Author: Anurag Gupta
The goal is to increase the overall market share and profits of MM’s Motors in the current market environment by targeting appropriate customer segments and proper allocation of marketing resources. Initial Strategy: Our initial strategy was to concentrate on segment A because of the following reasons * MM possesses a competitive position in this segment in terms of quality product offering and close customer relationships through high level of customer support.
* Also, the competitors’ new product was highly competitive in thermal resistance parameter which would make it difficult for MM to compete in segments B and C
* The net price of MM motors for segment D is $119 as compared to industry net price of $111 (refer the exhibits). Since this segment is highly price sensitive, to increase market share in this segment would require MM to reduce its list price. The current market share of MM in segment A is 19% and our initial strategy was to increase this market share by allocating maximum resources ($200,000) to market research and 50 % sales force time to segment A. The rest of the sales force time would be equally divided between the segments B, C and D. Change in Strategy: During simulation, we studied the effects of percentage increase of sales force time for each market segment individually along with decrease in list price. As we proceeded with the simulation, we found that * A decrease in list price and an increase in percentage sales force time for segment D would be more fruitful in the short run as it will increase the overall sales volume and overall profit much more than in the case where sales force concentrates more on segment A.
* This is because the overall market share of highly price sensitive customers in segment D and “small volume customers” is almost three times of segment A’s market share.
* So, even though the profit margin...