Market Opportunities in the United States and the European Union
David R. Cehelnik
MKT 601 – Marketing Management
Professor Robert Cutler
Cleveland State University
Table of Contents
Duncan Industries has kept to a fast growth track with its signature product, the Duncan Lift. In order to keep growing, the company is presented with a couple options to increase its market share in the scissor type vehicle hoist market. One option is to expand in the U.S. market by convincing the wholesaler that handles selling the Duncan Lift to push it to customers more or establish a sales office in New York to increase sales. The other option to consider is to enter into the European Market. This could be accomplished by entering into a licensing agreement with Bar Maisse, a French company that specializes in wheel-alignment products. Duncan Industries also could consider entering into a joint-venture with Bar Maisse where profits and investment would be split 50-50. Another way to enter the European Union market would be to establish a manufacturing facility and marketing team in Germany to sell the Duncan Lift.
Based on the information provided in this report, it is recommended that Duncan Industries enter into the European Union market via a joint-venture with Bar Maisse. Also it is recommended that Duncan Industries work with its wholesaler in the U.S. to push the Duncan Lift to its customers. Problem Statement
1. To decide whether to enter the European Union Market of vehicle hoists. There are three options of entering this market. a. Enter into a three-year licensing agreement with Bar Maisse to manufacture and market the Duncan Lift. b. Enter into a joint venture with Bar Maisse where investment and profits is split 50-50. c. Enter with a direct investment where Duncan Industries would establish a manufacturing facility and setup a management group to market the lift. 2. To make a decision on how to increase sales of the Duncan Lift in the U.S. market. Two options are available. a. Convince the U.S. wholesaler to push the Duncan Lift b. Establish a sales office in New York to increase sales in the eastern states. Industry Analysis
Each year, approximately 49,000 vehicle hoists are purchased by firms in North America that are part of an industry called the automobile aftermarket which is involved in supplying parts and service for new and used cars. Vehicle hoists are used by a large and diverse group of automobile outlets to lift an automobile into a position where a mechanic or service technician could easily work on the car. The two basic types of vehicle hoists are in-ground (21% of total sales in 1999) and surface (79% of total sales in 1999). In a given year, 30% of all vehicle hoists are purchased by new-car dealers with the remaining percentage purchased by used-car dealers, specialty shops, store chains, and independent garages. Experienced owner/operators will determine what vehicle hoist(s) are needed, next determine what is available and then make a decision. Those owners/dealers who knew little of vehicle hoists typically will purchase what is recommended by the parent company. In North America, sixteen companies (12 U.S. firms and 4 Canadian firms) compete in the vehicle hoist market. The industry is dominated by two large U.S. firms, AHV Lifts with 40% of the market and Berne Manufacturing with 20%. These two industries focused on in-ground and two-post vehicle hoists. AHV is the only company to use a direct sales force to supply the industry. All other firms use (1) only wholesalers or (2) a combination of wholesalers and...