Case-Summary-Tetra-Pak-in-China

CaseSummary:TetraPakinChinaInawayoranother,severallargecorporationsselltheirproductstootherorganizations.Evenlargeconsumerproductscompanies,whichmakeproductsmeantforfinalusers,alsoselltheirproductstootherbusinesses.Thebusinessmarketishuge.Infact,businessmarketsinvolvefarmoredollarsanditemsthandoconsumermarkets.However,businessmarketsdifferinmanywaysfromconsumermarkets.Thestructureanddemandaredifferent;soarethenatureofthebuyingunitandthetypesofdecisionsandthedecisionprocessinvolved.CaseStudy:TetraPakinChinaTetraPak,amulti-nationalcompanyheadquarteredinSweden,isaworldleadingcompanyinproducingmachinesandmaterialsforpackagingbeverages.AsasupplierinB2Bmarket,TetraPakholdsabout75%sharesofworld’sasepticpackagingmarket.In2005,itsnetsalesincomewasabout8.1billionEuros.In1985TetraPakofficialyenteredChinaandfoundedTetraPakChinaLtd.Co.Wasfoundedin1985.BasedinHongKonginitially,itsetuprepresentativeofficesinShanghaiandBeijingin1993.By2002,TetraPakhadoccupiednearly90%ofChina’sasepticpackagingmarket,afterbecomingthelargestsoftpackagingsupplier.WiththerapiddevelopmentofChina’ssoftdrinksanddairyproducemarkets,TetraPakwonmanyimportantclientsfromthesetwoindustries.Yili,China’sbiggestdairyproducers,hastopayTetraPak0.5yuanforeverycardboardpackagetocontainthemilk,whichinturnissoldat2.3yuan.ThecostofTetraPak’spackagemakesupabout40%ofthepriceofthemilk.BesidesitsShanghaiheadquarters,TetraPaknowhasthreejoint-venturesandnineofficeslocatedinBeijing,HongKong,Xiamen,Harbin,Xian,Chengdu,Kunshan,andFoshan.TetraPakalsohassalesandmarketingoffices.Together,theseofficesmakeupadistributionnetworkcoveringthewholeofChina.TetraPakhasonesolely-ownedfactoryinKunshan,twojoint-venturefactoriesinBeijingandFoshan,aswellasaprocessingequipmentsystemcenterinShanghai.TetraPakalwaysadvocatestheprincipleof“growingwithcustomers”.Hence,itneverstopsperfectingthePartnerRelationshipManagement(PRM),theverycoreofTetraPak’scustomervaluedrivenB2Bsolution.PRM1:EquipmentInvestmentFormanygrowingsmall-scaledairycompaniesinChina,itwouldmeanheavyfinancialburdenhavingtoinvestinthemachineryforpackagingmilk.TetraPakworkedoutaprogramforequipmentinvestmentwhichenabledcustomerstoinstallthe“TetraPakFino”equipmentwithonly20%paymentrequiredupfront.Theremaining80%ofpaymentwouldbeexemptedaslongastheyordercertainquantityofpackagingmaterialsannuallyinthenextfouryears.TetraPakquicklyexpandeditsmarketshareandbecamethefirstchoiceforalmostalldairyproducersinChina,keepingitscompetitorsoutoftheChinesemarketsuccessfully.Foroldequipmentreplacement,TetraPakhadanotherprogramknownas“oldequipment-moneyconversion”,whichhelpedreplacetheoldequipmentatlowcosts,providedthecompaniescontinuedbuyingpackagingmaterialsfromTetraPak.Onacceptanceofeitherprogram,TetraPak’scustomerssignedcontractsthatpreventedthemfrombuyingpackagingmaterialsfromothercompanies.The“TetraPakFino”alsohasacodedfeaturethatensuredotherpackagingmaterialswouldbeincompatible.PRM2:MarketInformationSharingTetraPakusesitsworld-wideinformationconsultingsystemtorealizebusinessinformationsharingwithitscustomers.Besides,TetraPakeditsthe“TetraPakNews”includingmarketinformation,industrynews,andrelevantstatistics,whichisprovidedtocustomersforfree.TetraPakhasgivensomuchinformationtocustomersthatmanyofthemregardTetraPakasamanagementconsultingcompanywhichprovidesinvestmentadvicesandprofessionalmarketingservices,besidesbeinganequipmentsellerandpackagematerialsupplier.PRM3:HumanResourcesandTrainingTetraPakisgenerousinprovidingtrainingsessionsforitscustomers.Thesetrainingsessionsrangefromthemostbasiconestovarioushigh-levelones.TetraPakisalsoactiveinrecommendingconsultingcompanyandtrainingcompany,arrangingvisitstorelevantcompanies,andevenlookingforhighermanagementtalentssuchasCEOaroundtheworldforitscustomers.Theseareeitherfreeofchargeorwithsomenominalcharge.PRM4:Value-addedServicesTetraPaknotonlyoffersitscustomershelpinpackagingproductsandequipments,butalsohelpsthemtogrowinotheraspectssuchasmarketsurveys,packagedesigning,channelpromotion,andfinance.OneofTetraPak’simportantcompetitiveedgesistoprovidevalue-addedservices.Inordertoimplementthisidea,TetraPakestablishesstrategiccooperatingpartnershipwithdownstreamfactoriesandcarriesoutitsembeddedcustomerservices.Beingthe“systemsupplier”,TetraPakworkswithcustomersinexploringmarketsandmarketingcommunicationefforts,tryingtoworkoutsolutionsforwin-winsituations.PRM5:QualifiedAccountTeamTetraPaksetsupakeyaccountmanagementteamthatofferscustomersprofessionalsupportandservice;includingqualitycontrol,marketing,technology,processing,researchanddevelopment,financeandmanagement.EverykeyaccountmanagerofTetraPakhelpstointegrate,organize,andbalancethenecessaryworkforceandresourceforeachofitscustomer.WorkingcloselywithitscustomersallowsTetraPak’saccountteamstoknowofproblemsfirstandtoseeksolutionsfast.Inthisprocess,TetraPaknotonlyensuresservicequalitybutalsoconvertsthecooperationbetweenindividualsintoteamcooperation.PRM6:DeveloptheConsumerMarkettogetherwithitsBusinessMarketChina’sdairyproducingspotsarescatteredalloverthecountry,re