What do you think of HBG’s approach? Do you agree with the approach of managing costs given a revenue target, or do you think there is something wrong with this approach?


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What do you think of HBG’s approach? Do you agree with the approach of managing costs given a revenue target, or do you think there is something wrong with this approach?


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The Hunter Business Group (HBG), a direct marketing consulting firm specializing in reorganizing the sales and marketing efforts of industrial firms, uses integrated customer contact technologies (including field sales, telephone, and mail) as a means of “revolutionizing the face of business-to-business (b2b) direct marketing.” The firm operates under the theory that a seller’s communications provide genuine value to a customer, and that successful direct marketing programs result in solid relationships, high retention rates, and increased profitability for the customer. This case highlights, in detail, HBG’s implementation of its approach for Star Oil’s tire, battery, and accessory (TBA) business that has been facing declining market share and profitability in the face of ever-increasing competition.

Questions:

  • What do you think of HBG’s approach? Do you agree with the approach of managing costs given a revenue target, or do you think there is something wrong with this approach? Explain.
  • How important are direct marketing mechanisms in the B2B context here?
  • How important is the Gold Account program as an incentive to the dealers? To what extent can dealers be persuaded to purchase a wider variety of products?
  • What is the tradeoff between eliminating salesforce people and the likely corresponding dropoff in contacts made as a result? Who would you eliminate–field reps, telesales operators, or mail personnel? Explain.