The Risky Case of Moving Up from Hospitals into Oil Fields

The Risky Case of Moving Up from Hospitals into Oil Fields

Gloria saw a new market opportunity emerging. Was it real?

Gloria’s Problem

Her problem is her firm’s engineering subculture. An engineering subculture sees safety and reliability as paramount. They see customers as “impersonal resources that generate problems rather than solutions.” 1

Gloria manages marketing of a specialty biocide.

The biocide has captured a major share of the hospital market for use as a disinfectant. An opportunity for expanding use of the biocide in the oilfield fracking caught Gloria’s attention.

In the oilfield market, a competitor, with an inferior biocide, is running rings around Gloria’s firm.. The competitor uses a FUD2 sales pitch, against Gloria’s biocide, to key decision makers in oilfield service companies.

Gloria wants to move fast and build productive dialogues with those key decision makers. To do so, she needs the use, full time, of two salespersons skilled in relationship selling.

Engineers in her Division are blocking her from doing so. They’ve told the division’s SR VP it’s a waste of sales resources they need for their projects.

Gloria’s Solution

Gloria was familiar with my system for B2B customer research3. She hired me to carry out a blind study4 of acceptance of her biocide in the oilfield industry.

Tasks for the oilfield project

  • My first task is to build a list of 200 knowledgeable people in the oilfield industry.
  • Second task is to chose, at random, people on the list and cold-call them.
    All respondents will hear the following phrase. “My client has created a new biocide for use in oil fields. On a bench scale they have been able to show that this new biocide has good antimicrobial properties..”
  • Third task is to analyze data collected during the calls. For statistical significance, I used the Central Limit Theorem in the analysis.

Executive Summary: Acceptance of Client’s Biocide in the Oilfield Industry

Respondents don’t care a whit about evaluating a new biocide.

For respondents, a new biocide::

  • ”Must be superior to XXX (Gloria’s biocide) in effectiveness/price when sterilizing oilfield fluids.”
  • XXX is the only biocide for oilfield use that has registrations, sub-registrations, and distribution in place — globally.
  • XXX sterilizes the injection fluid — prevents hydrogen sulfide formation — souring

“Oil producers and service companies formed a strategic alliances. They made a list of acceptable biocides. Any new biocide would need stupendous properties to get on that list.
     Mgr., Exploration Fluids … Shell E&P Technolgy Co.

Respondents’ feedback on competitor’s biocide

  • Negative feedback when compared to XXX on:

           – Sterilization effectiveness/Price

          – Global distribution

  • Positive feedback when compared to XXX on:
    • Desired technical information on competitor’s biocide reaches key decision makers by one-on-one contact with competitor’s salespersons.

“I first met people on (competitor’s) development team for oilfield uses ten years ago. They continue to stay in touch.”
     Dir., Water Management … Chevron Production Co.

1999 Market Acceptance of Client’s Oilfield Biocide.
And, two Scenarios for 2003.

  • 1999 Market Share Client’s 82% Competitor’s 12%
    Total Market 33MM lbs
  • 2003 Scenario I … Follow engineers’ passive stance
    . Market Share Client’s 40% Competitor’s 60%
    Total Market 55MM lbs
  • 2003 Scenario II … Follow Gloria’s forthright stance
    . Market Share Client’s 73% Competitor’s 27%
    Total Market 55MM lbs

Outcome

  1. Sr. VP approved Gloria’s immediate assignment of two full time salespersons.
  2. 2003 sales and market share of the client’s biocide were within 5% of the predicted figures for Scenario II.
  3. In 2018, the client’s biocide dominates competitors used in the oilfield industry.

Lessons Learned

10 years of benign neglect of a new competitor in your market is dangerous. You lose revenue and incur the expense of clawing back market share.

Endnotes

  1. Schein, E, H., 2017 p.228 Organizational Culture and Leadership 5th Edition NY NY Wiley
  2. FUD Fear, Uncertainty, Doubt, about a competitor’s product, is delivered to customer’s’ key decision makers. Gloria’s competitor positions their biocide is the “green” alternative. Gloria’s forthright stance provides evidence-based data that the competitor’s biocide is not “green”.
  3. Rule of 30 System: Key Tools, Key Skills. 1LK
  4. Blind Study In a blind study, a respondent doesn’t know who commissioned the study. “Blinding”reduces biased answers from prospective customers. It encourages candid evaluation by the respondent of the product concept’s value.