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Answer these questions on teh following case study:
Why have Hydrotech sales not met company expectations? Hydrotech had been very successful in gaining traction in other market segments (e.g., consumer and health care). What mistakes did they make in selling to the hospitality industry?
Transcript: Hydrotech Vacuum Cleaner Case Study
Product specifications for the Hydrotech Vacuum, the most technologically advanced vacuum on the market today:
- The Hydrotech is the most powerful and complete vacuum available today. It traps 99.9% of dirt, pollen, dust and other irritants using its patented Ionic-Scrub technology—and doesn't spew pollen and dust back into the air like other Vacuums. The Hydrotech is a much more advanced piece of equipment than other vacuums on the market.
- The Hydrotech is one of the most popular vacuums in the Health Club industry, because it stands up to any challenge.
- It's favored by many smart consumers in the upscale private sector.
- If consumers really care about cleaning, then they need a Hydrotech. Studies have shown that no other vacuum comes within 20% of the cleaning power of the Hydrotech.
- It starts at $1,200.
- With regular maintenance, and emptying of the water reservoir that traps what the Hydrotech picks up, this vacuum will provide years of service. It does take some training to understand how to carefully clean the Hydrotech after each use.
Corporate Strategic Goals Summary
To continue to grow we need to expand our customer base. After successfully gaining product recognition and steady sales results in the consumer market and health industry, the next obvious market for our company is the hospitality industry. For the Hydrotech Company, the advantages of making sales to the hospitality industry are many, the big one being that a sale to a consumer is one vacuum, but a hotel would buy multiple units. Further, in the hospitality industry vacuum cleaners are replaced approximately every three years. Once staff are trained to utilize the dramatic cleaning power of a Hydrotech, the results will create return customers. We did some market research of potential customers to see what Hydrotech's selling points would be.
Hydrotech Market Research
In our market research, we uncovered the following data points:
- A standard vacuum returns a high percentage of the dust and airborne allergens that it encounters back into the air.
- A Hydrotech vacuum removes 99.95% of them; 89% of hotel visitors rated this attribute as "very important".
- 80% of hotel visitors rated room cleanliness as "very important" to the quality of their experience.
- 55% of hotel visitors said allergies were an issue for them; 40% of visitors use medication to treat allergic symptoms.
- 60% of hotel visitors said they have had experience staying in a hotel where the room cleaning was sub-par, and it influenced their decision to not return for a follow up stay.
- Managers prefer to have one vacuum cleaner brand for all areas so maintenance is simple and replacement parts do not have to be stocked for different brands.
- Commercial vacuum cleaners also have to be much sturdier than the vacuums used by consumers for their homes.
- The list price of a commercial vacuum cleaner is around $500-$600, but discounts are routinely given by vendors to make a large sale. Housekeeping Directors can usually negotiate prices of $350-$450 for each unit purchased.
- Housekeeping Directors also prefer upright vacuum cleaners with only one attachment that cannot be removed—as one Director noted, "fancy, removable attachments get lost and are seldom used."
- Ease of operation for the vacuum cleaner is essential.
- Commercial vacuum cleaners for guest rooms typically weigh about 18 lbs and are 12-15 inches wide so they can go under and behind furniture.
- Vacuum cleaners for hotel public areas are generally much bigger, wider and more powerful then room-use models; they often are self-propelled.
Corporate Sales Report Results
Despite the best efforts of our talented sales team, including the introduction of an installment payment plan, we are very disappointed with our sales volume to date. Further analysis is needed to examine why we have not achieved the same success in the hospitality industry that we have enjoyed in other market segments.