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Alto Chemicals Europe A Case Solution

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492 1439 Words (5 Pages) Kamran Kashani IMD : IMD053
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Alto Chemicals Europe (ACE) is currently in a state of dilemma as its sales force, who are ultimately responsible for generating customer leads, are lacking motivation and not happy with head office marketing strategies to take the stabilizers business ahead. However, it is in the long-run interest and survival of the company to diversify into tapping other customers who would be looking for superior services and not just a price discount. It is essential to target customer bases as more satisfied and diverse customer bases would bring in increased revenues for the company. Hence, the features of a new sales strategy would have a trickledown effect on the sales force as well as the company earns more revenue through premium customers who are not bothered about a price increase. At the same time, however, it is expected that Graaff would take initiatives to bridge the communication gap between the marketing team in the head office and the sales team on the ground.

Following questions are answered in this case study solution:

  1. How has Alto’s stabilizers strategy evolved over the years? In what significant ways is Graaff’s revised strategy different from before. Does this new strategy enhance Alto’s ability to deliver benefits being sought by business customers in different segments.

  2. What explains the sales force’s opposition to the strategy?

  3. What should Graaff do now? Your recommendation should take into account the pros and cons of different options and how this strategy can be implemented.

Alto Chemicals Europe AR1 Case Analysis

1. How has Alto’s stabilizers strategy evolved over the years? In what significant ways is Graaff’s revised strategy different from before? Does this new strategy enhance Alto’s ability to deliver benefits being sought by business customers in different segments?

Alto’s stabilizers strategy over the years has been sales-driven. The sales force at the subsidiaries throughout Europe has been the pioneers in driving sales. The initial strategy for stabilizers focused primarily on Base customer accounts, an account defined by the subsidiaries as those of Tin stabilizers of Alto who are converted from Barium. Throughout the years, there has been less focus on future prospects, prospective customers and converting irregular (in-and-out) customers into more regular ones.

The way the company’s strategy evolved over the years can also be looked at through its origins ten years ago. Alto Chemicals Europe (ACE) went ahead with a step-by-step penetration into the European market, a market that was mainly using Barium in its plastic goods production. In the first stage of this strategy, Alto would spend a couple of years getting a feel of the market, that is, exploring the market and understanding its dynamics while not being too worried about fewer sales. Secondly, the company would then engage in third party productions to avoid the huge initial costs of set up and receive its supplies of Barium and then Tin from third parties.

The eventual aim of the strategy was to convert Barium users to Tin. Hence, when sufficient credibility had been built up by ACE in the market, it could go for Tin production and marketing with a discounted price. This would serve as a market penetration strategy. The last stage of this earlier strategy format involved identifying the various segments of the market which could be targeted. The initial focus remained on price-sensitive customers as the company had primarily competed on lower/discounted prices throughout this time period.

Moreover, Graaff’s new strategy regarding stabilizers was quite different from Alto’s legacy. This is because Graaff wanted the company to now follow a non-price selling strategy, an area where the subsidiaries did not hold expertise. Moreover, the focus was now to shift to generating sales leads into customers who were not price-sensitive. The company was to now earn more customers while projecting its core strengths as being product reliability, sales expertise and improved technical support.

The new strategy does cater to a large number of customer requirements as opposed to the previous strategy which was only price-driven and could mainly be targeted to flooring customers. The customers, such as those for wire and cables required more superior services than just a price discount.

2. What explains the sales force’s opposition to the strategy?

The primary reason for the sales force’s opposition appears to be that Graaff is making their job more difficult and they do not want to take an initiative in a new direction and burden themselves any further. Another linked justification is that of professional jealously and claiming competence; that is, for example, Graaff is much less seasoned in this field to devise strategies for the subsidiaries, where the sales managers are much more experienced.

However, some of the concerns raised by the sales force appear genuine. The sales force believes that they will be making a big mistake by not having price as their main competitive force. Throughout many years, the sales force in the region has built a reputation with different customer segments by giving them a window of price negotiation and earning their trust that Alto Chemicals Corporation listens to their price concerns. Graaff expected both price and volume leadership, which the subsidiaries found a strategy of contradiction. They believed Graaff was far from the fundamentals because he was not actually out in the field making sales, an area which they believed formed the major learning’s and findings to develop future strategies at winning customers.

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