Comments on the presentation
Dr Bearing liked the content of the presentation but added the caveat:
Don’t expect an immediate response from my customer group. It will take a
fair amount of education before they will accept the concept of hedging and
the improved communications required for effective hedging. To my knowl-
edge, no one in our industry has ever looked at aligning the needs of the
whole supply/value chain. Also, remember that during the presentation the
audience will be composed of representatives from competing companies –
none of them will want to tip their hand in front of each other.Keegan then had to convince her boss, Hans Volker, on the merits of the
approach.
Volker’s initial response was: ‘I can see how SVM and its customers will
benefit, but how will we? TNM is not a nonprofit educational organization.
You educate all those people and they are still free to buy their nickel from
whomever they wish.’ Keegan replied:
That’s true, but the Russians don’t have an LME trading operation like we do- they will be cut out of the business. Only ourselves and one other major
nickel producer have organizations capable of providing hedging services on
an ongoing basis. Further, we have the inside track as far as establishing the
required relationships. Once the required communication pathways are set
up to facilitate hedging activities it is very inconvenient for a customer to
switch suppliers on a whim. Basically the customer’s switching costs increase - that becomes our competitive advantage!
Volker’s response was: ‘How long will it take for the Russians to set up
LME trading and hedging capabilities? What will you do then?’ Keegan
shrugged and responded: ‘We will innovate again.’
Volker’s final comment was: ‘It sounds like it will be a lot of work for
little gain, but go ahead.’
With that OK from Volker to proceed with the relationship marketing
project she quickly realized that the ball was clearly in her court – just how
should she proceed with her initiative so that success for all those involved
would be realized? As this was her first solo initiative since joining the
Sales and Marketing Department in London, she wanted to do well with it.
214 Relationship Marketing