Fridgiaire Case Analysis

Frigidaire Case Analysis

Problems/Issues

Introduction of the front loading washing machine was confronted with a number of problems/issues. Besides the obvious technology differences between the front loading and top loading machine the big difference for a consumer is the price. The advantages such as tumble wash, energy efficiency, space saver, and about 8,000 gallons of water saved a year are overshadowed by the high price. There were other perception problem technologically speaking, however these are all minor. The major problem is the price of one unit and the lack of price savings from this energy/water savings over time to compensate for this higher price point. Consumer interest did not significantly increase according to focus groups until the price came down to $599 from the target retail price of $799.

Case Analysis

Kenmore in 1996 had 29% of washing machine marked share (exhibit 3). The initial sales for the new front loading washing machine dropped below forecast (exhibits 6 & 7) mainly due to failure to get Sears Kenmore brand in the mix. The expected DOE regulations were delayed indefinitely, therefore decreasing the demand for energy efficient machines.

The management team wanted to provide incentives to consumers, dealers, and Frigidaire. The research showed that close personal attention would be key in gaining market share, as well as highlighting the advantages of the front loading washing machine over the top loading washing machine to not only consumers but to dealers.

Alternatives

Invest more money (allocation of resources) in research to get the price point of the top loader down to $599. This will set the company back a bit, however if more research and development can produce lower production costs this will increase market share significantly.