The competition
TNM competes against Canadian, Australian and Russian nickel produc-
ers. Since the break-up of the Soviet Union in 1991, large quantities of
Russian nickel have been entering the European market, trading at a 2–4
per cent discount to the price charged by Western world nickel producers.
Many nickel customers have decreased purchases from suppliers like
TNM, shifting to the lower cost Russian nickel. TNM has been forced to
reduce prices to protect its remaining market share, thereby adversely
affecting overall profitability. Most customers continue to purchase a
certain baseline quantity of nickel from TNM or other Western producers
in order to maintain an on-going business relationship. Generally metal
industrial users recognize that Russian material does not represent a secure
source of supply and therefore try to maintain ties with more reliable
Western producers.
The relationship marketing initiative
Keegan’s direct superior, Hans Volker, was Managing Director of TNM’s
European marketing operations. Volker had learned the metals business
through working as a metals trader for the Austrian metals company
Metalgaburger. Years of trading had honed his skill at assessing situations
quickly and making split second decisions. When Keegan approached
Volker with the idea of introducing relationship marketing Volker’s retort
was:
There are no relationships in metals marketing – raise your price 1 cent a
pound, you lose your relationship; drop your price I cent and you have more
relationships than you know what to do with. This relationship marketing
theory you describe may work in consumer goods but it has no place in the
marketing and sale of industrial commodity products.Volker then paused and, thinking for a brief moment about his own daugh-
ter, who was about Keegan’s age, reflected:
Listen Jane, we were all young and inexperienced once and we all have to
learn the hard way – if you think relationship marketing will bring you higher
premiums, try it, but in my opinion the only way you get higher premiums is
to charge higher prices – it is not that complicated! And remember, no one
lasts too long around here if their group doesn’t make its targeted numbers- both sales volume and sales price!
Keegan thought to herself that real life certainly was not much like the
210 Relationship Marketing