Phillips Company: Manufacturer of Steam Power Plants – The Role of the Sales Force in the Company Image

Sam McDonald, Vice-President of Sales of the Phillips Company, was con­cerned with the potential role of his sales force in correcting his company’s image in the electric utility industry. The Phillips Company, one of the lead­ing manufacturers of steam power plants in the United States, was located in Philadelphia. The company was started by Aaron Phillips, who began manufacturing small steam engines in Philadelphia in 1846. Currently the company had annual sales in excess of $200 million and sold power plants to industrial users throughout the world. McDonald was concerned because public utilities, important users of steam power equipment, only accounted for 12 to 15 percent of Phillips’ sales. Some utilities were good custom­ers, but many other major utilities never bought from the company at all. Concerned With whether this low acceptance was a result of a poor image of steam power plants as a power alternative or a poor image of the Phillips Company as a source of steam power plants, McDonald suggested to top management that they explore the buying attitudes and motivation of elec­tric utility companies as completely as possible. To remove the risk of per­sonal bias, an outside research agency was called in to conduct the survey.

The research agency set out to find out what customers and potential customers really thought of the Phillips Company. Depth interviews were carried out with influential buying personnel in a selected sample of all electric utilities. The results that were presented to the executive commit­tee in September were not too pleasant to hear. In general, Phillips’ engi­neering skills were rated highly; product quality and workmanship were considered good. However, a number of respondents thought of Phillips as a completely static company. They were completely unaware of Phillips’ excellent research operations and many new product developments.

The research organization pointed out other useful information about the Phillips Company and its market. Sales were normally personnel related; that is, personal relationships and personalities were important in the buying decision. The buying responsibility was widely dispersed for products sold by Phillips. As many as forty people, ranging from the pres­ident down, might be involved in a purchase. Many Phillips salespeople were not too well informed about the details of new product developments and would probably need additional training to be able to answer technical questions.

It was obvious to McDonald that Phillips’ communications meth­ods had failed completely to keep potential utility customers aware of changes taking place in the company and its products. Some method had to be devised to break down the communications barrier and sell Phillips products. At this point a disagreement developed between the advertising and sales departments as to how to go about changing the image. Representatives of the advertising department came up with two possible approaches that could be used separately or jointly. First, they might advertise in mass media to get across the Phillips story. Second, they could launch an intensive publicity campaign, blanketing all news media and particularly utilities trade media with information and press releases. McDonald’s suggested approach started with a complete upgrad­ing of information to the sales force about new-product developments and current research. Then, the sales staff could make presentations directly to prospects in the field. Flipcharts and visual aids could be used where appropriate. Alternatively, the company could try to schedule educational meetings for key electric utility personnel. This would require a traveling symposium, staffed by top personnel and equipped with audiovisual aids, that could spend several hours with groups of employees in selected utili­ties across the country.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.