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Situation Analysis: TeraTech Marketing is a complex array of activities that ultimately drives corporate strategies and
attempts to influence consumer behavior. The following case study focuses on a relatively young
company whose leaders desperately need to reexamine the organization’s marketing strategies as
they attempt to retain their current specialty dominance in the software industry. Exploring some
of the issues and opportunities facing TeraTech leads to a core opportunity. With stakeholder
perspectives in mind, evaluating recommended alternatives reveals an optimal solution,
implementation plan, and measurements of success, which cumulatively support TeraTech’s
desired end state.
Situation Background
Company Profile
TeraTech is a software development and implementation company that specializes in
operational customer relationship management (oCRM) solutions. The company’s secondary
revenue stream derives from professional and support services. TeraTech’s target market is the
pharmaceutical industry and the customer base consists of 150 clients. TeraTech, founded five
years ago, is a relatively young company that rapidly achieved industry dominance in oCRM
solutions, which is a new concept quickly gaining ground across industries. CRM’s technical
component is software, but the concept is an overall customer-focused business culture. To
support CRM’s customer-focused concept, TeraTech is proposing a new product that
incorporates analytical and modeling capabilities intended to afford users the opportunity to
increase the value of customer data and help align marketing strategies.
Company Situation
In the past quarter, TeraTech experienced slowing sales; customer satisfaction with the
company’s oCRM product and support is waning. A recent survey revealed that nearly 50% of
the company’s customers rate the product as less than good on a 4-category scale of excellent,
good, poor, and missing. The company’s founder and CEO, Jack Dwyer, would like to see plans
on sales growth strategies; he is also concerned with addressing customer service issues. He has
asked that preliminary plans are ready for an upcoming meeting to discuss corporate direction.
Problem Definition TeraTech operates in a rapidly changing industry that is redefining CRM applications and
creating a need for the company to move beyond selling a bucket-filling product to creating a
value-driven solution. Technology advancements, fierce competition, inadequate internal skills
and low customer confidence in CRM threaten to derail the current initiative and stall the
company’s forward progression. TeraTech needs to align corporate strategy with industry trends
while simultaneously attracting new business and retaining existing customers.
Table 1
Issues
Issues Competitive landscape • Rapidly changing – software companies diversifying and offering CRM as part of total solutions packages
- Competitors poised to offer analytical/modeling module; internal estimates are two-years out for initial offering Fairly new business arena • Sustaining dominance requires proactive stance
- Consumer confidence in CRM low; product does not appear to currently have any ROI or customer retention impact Customer dissatisfaction • Nearly 50% rate satisfaction with company and product < “good”
- Small customer base (150 accounts) means loss of ½ the base could have dire ramifications including corporate demise
- System is not integrated; only 4.9% of the customers’ Marketing Departments use the product limiting customers’ ability to achieve goals Technology advancements • Outpacing current CRM software
- Increasing customer demands and expectations
Table 3
Stakeholder Perspectives and Ethical Dilemmas
Stakeholder Perspectives and Ethical Dilemmas Stakeholder Group Interests, Rights, and Values Ethical Dilemmas External customers (pharmaceutical companies)
ROI; satisfaction of their customers; ability to effectively use marketing efforts to appeal to customers Back-end RX consumers
Safe, effective products; accurate thorough reporting of potential side effects and success rates; long-term health and well being Senior Leaders On-going corporate viability; social accountability; company image Internal Customers (employees)
On-going corporate viability; fair and equitable treatment; Regulatory Agencies HIPPA compliance; fair, unrestricted trade; consumer protection and safety; FDA (accuracy of clinical trials data reporting)
Table 4
Goals Based on Stakeholder Needs
Scale: 1 = Low, 3 = Medium, 5 = High
Value-driven product offering: Baseline: 6 mo. Stretch: 4 mo
Improve overall customer satisfaction to the 95th percentile
Achieve 12-month sales growth minimum of industry forecast: 9%
Workforce turnover rate
Totals
Internal development of aCRM
Vertical market expansion
Strategic alliances with other IS vendors
Collaborative partnership focus with Pharmaceutical customers
Second Tier
Alternatives
Strategic alliance formation so ready to act on results of collaborative partnerships
Table 5
Risk Assessment and Mitigation
Risk Assessment and Mitigation
Alternative Risk Consequence Mitigation
- Internal development of aCRM
*(significantly detracts from critical goal: eliminates further consideration)
- Vertical market expansion
- Uncertainty of attracting a new market for existing product
- Competitor’s faster to market with the aCRM technology attract existing customers
- Limited resources (i.e., time and money) - TeraTech could possibly become obsolete - Loss of customer’s - Continued sales decline - Thorough market research and customer identification - Current customer communication improvements
- Strategic alliances with other IS vendors
- Interdependence risks
- Integration risks
- Initiative risks
- Legal problems
- Loss of revenues
- Loss of customers
- Damaged corporate image - Partner with only reputable, well- known software/hardware vendors (i.e., Microsoft or IBM)
- Collaborative partnership focus with Pharmaceutical customers
- Unable to meet needs in a timely manner once identified - Continued decline in customer satisfaction - Loss of customers and revenues - Strategic alliance with aCRM vendor that can quickly customize program specs
Table 6
Pros and Cons of Alternative Solutions
Alternative Pro Con
- Internal development of aCRM
*(significantly detracts from critical goal: eliminates further consideration)
- Vertical market expansion (^) • Capitalizes on current product
- Potential to generate software revenues which can be reinvested in R&D
- Time and cost associated with market research, which is needed to define the best vertical alignment
- May alienate current customers who feel “neglected”
- Less expensive alternatives on the market gaining in popularity
- Strategic alliances with other IS vendors
- Potential to create a “wow” that dramatically boosts customer confidence levels - Reliance on third-party - Without gaining customer insight may develop a useless tool
- Collaborative partnership focus with Pharmaceutical customers
- Builds sustainable customer relations - Alone does not ensure ability to meet tangible needs
Table 8
Evaluation of Results
End-State Goals Measure Results 5 Years later
Value-driven product
offering:
Baseline: 6 mo.
Stretch: 4 mo.
Ready-to-launch date; signed customer contracts for new product
System continues to meet customer needs; customers experience significant ROI
Improve overall customer
satisfaction to the 95th
percentile
Tool: re-developed performance measurement instrument Results: achieved 95%+ overall customer satisfaction rate
Quarterly instrument administration reveals consistent ranking trends with old and new customers
Achieve 12-month sales
growth minimum of
industry forecast: 9%
Sales variance analysis against prior rolling 12- month period
Outpacing industry growth rate
10% Workforce turnover
rate
Analysis of turnover trends High EOW ratings; company becomes employer-of-choice in the industry leading to acquisition of top-talent from competitors
