Contemporary Marketing, 2013 Update 15th Edition by Louis Boone ,David Kurtz

Exercise 17

Peerless Pump Puts Customers First
Pumps are the world's second most commonly used machines. They supply almost a quarter of global demand for electric motor energy. Peerless Pump Co. of Indianapolis has been providing reliable pumps for high-value applications in the industrial, municipal, agriculture, and fire protection segments since 1923. By focusing on safety, quality, schedule, and cost-in that order-the firm has enjoyed steady growth and even increased its revenue expectations for the future. "Continued enthusiasm and management commitment make our future growth ambitions very attainable," says Fred Bock, Peerless vice president of marketing and business planning.
A company initiative called "One Peerless" focused the attention of the company's 430 employees, who work in many different global locations, on improving teamwork, communication, leadership, and continuous improvement (growth). "It is very easy to focus on needs, One Peerless takes a proactive approach to focusing on what our customers-both internal and external-truly want," Bock says. "One Peerless is a well-rounded operations, sales, and marketing plan that involves everyone associated with our company, from suppliers to employees to distributors to end users."
The company, with $120 million in annual sales, was acquired in 2007 from a private equity firm by Danish pump giant Grundfos, which has been expanding rapidly in eastern Europe and Asia, as well as a significant commitment to North America, where they see "significant growth potential."
"The synergies and similarities in corporate culture are significant and will allow for the acceleration of the growth that Peerless Grundfos have enjoyed over the past five years," added Bock, who also holds the position of North American Marketing Director for Grundfos.
Originally founded in California to supply agricultural irrigation pumps for orange growers, the company now counts water treatment facilities, stadiums, airports, and many of the world's tallest skyscrapers among its many clients. With energy costs increasing, such customers continue to increase their focus on saving money on operations wherever possible. Peerless assists its partners by applying a "life cycle cost" approach to its design and sales strategies by examining costs-in both time and resources-of repair rather versus replacement of less efficient equipment.
Looking at the costs associated with installation, maintenance, and especially energy consumption over the long term-some pumps are in service for more than 50 years-allows Peerless to compare all possible solutions, from which the customer can evaluate the best solution. The company identifies the particular pump features and specifications in each option that will best improve reliability and minimize energy consumption, even in pump systems that move large volumes of water 24 hours a day. Market growth for new equipment far exceeds repairs as a source of revenue; however, in order to minimize downtime from potential breakdowns and help customers make the right repair/replace decision, Peerless advocates and offers ongoing training of its engineers and customers in preventive maintenance and repair as well as recommending spare parts inventories. This strategic approach makes the continuous and open line of communication between the company and end user a necessity.
What benefits does Peerless gain from helping its customers evaluate system repair as a potential alternative to costly replacement of a pump system? What strategies and business tools do you think the company must have in place to fulfill this customer need? Why is it important for Peerless to address it, if it is not as profitable for the firm as selling a new system?