Introduction
Business marketing takes many forms and is associated with several controversies. By definition, business marketing is the practice of marketing your product, service or both. In essence, it is about marketing the entire organization. Business marketing allows organizations to their products and services to other organizations or companies that are in need. This essay presents a particular marketing scenario between tow companies namely ABB and Caterpillar. The two companies are operating in distinct but a similar business environment. The caterpillar’s vision is the market itself to ABB Ltd. Similar, ABB wants to market itself to the Caterpillar. They both use unique, but similar marketing approach to achieving this. This essay tries to answer two questions concerning the business relationship between caterpillar and the ABB Ltd. First, why does ABB want to “do” Global Account Management with Caterpillar. Secondly, why would Caterpillar allow ABB to “do” GAM with them.
Background to the Two Companies
ABB Ltd is a billion dollar Swiss-Swedish engineering company. This company is a global leader in automation and power technologies. In particular, its core business is to manufacture and supply utilities to a wide range category for its global customers. ABB Ltd is operated in more one hundred countries across the globe. The company has a large employee population of more than 104,000 people. ABB’s business is divided into five major divisions namely the automatic products, power system, power products, as well as robotics and process automation division. In 2004, ABB Ltd became the world leader in the manufacturer of turbochargers, which is a product of its process automation division. This product provided customers with integrated solutions for plant optimization, control, and knowledge for industry-specific application.
On the other hand, Caterpillar is a company that specializes in the manufacture of mining and construction equipment. in addition, Caterpillar also manufactures assorted products such as natural gas engine, diesel engine, as well as industrial gas turbines. The company has earned a strong global market presence in the manufacture of these products. Caterpillar is headquartered in Peoria, Illinois, United States of America. Just like ABB, Caterpillar has an operational presence in several countries across the globe. In 2005, Caterpillar’s sales and revenue collections reached a record high $36.3 billion. Caterpillar’s business activity is divided into three major divisions namely the engines, the financial products, and lastly the machinery.
Why ABB want to “do” Global Account Management with Caterpillar
According to this easy, ‘doing Global Account Management’ imply Caterpillar accepting to be managed by the ABB’s Group Account Manager. This is a customer management system set and defined by ABB Limited whereby each customer has one group account manager. The GAMs operates at the business division levels and each is responsible for one key customer. His role is to maintain the account and push the interest of the business division to the customer. There are many reasons possibly why ABB Ltd seriously wants to ‘do’ global account management with their business client, the Caterpillar, all of which are pegged on the interest of maintaining their business relationship and market existence.
First, ABB has recognized the significant roles of GAM in pushing the interest of the particular business division. As noted by Dan Ahern, the new GAM for Caterpillar, management business units were based on specific market, and it was inefficient. For instance, all the interest of business divisions were pushed together under one marketing platform. This arrangement made the interest of key customers a second priority. Dan considers the change to GAM system is fundamentally important because it technically makes ABB a very good and efficient company in managing and handling client accounts.
Second, ABB Ltd insists on doing GAM with Caterpillar because it offers efficient time management and opportunity to build positive customer relationships. This system gives the Group Account Manager ample time to visit clients and build strong relationships with the company clients. With this system, GAMs can visit company clients at any time without any time and resource constraints. As asserted by Dan Ahern, he can see his customers whenever he needs and wherever they are. This structure enables the company to serve well its global customers wherever they are. This is very crucial to ABB Ltd given that it has a global presence. The structure also enables the company to gain better perceptive of its global customers on various opportunities that it offers.
Last, ABB does not want to lose the Caterpillar account. This is because Caterpillar is one of its very significant clients contributing its annual sales and revenue collections massively. For instance, in 2005, ABB Ltd earned $36.3 billion in sales and revenues from Caterpillar. Caterpillar is certainly a massive account for ABB, and they cannot afford to lose it. Being a world leader in the manufacture of mining and construction equipment, Caterpillar has great potential of enhancing ABB’s growth prospect through increased revenues and sustainability of the business. Besides, ABB insists on ‘doing’ GAM because it is the primary supplier to Caterpillar. For example, in 2004, Caterpillar earned more than $67 million in sales revenue from ABB. The supply of turbocharger actually contributes a significant percentage of their business. Dan Ahern summarized the need of doing GAM with Caterpillar as result of many business opportunities that is presented for both the two companies when they work together.
Why Caterpillar allow ABB to “do” GAM with them
Although they were hesitant at the beginning, the caterpillar finally allows ABB to do GAM with them. This is vividly expressed in a response email that one of the Turbocharger BU Management wrote to Dan Ahern. Although it is in protest, the email indicated the willingness of caterpillar to do GAM with the ABB Limited. There are many reasons that could have made the caterpillar change their initial position and accept to do GAM with the ABB.
First, Caterpillar realized that they could not afford to lose ABB. Being one of their leading sales channels, it was important for the Caterpillar to maintain their relationship with ABB. They were leading in turbocharger sales from Caterpillar. In particular, ABB supplied turbochargers to Lafayette Indiana and Lafayette Kiel, which are the two major plants for Caterpillar. This is why Dan was interested in removing the ‘disconnect’ between the two companies. He decided to pay a visit to ABB together with other senior managers to maintain the turbocharger sales.
The discovered friendship and similar cultural background between Paul Wroblewski and Dan Ahern also made caterpillar allow ABB to do GAM with them. Although initially not interested in any further discussion with Dan, Paul changed his mind and strong position after learning that they were both raised in Iowa. Paul discovered that it was a great deal to do business with one of his homeys. An exceptionally good chemistry started development between the two, and they agreed on the proposed business terms.