22 April 2014
Case Study #3:
Jolson Automotive Hoist: The Market-Entry Decision
Jolson Automotive Hoist, Inc. began in 1991 after Mark Jolson had left his previous employer to pursue a hoist design that he believed to be a potential success. In 1992, Jolson hired Pierre Gagnon to handle the marketing side of the operations. The Jolson Lift was a surface scissor lift, as opposed to the traditional in-ground single and four post lifts, making it appealing due to its mobility and easily installable. After the original design was made, Jolson continually made improvements to his product, including more safety features, such as safety locks, that other lifts did not have. The Jolson Lift soon became considered a leader in automotive lift safety. Jolson Lift has developed the reputation in the industry as the “Mercedes” of hoists, a continuing reputation of quality that Mark Jolson plans to keep throughout all decisions the company makes.
The industry that hoists belong to sells approximately 49,000 hoists each year in North America. The hoists are typically purchase by any automotive outlet that serviced or repaired cars, including new-car dealers, used-car dealers, specialty shops, and independent garages. Jolson Automotive Hoist competed in specialty shop segment and those shops dealing with wheel alignment. It’s estimated that 85% of company sales are to the wheel alignment market in service centers, such as Firestone and Goodyear, and independent garages that specialized in wheel alignment. The remaining 15% of sales are made to customers who use hoists for general mechanical repairs.
Jolson Automotive Hoist’s current marketing strategy, as stated early, has helped it develop a reputation for a quality product backed by good service in the hoist lift market. The strategy involves the use of three types of distributors: (1) a company sales force, (2) Canadian distributors, and (3) a U.S. automotive wholesaler. In 1999, Jolson’s lifts sold for an average of $10,990. Through the mix of sales of the three distribution channels, Jolson received 100% of the selling price from direct sales through he sales force, 80% through the Canadian distributor, and 78% through the U.S. wholesaler. Based off of the 1999 sales records, 1,054 units were sold– 264 from direct sales (25%) earning the full $10,990/unit, 210 (approx. 20%) from the wholesaler earning $8,572/unit, and the remaining 580 units from the Canadian sales earning $8,792/unit.
The company sales fore consists of four salespeople plus Gagnon. Their main task is to service large “direct” accounts. The sales force generates about 25% of the unit sales each year. The Canadian distributors sold, installed, and serviced units across Canada. The distributors handle the Jolson Lift and carry a line of noncompetitive automotive equipment products and noncompetitive lifts. These distributors focus on smaller chains and the independent service stations and garages. The U.S. wholesaler sold a complete product line to service stations, making the Jolson Lift one of five different types of lifts. Although the wholesaler provided Jolson Automotive Hoist with extensive distribution in the U.S., the Jolson Lift was a minor product with the wholesaler’s total line. The Jolson Lift only accounted for less than the wholesaler’s total lift sales.
Gagnon has brought to Jolson’s attention of the potential to expand globally, specifically to the European Union. Gagnon points out that the key indicator of the potential market for the
hoist is the number of passenger cars and commercial vehicles in use in a particular country. Their focus would be on a “Big Four” of the industrialized nations in Europe: Germany, France, the United Kingdom and Italy. Gagnon provided three options for abroad investment: 1. Licensing
a. Jolson Hoist would license out its hoist design to Bar Maisse, a French manufacturer of...
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