Flashcards in Case - Michelin Deck (12):
What is the issue with Michelin?
They went from product oriented to service oriented in B2B context only, not B2C side of business
Their Michelin Fleet Service is not performing the way it should though.
So this is an expansion strategy, there is already a system in place but Michelin wants to find a better way to do it
How is the Michelin case different from other product-service orientation?
They are not adding to product, or changing process, no instead they are actually changing the product entirely. They are actually trying to go from selling tires, to selling solutions in a B2B context
What are the 4 lives of the tire for Michelin?
Guarantee more mileage and lifespan for tires by
1. Purchase tire
2. Regroove (make tread better)
3. Take tire casing off and put new tread on entirely
What is the actual offer under MFS from Michelin?
Michelin will monitor, repair, rotate, and implement 4 live program to tires.
How is selling the tires (products) different from selling the solution for Michelin Clients?
The tires have a broad customer base, whereas the solutions are targeted to a smaller segment to large european transportation companies
How is selling the tires (products) different from selling the solution for Michelin distributor?
They were relying on independent distributors, and now they're trying to have standardized towards long term service commitment, so it's tough to do this from independent distributors.
This is something we could address in our recommendations for case.
How is selling the tires (products) different from selling the solution for Michelin Michelin?
Selling the tires is much more transactional, whereas the solution is a long term service relationship.
The cost of tires is going to go from a fixed cost (one time purchase) to a variable cost (that will be monthly expense on customers accounting sheets), depending on how much they're used. So this is a huge fundamental change! These are 3-5 year commitments, so it all needs to go as planned!
What are some external factors (trends) that Michelin was facing?
1. Competitors (some customers couldn't differentiate Michelin against low cost competitors resulting in price war)
2. Tires could be becoming a commodity so less room for differentiation
4. Concentration of customers (fewer but bigger clients, consequence of losing one is much greater)
So if there is price war and tires as commodity, this is not good for Michelin as they are positioned on quality and not price
What are the internal forces that Michelin was dealing with?
1. 4 Lives program
2. Relationship Management
What are the advantages to the customers of MFS, and Michelin itself?
1. Allows customers to outsource entire maintenance program to Michelin
2. Easier cost control for customers because the expense is now a fixed-variable cost that they know to expect every month. It also should reduce costs such as more efficient tires and better maintenance
3. Better Service to Michelin's customers
1. Administrative Costs could be lower
What are the disadvantages to the customers of MFS and Michelin itself?
1. They might have little knowledge or be unfamiliar with how Michelin is going to deliver the service. It's an unknown, and might be seen as risky because they have NO reference price. An example is MFS salesperson saying that paying per km will reduce cost, customer has no frame of reference if it will rather than how he's been doing it.
1. Not profitable enough
2. Different selling process requiring different skills (so Michelin hired new MFS salesforce)
3. Conflict between salesforce, and they are actually competing with conflicting compensation. So traditional salespeople even trashed MFS salespeople during meetings with potential clients they were selling too
4. The logistics for managing the tires on trucks all over europe is going to be tough