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Michelin Fleet Solutions - A new sales strategy

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Michelin Fleet Solutions - A new sales strategy

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    1. Michelin Fleet Solutions - A new sales strategy

    2. Agenda 21.11.2011 2 Sales and Customer Relationship Management

    3. Agenda 21.11.2011 3 Sales and Customer Relationship Management

    4. Overview of Truck and Buses tire industry Truck and Buses (TB) Tire Industry equals 27% of all tire sales worldwide European TB tire market accounts for 29% of world market (24.5 million units in 2002) 21.11.2011 4 Sales and Customer Relationship Management Truck and Bus (TB) Tire Industry equals 27% of all tire sales worldwide (second to passenger car tires with 60%) European TB tire market accounts for 29% of world market (24.5 million units in 2002) Relies on a strong road transportation industry (road: 44% share in European transportation, with expected 3% growth annually) Truck and Bus (TB) Tire Industry equals 27% of all tire sales worldwide (second to passenger car tires with 60%) European TB tire market accounts for 29% of world market (24.5 million units in 2002) Relies on a strong road transportation industry (road: 44% share in European transportation, with expected 3% growth annually)

    5. Overview of Truck and Buses tire industry 21.11.2011 5 Sales and Customer Relationship Management

    6. Overview of Truck and Buses tire industry Road transportation : 44% share in European transportation, with expected 3% growth annually ? High flexibility, competitive prices Road transportation suffers from a negative image as it is viewed as a key contributor to CO2-emissions ?Tires play a key role in reducing carbon emissions European road transportation market is dominated by five large players (Schenker, DHL, TNT, Geodis, Norbert Dentressangle) Total of 1,500 European transportation companies ?hyper-competitive market 21.11.2011 6 Sales and Customer Relationship Management However, road transportation suffers from a negative image as it is viewed as a key contributor to CO2-emissions Tires play a key role in reducing carbon emissions European road transportation market is dominated by five large players (Schenker, DHL, TNT, Geodis, Norbert Dentressangle), but 80% of transportation companies operate with a small fleet (< 5 vehicles) Total of 1,500 European transportation companies -> hyper-competitive market However, road transportation suffers from a negative image as it is viewed as a key contributor to CO2-emissions Tires play a key role in reducing carbon emissions European road transportation market is dominated by five large players (Schenker, DHL, TNT, Geodis, Norbert Dentressangle), but 80% of transportation companies operate with a small fleet (< 5 vehicles) Total of 1,500 European transportation companies -> hyper-competitive market

    7. Agenda 21.11.2011 7 Sales and Customer Relationship Management

    8. Michelin‘s Original Business Model Traditional Business : Manufacturing and selling of tires Michelin is one of the three dominant players in the tire industry Michelin‘s Mission: „Contribute to the mobility of goods and people“ Different Products lines, e.g. Cars, Truck and Buses, Motorbikes Truck and Buses Product line accounts for 25% of overall sales (2002) 21.11.2011 8 Sales and Customer Relationship Management

    9. Michelin‘s Original Business Model 21.11.2011 9 Sales and Customer Relationship Management

    10. Agenda 21.11.2011 10 Sales and Customer Relationship Management

    11. Michelin Fleet Solutions 21.11.2011 11 Sales and Customer Relationship Management

    12. Agenda 21.11.2011 12 Sales and Customer Relationship Management

    13. Pros and Cons Advantages of Michelin Fleet Solutions 1/2 21.11.2011 13 Sales and Customer Relationship Management

    14. Pros and Cons Advantages of Michelin Fleet Solutions 2/2 21.11.2011 14 Sales and Customer Relationship Management

    15. Pros and Cons Negative aspects of MFS 1/3 21.11.2011 15 Sales and Customer Relationship Management

    16. Pros and Cons Negative aspects of MFS 2/3 21.11.2011 16 Sales and Customer Relationship Management

    17. Pros and Cons Negative aspects of MFS 3/3 21.11.2011 17 Sales and Customer Relationship Management

    18. Pros and Cons Difficult to show clients the value of the new solution offer Intangibility of services makes it difficult for clients to judge Process of selling requires adaptations to the new product type Competition between traditional sales force and MFS sales force Conflicting interests: Selling as much new tires as possible vs. increasing the life of tires Pricing problems Underestimation of costs involved ? fees to low Many fleets under contract were unprofitable 21.11.2011 18 Sales and Customer Relationship Management It's difficult to show the potential clients of the value of the new solution offer. Since the traditionsl product edge is no longer the heart of offer, and the scope of service is too large to list all the benefits. The result is the sales couldn't persuade clients to pay more for tire management solution than they used to pay when only bought tires. It's difficult to show the potential clients of the value of the new solution offer. Since the traditionsl product edge is no longer the heart of offer, and the scope of service is too large to list all the benefits. The result is the sales couldn't persuade clients to pay more for tire management solution than they used to pay when only bought tires.

    19. Agenda 21.11.2011 19 Sales and Customer Relationship Management

    20. Recommendations 21.11.2011 20 Sales and Customer Relationship Management The concept is good and can lead to a potential competitive advantage over other competitors. However, the current configuration of the model is not efficient and lacks certain adjustments: Previously named problems can be solved through: Cross link departments especially sales of original tires and the new MFS: New pay schemes can be used to interlink the departments ? departments have an incentive that they both perform good which reduces the potential sabotaging Specify target customer: tackles also the problem of the both departments working side by side? MFS should focus only on logistics providers and OTB should focus on the rest of the business and only step in in case MFS was not able to convince the customer. OTB as a sort of backup sales force for service providers so Michelin does not loose customers to competitors Interlink service providers: Basically a principle agent problem as Michelin sacrifices its name in case a service provider does not deliver the promised service. Try to link the service providers to MFS by adjusting their contracts and using KPI?gives incentive to deliver the best possible service Focus on key advantage for customers: Pointing out the variable cost and explaining possible benefits for the customers ? regulation in case business is not going as well as suspected, use of trucks is more flexible and can be adjusted. Only one contract for the customer instead of constantly searching for good tire-offers and searching for service stations. Reconfiguration of Information System: Seperating the MFS from original business model as a different approac is needed. The massive amount of invoices should be handled by a separate team which could increase efficiency. The concept is good and can lead to a potential competitive advantage over other competitors. However, the current configuration of the model is not efficient and lacks certain adjustments: Previously named problems can be solved through: Cross link departments especially sales of original tires and the new MFS: New pay schemes can be used to interlink the departments ? departments have an incentive that they both perform good which reduces the potential sabotaging Specify target customer: tackles also the problem of the both departments working side by side? MFS should focus only on logistics providers and OTB should focus on the rest of the business and only step in in case MFS was not able to convince the customer. OTB as a sort of backup sales force for service providers so Michelin does not loose customers to competitors Interlink service providers: Basically a principle agent problem as Michelin sacrifices its name in case a service provider does not deliver the promised service. Try to link the service providers to MFS by adjusting their contracts and using KPI?gives incentive to deliver the best possible service Focus on key advantage for customers: Pointing out the variable cost and explaining possible benefits for the customers ? regulation in case business is not going as well as suspected, use of trucks is more flexible and can be adjusted. Only one contract for the customer instead of constantly searching for good tire-offers and searching for service stations. Reconfiguration of Information System: Seperating the MFS from original business model as a different approac is needed. The massive amount of invoices should be handled by a separate team which could increase efficiency.

    21. Thank you for your attention! 21 21.11.2011 Sales and Customer Relationship Management

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