Case 2.2 Carlton Electronics
This case was written by Professor Martin Christopher, Cranfield School of
Management as a basis for class discussion rather than to illustrate effective or
ineffective handling of an administrative situation.
© Copyright Cranfield School of Management, August 1996. All rights reserved.
Philip Millard, the marketing director of Carlton Electronics, was examin-
ing the results of a customer survey concerning the quality of Carlton’s
customer service. As he looked through the results, he began to consider
possible courses of action that he might take. However, he was not clear in
his own mind which direction the company should take.
Carlton was a producer of a range of telephone answering machines and
related peripherals. It was not a large company, but its reputation as a
quality supplier was well established in a fast-changing market. Marketing
practices at Carlton had followed a traditional approach in the past, selling
mainly through British Telecom. As the telecommunications market
changed, Carlton had been forced to keep pace, although they had not
taken a position of marketing leadership. First, there had been a wave of
new competitors from continental Europe, in which competitive products
were offered to customers at slight discounts from Carlton’s quoted prices.
Carlton had responded, not by matching prices but by investing in a mar-
keting programme emphasizing the quality which had identified Carlton
products. The next wave of competition from Japan was more difficult to
deal with. There were some Japanese lines that had become established as
equal quality but at a significantly lower price. In addition, there had been
a flood of low-priced imports from South-east Asia which looked as if they
were going to take over the consumer market completely.
Carlton’s immediate customers fell into three categories: large chain
stores specializing in consumer electronics, British Telecom and discount
operators. British Telecom had been the basis for Carlton’s original
markets. However, with the growth of competition through deregulation,
Carlton had to rethink its strategy. Within the last few years, new cus-
tomers had emerged in the form of large specialist chain stores and dis-
count stores. Where British Telecom had previously tended to take the full
product line and maintain the established price structure, chain stores
tended to be more selective and also to press Carlton for promotional dis-
counts. The discounters were far more aggressive in their dealings with
Carlton. They only took high-volume lines, but moved these products in
significant volumes. They asked for substantial discounts on cumulative
quantity purchases, but only passed part of these discounts on to the con-
sumer.
The volume of business with British Telecom had held steady, while that
of the chain stores had grown. The promise of future growth, however, lay
The customer market domain: Managing relationships with buyers 75