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Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Oliver Schonrock who wrote (6078)	7/25/1999 10:41:00 PM
From: Drew Williams	Read Replies (3) \| Respond to of 29987

Oliver et al, long Marketing chat follows. I had never quite thought to put the "distribution" tag on GlobalStar's sales & marketing arrangement, but the moniker (not Monica) sorta fits. And I think it is the right way to do it. Obviously, because Bernie's former customers at Loral were mostly government agencies, he never developed any consumer marketing expertise at Loral. So I think he did the correct thing by going the way he has. No point to reinventing the marketing wheel -- as Iridium tried to do -- especially if marketing isn't what you do best. Instead, enlist the active assistance of someone who already knows how to do it. In 1990 I was hired as Director of Marketing for a company that had a product that would be used by electricians and building maintenance personnel. The company had no marketing history and practically no money to spend. The product identified which circuit breaker or fuse controlled a specific wall outlet. Think for a moment of how many breakers in your home are labeled at all, much less properly, and what you need to do to identify the correct one. That's right, it's called trial and error. Now, make believe you are in a professional building with hundreds or thousands of breakers all connected to mission critical or life safety equipment. If you throw the wrong breaker, bad things happen. I did three things. First, the engineer who invented it (and owned the company) had called it a "FM Carrier Signal Tracer." I renamed it "Breaker Finder" and put a graphic of a circuit breaker on the front of the unit. The engineer was under the quite mistaken impression that anyone other than him cared diddly how the blasted thing worked. I thought it was more important that it be clear what it did. Then we hired a group of independent manufacturers' representatives and did not pay them a salary or guarantee dime one. Instead, we promised to pay them a better than industry standard commission, because they would have to do the prospecting and also because we weren't going to pay them at all until after we got paid. (We made a good profit, but did not have much in the bank.) These were all well established professionals taking our product to the distributors, so this eliminated any credibility issues. Also, it helped a lot that the product worked well and was simple enough so it was easy to demonstrate. In the first thirteen months (until I left for reasons not worth mentioning here) we filled the pipeline and sold units to approximately twenty percent of the professional electricians in the US. (I think Maorice would say that this sales level indicated we had p*****d our unit too low. He would be correct.) Third, we did a highly targeted, direct telemarketing program to maintenance supervisors at hospitals. We called the hospitals, found out who was responsible for maintaining the electrical stuff, got him (it was always a "him") on the phone, explained the product's benefits and the potential liabilities of switching off the wrong breaker in a hospital, and then we offered him a free 90 day trial. They had to give us an official purchase order at list price (about twice what we charged the distributors) on net 90 terms (our distributor terms were 2% 10 days net 30 -- we usually got paid less 2% in about 60 days) before we would ship, but we did not ask for any up front money. (Our reps did not object to this end run around their distributors, since we paid the reps anyway on the units we shipped into their territory.) The hospitals must have been satisfied, because only one unit was ever shipped back to us. It had gotten stepped on, so we replaced it. And nobody ever stiffed us. We had shipped to about 6% of American hospitals when I left. The point is, GlobalStar has enlisted the help of marketing organizations that talk every day to GlobalStar's target markets, just like electrical distributors talked to mine. Our reps knew that they had to go out and sell, and sell only to creditworthy distributors, if they wanted to make the outrageous commission we offered. GlobalStar's partners know that they will only get a return on their substantial GlobalStar investment if they actually get out there and sell phones and minutes. In other words, Bernie has made GlobalStar's success important to their marketing partners, so they will do what it takes to protect their investment and make it grow. At least that's the theory. Airtouch and the others, by virtue of their investment in GlobalStar, have exclusive marketing rights within their geographic territory. That exclusivity better come with performance guarantees. In this case, I would have demanded a guaranteed minimum schedule (subject to satellite launches, base station construction, government approvals, etc.) of minutes sold based on some formula taking into account the population and economic level of the territories involved. More $$ in England than East Timor, for instance. Do these guarantees exist? Subject to what kind of if's, and's, but's, and maybe's? And if the partner does not meet his numbers, what happens? I fired a bunch of reps before I had a full complement of good ones.