We never discuss the price first, we talk about the customer's problems', says Mr Dong. SKE Vietnam believes it has several strengths that help justify its prices which are higher than those of international competitors:
• Product quality. 80% of all bearings made and used are standard items, which generally makes product differentiation difficult Some SKF bearings are of higher quality than equivalent competitors' bearings thanks to continuously improved design as well as the quality of steel used. Further, SKF has only one quality of bearing which it supplies worldwide. Some competitors have different quality levels which are inconsistently supplied to Vietnam, and customers have noted the quality variation.
• Reliability of service and availability of supply. Stocks held within the DID network ensure that major items are always available. Afthough there is no computer system linking the individual distributors with the SKF Vietnam office, telephone calls can rapidly track down in-country supply. In Ho Chi Minh City, for example it may be possible for a customer to collect the required bearing from an aftemative location in as little as an hour.
• Broad range of bearings. SKF Vietnam can satisfy 80 - 90% of customers' needs immediately, whereas a competitor would be able to meet perhaps only 50% of their requirements. Customers do not have to spend all day completing their list of purchases.
• Forward planning of supply. Regular customers are assured of supply even if they need only a single bearing once a year. In an emergency SKF Vietnam can try to source the item first from the Singapore warehouse, second from an SKF factory, and finally from a competitor. Over the last two to three years, SKF Vietnam has learned the critical needs of its main customers. If it can persuade them to buy an extra unit of the critical bearing, SKF Vietnam will supply a replacement as soon as the standby is used.
• Competence. SKF Vietnam engineers are thoroughly trained and can provide an analysis of bearing failures (for example incorrect-or insufficient lubrication), to help customers identify avoidable problems. We have to be applications engineers, too' says Mr Dong.
• \ietnamese language catalogue. In 1994, SKF Vietnam chs*rt a detailed handb for end-users of all mor bearings (see Exhibit CS I 1.8.. o%siig th&ii to iderj worn-out bearings by weight size and picture, arid giving internationally recog classification codes alongside to facilitate new orders. This catalogue is an irnpo marketing tool, since Russian bearings are not marked, and very okl bearings may ha classification numbers worn off The handbook is also adapted to the nee Vietnamese engineers trained in Russian terminology. Since ball-bearing ted inology new to Vietnam, the technical terms are also new and vary between the nortth a south of the country. Competitors have so far produced only English Iangija marketing materiai&
• Emergency services for core customers. Big customers have very specific macbin requiring non - standard bearings that can be air-freighted from Singapore in emergency.
• Complementary products. SKF Vietnam is able to supply non-bearing items commo:
used by industrial customers, for example textile machinery components, lubrican mechanical tools, etc. These are not always SKF products, and represent only a srr portion of total business.
SKF's bearings are on average 20% more expensive than those of its competitors. Moreover, i company uses a fixed-price system, i.e. all distributors are told the price at which they may each bearing, which is similar to SKF prices elsewhere in the region. (In the markets, wh competitors' bearings tend to be sold, prices may vary considerably.) Transparent pricing simplified SKF's business relationships, as the customer knows that the price on the invoice is - real price paid.
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