Professor of Marketing and Management, Weber State University
J.D. and MBA student, Weber State University
Volume 14, Issue 2
Winter 2006/2007
Published by
SCR
THE SOCIETY
FOR CASE
RESEARCH

Business Case Journal
SCR
32
SCR
THE SOCIETY
FOR CASE
RESEARCH
1
This case was prepared by E. K. Valentin, Professor of Marketing and Management, Weber State University, and
Heather Hess-Lindquist, J.D., and MBA student Weber State University. It is intended to be used as a basis for class discussion. The views presented here are those of the case authors and do not necessarily reflect the views of the
Society for Case Research. The authors' views are based on their own professional judgments. Copyright © 2007 by the Business Case Journal and the authors. No part of this work may be reproduced or used in any form or by any means without written permission of the Society for Case Research.
In 1987, Alan E. Hall was president of Netline, the second company to fail while he was at the helm. Ten years later, he was named Ernst and Young's Utah Entrepreneur of the Year for having transformed TempReps, a precarious home-based startup that demonstrated PC products, into MarketStar, a prosperous international marketing firm. By 2006, MarketStar served a host of
Fortune 500 companies in more than 100 countries and, under Hall's guidance, had pioneered manifold services that powered clients' go-to-market strategies.
2
How did Mr. Hall do it? What had two failures taught him? What insights had compelled and enabled him to successfully reinvent his company when necessary? And why had so many prominent global firms made
MarketStar a vital partner in shaping and implementing their go-to-market strategies?
MarketStar's Roots
Making diamond-tipped dental drill bits was Alan Hall's first entrepreneurial venture. To get started, he had to invest most of his meager personal assets in developing a way of fusing an industrial diamond to the metal shaft of the bit. Every dentist would give his eyeteeth to get such drills, he thought. But soon after solving the most formidable manufacturing problems, he discovered an even bigger obstacle: distribution. The venture failed, according to Hall, because all effective channels had been preempted by larger makers of dental equipment, and forming his own distribution network was too costly.
Later, as president of fledgling Netline, he encountered a similar problem. Netline made software that allowed several PCs to share one printer. A need for such software clearly existed then because sharing printers saved organizations money, printer-sharing capabilities had not yet been built into operating systems, and networking systems were very expensive and complex. "It was a great product at the time," Mr. Hall opined. Nevertheless, he could not induce channel partners to give it the attention and push needed to generate profitable volume. To resellers, such as CompUSA, Netline's goods were merely a few boxes among thousands displayed in every store. Hall initially experimented with conventional promotions, but advertising, telemarketing, trade shows, and demonstration software mailed to prospects all proved ineffective.

Business Case Journal
SCR
33
In a last-gasp attempt to save Netline, he hired and trained 25 temporary reps to demonstrate his software to sales personnel in retail outlets that sold PC ware. They pointed out distinctive features and provided sales tips as they visited more than 3,000 stores throughout the continental U.S.A. during a three-month period. Unfortunately, Hall conceived this innovative marketing approach too late to save Netline.
The TempReps Era (1988-1993)
Successive busts might have broken the will of a less consummate entrepreneur. But Alan
Hall refused to quit. He saw potential in Netline's ashes and needed only his wife's support to launch yet another business. "When we started our company," Mr. Hall once remarked with wife
Jeanne by his side, "we had six children at home. To get a business loan, we had to pledge our house." With an admiring glance toward Jeanne he added, "This remarkable woman signed the papers without hesitation even though she knew we were taking a huge risk. It was a scary time in our lives."
3
The Halls had good reason to be anxious, since roughly 40% of all upstarts failed the first year and no more than 10% weathered a decade.
4
Yet, Alan was convinced success would not elude him a third time. His two failed ventures had conveyed indelibly that securing effective distribution was deceptively difficult, especially for small firms. Further, his Netline experiment had convinced him that (a) in-store demonstrations of PC products could motivate salespeople to recommend featured brands to customers and (b) customers were swayed by such recommendations. As he pondered the lessons setbacks had taught him, he envisioned providing a service for makers of PC ware that would give featured products the last push they needed to traverse retail channels. That push, he thought, was a salesperson's enthusiastic recommendation; and the best way to get salespeople to recommend particular products, he thought, was to educate them via product demonstrations. These premises induced Mr. Hall to found TempReps (TR) in
1988 and to embark on the odyssey chronicled succinctly in Table 1.
TR operated as follows: Four national 90-day campaigns were organized per year with four product slots per campaign. Thus, TR could represent as many as four or as few as one client per quarter, depending on whether clients bought multiple slots. Campaigns began with tutorials conducted near TR's headquarters in Utah — clients were the teachers, TR's demonstrators were the students. After mastering the products to be featured, demonstrators visited resellers in their assigned territories for the remainder of the quarter. "When a young couple I was sending to Texas pulled up in front of our house with their U-Haul," Alan recalled, "I realized how much TempReps was affecting people's lives. It was a moment Jeanne and I will never forget. It was surreal."
In-store product demonstrations were nothing new, of course. But TR gave them a novel twist: Instead of targeting customers directly, TR used product demonstrations to educate and inspire sales associates whom customers often asked for recommendations. TR's tactic worked; hence, clients sang its praises.

Business Case Journal
SCR
34
Table 1
MarketStar Time Line
1988
1989 through
1992
1993
1994 through
1996
1997 through
1999
2000 through
2005
• Genesis – Alan E. Hall founds TempReps (TR), which evolved into MarketStar, in his Roy, Utah, home.
• Business scope – TR demonstrates clients' PC products to resellers with the aim of motivating them to recommend featured brands to customers.
• Business model – 90-day campaigns; clients share reps.
• Clients – Makers of PC products; very first client made forerunner to FranklinCovey's Ascend.
• V alue proposition – TR proffers its services as a superior promotional alternative.
• Gross sales – $250,000.
• Services and business model – Refinements are made during these years, but no major changes are implemented.
• Value proposition – Faster, better, and cheaper than clients can do it themselves.
• Business scope – The range of technology products represented widens.
• New clients – Notables include Genera, Ashton Tate, Canon, Autodesk, and Mitsubishi.
• Competition – No serious rivals yet; competition stems mainly from clients' internal efforts.
• Strategic turning point – A new paradigm emerges: Some clients opt for long-term dedicated-team representation, but most still contract for 90-day shared representation.
• Business scope – Of the products represented, approximately 80% are software.
• Name change – TempReps is renamed Technology Advancement Corporation in 1994 and TAC in 1996.
• Strategic turning point – Increasingly, clients opt for representation of one-year or longer by dedicatedteams, which stabilizes revenues and profits and facilitates customizing services.
• Business scope – Expanded integrated marketing services are offered under the rubrics IntroTech, Blitz
America, and DataNow.
• New clients – Notables include IBM, Sony, Intel, and Hewlett-Packard; emphasis is on courting medium and large firms.
• Sales growth – Sales nearly doubled from $9.5 million in 1995 to $17.6 million in 1996.
• Strategic turning point – Although most clients make technology products, TAC seeks and attracts more diverse clients (e.g., makers of sporting goods, major appliances) and explores new offerings. The company becomes increasingly client-centric; services are tailored increasingly to meet needs of key clients, who are seen as assets and are nurtured accordingly. Customer intimacy is adopted as the primary value discipline.
• Name change – TAC is renamed the MarketStar Corporation in August, 1997.
• New capabilities – Call center.
• Sales – $32 million in 1997.
• New clients – Notables include NordicTrack, BellSouth, Whirlpool, Browning, Hitachi, Motorola, Xerox.
• Honors – CDW names HP's MarketStar field team "the best there is."
• Strategic turning point – MarketStar joins Omnicom (December 1999).
• Business scope – Increased emphasis on globalization.
• New clients – Lucent, Xircom, Simplexity.
• Business scope – MarketStar doggedly pursues health-care and medical-devices clients, but eventually fails.
• Management – Future CEO Dave Treadway joins MarketStar as COO (2003).
• Management – Alan Hall heads Omnicom's Channel Trade Group (2004), which includes MarketStar, CCS, and NIS.
• Growth – Profits grow each year; sales grow approximately 30% in 2005.
2006 • Management – Alan Hall remains MarketStar's chairman, but former COO Dave Treadway becomes CEO and president, while Aaron Hall becomes COO and executive vice president.
When asked how he actually created TempReps, Mr. Hall said, "I had to set up all the operational activities simultaneously." To be exact, he had to recruit demonstrators, find and sign clients, and line up stores in which to conduct demonstrations. Success hinged on all three elements converging at a critical moment.

Business Case Journal
SCR
35
Mr. Hall's first platoon of demonstrators consisted of technically savvy Brigham Young
University (BYU) students, mostly former Mormon missionaries who interrupted their studies for a semester.
5
To be hired, they had to have a car and a laptop PC. Because TR did not reimburse per diem expenses, employees had to economize. As a former Mormon missionary and, later, a Peace Corps volunteer, Alan Hall knew plenty about living cheaply in the field. He gladly shared that knowledge with his recruits and encouraged them to seek out Mormon families willing to provide lodging for little or nothing. "I paid reps weekly while clients paid me monthly," Hall recalled; "so we pledged our home to get the loan we needed to cover shortfalls between payroll and receipts."
When TR was launched, WordPerfect and Lotus were leaders in word processing and spreadsheets, respectively. But only Microsoft's DOS operating system and Intel's CPUs were true de facto standards in the rapidly growing PC industry. Market shares for other PC products were still hotly contested, and significant improvements in software and hardware emerged in quick succession. Hence, PC ware had to gain customer acceptance quickly – before more advanced competing substitutes were launched or, worse yet, a competing substitute emerged as the de facto standard.
6
Early TR clients consisted mostly of small companies and a few notables who found outsourcing to TR cheaper than hiring and training additional permanent or temporary personnel.
Word of TR's proficiency spread quickly among makers of PC ware whose survival generally depended on going to market swiftly and effectively. Such firms had no time or money to waste. As the number of TR success stories multiplied, so did the number of eager prospective clients who had become convinced that hiring TR was their most potent and least risky option.
But to keep clients happy, TR could not represent directly competing substitutes during a 90-day campaign. For example, while representing Intel, MarketStar was not free to represent competing AMD chips. Therefore, many firms that would have hired TempReps were forced to pursue other alternatives.
Although clients generally were delighted with TR's performance, some key clients disliked the 90-day contracts, particularly because a 90-day campaign that featured their products might be followed immediately by one that promoted competing brands. Lotus
Development Corporation, whose Lotus 1-2-3 spreadsheet led the market for most of the '80s and early '90s, was among several clients who wanted ongoing exclusive representation. Hence, in late 1992, Lotus signed a one-year contract with TR that was much more to its liking.
Specifically, Lotus secured a TR team dedicated to promoting only Lotus products. Several other clients soon wanted similar deals.
Account managers initially served multiple clients. However, clients' concerns quickly led to a change that gave each dedicated team its very own account manager. Each account executive had to be readily available to the assigned client, provide timely status reports, and be sensitive to changing client needs.
The new dedicated-team arrangements eased clients' apprehensions about the safety of confidential information and potential conflicts of interest, which many clients thought were inherent in the original TR business model. Nevertheless, clients continued to insist that TR not

Business Case Journal
SCR
36 represent competing products. Long-term dedicated representation brought greater stability and prosperity to TR as its popularity increased. It also created a climate in which relationship building paid off and services could be tailored to meet each client's distinctive needs and preferences.
The TAC Era (1994-1998)
Circa 1990, TR's future looked bright at first glance, but Mr. Hall sensed trouble. TR's annual sales, he thought, would top out near $10 million. Worse yet, he knew that determined poachers could not be held at bay.
Mr. Hall sensed further trouble because new releases of familiar software needed less, if any, demonstrating; and software was becoming increasingly user friendly, which was bound to devalue product demonstrations. Moreover, likely shakeouts and consolidations in application categories such as word processing and spreadsheets threatened to shrink his client pool.
Rather than wait for fate to run its course, Mr. Hall took action. He strove to cement relationships with clients and searched for new opportunities. In his words,
We wanted to become indispensable to clients and do more to help them navigate channels. Just hanging on to what we had was not a viable option. Besides, every small company wants to grow.
By then he saw marketing systems, which mobilize and fill demand, as complex networks of myriad activities that had to be configured and managed effectively.
7
He mused,
Our mission and value proposition was "Faster, better, and cheaper than clients can do it themselves." It resonated with clients. So I thought long and hard about what else we might do faster, better, and cheaper.
Firms had routinely outsourced most of their advertising, marketing research, and transportation activities for decades. Hall's insight was that firms still performed many other marketing activities – particularly channel activities – that an external specialist might perform more proficiently.
8
But Hall's challenge may have been more difficult than it looked. According to News.com:
80 percent of organizations that outsource their customer management operations purely to cut costs will fail to do so, while 60 percent of those who outsource parts of the customerfacing process will have to deal with customer defections and hidden costs that outweigh any potential savings offered by outsourcing.
9
Initially, Alan Hall focused his search for opportunities on makers of PC and information technology products who were caught up in a revolution that kept them busy with product

Bu ness Case Journal
SCR
37 development and manufacturing. These firms seldom had time or money to spend on honing their marketing skills. Later, Hall broadened his search for new clients.
To better communicate his expanding firm's capabilities, Mr. Hall changed its name to
Technology Advancement Corporation in 1994 then shortened it to TAC in 1996. TempReps and three new divisions – IntroTech, BlitzAmerica, and DataNow – resided under the new corporate umbrella.
TR's mission was unaffected by the new structure: Push featured products through the retail channel by motivating resellers and educating them about product features and capabilities.
In the mid-'90s, TR employed more than 150 people nationwide.
IntroTech's mission, also, was to boost sales of featured PC ware. However, while TR groomed resellers, IntroTech focused on sales to end users. Specialists demonstrated PC products in retail stores and at trade shows and for user groups, corporations, government agencies, and educational institutions. IntroTech employed approximately 400 people throughout the U.S.A. in the late ‘90s.
BlitzAmerica provided detailing and merchandising for makers of electronic products sold by chain stores. On behalf of manufacturers, Blitz serviced computer superstores, office supply stores, warehouse clubs, and consumer electronics stores. The HP team, for example, consisted of as many as 250 merchandisers that called on stores weekly, monthly, or quarterly, depending on HP's needs. Reps ensured HP products were in stock and displayed with the proper promotional materials. Additionally, they serviced customer-operated demonstration products and provided sales associates with basic training on demonstrating and maintaining HP products.
DataNow provided current distribution information of interest to manufacturers of PC and video game software and hardware. Questions about sales volume and prices of a client's product in relation to competing brands usually could be answered immediately by accessing
DataNow's proprietary database. Surveys of channel intermediaries were conducted to answer more complex questions.
Although Alan Hall delineated the basic missions of the four TAC divisions, clients determined the specific mix of services provided at any point in time. For example, once and only once, IntroTech was hired by a maker of video games to recruit and manage a field force of college freshmen and high school seniors to introduce a new game by playing it in computer stores. IntroTech also briefly demonstrated PC ware in an airport lounge. In contrast, the merchandising and detailing work BlitzAmerica performed for HP endured.
Each division developed the core skills needed to accomplish its basic mission, which enabled TAC to customize and create services quickly to meet clients' ever changing needs. Alan
Hall never considered the four TAC divisions separate organizations. Instead, he viewed them as complementary categories of capabilities – capabilities that could be integrated and customized on demand. The TAC business model was exceedingly fluid and flexible.

Business Case Journal
SCR
38
From TAC to MarketStar
The TAC era was a time of transition during which Mr. Hall reinvented his company and transformed it from a single-service boutique that had few steady customers into a client-centric enterprise that offered solutions to complex worldwide channel problems. It thrived by forging enduring integrative relationships with prime clients.
New Realities and a New Name . Alan Hall's company grew exponentially in the 1990s. Gross annual revenue, which was a mere $250,000 in 1988, reached $9.5 million in 1995, $17.6 million in 1996, and $32 million in 1997.
10
TAC was renamed the MarketStar Corporation in August of
1997 because TAC's client base had grown beyond the high-tech domain and new clients were expected to come from varied sectors. Whirlpool, for example, made major home appliances, not high-tech products, yet hired Hall's company to recruit and manage people who would demonstrate appliances in retail stores.
Consolidation and a New Vision . In 1998, the TAC entities were consolidated under the
MarketStar banner. Thus, BlitzAmerica's merchandising and DataNow's research, for example, were portrayed more effectively as services that MarketStar could combine.
Consolidation went far beyond cosmetic change. It was a further step in the vital metamorphosis of Mr. Hall's company from a boutique that specialized in product demonstrations into a one-stop provider of diverse customizable marketing services for diverse clients worldwide. Most key MarketStar clients served technology markets and markets being transformed by the Internet, which grew and changed so rapidly that no firm caught up in the revolution could hope to prosper without an effective network of supporting specialists. Indeed, many early biotech companies failed because they tried to do too much in-house including research, development, testing, certification, sales, and support.
11
Any firm that stumbled or failed to build a proficient support network risked being trampled by rivals. Hence, few
MarketStar clients could afford to retain partners whose performance was sub par or whose capabilities failed to keep pace with emerging needs.
Mr. Hall fathomed quickly that MarketStar's fortunes were tied closely to those of its clients: The more MarketStar helped clients succeed, the better the chances that MarketStar would succeed as well. Hall also knew that MarketStar had to coevolve with key clients – to change as their needs changed.
12
Successful coevolution required working more collaboratively with major clients than ever before to develop potent comprehensive solutions to the dynamic channel problems they faced. To thwart ravenous poachers, Alan Hall would have to prove continually that clients could count on MarketStar to deliver the services they needed where and when they needed them.
Would MarketStar have to create a plethora of new services and make them available around the world before actual demand for them materialized? Alan Hall did not think so. He aimed to delight clients by responding quickly and flexibly to their needs. His plan centered on developing core competencies and capabilities from which programs could be fashioned to meet each client's distinctive requirements.

Business Case Journal
SCR
39
As MarketStar matured, Alan Hall continued to innovate and keep a close eye on costs.
However, the company adopted customer intimacy as its primary value discipline. Practitioners of customer intimacy strive to understand key customers and their needs completely and continually shape and reshape their offerings accordingly. They are committed to giving each customer exactly what the customer wants.
13
Customer intimacy promoted virtual integration which, like vertical integration, entails replacing loose affiliations among functional entities with tighter bonds. Both forms of integration are intended to improve coordination and performance. However, while common ownership holds vertically integrated organizations together, trust and contractual obligation conjoin the constituents of virtually integrated systems. When a sourcer, such as MarketStar, is virtually integrated by a client, such as HP, the client depends on the sourcer as if the sourcer truly were part of the company.
14
Carried over from the earliest TempReps days was Alan Hall's take on the impact employees had on his business. "We owe our success to our people," he would tell anyone who asked about MarketStar's enviable performance. "People," he would go on to explain, "determine whether we win and retain a client and what that client tells other potential clients."
Mr. Hall discovered that the Service Profit Chain Model (SPCM) encapsulates his longheld beliefs about the paramount importance of employees.
15
The SPCM derives from research that revealed employees strongly affected profitability in service businesses. Human service providers and support personnel, researchers found, greatly affected customer satisfaction and loyalty. Greater loyalty commonly increased sales growth and profitability by reducing the number of lost customers and corresponding profits along with the cost of replacing defectors.
Effective implementation of the SPCM, Mr. Hall believed, constituted best practice and afforded an immeasurable competitive advantage. "Our direct control of growth, profitability, and even customer loyalty is very limited," he explained; "they all depend on how well we motivate, train, and select our people." Hence, MarketStar chose employees carefully, invested in their training, compensated and rewarded them fairly, and gave them "60 days to figure it out," as Alan Hall described the probationary period given new hires to demonstrate they fit in. While on the subject of employees, Mr. Hall declared, "I have established a philosophy of life that I teach to all my employees. It is that we should focus on God, self, family, career, and community – in that order."
Also carried over from the earliest TempReps days were client-imposed prohibitions against representing competing products, such as Intel and AMD microprocessors. Mr. Hall observed:
To our clients, dedicated representation means exclusive representation – it means MarketStar should refrain from doing business with their adversaries. I have assured them personally that no client's interests will ever take a backseat to another's and that proprietary information is safe with us.
But it hasn't done much good. They haven't given in, which has slowed our revenue and profit growth. It's frustrating!

Business Case Journal
SCR
40
Hall thought that creating ChannelMasters might be the solution to MarketStar's representation problem. He envisioned ChannelMasters as an autonomous company that would compete directly against MarketStar. Thus, MarketStar could represent Intel, for example, and
ChannelMasters could represent AMD. But ChannelMasters never progressed much beyond the idea stage because key clients, including Intel, did not share Hall's vision. They perceived little distance between MarketStar and ChannelMasters. AMD eventually hired MarketSource,
MarketStar's main rival.
Fluidity and flexibility were two defining characteristics of Alan Hall's approach to business development. Launching trial balloons, such as ChannelMasters, was another.
MarketStar Joins Omnicom
"By the late '90s, we needed capital to meet our growth objectives," Alan Hall disclosed.
He had thought about securing venture capital, but confided, "I probably would have lost the company had we gone that route."
16
He then explained, "We were really looking for a partner whose objectives and culture coincided with ours." That partner turned out to be Omnicom, which Hall was thrilled to learn embraced the Service Profit Chain Model. Indeed, Omnicom conducted annual surveys at all levels that required employees to evaluate their supervisors.
Results affected managers' evaluations and pay.
MarketStar joined the Omnicom Group in December, 1999. Founded in 1986 via the merger of DDB Needham and BBDO, Omnicom grew into an enormous holding company that managed an immense portfolio of leading marketing firms. In terms of revenue, it had become the world's largest media services conglomerate by 2004, serving some 5,000 clients in more than 100 countries. The 100 largest clients accounted for approximately 45% of consolidated
2004 revenue. Omnicom's management recognized that individual clients often had multiple needs and strongly believed clients' specific requirements should shape the firm's structure and resource allocations. Accordingly, it had fashioned Omnicom into what it believed was a network of complementary subsidiaries that could provide the complete marketing solutions many clients sought. The ability to provide complete solutions, top management contended, gave
Omnicom a significant competitive edge.
While Omnicom's specific services were legion, they fell into four general categories: traditional media advertising (43% of 2004 revenues), customer relationship management (34%), public relations (11%), and specialty communications (12%). Agency networks BBDO
Worldwide, DDB Worldwide, and TBWA Worldwide served Omnicom's global advertising clients, while such firms as GSD&M, Merkley Partners, and Zimmerman Partners served regional and national clients. In 2006, MarketStar and more than 160 other subsidiaries comprised Omnicom's Diversified Agency Services (DAS) Division, which provided a wide variety of direct marketing, public relations, promotional marketing, and specialty communications services in many parts of the world.
DAS formed the Channel Trade Group (CTG) for internal purposes in 2004 and chose
Alan Hall to lead it. In addition to MarketStar, the CTG included Creative Channel Services

Business Case Journal
SCR
41
(CCS), National In-Store (NIS), and Create. Jointly, the CTG companies offered a broad mix of customizable services that could provide total solutions to clients' diverse sales, marketing, and training problems. The following profiles depict each company's offerings circa 2006.
MarketStar (www.marketstar.com) . According to MarketStar's research, more than 70% of all sales can be influenced substantially by salespeople at the "moment of sale," which is what Alan
Hall called the few minutes or seconds preceding a purchase. He thought print and broadcast media brought consumers to stores, but inside they were overwhelmed by countless choices and, thus, were susceptible to suggestions at the moment of sale.
Managing the moment of sale was Hall's passion ever since he founded TempReps.
Hence, MarketStar offered clients – mostly manufacturers – a wide variety of services for better managing the moment of sale directly and indirectly in retail and other channels.
MarketStar services available in 2006 could be categorized loosely according to their general objective:
•
Stimulate sales through the retail channel . MarketStar pioneered moving technology products through the retail channel by training store personnel. The company had been engaged more than 2 million times to perform such services by 2006. These engagements enabled
MarketStar to develop excellent working relationships with numerous regional and national retail chains and over 10,000 retail outlets.
•
Stimulate sales of technology products to organizational end-users and value added resellers
(VARs) . Savvy MarketStar representatives had extensive experience calling on businesses, institutions, and VARs.
•
Recruit effective channel partners . MarketStar screened prospective resellers and often assisted with enlisting and nurturing promising intermediaries.
•
Provide market intelligence . MarketStar could provide diverse intelligence and research services designed to sense trends and detect subtle market changes.
•
Sales training for retailers . Although MarketStar's clients consisted predominantly of manufacturers, the company had some retail clients who hired MarketStar to train salespeople on a one-time or an ongoing basis.
•
Provide call-center support . In large part, MarketStar's Call Center supported the aforementioned services.
Table 2 is a partial inventory of services designed to accomplish the noted objectives.

Business Case Journal
SCR
42
Table 2
Partial Inventory of MarketStar Services for Manufacturers
Service Objective : Stimulate sales of the client's products to consumers.
Services : Program development usually began with thorough research into where and how targeted customers shopped.
Next, MarketStar helped clients select services and tailor them to meet exact needs. Particular services included:
• In-store product and sales training – MarketStar's field teams aimed to turn store personnel into knowledgeable enthusiastic advocates for each client's products and brand. Teams could be shared by several clients; but after 1995, most clients opted for a dedicated team.
• Dedicated in-store product demonstrations for product launches, store openings, and other special events. MarketStar could cover hundreds of stores on the same day throughout the U.S.A.
• Field merchandising services – MarketStar's highly trained field reps ensured clients' products were in stock and displayed effectively along with promotional literature and coupons. They ensured demo items were operational and could conduct audits, including gathering information about the client's and competitors' prices and stock levels.
• E-commerce services included Web hosting and complete e-commerce system design.
Service Objective : Stimulate sales of client's products to organizational end-users and value-added resellers (VARs).
Services included:
• Inside and outside sales/marketing – MarketStar offered dedicated teams that could comprise a client's entire sales/ marketing staff or serve as an auxiliary force. Clients were spared many burdens that stem from hiring, training, and managing salespeople and downsizing the sales force when necessary.
• Customer relations management (CRM) to increase the life-time value of each customer.
• Lead generation and follow-up, including finding, qualifying, and developing leads and connecting promising leads with the client via inbound telemarketing, the Internet, or other means.
Service Objective : Recruit effective channel partners (i.e., intermediaries).
Services included:
• Identifying and recruiting effective channel partners.
• Relationship management designed to ease client's products through market channels by cultivating relationships with intermediaries and ensuring intermediaries are eager, knowledgeable purveyors of the client's brand and products.
Service Objectives : Provide market intelligence.
Services included:
• Estimating the market potential of new products.
• Assessing products, strategies, and programs and providing insights into improving them.
• Monitoring market trends continually and sense changes that might signal opportunities or threats.
• Monitoring brand awareness and preference, purchase behaviors, positioning, and pricing in relation to competing brands.
Service Objective: Provide call-center support.
Services : MarketStar's Call Center supported many of the aforementioned services. It had both inbound and outbound calling capabilities that could be tailored to meet clients' diverse needs. Its routine functions included:
• Customer service and pre-sales support.
• Lead generation and qualification.
• Customer acquisition and client profiling.
• Survey research; e.g., customer satisfaction surveys.
Jay Larkin, General Manager of MarketStar's Contact Center Services, exuberantly explained the Call Center's functions:
What the Call Center does at any given time varies based on our customers' needs. . . . By choice and circumstance, we tend to conduct
Business to Business (B2B) activities. We have the ability to perform a large variety of sales and support functions . . . The majority of what we actually do is sales and marketing related, performing relatively short-term projects for MarketStar's main clients. As an example, we have conducted a research survey on behalf of Microsoft to identify over
800,000 business decision makers worldwide to determine their software purchasing habits and likelihood. Recently, we contacted thousands of small businesses to help them lay claim to funds available from

Business Case Journal
SCR
43 a class action lawsuit. We routinely profile companies to identify if they would be a good fit for our clients' sales efforts, then send the leads to the client company. Sometimes, we actually continue the process and carry the recruiting or sales effort to completion. . . . although we can do tech support, . . . generally those functions are performed by dedicated teams aligned with our larger clients and are not housed under the Call Center.
17
CCS (www.creativechannel.com) . Creative Channel Services (CCS) focused on the point of sale. As an integrated sales, marketing, and training services agency, it helped manufacturers and resellers, particularly of computer products and consumer electronics, increase retail and business-to-business (B2B) sales. Some services and capabilities were similar to MarketStar's.
CyberScholar® was a particularly interesting CCS sales training tool. Vendors represented on CyberScholar.com for a fee could choose between custom-developed e-learning sites or template-driven training pages. In January, 2006, Canon, Epson, Gateway, LG,
Nintendo, Roxio, Samsung, Sony, and Toshiba were just a few of the many brands featured.
CyberScholar®, CCS claimed, had delivered over 6,200,000 completed training modules to
90,000 retail salespeople who influenced millions of consumers across North America.
Salespeople were enticed to complete CyberScholar® training modules for the products they sold by lottery-like offers of cash and other prizes. "Remember," CyberScholar.com beckoned,
"the more training you complete, the more entries you earn, the better your chances to WIN!"
Staples and CompUSA made CyberScholar® training mandatory. CyberScholar® LIVE combined face-to-face seminars with online product training. CCS claimed its e-learning and content management systems – essentially CyberScholar®, which could be customized – helped major retailers like Staples and CompUSA reduce training costs dramatically, strengthen employee retention rates, increase sales, decrease product returns, and improve overall customer satisfaction.
NIS (www.nationalinstore.com) . In January, 2006, National In-Store Services (NIS) claimed to be the fastest growing U.S. retail support company, conducting over 3 million retail store visits per year. Its capabilities included merchandising; retail intelligence; in-store product demonstrations; sales training; mystery shopping; delivery and management of point of purchase
(POP) materials, displays, fixtures, and merchandise; call-center services; and nearly all imaginable human resources services needed to manage employees from recruitment to retirement.
Clients included a host of manufacturers and retailers of consumer packaged goods, consumer electronics, automotive items, apparel, home improvement tools and supplies, and sporting goods. Among the many prominent retail chains served by NIS's 10,000 brand advocates were Seven-Eleven, A&P, Kroger, BestBuy, Circuit City, RadioShack, Target, Home
Depot, Lowe's, J. C. Penney, Kohl's, Dillard's, Nordstrom, Sears, Staples, Sports Authority,
Walgreens, Pep Boys, PetSmart, Costco, and Sam's Club.
Create . Much like the defunct ChannelMasters, Create was launched to facilitate representing competing substitutes. Accordingly, Alan Hall hoped clients would perceive Create as an

Business Case Journal
SCR
44 autonomous entity that competed directly against MarketStar and other constituents of
Omnicom's Channel Trade Group. But as of January 2006, Create did not have a Web site and was not mentioned in any of Omnicom's Web pages.
Moving On
Over the years, MarketStar's client mix changed dramatically from mostly small obscure firms to mostly large prominent firms and included many clients other than makers of PC ware.
Like its mix of services, MarketStar's international growth reflected clients' requirements. Cisco
Systems and later Intel were the first major clients to insist on international representation. In early 2006, MarketStar claimed to be the largest direct marketer of information technology products in the world, operating in more than 100 countries and serving customers who, collectively, spoke 27 different languages. Corporate headquarters were in Ogden, Utah. Also located in Utah were two major offices serving HP and Cisco. Other major offices were in
Atlanta, Georgia; Raleigh, North Carolina; Mexico City, Mexico; San Jose, Costa Rica; Sidney,
Australia; and Seoul, Korea. Outside the U.S., MarketStar typically partnered with indigenous enterprises that could mitigate legal and cultural obstacles.
MarketStar had come along way, but Mr. Hall continued to ponder its future. On a sunny afternoon in the fall of 2005, he remarked:
We've been fortunate so far. MarketStar and much of the Channel
Trade Group has experienced double-digit growth for many years, but we can't afford to let up. There aren't a lot of secrets we can keep or a lot of innovations we can protect. Someone is always trying to lure clients away by promising to do what we do, but for less money.
Everyone in this business is getting better, and clients know they have choices. Unless we want to compete strictly on price and lose our margins, we have to give clients more than price to think about.
When asked just how competitive MarketStar's business had become, Mr. Hall acknowledged that only MarketSource (www.marketsource.com) had capabilities comparable to
MarketStar's. The rest of the field, he said, consisted of relatively small specialty boutiques.
They generally lacked international capabilities and, individually, could not provide the comprehensive channel solutions that MarketStar's prime clients demanded. He then recollected that MarketStar had doggedly, but unsuccessfully, pursued health-care and medical-devices clients a few years ago. In his words:
We got close several times, but always fell short. In the end, the companies we targeted outsourced their business to established specialists in their field. We had done a lot of things well for a lot of clients. But we didn't have much experience in the health care or the medical devices area, and no one wanted to be our guinea pig. It cost us a small fortune, but the experience reminded us of how critical a track record is in some sectors.

Business Case Journal
SCR
45
When asked whether Omnicom actually gained a competitive edge from the hundreds of diverse companies in its portfolio, Mr. Hall quickly pointed out that Omnicom was a holding company whose subsidiaries were nearly autonomous. Hence, partnering with another Omnicom company was not much different from teaming up with an outside firm. Without ample economic incentives for all involved, alliances could not be forged, not even among companies in the
Channel Trade Group (CTG). But as head of the CTG, somehow deriving synergy from the companies under his purview was high on his list of priorities. Mr. Hall said he intended to look at all possibilities for getting the most out of the CTG, but would not say whether he intended to merge the CTG constituents into one company.
When asked whether Create had actually represented products that competed with those of current MarketStar clients, Mr. Hall said, "Create is still mostly an idea." Convincing clients to let MarketStar represent competing products, he lamented, had not become easier over the years. Then he added:
I recently approached Sony Ericcson about representing a competitor. When they said "OK," I was floored. But generally, clients aren't receptive to the idea. They don't see an upside to it.
I am still looking for a way to convince them.
Mr. Hall seemed as determined as ever to resolve perpetual representation conflicts in some positive way. But he was not ready to play hardball. MarketStar, he insisted, would never ignore clients' concerns. Hinting that MarketStar's bargaining power had increased, he explained:
Legally we can represent anybody we want; we don't have to ask clients for permission. But we don't want to jeopardize goodwill that took years to build; so we move very carefully. Our clients know they can count on us. They also know it takes time to build effective working relationships – to get everything in sync. Dropping us would be risky for them. That's why they aren't shopping around. We'd like to keep it that way, which means we can't push them too hard.
The fact is we need each other and need to work together. But there has to be some give and take. So, I make sure they understand we lose money every time we turn one of their competitors away. Usually, they'll compensate us by sending more business our way. Most of the time that works, at least for now.
In February, 2006, Mr. Hall declared, "We are now moving to the next chapter of
MarketStar's very bright future." He would continue as MarketStar's chairman, but COO Dave
Treadway would become CEO and president, while Aaron Hall, his son and right-hand man for many years, would be COO and executive vice president.
18
The new top management team is profiled in Table 3.

Business Case Journal
SCR
46
Table 3
Profiles of MarketStar's Top Executives, November 2006
Alan E. Hall , Founder & Chairman – Shortly after graduating high school in 1963, Ogden, Utah, native
Alan Hall served a two-year mission in Guatemala for the Church of Jesus Christ of Latter Day Saints, the
"Mormon" church in which he continued to be active. Thereafter, he earned a B.S. degree in psychology from Weber State College (1969) and an M.B.A. degree from Brigham Young University (1972). He married between earning degrees. In 1972, he and his wife, Jeanne, joined the Peace Corps, spending a year in the jungles of Brazil. Before founding TempReps, which evolved into MarketStar, he was
President of Netline, Inc., a computer software company.
A prominent civic and business leader, he has served as President of the Weber School District
Foundation, Chairman of the Board of the Ogden/Weber Chamber of Commerce, Executive Director of
Alumni Relations at Weber State College (later renamed Weber State University), Chairman of Weber
State University's National Advisory Council, Board Member of UITA (Utah Information Technology
Association), a member of Wells Fargo Bank's Northern Utah Advisory Board of Directors, President of
Ballet West, and Chairman of the Hall Foundation. Additionally, Hall as been an adjunct professor at the
University of Utah, and he is a Founder of Grow Utah Ventures.
Hall has been recognized for his business successes and civic contributions by several organizations, including Ernst & Young, which honored him as Utah's 1997 Entrepreneur of the Year, and the
Ogden/Weber, Utah, Chamber of Commerce, which honored him an his wife as Wall of Fame recipients in 2005. In his remarks at the Wall of Fame banquet, he proclaimed that his wealth was a gift entrusted to him by God to use for the betterment of humankind.
David C. Treadway , President & Chief Executive Officer – Responsible for strategic and operational leadership. Treadway worked closely with MarketStar's clients and partners to develop strategic initiatives that accelerated growth via the application of best practices. Prior to joining MarketStar in
2003, Treadway held several executive positions over a 20-year span with Hewlett-Packard. Treadway earned a B.S. degree in Business Administration from San Jose State University.
Aaron Hall , Executive Vice President of Field Services & Chief Operating Officer – Responsible for the operational excellence of MarketStar's client teams. A 13-year MarketStar veteran, Hall oversaw channel execution for leading technology and consumer electronic clients, including Intel, HP, IBM, Sony, and
Cisco. Hall also launched MarketStar operations in Latin America, the Asia Pacific region, and Europe.
Hall earned a B.A. degree from Weber State University and completed Omnicom's Senior Management
Program. He twice won Omnicom's Catalyst Award in Marketing and Sales Integration.
Looking Back
Among the first to read Mr. Hall's announcement in the morning newspaper were a bright
MBA student and one of her professors. Both had followed Market Star's progress closely for some time, and both had admired Alan Hall for his entrepreneurial and philanthropic efforts. As they talked later that day about Mr. Hall's decision, several searching questions arose:
1. How risky was launching TempReps?
2. Did Alan Hall have good reason to worry about TempReps' future, or did first-mover advantages protect his venture from poachers and other threats?

Business Case Journal
SCR
47
3. Why could MartketStar perform some marketing activities better, cheaper, and faster than clients could perform them? And why was faster so important?
4. What are the dangers of outsourcing?
5. How did Alan Hall's company change as it evolved from TempReps into MarketStar, what prompted the changes, and how effective were they?
6. Alan Hall got the capital he needed to fund growth by agreeing to a merger that made
MarketStar an Omnicom subsidiary. Did MarketStar really have to grow at a faster rate than earnings alone could sustain or was slowing down a viable option? Did Omnicom have more than capital to offer MarketStar?
7. Why was super salesman Alan Hall unable to convince many clients to let MarketStar represent competing products? Should he keep trying?
End Notes
1. See www.marketstar.com for additional information about MarketStar. Information not cited explicitly was provided by MarketStar chairman and founder Alan E. Hall.
Quotations not cited explicitly came from several interviews the authors conducted with
Alan E. Hall between 2004 and 2006.
2. According to ZS Associates (www.zsassociates.com), go-to-market strategy centers on channels and processes that connect a company to its customers. Recent innovations in technology and the proliferation of channel options have had a major impact on go-tomarket strategies.
3. From a speech given by Alan E. Hall, January 27, 2005, when he and Mrs. Hall were honored by the Ogden, Utah, Chamber of Commerce.
4. Jeffrey A. Timmons, New Venture Capital Creation: Entrepreneurship in the 1990s ,
Irwin, 1990, p. 9.
5. The official name of the "Mormon Church" is the Church of Jesus Christ of Latter Day
Saints. It also is known as the LDS Church.
6. Due to switching costs and network externalities, products that become de facto standards dominate their markets and usually are very hard to displace, even by technically superior products. Network externalities prevail when a product's value depends on the number of adopters. For example, switching costs and network externalities, not technological sophistication, account for the DOS operating system's long life. For details, see W. Brian Arthur, "Increasing Returns and the New World of
Business," Harvard Business Review , July-August, 1996, pp. 100-9.
7. The notion that activities are the basic building blocks of marketing systems – particularly channels – is echoed in Rowland T. Moriarity and Ursula Moran, "Managing
Hybrid Marketing Systems," Harvard Business Review , November-December, 1990, pp.
146-155.

Business Case Journal
SCR
48
8. For a concise examination of the economic and strategic aspects of outsourcing see Mark
Gottfredson, Rudy Puryear, and Stephen Phillips, "Strategic Sourcing: From Periphery to the Core," Harvard Business Review , February, 2005, pp. 132-139.
9. Andie McCue, "Gartner: Outsourcing Costs More Than In-house," March 7, 2006,
News.com.
10. Mr. Hall declined to provide a complete sales history; the compounded annual sales growth rate between 1988 and 1995 was approximately 68%.
11. James F. Moore, The Death of Competition: Leadership & Strategy in the Age of
Business Ecosystems , Harper Business, 1996, p. 73.
12. Ibid. Moore depicted businesses as embedded in evolving ecosystems and as coevolving, if successful, with other system constituents. He advised, "Understand the economic systems evolving around you and find ways to contribute" (p. 6).
13. Michael Treacy and Fred Wiersema, "Customer Intimacy and Other Value Disciplines,"
Harvard Business Review , January-February, 1993, pp. 84-93.
14. Joan Magretta, "The Power of Virtual Integration: An Interview With Dell Computer's
Michael Dell'', Harvard Business Review , March-April, 1998, pp. 73-84.
15. James L. Heskett, et. al., "Putting the Service-Profit Chain to Work," Harvard Business
Review , March-April, 1996, pp. 164-174.
16. For a concise exposition of the aims of venture capitalists and the hazards of seeking venture capital, see Bob Zider, "How Venture Capital Works," Harvard Business Review ,
November-December, 1998, pp. 131-139.
17. E-mail from Jay Larkin, January 6, 2006.
18. Jeff DeMoss, "MarketStar CEO steps down," Standard Examiner , Ogden, Utah, February
28,2006, p. 4C.