At the time Tom Cross took over as managing director at Powerdrive Motors in South Africa,...
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At the time Tom Cross took over as managing director at Powerdrive Motors in South Africa, the company was an established manufacturer of small electric motors with a strong reputation for product reliability and technical leadership. On the downside, it was also regarded in the trade as having high prices and variable delivery. Tom's first task was to tackle the huge product variety on offer. He saw this as the major prob- lem in addressing the negative views in the marketplace, and also saw opportunities in streamlining design and production. The product range was replaced with a new generation of designs based on a few hundred 'modules', which could be assembled in many different combinations to give variety at low cost. This meant the loss of some customers who had gone to Powerdrive because they could rely on the company's technical leadership to produce designs that suited their particular needs. This was not considered important because the combined sales volume of such customers was under 5 per cent. Using the new designs, Tom was now able to reorganise the factory into cells that produced major subassemblies such as rotors and stators. The work flow was trans- formed, and manufacturing throughput time was reduced from six weeks to just four days. Cost improvements meant that average price reductions of between 10 and 15 per cent could be offered. Powerdrive's customer service policy was redrafted to offer quotations within a maxi- mum of one hour of any enquiry, and for deliveries of finished product to be made with- in one week 'anywhere in northern Europe'. This new policy was explained to internal sales staff, and to sales representatives and agents employed by the organisation. If 'old' customers wanted special designs that were no longer in the range, the sales staff were instructed to explain Powerdrive's new policy and politely decline the order. At first, business soared. Impressed by the lower prices and short delivery times, cus- tomers flocked to Powerdrive and sales jumped by 50 per cent. But then things began to go sour. First, the factory could no longer cope with the demands being placed on it. The addition of a large order for lawnmower motors blocked out a lot of production capacity from January to June. Order lead times during this period in particular slid back to former levels. Second, a Brazilian supplier spotted the opportunity to enter the market with prices that undercut Powerdrive by 20 per cent. Whilst only half of the product range was covered by this new entrant, it was the high-volume products that were especially threatened. Further, the new competitor offered three-day lead times from stock that had been established in the country. Third, some of the former customers, who could no longer obtain their bespoke designs from Powerdrive, were complaining within the industry that Powerdrive's technical leadership had been sacrificed. Although small in number, such customers were influential at trade fairs and conferences. Questions 1 Characterise the changes in the market segments using the concept of order winners and qualifiers. 2 Evaluate the changes that took place in the marketing mix and how this impacted on the fulfilment of different market segments' needs (in terms of OWC and QC) by logistics. At the time Tom Cross took over as managing director at Powerdrive Motors in South Africa, the company was an established manufacturer of small electric motors with a strong reputation for product reliability and technical leadership. On the downside, it was also regarded in the trade as having high prices and variable delivery. Tom's first task was to tackle the huge product variety on offer. He saw this as the major prob- lem in addressing the negative views in the marketplace, and also saw opportunities in streamlining design and production. The product range was replaced with a new generation of designs based on a few hundred 'modules', which could be assembled in many different combinations to give variety at low cost. This meant the loss of some customers who had gone to Powerdrive because they could rely on the company's technical leadership to produce designs that suited their particular needs. This was not considered important because the combined sales volume of such customers was under 5 per cent. Using the new designs, Tom was now able to reorganise the factory into cells that produced major subassemblies such as rotors and stators. The work flow was trans- formed, and manufacturing throughput time was reduced from six weeks to just four days. Cost improvements meant that average price reductions of between 10 and 15 per cent could be offered. Powerdrive's customer service policy was redrafted to offer quotations within a maxi- mum of one hour of any enquiry, and for deliveries of finished product to be made with- in one week 'anywhere in northern Europe'. This new policy was explained to internal sales staff, and to sales representatives and agents employed by the organisation. If 'old' customers wanted special designs that were no longer in the range, the sales staff were instructed to explain Powerdrive's new policy and politely decline the order. At first, business soared. Impressed by the lower prices and short delivery times, cus- tomers flocked to Powerdrive and sales jumped by 50 per cent. But then things began to go sour. First, the factory could no longer cope with the demands being placed on it. The addition of a large order for lawnmower motors blocked out a lot of production capacity from January to June. Order lead times during this period in particular slid back to former levels. Second, a Brazilian supplier spotted the opportunity to enter the market with prices that undercut Powerdrive by 20 per cent. Whilst only half of the product range was covered by this new entrant, it was the high-volume products that were especially threatened. Further, the new competitor offered three-day lead times from stock that had been established in the country. Third, some of the former customers, who could no longer obtain their bespoke designs from Powerdrive, were complaining within the industry that Powerdrive's technical leadership had been sacrificed. Although small in number, such customers were influential at trade fairs and conferences. Questions 1 Characterise the changes in the market segments using the concept of order winners and qualifiers. 2 Evaluate the changes that took place in the marketing mix and how this impacted on the fulfilment of different market segments' needs (in terms of OWC and QC) by logistics.
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Powerdrive Motors Case Order Winners Qualifiers and Marketing Mix 1 Changes in Market Segments using Order Winners and Qualifiers Before Tom Cross Order Qualifiers Reliability and technical leadership ... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
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