Bombardier had to realize that they were marketing a relationship product not just a technology. » Quality of an “Relationship Product” depends upon both seller and buyer Relationship Management is critical Lawsuits are the last resort. » Are you right? And can you prove it? Even then the lawsuit may take years. » Consider the long term effects about publicly deriding the reputation of your customer Bad press and complaints may have been inevitable but if Gunn and his team at Amtrak had a relationship with Bombardier » Bombardier could have avoided denigrating statements = crapper doors » Would exist a congenial approach to solving problems this is critical if you need information from your buyers. » Critical for “Relationship Products” where the ultimate quality is based on both parties. Ganesh Iyer 4 Learning: Marketing Myopia If your firm is like Bombardier (Market Leader, Technology Leader and Innovative) » Beware the curse of Marketing Myopia. » Pay attention to customers (even bad customers) and not just your product. Avoiding Marketing Myopia is important for Bombardier as it is for P&G. Marketing is costly but… » So is redesigning products, costly R&D and salvaging public relations disaster. Ganesh Iyer 5 Removing Marketing Myopia Marketing Orientation Execution Toolkit Ask what is the basic customer need and not what is the great product we are selling? » A marketing orientation means understanding consumer needs and connecting with them. » It means not being mesmerized by your product. Sincerity (Reputation) >> Product = Marketing Orientation. » You can recover from a bad product but almost never recover if the customer doubts your sincerity. » If “sincerity” is costly then avoid that business. Ganesh Iyer 6 What happened? Lawsuit settled 2 years after the case, » » By 2005…Amtrak and Acela are doing well and Bombardier is selling trains to Amtrak having re-established the relationship. » David Gunn over the past 3 years turns out to be Amtrak’s best president in years holding down costs In November 2005 Amtrak’s board fires Gunn. » Bombardier only got 42.4 million of the 70 million it was owed by Amtrak plus all the legal costs, But Bombardier loses maintenance contract…prevents Bombardier from learning through its involvement in maintaining the trains. The Bush administration wants to privatize Amtrak starting with the profitable Northeast corridor and Gunn opposes it. In October 2004, Bombardier secures the only high speed train order sold outside of northern Europe since 2002 » Sale of 20 high-speed trains to China (Bombardier’s part of the deal is $263). Ganesh Iyer 7 Analysis Framework Company Analysis Marketing Myopia Customer Analysis Marketing Orientation Competitor Analysis Marketing Orientation Marketing Strategy Product Price Promotion Place Market Ganesh Iyer 8