Swisher Mower And Machine Company

SWISHER MOWER AND MACHINE COMPANY (SMC)

Introduction

Wayne Swisher, CEO of SMC, is concerned with the company's future prospects. The unit volume sales of the SMC riding mower, which constituted 64% of the total sales of SMC, had plateaued in recent years. He is presented with an attractive private-brand arrangement that can impact SMC's prospects and has to decide whether to accept it. Alternatively, or additionally, he can decide to have more aggressive advertising and sales effort to recruit new dealers and assist current dealers. SMC is also preparing for the introduction of a new Trim-Max product. Wayne's ability to make the right strategic marketing decisions now will decide the destiny of SMC in the future.

Product Line

Swisher Mower Company (SMC), established in 1945, has a current portfolio of three products - push mower kits, trailmowers and riding mowers. It is also in the process of developing a new product - all-in-one trimmer, edger and mower. Chart 1 shows the percentage contribution of each of these products to SMC's total sales and Chart 2 shows the percentage contribution of each of these products to SMC's total gross profit in 1995.

Assuming that 80% of the parts business is generated from the sales of the riding mowers, we can infer that 80% of SMC's profit arises from the sales of riding mowers or their spare parts. We can therefore observe that SMC's company's performance is largely dictated by riding mower sales.

Riding Mower

Referring to the material, we observe in Exhibit 7 that there is a rising trend in the unit sales of riding lawn mowers and lawn tractors in the 1990s for the mower and tractor industry. However, Exhibit 1 shows that the sales trend of SMC's riding mowers for the same period is constant. Compared to the 1970s and 1980s, the market share of SMC has also fallen in the 1990s.

In terms of unit volumes, the SMC's sales peaked at a volume of 10,000 riding mowers almost 30 years ago i.e. 1966. They were able to generate sales near this level till 1973 (nine years). Unit sales declined to about 4200 riding mowers in the year 1974. They have been selling at this level for approximately 21 years now. However, during these 21 years, industry sales for riding mowers and lawn tractors have gone up from 640,000 units to about 1,263,000 units, a 97% increase. Clearly, SMC's performance indicates that it is lagging behind the US riding mowers and lawn tractors industry trend.

Customers, Distribution and Promotion

The current market segment served by SMC is mainly industrial users located in the non-metropolitan areas (75% of the company sales). SMC employs three different mechanisms for distribution; through wholesale distributors who in turn supply to independent dealers, directly to dealers and through private-labelling arrangements for two buying networks (Midstates and Wheatbelt). They also have a small presence in Europe and the South Pacific. Chart 3 shows the share of sales for different distribution channels. For the vast American west and pacific region, it virtually has no presence. SMC has not made any significant attempts to move into the metropolitan areas.

SWOT Analysis

To formulate a sound marketing strategy, it is important to analyse SMC's intrinsic strengths and weaknesses and its extrinsic opportunities and threats. This table summarises these factors and each is discussed in detail in the paragraphs after this table.

Strengths Weaknesses

1. Established Company with more than 50 years history2. Recognised for product quality3. Differentiated product4. Strong financial position 1. Front-engine and rear-engine lawn tractors are more popular than mid-engine lawn tractors2. Limited distribution channels: mainly in non-metropolitan areas

Opportunities Threats

1. Increasing trend for industry riding mower and lawn tractor unit sales 2. Potential of entering into new market segment in metropolitan areas with existing product - Ride King (for small to medium size lawn area)3. Potential for reconfigured product in current market segment (front-engine mowers for non-metropolitan area)4. Potential for new product in new market segment (Trim-Max for metropolitan area - very small lawn area) 1. The sales of SMC riding mowers has plateaued and may decline if not managed

Strengths

SMC is a well-established company with more than 50 years history. The company is credited with producing the first zero-turning-radius riding mower, and no other competitor has yet to copy the exact design of the Ride King. SMC has a reputation for producing high-quality riding mowers with simple designs that allow for ease of use and maintenance. Its mowers often run for more than 25 years before they need to be replaced. SMC also has an excellent financial position. It has remained a profitable company since its founding with annual net profit margins of more than 10%, and has been able to generate cash flow at levels large enough to minimize the need for any major short-term or long-term financing.

Weaknesses

The main weakness of SMC is that the riding mower that it produces is the least desired model on the market. There are mainly three types of riding lawn mowers on the market: the front-engine lawn tractors/garden tractors, the rear-engine riding mowers, and the mid-engine riding mowers, which SMC produces. The front-engine model ranks first in popularity, followed by the rear-engine and mid-engine models.

Secondly, it can be observed from the earlier discussion on the SMC's distribution that it has a distribution network that is limited to non-metropolitan areas.

Opportunities

As discussed earlier, industry sales for riding mowers and lawn tractors have gone up from 640,000 units to about 1,263,000 units, a 97% increase, in the last 21 years. In 1993 and 1994, the industry posted record unit sales, and projections for 1995 and 1996 indicate further increases in unit volume. This upward trend of the industry provides SMC with good opportunities to expand sales, distribution and production.

Next, the private-brand offer alerts SMC that there is a potential market segment of residential users that they have not tapped in the metropolitan areas. This