Dominon Motors & Controls Ltd. - Marketing Practices and Implementation

[pic 1][pic 2][pic 3]

Dominion Motors & Controls Ltd.

Case facts:

Dominion Motor Company is a large supplier of control panel equipment and pumping motors for Canadian Oil producers and has an excellent reputation for product quality. DMC had 50% Market share of oil well pumping motors in the Canadian market. DMC had an excellent sales person and sold a wide range of products (motor control and panel board units. A few of the short comings of DMC were that the motors produced have low torque compared to the competitors and a weak advertisement campaign. Spartan motors and Universal motor company along with other foreign companies were the chief competitors of DMC. Hamilton is the largest oil company active in Canada and operates over 30% of the total producing wells. Addition of 1000 New Wells each year for next five years offered a mouthwatering market opportunity for DMC.

Issues:

Hamilton, DMC's largest consumer of oil well pumping motors has ranked them the #3 supplier after Spartan and Universal for supply of motors. This can impact purchasing from Hamilton as well as other smaller companies could follow suit for their purchasing decisions, so that they get the benefit of copying their R&D decisions. This may lead to DMC's potential loss of significant market share in the near and long term, of oil well pumping motors if DMC doesn't respond fast and effectively to the changes expected in motor specs for the industry. Also there is a new schedule of connected horsepower of an installation which requires DMC to stop overmotoring while maintaining the torque of the motor. Hamilton conducted a study that concluded that ideal motor has low horsepower and high torque.

Alternatives:

1. Reduce prices of 10 HP Motor and bring at par with 7.5 HP motor

Companies don’t care about little savings in energy in the short period, and because the torque of the 10-hp is higher than the 7.5-hp’s.

Benefits:

• Counters immediate loss of customers in the most prosperous period (80% of sales)
• If aggressively marketed, will prevent loss to DMC

Cons:

• Short term solution & Reduce company profits
• Increase Operating cost per motor for the client by a sizeable 18%
• This will lead to eventual if not immediate loss of customers

[pic 4]

1. Reengineer 7.5 HP motor to make it with starting of atleast 105 torque

Temperature rise would be greater than NEMA standards. Safety standards will be respected by using special high temperature insulation.

Benefits:

• Will provide a ready product to put forth to meet competition.
• No additional investment in plant or equipment
• Lesser time for development eg. approx 3 months
• Lower operating cost for customer

Cons:

• Risk of a torque war which could lead to unbalanced motor design
• Might lead to safety and performance issues thus damaging brand value and customer trust irreparably
• Reluctance in customers towards using non-standardized products

[pic 5]

1. Design a definite purpose 5 HP Motor with starting torque of 105 torque

Caters to the consumer needs perfectly

Benefits:

• Will provide market superiority and increased market share (approx. 60%)
• Satisfied customers
• Can be priced higher than the 7.5hp model due to its attractiveness
• High profit margin can allow the company to pursue more advertisement investments

Cons:

• Product will not be ready in time to capitalize on the start of the season boom
• Loss of customer base in the intervening period of 5-6 months
• Loss of brand respect for being ranked behind competitors

[pic 6]

1. Persuade Bridges and Hamilton to reevaluate the overemphasize on Bridges’ study

DMC managers believe that Bridge’s conclusions aren’t completely accurate and consider waiting for the results before considering changes in product and market strategy. DMC executives also evaluated that high starting torque it’s not the most important feature. In fact an 80 pounds-feet motor is deemed capable of “breaking” a pump in the most extremely cold weather. If this statement it’s true, Spartan motor won’t be any more the first Hamilton’s choice because of its highest starting torque.