MARKETING PROGRAM DESIGN
Under the Guidance of Dr. Waheed
The case, presented by Professor E. Raymond Corey, presents to the potential threat to a company, Dominion Motors, by a report brought up by John Bridges, a big name in the whole Oil Production domain. DMC was a large supplier of motors and control equipment in the Canadian market. Bridge’s report had placed Dominion’s motor at the third place in terms of preference, which shows their declining market share. Thus the managers got together, and were formulating a strategy for the same. DMC's potential loss of significant market share in the near and long term, of oil well pumping motors if DMC doesn't respond quickly and effectively to the expected change in motor specs for the industry.
Also DMC's perceived late discovery of the study has left them wondering about the actual significance of the report as a whole. Possible solutions suggested were: 1. Reduce the price of DMC’s 10 HP power to that of 7 and a half motor. 2. Reengineer DMC’s present motor.
3. Bring up a specific definite purpose motor for oil pumping market. 4. Persuade Bridges regarding the maximum torque.
1. What do we really know about this situation?
2. Is this just a ‘brush-fire’—or an important problem? 3. How profitable is each of the four alternatives suggested? 4. What other considerations are there in planning a product for this market? 5. What will the production people want to say this problem? the finance people? The engineers? The public relations people? 6. What should DMC’s program be for this coming selling season? 7. What other recommendations should be made toward improving DMC’s marketing program? The problem: DMC's potential loss of significant market share (in the near and the long term) of oil well pumping motors segment. If DMC doesn't respond quickly and effectively to the expected change in motor specsfor the industry, it might lose out in the race.
Causes of the problem:Hearsay concerning a study by the trend setting buyer in the market, which, if true, willpromote the motors of DMC competitors and relegate DMC to third choice in the oil pumpingmarket.Also DMC's perceived late discovery of the study (Other manufacturers don't seem to know soDMC may still be ahead of the others in information, but their machine is 3rd choice so timelyinformation is more critical to DMC).
Is this a brush fire or an important problem?1000 wells per year over the next 5 years (possibly more) means DMC has approximately 51%=510 per year=2550over 5yrs (plus whatever replacements). Now, 510/year at $1200= $612000/year.DMC thus couldlose brand image and reputation as a result of being downgraded in the industry.
This couldbe worse than lost dollars. In addition it could lose the industry by losing the tag of leader of theindustry. Although this market is a small slice of DMC's revenues, one cannot afford to easilylose market share. In addition, this could have spill over affects in its other markets when itcirculates that DMC was a "failure" in one market.In the end we consider this an important problem, not for the immediate dollars, but for thefuture dollars that could be lost with a "tarnished" image as well as losing market share.
The background to this problem arises from the fact that DMC's largest consumer of oil well pumping motors has ranked them the number III supplier, and not only could this impact purchasing from this customer (Hamilton), other smaller companies follow this large company for their purchasing decisions, so that they get the benefit of copying their R&D decisions. What are the causes of the problem? Power companies implemented a graduated monthly base charge per HP...