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Manufacturing in Action, Source : British Industry
Published : December 2001

Over the coming year, a number of major changes are planned at Action Computer Supplies. Colin Browning looks at what is in store

Building a customer base, especially one that returns to do business with you time and again, is not an easy process. Classical economic theory dictates that price is the deciding factor in the allocation of scarce resources, but this is far from being the whole picture. Service counts, as does ease of working, but it is often the nature of human relationships that make the difference between success and failure.

Action Computer Supplies has built up a loyal clientele. With this in mind, it enters the next phase of its history with a sense of caution. Action was formed in the 1980s as a mail order IT product company, designed to serve the needs of the business market. In the main, the business was driven by orders coming in through the company’s catalogue, which provided the business community with access to over 25,000 separate products. As the company evolved, other methods of ordering were added so that customers could select the approach that best suited their needs. Based in Middlesex, Action soon had command of a sizeable chunk of the UK market and sales in 2000 were over £273 million.

The time had come to make a decision about the future direction of the company and one path stood out from all the others. Action decided to become part of a larger group, so in September 2001 the announcement was made of the intention to sell the business to Insight Enterprises Inc. “The acquisition brings together two companies that fit together exceptionally well,” explained Marco Potesta, who now works as director of marketing at Action. “Between them, Insight and Action have expertise in servicing both the corporate and SME sectors of the market. The routes to market are certainly different in that while Action uses mail order, Insight has a strategy of direct selling with account handlers to create relationships. These handlers are in constant contact with those that buy from them and by offering a very proactive service, they drive a greater depth into the idea of the customer relationship.”

The deal was finalised in October 2001 and having got the number crunching out of the way, the real work could begin in earnest. “The task we are faced with now,” said Potesta, “is the always difficult one of managing a brand transition.” It would be fair to say that while Insight is a highly-regarded name in many countries across the world, it is not particularly well known within the UK. Now, in much the same way as Marathon eaters had to adapt to munching on a Snickers bar, Action customers are to be asked to accept the new Insight identity.

One should not underestimate the delicate nature of this transition. “What we have to do is bring the Action brand equity with us as we unify under the Insight banner,” was how Potesta put it. The changeover certainly needs a great deal of care if Insight is not to alienate those that have been loyal to Action over the years. “This is undoubtedly a major undertaking that we are about to embark upon,” Potesta continued, “but we have carried out this sort of thing before so we are not without experience within the field.” The aim therefore is to combine the brand equities that the two companies originally had so that the result is greater than the sum of its parts.

So what then will be on offer to both existing and potential customers? “The catalogue will remain, as it is a great reference point,” Potesta said. “It allows the customer to get a good general idea of the extent of our product range and the quality of the literature means that the information is available to make an informed decision. However, it remains a snapshot of a point in time. The most up to date information is available on the website,” Potesta continued. “Here the customer can get real time information and see the price of a product at that moment and its availability. This system links through to our suppliers so we are not forced to carry all the stock ourselves and these savings can then be passed on.” What this means is that Action is able to keep prices down by utilising economies of scale without the burden of a large warehousing set up. Not that the customer sees it, but the website gives, in effect, access to a virtual warehouse.

When the brand combination exercise is completed, the new company will market itself as a business with a high tech approach to selling high tech products at a low cost. Tough times could still lie ahead though, because the market itself is less than buoyant at the moment. However, Potesta believes that, “people like us succeed because we are lean and focused on the end-user. Overall, I am very excited by the whole challenge of bringing the Action brand into the Insight group.”