Strategic Marketing Baxton Technology 29. September 2011 Introduction Baxton Technology Company manufactures surface automotive hoists which are used by garages, service stations and other repair shops to lift cars for servicing. Because of its design, quality of workmanship, safety features, ease of installation and five-year warranty, Baxton Lifts achieved a reputation as the “Mercedes” of the hoist industry and is considered a leader in automotive lift safety in Canada and United States.
There are sixteen firms competing in the automotive lift market in North America. AHV Lifts and Berne Manufacturing together held near 60 percent of market. Baxton Technology has two competitors that manufactures scissor lifts. One is the AHV Scissor Lift, which had a different lifting mechanism without safety locking features and was sold for about 20 percent less than the Baxton Lift. The other competitor is Mete Lift, sold for about 5 percent less than the Baxton Lift.
Baxton Technology has used three types of distribution channels: a company sales force, Canadian distributors and a U. S automotive wholesaler. The company’s success to date is based on a strategy of offering a superior product that is primarily targeted to the needs of specific customers. The strategy stressed continual product improvement, quality workmanship and service. And personal selling was a key part of the strategy as well. Define Problems
In order to continue a fast growth of the company, the Baxton Technology will meet two problems. One is developing its business in the European market and how to go about doing this. It appears there are three main strategies to choose from: a licensing agreement, a joint venture option or a direct investment. Additionally, choosing which country to develop still needs to be taken into consideration. The second problem is developing the company’s business in the U. S. A.
If the American wholesaler could push the Baxton Technology hoists, sales will be increased, though it might also be possible to establish sales offices of the company’s own in the United States, as another way to increase sales. SWOT-Analysis |Strengths |Weaknesses | |Plentiful resources, high-quality product |Relatively minor presence in the U. S. |Experienced salespeople and production managers |Limited experience with the European market | |Opportunities |Threats | |Few large manufacturers in Europe |Current rivals with their sights set on Europe | |Licensing offer from experienced company |Refusal from Bar Maisse to embark on a joined venture |
Options American Sales Office Though opposed by the American wholesaler, Baxton Technology could very well establish a sales office in New York, which would allow the company to cover a large part of the east coast in their marketing efforts. However, the company is already making money off of the American population, and even though the U. S. Makes for a large market, western Europe is almost as large and does not require us to compete with companies that are presently aiding us.
On the other hand, our company has far more experience with the Canadian and American markets, and unlike in the case of a licensing agreement or a joint venture, our company would retain almost all of the profit. Licensing While licensing our product to the French company is basically free of risk to ourselves the return will not be as high as it might be if we invest more resources into Europe as a market. Our ability to influence the operations of Bar Maisse will likely be minimal as well. However, we already have the offer in hand and all we need to do is agree to it.
Joint Venture By involving ourselves more with the production and marketing processes of Bar Maisse, and starting a joint venture with the company, we would be able to gain a far larger share of the profits of the sales of our hoists, and a far greater influence over the market compared to what we would have through a licensing agreement. With our expertise in the field of hoist repair and production, and Bar Maisse’s experience with the European market, we will likely be able to gain a larger market share together than either of us would be able to alone.
Direct Investment For Baxton Technology to make a direct investment, construct manufacturing plants and sales offices of its own in Europe, is a distinct possibility. The company has the resources to go through with a large-scale operation such as this, and doing so would allow Baxton Technology retain all the profit they make off their hoist sales. However, this would be a very expensive and risky venture, especially as Baxton Technology has no experience with the European market. Proposal
We propose Baxton Technology choose to enter a Joint Venture with Bar Maisse to get access to the European Market. The European Market offers great opportunities for Baxton Technology because the European countries France, Germany, Italy and UK each have more than 20 million vehicles in use, with Germany having the largest domestic fleet of 44 million vehicles followed by Italy, France and the UK. The number of cars was an important indicator, since the more cars are in use meant a greater number of service and repair facilities that needed vehicle hoists – potentially the Baxton Lift.
The European market also has a great deal fewer powerful competitors than the United States, and does not have the same types of well-established wholesalers that could push Baxton Technology out of Europe. Baxton Technology met the marketing manager of Bar Maisse on a trade show in Detroit. They had a casual conversation about their companies and what they manufactered. The marketing manager was seeking a North American distributor for the modular aligner and other products manufactured by Bar Maisse. Phillip Baxton felt the lift would complete Bar Maisse? s product line.
In the short-term we suggest that Baxton Technology should follow a Joint Venture approach to expand its business. A Joint Venture is less risky than a direct investment but still allows for some real profit for the company as well as providing an opportunity for the company to gain experience with the European market. Another advantage is ensuring equal power-sharing between Bar Maisse and Baxton Technology whilst also reducing costs relative to a direct investment. Furthermore, Baxton Technology would benefit from the expertise and knowledge of Bar Maisse of the European Market, especially France.
For our mid-term strategy we propose to use the existing European distribution channels of Bar Maisse to enter the market of the most important European countries (Germany, Italy and United Kingdom) carefully. If entering other European countries by distribution will be successful, we advice Baxton Technology to enter into Joint Ventures in Germany], UK and Italy, too. In the long-term perspective the eastern market of the United States should be focus on establishing a sales office in New York. [pic] Fig. : short-, mid- and long-term proposal for Baxton Technology Forecast – Potential of the European Market With the assumption that each hoist can be used to service four cars a day (which makes 1460 cars a year), we conclude that the need for hoists in France amounts to at least 22. 534. Assuming that half of these hoists will need to be replaced within the next two years, the potential hoists sold in France in that time is roughly 11. 267. If we make similar assumptions for Germany (need of 15. 135 hoists), Italy (need of 12. 294 hoists) and the UK (need of 9. 17 hoists), the number of hoists which will need to be replaced in two years is 48. 113. If we can attain a 60% share of the market within that time, we can sell upwards to 28. 867 hoists in two years, and we are working with a very low assumption of the amount of hoists required in the country (no accounting for holidays, traffic accidents and such). Marketing strategy for short- and mid-term perspective While entering the European Market through a Joint Venture it is important that Baxton Technology products are promoted well to achieve awareness.
We advice Baxton Technology and Bar Maisse to promote the new products on several events, like car events, trade shows and other suitable events in France. Looking at the mid-term strategy Baxton Technology could also use this type of marketing strategy for promoting their products in Germany, Italy and the UK. Aside from promotion through events, the company should employ sales representatives who visit and inform service stations, repair shops and garages specializing in wheel alignment to inform them about the high product quality of the hoists.
To gain awareness of the product in the European countries they should have a website on the Internet that informs about the hoist in different languages. In respect to the mid-term perspective Baxton Technology have to search for Joint-Venture partners in the other European countries Germany, Italy and the UK. Marketing departments, similar to the one planned for the eastern United States, would serve our marketing efforts in Europe quite well.