How well did Thaldorf interact with each member of the DMU? On what date did Thaldorf effectively lose the sale to Lohmann University? On December 18, Kurt Thaldorf, a sales engineer for can diagnose cancer of the pancreas in less than two the German sales subsidiary of Mediquip, S.A., was weeks after it develops. This was not possible before informed by Lohmann University Hospital in Stuttgart CT scanners." that it had decided to place an order with Sigma, a Mediquip was a subsidiary of Technologie UniDutch competitor, for a CT scanner. The hospital's verselle, a French conglomerate. The company's proddecision came as disappointing news to Thaldorf, who uct line included, in addition to CT scanners, X- ray, had worked for nearly eight months on the account. ultrasonic, and nuclear diagnostic equipment. Mediquip The order, if obtained, would have meant a sale of enjoyed a worldwide reputation for advanced technol(Euro) 2,370,000 for the sales engineer. 1 He was con- ogy and competent after-sales service. vinced that Mediquip's CTscanner was technologically "Our competitors are mostly from other European superior to Sigma's and, overall, a better product. countries," commented Mediquip's Sales Director for Thaldorf began a review of his call reports in order Europe. "In some markets they have been there longer to better understand the factors that had led to Lohmann than we have, and they know the decision-makers betUniversity Hospital's decision. He wanted to apply the ter than we do. But we are learning fast." Sigma, the lessons from this experience to future sales situations. subsidiary of a diversified Dutch company under the same name, was the company's most serious competiBACKGROUND tor. Other major contenders in the CT scanner market were FNC, Eldora, Magna, and Piper. At the time, the computer tomography (CT) scanner Mediquip executives estimated the European marwas a relatively recent product in the field of diagnostic ket for CT scanners to be around 200 units per year. imaging. This medical device, used for diagnostic pur- They pointed out that prices ranged from 1.5 to 3.0 poses, allowed examination of cross sections of the million per unit. The company's CT scanner sold in the human body through display of images. CT scanners upper end of the price range. "Our equipment is at least combined sophisticated X-ray equipment with a com- two years ahead of our most advanced competition," puter to collect the necessary data and translate them explained a sales executive. "And our price reflects this into visual images. When computer tomography was first introduced in Mediquip's sales organization in Europe included the late 1960s, radiologists had hailed it as a major tech- eight country sales subsidiaries, each headed by a mannologiqal breakthrough. Commenting on the advantages aging director. Within each country, sales engineers of CT scanners, a product specialist with Mediquip said, reported to regional sales managers who, in turn, ".

1. How well did Thaldorf interact with each member of the DMU?
On what date did Thaldorf effectively lose the sale to Lohmann University? On December 18,
Kurt Thaldorf, a sales engineer for can diagnose cancer of the pancreas in less than two the
German sales subsidiary of Mediquip, S.A., was weeks after it develops. This was not possible
before informed by Lohmann University Hospital in Stuttgart CT scanners." that it had decided
to place an order with Sigma, a Mediquip was a subsidiary of Technologie UniDutch competitor,
for a CT scanner. The hospital's verselle, a French conglomerate. The company's proddecision
came as disappointing news to Thaldorf, who uct line included, in addition to CT scanners, X-
ray, had worked for nearly eight months on the account. ultrasonic, and nuclear diagnostic
equipment. Mediquip The order, if obtained, would have meant a sale of enjoyed a worldwide
reputation for advanced technol(Euro) 2,370,000 for the sales engineer. 1 He was con- ogy and
competent after-sales service. vinced that Mediquip's CTscanner was technologically "Our
competitors are mostly from other European superior to Sigma's and, overall, a better product.
countries," commented Mediquip's Sales Director for Thaldorf began a review of his call reports
in order Europe. "In some markets they have been there longer to better understand the factors
that had led to Lohmann than we have, and they know the decision-makers betUniversity
Hospital's decision. He wanted to apply the ter than we do. But we are learning fast." Sigma, the
lessons from this experience to future sales situations. subsidiary of a diversified Dutch company
under the same name, was the company's most serious competiBACKGROUND tor. Other
major contenders in the CT scanner market were FNC, Eldora, Magna, and Piper. At the time,
the computer tomography (CT) scanner Mediquip executives estimated the European marwas a
relatively recent product in the field of diagnostic ket for CT scanners to be around 200 units per
year. imaging. This medical device, used for diagnostic pur- They pointed out that prices ranged
from 1.5 to 3.0 poses, allowed examination of cross sections of the million per unit. The
company's CT scanner sold in the human body through display of images. CT scanners upper
end of the price range. "Our equipment is at least combined sophisticated X-ray equipment with
a com- two years ahead of our most advanced competition," puter to collect the necessary data
and translate them explained a sales executive. "And our price reflects this into visual images.
When computer tomography was first introduced in Mediquip's sales organization in Europe
included the late 1960s, radiologists had hailed it as a major tech- eight country sales
subsidiaries, each headed by a mannologiqal breakthrough. Commenting on the advantages
aging director. Within each country, sales engineers of CT scanners, a product specialist with
Mediquip said, reported to regional sales managers who, in turn, "The end product looks very
much like an X-ray image. reported to the managing director. Product specialists The only
difference is that with scanners you can see provided technical support to the sales force in each

2. sections of the body that were never seen before on a country. screen-like the pancreas. A
radiologist, for example, BUYERS OF CT SCANNERS * This case was prepared by Professor
Kamran Kashani as a _ A sales executive at Mediquip described the buyers of basis for class
discussion rather than to illustrate either effective CT scanners as follows: or ineffective handling
of a business situation. All names and Most of our sales are to what we call the public sector,
financial data have been disguised. Copyright 1998 by IMD-International Institute for
Management Development, health agencies that are either government-owned or Lausanne,
Switzerland. Not to be used or reproduced without belong to non-profit support organizations
such as univerwritten permission directly from IMD. sities and philanthropic institutions. They
are the sort of i For the purposes of this case, use the following exchange buyers that buy through
formal tenders and have to rates for the Exchange =$1=1.09. budget their purchases at least one
year in advance. Once
the budget is allocated, it must then be spent before the school. The university was a leading
teaching center end of the year. Only a minor share of our CT scanner and enjoyed an excellent
reputation. LUH's radiology sales goes to the private sector, profit-oriented organiza- department
had a wide range of X-ray equipment from tions such as private hospitals or private radiologists.
a number of European manufacturers, including Sigma Of the two markets, the public sector is
much more and FNC. The radiology department had five staff complex. Typically, there are at
least four groups that get members, headed by a senior and nationally known administrators and
people from the supporting agencyusually the ones who approve the budget for purchasing a CT
scanner. Radiologists are the ones who use the equipment. From the records he had kept of his
sales calls, ThalThey are doctors whose diagnostic services are sought by dorf reviewed the
events for the period between May 5 , other doctors in the hospital or clinic. Patients remember
when he learned of LUH's interest in purchasing a CT their doctors, but not the radiologists.
They never receive scanner, and December 18 , when he was informed that flowers from the
patients! A CT scanner could really enhance their professional image among their colleagues.
Mediquip had lost the order. Physicists are the scientists in residence. They write the technical
specifications which competing CT scanners must meet; they should know the state of the art in
X-ray Office received a call from a Professor Steinborn from technology. Their primary concern
is the patient's safety. Lohmann University Hospital regarding a CT scanner. The administrators
are, well, administrators. They I was assigned to make the call on the professor. have the
financial responsibility for their organizations. Looked through our files to find out if we had
sold anyThey are concerned with the cost of CT scanners, but also thing to the hospital before.
We had not. Made an with what revenues they can generate. The administrators extremely wary
of purchasing an expensive techno- are apointment to see the professor on May 9. logical toy that

3. will become obsolete in a few years. The people from the supporting agency are usually not
MAY 9 directly involved with decisions as to which product to Called on Professor Steinborn,
who informed me of a purchase. But, since they must approve the expenditures, recent decision
by university directors to set aside they do play an indirect role. Their influence is mostly felt
funds next year for the purchase of the hospital's first by the administrators. CT scanner. The
professor wanted to know what we The interplay among the four groups, as you can had to offer.
Described the general features of our CT imagine, is rather complex. The power of each group in
system. Gave him some brochures. Asked a few quesrelationship to the others varies from
organization to tions which led me to believe other companies had organization. The
administrator, for example, is the top come to sce him before 1 did. Told me to check with Dr.
decision-maker in certain hospitals. In others, he is only a One of the key tasks of our sales
engineers is to Rufer, the hospital's physicist, regarding the specs. define for each potential
account the relative power of the Made an appointment to see him again ten days later. players.
Only then can they set priorities and formulate Called on Dr. Rufer, who was not there. His
secretary selling strategies. gave me a lengthy document on the scanner specs. The European
sales organization at Mediquip had MAY 10 recently started using a series of forms designed to
help sales engineers in their account analysis and strategy Read the specs last night. Looked like
they had been formulation. (A sample of the forms, called Account copied straight from
somebody's technical manual. Management Analysis, is reproduced in Exhibit 1.) Showed them
to our Product Specialist, who confirmed my own hunch that our system met and exceeded the
specs. Made an appointment to see Dr. Rufer next wcek. LOHMANN UNIVERSITY
HOSPITAL MAY 15 Called on Dr. Rufer. Told him about our system's feaLohmann University
Hospital (LUH) was a large gen- tures and the fact that we met all the specs set down on eral
hospital serving Stuttgart, a city of one million res- the document. He did not seem particularly
impressed. idents. The hospital was part of the university's medical Left him with technical
documents about our system.
ACCOUNT MANAGEMENT ANALYSIS The enclosed forms are designed to facilitate your
management of: 1 Akey sales account 2 The Mediquip resources that can be applied to this key
account Completing the enclosed forms, you will: - Identify installed equipment, and planned or
potential new equipment - Analyze purchase decision process and influence patterns, including: -
Identify and prioritize all major sources of influence - Project probable sequence of events and
timing of decision process - Assess position/interest of each major influence source - Identify
major competition and probable strategies - Identify needed information/support - Establish an
account development strategy, including: - Select key contacts - Establish strategy and tactics for
each key contact, identify appropriate Mediquip personnel - Assess planis for the most efiective

4. use of local team and headquarters resources KEY ACCOUNT DATA Q Original (Date:
Account No: Type of institute: a fevision (Date: Sales Specialist. Bed Size:
Countyyfliegion/District: Teleptione: 1. CUSTOMER (HOSPITAL, CLINIC, PRIVATE
INSTITUTE) Name: Street Address: City, State: 2. DECISION MAKERS - IMPORTANT
CONTACTS
EXHIBIT 1 (continued) 3. INSTALLED EQUIPMENT 4. PLANNED NEW EQUIPMENT 5.
COMPETITION 7. ACTIONS - IN SUPPORT OF PLAN 8. ORDEF STATUS REPORT
MAY 19 final decision will be made by a committee made up of Called on Professor Steinborn.
He had read the mate- Hartmann, Professor Steinborn and one other person rial I had left with
him. Seemed rather pleased with the whom she could not recall. features. Asked about our
upgrading scheme. Told him we would undertake to upgrade the system as new feaJUNE 20
tures became available. Explained that Mediquip, Called on Dr. Rufer. Asked him if he had read
the unlike other systems, can be made to accommodate the material about our system. He had,
but did not have latest technology, with no risk of obsolescence for a much to say. I repeated
some of the key operational long time. This impressed him. Also answered his advantages our
product enjoyed over those produced questions regarding image manipulation, image pro- by
others, including Sigma and FNC. Left him some cessing speed and our service capability. Just
before I more technical documents. left, he inquired about our price. Told him I would have On
the way out, stopped by Hartmann's office. His an informative quote for him at our next meeting.
secretary told me that we had received favorable comMade an appointment to see him on June
23 after he ments from the hospitals using our system. returned from his vacation. Told me to get
in touch with Carl Hartmann, the hospital's general director in JUNE 23 the interim. Professor
Steinborn was flabbergasted to hear that I
JUNE1hospitaladministrationsinstructionstothateffect.Hecouldnotdiscussourpricewithhim.Toldhi
maboutthe Called on Hartmann. It was difficult to get an appoint- could not believe this,
especially when Sigma had ment with him. Told him about our interest in supplying already
given him their quote of 2,100,000. When he his hospital with our CT scanner which met all the
calmed down, he wanted to know if we were going to be specs as defined by Dr. Rufer. Also
informed him of our at lcast competitive with the others. Told him our system excellent service
capability. He wanted to know which was more advanced than Sigma's. Promised him we other
hospitals in the country had purchased our sys- would do our best to come up with an attractive
offer. tem. Told him I would provide him with a list of buyers Then we talked about his vacation
and sailing experiwithin a few days. He asked about the price. Gave him ence in the Aegean Sea.
He said he loved the Greek food. an informative quote of 2,850,000 - a price my boss and I had

5. determined after my visit to Professor Stein- JULY 15 born. He shook his head saying, "Other
scanners are Called to see if Hartmann had returned from his vacation. cheaper by a wide
margin." I explained that our price He had. While checking his calendar, his secretary told
reflected the fact that the latest technology was already me that our system seemed to be the
"radiologists' built into our scanner. Also mentioned that the price choice," but that Hartmann
had not yet made up his mind. differential was an investment that could pay for itself several
times over through faster speed of operation. He JULY 30 was noncommittal. Before my leaving
his office, he Visited Hartmann accompanied by the regional maninstructed me not to talk to
anybody else about the ager. Hartmann seemed to have a fixation about the price. Asked him
specifically if that included Professor price. He said, "All the companies claim they have the
Steinborn. He said it did. Left him with a lot of material latest technology." So he could not
understand why our about our system. offer was "so much above the rest." He concluded that
JUNE 3 only a "very attractive price" could tip the balance in Went to our favor. After repeating
the operational advantages our system enjoyed over others, including those prosimilar in size to
LUH that had installed our system. duced by Sigma and FNC, my boss indicated that we He was
out. Left it with his secretary, who recognized were willing to lower our price to 2,610,000 if the
me. Learned from her that at least two other firms, equipment were ordered before the end of the
current Sigma and FNC, were competing for the order. She year. Hartmann said he would
consider the offer and also volunteered the information that "prices are so dif- seek "objective"
expert opinion. He also said a deciferent, Mr. Hartmann is confused." She added that the sion
would be made before Christmas.
AUGUST 14 SEPTEMBER 29 Called on Professor Steinborn, who was too busy to Took our
offer of 2,370,000 in a sealed envelope to see me for more than ten minutes. He wanted to know
Hartmann. He did not open it, but he said he hoped the if we had lowered our price since the last
meeting with scanner question would soon be resolved to the "satishim. I said we had. He shook
his head and said with a faction of all concerned." Asked him how the decision laugh, "Maybe
that was not your best offer." He then was going to be made. He evaded the question but said
wanted to know how fast we could make deliveries. he would notify us as soon as a decision was
reached. Told him within six months. He did not say anything. Left his office feeling that our
price had a good chance of being accepted. SEPTEMBER 2 The regional manager and I
discussed the desirability OCTOBER 20 of inviting one or more people from the LUH to visit
Called on Professor Steinborn. He had nothing to tell the Mediquip headquarters operations near
Paris. The me except that "the CT scanner is the last thing I want three-day trip would give the
participants a chance to to talk about." Felt he was unhappy with the way things see the scope of
the facilities and become better were going. acquainted with CT scanner applications. This idea

6. Tried to make an appointment with Hartmann in was finally rejected as inappropriate.
November, but he was too busy. SEPTEMBER 3 NOVEMBER 5 Dropped in to see Hartmann.
He was busy but had time Called on Hartmann, who told me that a decision to ask for a formal
"final offer" from us by October 1 . would probably not be reached before next month. He On the
way out, his secretary told me there had been "a indicated that our price was "within the range,"
but that lot of heated discussions" about which scanner seemed all the competing systems were
being evaluated to see best suited for the hospital. She would not say more. which seemed most
appropriate for the hospital. He SEPTEMBER 25 repeated The question of price was raised in a
meeting with the regional manager and the managing director. I had rec- DECEMBER 18
ommended a sizable cut in our price to win the order. Received a brief letter from Hartmann
thanking The regional manager seemed to agree with me, but the Mediquip for participating in
the bid for the CT scanmanaging director was reluctant. His concern was that ner, along with the
announcement that LUH had too big a drop in price looked "unhealthy." They finally decided to
place the order with Sigma. agreed to a final offer of 2,370,000. Made an appointment to see
Hartmann later that week.