to sell or not to sell...that is the question?

We recently received a purchase order from a direct competitor. To me this raises the "red flag". Why would they be buying another company's controller when they can either sell what they have or design what they don't have?

The company has been rather evasive when asked about their intent. The purchase request was generated by the president of the company. When asked to speak with him, I am told that he is on vacation. I send him an email and receive a response from him this morning "good grief, give us a break. Are we the customer or what?"

I am looking for some other points of view. What does this seem like to you?

God Bless,

Having no idea who your competitor is, it seems likely from their response that they are a small outfit. I say this because it seems it would be awfully easy to find a go-between to do the purchasing just to keep you from raising your red flags. Furthermore, the Presidents of most larger companies will rarely place orders themselves.

So, my first instinct would be that they are trying to get a better feel for their competition. How better to do that than to get one of your controllers and work with it directly?

Just a thought.

Steve

Stephen Luft

UHHH.. Please forgive me for my ignorance. I log into this forum so many times a day because it helps me better understand the PLC tutorials I'm doing at home. Is your question relevent to this forum ? Sir, I don't know you and frankly don't know most of the people here so I apologize if I sound rude.

I used to work for a distributor of GE Fanuc PLCs. One day I got a call from a persom with whom I had worked at a previous employer. This person was now employed by a direct competitor, and was seeking to purchase a Fanuc CNC controller. We assumed that he wanted the controller to pick it apart and learn how it worked.

We decided to decline to quote. Our reasoning was not based on any moral or ethical concerns, strictly financial. We figured that somehow or other GE would find out that we'd sold the product to the competitition, and they would not be happy about it.

There are any number of ways that the competition can get their hands on your product. In our case, they could have bought a machine tool that used one of the controllers they wanted to investigate. In your case, they could find out what OEMs are using your product and buy from one of them. That's more expensive, so they're trying to get one of your units at the lowest possible cost. Why should you make life any easier for your competition?

Personally, I think I'd just walk away from it. I can't imagine that you make enough money on the sale of a single unit to justify the negatives associated with such a deal.

Consider this possibility: You assume the competitor wants your unit to reverse-engineer it, or to study it to get whatever insights he can from it. Suppose you sell him a unit that you know is flawed. If he complains, you replace it under warranty. If not, your original assumption is correct, and now he's making decisions based on bad data. Competitive advantage to Entertron, but the ethics...

Or how about this. Make him a counter-offer. Swap one of yours for one of his. Do you send him a good unit? Do you expect him to send you a flwaed unit? There is enough potential subterfuge for a spy novel.

clarification

Steve,

I don't know their annual sales but it would be safe to say that they are probably larger than we are.

The President didn't actually place the order, but he is the person who originated the request.

zqew05,

No need to appologize.

This forum offers a wide selection of questions posed by members and guests alike. Some questions are product specific, some are application specific, while others may not fall under a specific category.

God Bless,

This reminds me of a little problem that Thamesport faced 3 years ago when they purchased a new ship to shore crane...

Our new crane was being built in Ireland by Liebherr, we specified that we want Bromma's twin lift spreaders operating on this crane, Liebherr acting on our specification tried to buy a spreader from Bromma, Bromma knowing that Liebherr make their own spreaders refused to sell them 1 for use by us.

I expect that Bromma were worried about 'reverse engineering'.

The way round that little problem, Thamesport purchased the spreader and shipped it to Liebherr. As it turned out Bromma had nothing to fear from Liebherr getting hold of one of their spreaders.

Maybe Stephen your rival has had an order from a customer who has specified your controllers...

Then again maybe not!

Paul

sell directly to them

if you dont they will try to find other way to get to it.
just be direct and treat them as normal customer.
i think you do know their product too.
maybe even bought it.

This is common.

Back in the early 90s Rockwell bought bought one of our TI505 compatible motion controllers because is was good competition for the 1771 QB. We had nothing to hide or be embarrassed about so we sold the motion module. In fact we talked about this yesterday remembering it was probably the first controller we sold for list price. In the end everything worked out OK.

I was talking to a Temposonic regional sales guy this week. We was telling me how they trace some of their rod to the competition.

Now I will confess. Although we have not bought any competitors motion modules, but we have manuals on all the competitors motion modules that we can get. We spend a lot of time asking questions what customers like about competitors modules relative to ours or the what they like about ours over the competition.

Obtaining information on competitors is standard business practice. This is the way it is. Get used to it. Just sell the PLC at list price

I think you should sell it. There are several possibilities:

1) They may be crooks that want to reverse engineer your product. In that case, they will get one anyway, and at least if you sell it you know and can control what they have access to.

2) They may want it to fill a niche for a specific customer, where their product line doesn't have a good match. This is the upside, and you may end up with a "partner". I know, for example, that some major DCS manufacturers also buy a lot of PLCs to integrate in their systems.

3) They may be doing competitive intelligence for comparative marketing. You may as well sell it to them, again because they can get one anyway and now you can control the one they have, and also so that they are selling against your products real features and not BS. I once worked with a sales manager that sent our new product releases to his peers at the competition as soon as they were released. He figured they may as well have the correct information to sell against, and they were always going to get SOME kind of info anyway, so it may as well be accurate.

After you ship the unit, give the president a call and let him know you would like the results of his evaluation. It may be the start of a great relationship, or it could at least put the SOB on notice if they are trying to pull a fast one.

Please keep us informed Stephen this is gripping stuff.................

If you were my competition and I wanted to buy something from you to reverse engineer it or copy it, I would get one, be it directly or indirectly. If this couldn't happen we would all still be in the dark ages. Too many companies waste too much time and resources on "protecting" what they have, while the rest of the world passes them by. Strive to be the best, and while you are at it, order up a unit from them.

Vetteboy

Don't worry about reverse engineering.

It takes too much work to reverse engineer a product If one was completely clueless and had government backing then it would make sense. Some desparate companies or countries may do this. Even then it is easier to steal the information. Get real folks because I KNOW IT HAPPENS.

Vetteboy has this part right.

Strive to be the best.

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Vetteboy has this part wrong.

Too many companies waste too much time and resources on "protecting" what they have.

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Secrets are good. The ability to keep secrets is good. I/We have many although we have lost a few.

Now what really gets me is that most companies secrets are not about how good they are, but where their weaknesses are or how poor their designs are.

Hi All,

It has been about three weeks since I posted this thread. A couple of you had asked to keep you updated.

Well, after two additional emails to the competitor, requesting additional information as to there intent, we received nothing back. So, today we emailed them, canceling their order. We received no response from the cancelation notice either.

Thanks to everyone for there input and opinions.

God Bless,

Now Peter, in a way you misquoted me. You shortened my actual sentence. I know what you are saying, but my point is that overprotection leads to the market dropping you in the end.

It may be that you invented the Beta VCR like Sony did. Nobody can deny that the quality is better than VHS. But I got stuck with a Beta machine when the rental market went all VHS because Sony was greedier than JVC.

You can protect what you have done, but when the price becomes too much to pay, someone else will reinvent your wheel.....

Just curious

Well, after two additional emails to the competitor, requesting additional information as to there intent, we received nothing back. So, today we emailed them, canceling their order.

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Do you ask this of ALL customers? What they will do with your product?

Personally I dont see why you would turn down a sale, to anyone.