Case Analysis

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Case Study

Everglo Battery, the premier battery manufacturer and service provider in South Africa, looked back on the development of its marketing strategy in four stages. Each had been signalled by advancing the concepts of what is meant by ‘quality of service’. Stage 1 had been the basic product: a sealed lead-acid battery for use in mining applications. Batteries were regarded by customers as a mature product and as a ‘grudge buy’. Each year, the basic product was under heavy downward price pressure. Stage 2 had been the industry reaction to customer service: the addition of warranty replacement of defective products, of quality assurance (QA) audits of a supplier’s design and manufacturing processes, and of parts and service provision.

Stage 3 had recognized the need to go much further in terms of customer service. A whole raft of additional services had been conceived with a view to adding value. Breakdowns were fixed at short notice by means of field service engineers. Everglo products could now be delivered and installed at customer premises. Price lists were simplified by including peripheral equipment, such as contactors, that had to be added to a battery rack in order to make it work. Advice and tips were added to help customers warm to Everglo products. In a proactive move, Everglo introduced charts and advice about the application of battery products in general, and the resulting tables became an industry standard. Parts and service in the field were upgraded to a ‘24-hour, no-nonsense back-up service’. And customer training built on Everglo’s position as an industry leader. Rather than sales seminars, Everglo’s held customer training seminars, where the company spoke on behalf of the industry rather than as a supplier.

In spite of having reached a pre-eminent position in mining power supply, Everglo recognised that the centre of Figure 2.6 was, in effect, a ‘black hole’. Each year, competitors added more services to their basic products, too. In effect, the second and, to some extent, the third circles were being absorbed into the ‘commodity’ category, and customer expectations increased all the time. A new stage 4 strategy was conceived to take Everglo into a position that competitors would find even more difficult to follow. The new strategy was coined ‘Batman’: battery management for life. The aim was nothing less than a total, customer-orientated product management service that provides ‘power for life’. The supplier takes over the task of managing the customer’s assets, including problem identification, training and managing cash flow. The objective of ‘Batman’ is to look at the product the way the customer does, performing best at what the customer values most rather than at what the supplier values most.

Questions

Has Everglo reached the end of the line in terms of its quality of service strategy?

As a competitor to Everglo, what would be your options in response to Everglo’s latest moves?