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Marketing Myopia Bombardier and Amtrak Summary. Summer 2008 XMBA 206.1 . 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”

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amtrak and the n e corridor the situation
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.
amtrak and the n e corridor situation management
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.
marketing myopia relationship management for a relationship product
Marketing MyopiaRelationship 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.
learning marketing myopia
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.
removing marketing myopia marketing orientation
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.
what happened
What happened?
  • Lawsuit settled 2 years after the case,
    • 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.
  • 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.
    • 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).
analysis framework
Analysis Framework

Company Analysis

Marketing Myopia

Customer Analysis

Marketing Orientation

Competitor

Analysis

Marketing

Orientation

Marketing Strategy

Product

Price

Promotion

Place

Market