Genteel Extortion? Or Just Clever Marketing?
At least one plumbing manufacturer was offended by a recent solicitation inviting his company to advertise on CD-ROMs containing master specifications for Hilton Residential SuitesT and Hilton Garden InnsR. Some 100 of the former and 200 of the latter hotels are in the development stage, representing an estimated $3.3 billion worth of construction dollars. That's quite a bit of potential business for building suppliers. Many sales and marketing executives are sharpening their pens and preparing their best pitches to go after that business.
However, a suggestion has been made that the main competitive edge has nothing to do with price quotations or who can best deliver the goods. Instead, selected companies may "ensure" their specification for the Hilton projects by advertising on project CD-ROMs produced for Hilton by a company called ViscommT, formerly known as CadspecT.
The CD-ROMs are aimed at franchise developers as an alternative to binders upon binders full of project documents. Almost anything developers need to know can be obtained at the click of a mouse, including data about the specified materials and products.
But Only If...Viscomm has been telling construction suppliers that in order to get specified they need to advertise on those CD-ROMs. Advertisers have three options ranging from $6,000 a year (labeled the "Standard Room" program in Viscomm's promotional literature), to $10,000 for a "Junior Suite," to $15,000 per year for the "Standard Deluxe Suite." The more they pay, the more text and photographs suppliers get to display of their products.
Not every supplier has access to this offer. Viscomm solicits only pre-qualified companies in various product categories. These have been identified by the Hilton organization as "Preferred Suppliers" or "Strategic Partners," presumably based on past experience.
A sales letter written on letterhead that includes both the Viscomm and Hilton logos says, "Your participation in our HiltonT programs ensures that your product will be specified for every hotel project (our italics). ViscommT develops the Master Specifications for the Hilton Garden InnR and Hilton Residential SuitesT on CD-ROM. We can work with your company to get you specified and create a colorful advertisement on the CD-ROM that goes out to all developers of these hotels."
Crux of the Issue"Basically, they are asking me to pay them to specify my product," charged an indignant plumbing manufacturer who received this notice. "It sets a bad precedent for plumbing engineers."
Viscomm's vice president of business development, Dennis Nealy, responded to my inquiries about this issue. Nealy explained that Hilton is looking to restrict the number of preferred suppliers to no more than three in most product categories. If one chooses not to participate, a competitor is likely to win Hilton's business for these particular hotels. By way of example, Nealy mentioned a major faucet company that declined the advertising offer and consequently was not included on one of the hotel CD-ROMs. After seeing three competitors show up instead, that company changed its mind and bought space on the second version.
Nealy pointed this out to illustrate the value of his company's product. Inadvertently, though, it supports the contention of our source that specification is tied to a payment.
Is this a genteel form of extortion? Or does it merely fall into the realm of clever marketing?
Nealy is an architect who came up with the idea for such CD-ROMs as a way to simplify project development. Besides Hilton, his company has devised similar products for U.S. Gypsum and Chevron. His argument in defense of Viscomm's sales practice went along the following lines:
- 1. Hilton has every right to be selective in the companies it chooses to supply materials to its projects.
2. These companies have the right to accept or decline the advertising proposal. This is a marketing decision no different than deciding whether to advertise in this magazine or anywhere else.
3. Nealy suggested that what they're doing does not even constitute advertising, per se. He pointed out that it's expensive to produce CD-ROMs, and the chosen suppliers in essence are being asked to underwrite the costs associated with formatting their specification information.
4. In any case, participation does not guarantee sales for the advertiser, just specification.
I accept wholeheartedly proposition number 1. Just as conclusively, I reject number 3. It is contradicted by Viscomm's own sales literature, which unequivocally refers to advertising several times in its solicitation. As for number 4, while technically correct, construction suppliers would not spend all the money they do marketing to specifiers if it were not a tremendous advantage to be named in the project specs.
Number 2 is the troublesome issue. Although companies certainly have the right to say yes or no to the offer, if they don't pay up, they don't get specified. It is this tit-for-tat that lit the controversy.
You DecideI'm not trying to blow raspberries at Viscomm's products. Their CD-ROMs are helpful electronic age tools for engineers and everyone else in the project stream. Think of how convenient it is to have specification information available at the click of a mouse. Viscomm is a credible company that has identified a business need and found a way to fulfill it.
But also think about being exposed only to products hinged to advertising dollars. Is it any different than our advertisers gaining an edge through exposure on these pages? Rather than pontificate about it, I'd prefer to let you folks in the engineering community pass judgment.
How about it, Readers? Do you think Viscomm's ad policy is something apt to compromise project integrity? Or is the critic making much ado about nothing?
Tell me what you think at email@example.com or by dropping me a note via fax (847-297-8371) or snail mail at the address below. I'll report what you have to say in an upcoming issue.
Viscomm can be checked out at www.viscomm.com. Their CD-ROM solicitation can be found at www.viscomm.com/newsletter.htm.