Posted: May 25th, 2022

Technological quality of the product essays

Kimura K.K. Case Study

The case study presents the situation of Pramtex Ltd and its
relationship of Kimura K.K., a Japanese customer. The main issue of the
case study relies on the fact that Pramtex was supposed to sell to Kimura
K.K. three additional Spartacus machines. However, Kimura K.K. changed
their mind and decided they will no longer respect their agreement with
Pramtex and they will not buy the extra machines anymore.
The problem is even more serious, since it is emerging after Pramtex
had lost another customer in the same week. Even more, Pramtex is
completely unaware of the reason Kimura K.K. had decided not to buy the
company’s products anymore.
However the main question is what are the reasons that led to this
decision. In other words, Pramtex must analyze why Kimura K.K. will not buy
the Spartacus machines from Pramtex, especially since Kimura K.K. did not
motivate their decision.
When analyzing the situation and trying to find out the reasons that
led to this decision, the chronology of these events is very important.
Before this situation, Pramtex and Kimura K.K. had a very strong business
relationship. Pramtex is one of the best optical disks manufacturing
equipment producers, while Kimura K.K. is one of the most important
customers for Pramtex.
Kimura K.K. has always been a fan of Pramtex products. But out of the
sudden, Kimura K.K. decides to reject the offer from Pramtex, giving no
reasons for this decision. Sony was the other important customer that
Pramtex lost in favor of local competitors.
At first, Kimura K.K. declared that “Pramtex had the best and most
technologically advanced equipment in the market” (Turpin, 2001). Even
more, Pramtex lowered the machines’ prices by 10%, hoping that Kimura K.K.
would become loyal to Pramtex. In such conditions, Pramtex would gain other
important customers also that would follow the example of Kimura K.K.
In other words, Kimura K.K. agreed to the quality of Pramtex products
and the price was significantly lower. Still, Kimura K.K. decided that the
quality of Pramtex products and the 10% discount were not worth it.
As developed in the case study, the most important elements that
affect the buying decision for Kimura K.K. are:
. Technological quality of the product
. Price of the product
. Having the products delivered on time.

Each of these elements has its degree of importance in making the
buying decision. Regarding quality, Pramtex products are considered by
Kimura K.K. to be the best in the market. However, there is a downside
accompanying this quality, and that consists in high prices.
Pramtex products’ prices are considered to be too high for Kimura K.K.
Two competitors of Pramtex have already presented their offers to Kimura
K.K. Competition is very tough for the Kimura K.K. account. One of the
competitors offers good quality products at much lower prices. The other
competitor offers good quality products, lower prices, the company has
supported Kimura K.K. since the company began its activity, and it also
presents the advantage of being near Kimura K.K., which would significantly
diminish transportation costs, and the maintenance process could be
performed faster.
Another extremely important factor that influenced the decision of
buying these machines consists in receiving the products on time. Kimura
K.K. had recently started a very important collaboration with Disney
Studios. Therefore, Kimura K.K. cannot afford to lose time with these
machines, since any delay could severely affect the collaboration between
the company and the studios. Of course, all of the competitors that
presented their proposals to Kimura K.K. have promised to deliver the
machines in due time.
Given the conditions described above, Pramtex was forced to do
something in order to maintain Kimura K.K.’s interest in the company’s
machines. As a consequence, Pramtex decided to lower the prices by 10%.
But Kimura K.K. was not satisfied by this discount. The company was
expecting a significantly bigger discount. The machines’ prices practiced
by Pramtex are very high, which means that a 10% discount does not make
much of a difference for Kimura K.K.
It is obvious that Kimura K.K. would rather buy cheaper products that
are not as good as Pramtex products are. Given the circumstances, Pramtex
cannot win this account with these prices. Pramtex was the favorite
supplier for Kimura K.K. and the company tried to allow Pramtex to do
whatever they can to please Kimura K.K.
It seems that Kimura K.K. have practically made their mind about this
matter. The only thing that Pramtex can do in order to determine Kimura
K.K. to buy the Spartacus machines is to significantly lower the prices.
Another issue that must be taken into consideration by Pramtex when
developing business relationships in the future is represented by the fact
that Pramtex was not able to create customer loyalty. With the advantages
that Pramtex presents and the relationship that the company has with Kimura
K.K., it is unacceptable that Pramtex did not manage to become the first
choice for Kimura K.K.
It seems that Pramtex was unable to develop a suitable product
strategy that would work best for Kimura K.K. Any product strategy is
consisted of engineering issues, production and distribution activities
(Crow, 2001). Also, through the product strategy, the company must evaluate
the expectations that customers might have regarding the purchased
products. The company must also anticipate and analyze any possible actions
that its competitors might take in order to counteract them and not to lose
ground in the favor of other competitors (Kivisaari, 2004).
From these points of view, the product strategy that Pramtex applied
in the case of Spartacus machines and Kimura K.K. was incomplete and was
not suitable in this case. Regarding engineering issues, Pramtex behaved
perfectly, providing the highest quality machines.
The distribution process was not so perfectly developed, since Pramtex
omitted to send Kimura K.K. an important spare part with the machines. This
situation proves that Pramtex may not have taken seriously enough the
Kimura K.K. situation. This might have been the decisive factor that led to
Kimura K.K.’s choice of favoring a local competitor of Pramtex.
Pramtex was also unable of anticipating competitors’ moves. Even more,
Pramtex was probably not interested at all in analyzing competitors’
behavior. In such a case, the company would have been aware that its
competitors will practice significantly lower prices compared to Pramtex.
In order to counteract such difficulties, it is recommended that Pramtex
applies the IBM business model (Business Innovation, 2008). This way,
Pramtex will be able to anticipate competitors’ actions.

Reference list:
1. Turpin, D. (2001). Kimura K.K. Can This Customer Be Saved?
Retrieved November 15, 2008.
2. Kivisaari, Eino (2004). Product Strategy. Technology
Management & ICT Business. Retrieved November 16, 2008 from
http://www.tml.tkk.fi/Opinnot/T-
109.410/2004/kalvot/Tekjoht6s04.ppt#256,1,Product Strategy I.
3. Crow, Kenneth (2001). Product Development Strategic
Orientation. DRM Associates. Retrieved November 16, 2008 from
http://www.npd-solutions.com/strategy.html.
4. IBM’s three types of business model innovation strategies
(2008). Business Innovation. Retrieved November 16, 2008 from
http://www.unitedbit.com/ibms-three-types-of-business-model-
innovation-strategies/.

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