In the last 90 minutes or so I created this masterpiece, however has any one of you any clue while reading this what Electromach actually has as market and customers? ps. the references are not yet complete nor final.
In this paragraph the market, customers and products of Electromach are analyzed. This is done from a production perspective using Reid & Sanders and from a marketing perspective using Kotler
(Kotler, 2003). [HMorsink1] We also use
Little (Little 1974)[HMorsink2] to classify the position of Electromach between its competitors. This will ensure us that we have classified the internal and external environment of Electromach and we have paid specific attention to the competition.
First we use Kotler (Kotler, 2003) to determine what kind of market Electromach operates in and what kind of customers Electromach has, we also use some of his terminology to further specify the market of Electromach.
Electromach operates in a business to business (B2B) market and only in this market. They are a production company that delivers a product, not a service. Ofcourse there are contractual terms which means that at times Electromach delivers a service, but this is not their primary process. Their target market is the explosion proof equipment industry, which mainly is a segment of the petrochemical industry, but it also has other industries like the chemical industry, while their customers are engineering firms, petrochemical companies and other companies which have a need for explosionproof equipment. Their products are used as end products, but also as a component for other products. In appendix XXX you can find a list of all of Electromachs products, self produced and sold as a merchant. We use Kotler’s chapter on business market analysis to see what kind of buying situation the customers of Electromach usually is in, this helps us better understand certain specific needs of these customers and why Electromach has to take this into account. There are three kinds of buying situation, namely straight rebuy, modified rebuy and new task. Straight rebuy is when a company runs out of an item or raw material and needs to replace it. Modified rebuy means that a replacement of an item or raw material is needed, but that the specifications that have to be met are to be changed. New task means that the buyer buys the item for the first time. Electromachs c ustomers are mainly in the new task situation, while Electromach is mainly in the straight rebuy and modified rebuy position, when view from their suppliers. To further specify this we specify the products of Electromach according to Kraljic as strategic products or bottleneck products for the customer. This means that the products have high value for the customer and involve high risk, The customers wants trust and reliability, Others are routine products and leverage products, which involve less risk and less costs for a customer, price is an order winner there.
Using the adaption from Kotler of
Thomas V. Bonoma and Benson P. Shapiro[HMorsink3] we can further specify the marketsegments and customers Electromach targets. This adaption gives a list of 17 points which classifies the major segmentation variables of business markets.
Electromach serves large companies, mainly engineering firms, within the petrochemical industry, directly and through their R. Stahl affiliates. One third of those are within the Netherlands and the other two thirds are abroad, while half of them are sold to through the affiliates of R. Stahl. The customers use sophisticated yet robust technology as a heavy user while the customer needs only a few of the complete systems Electromach offers. The customers are usually centralized organization, or at least the order should be made there, as they provide mission-critical tools for an organization. They target engineering dominated companies with whom they have medium to strong relationships. They compete with flexibility and reliability, while they are cost-efficient. Electromach works on a project basis, but the deadline is for many customers sacred. Electromach has small orders for specific applications. They serve risk-minimizing companies who share the same believes of Electromach with regard to values and standards. Loyalty within this industry is a non-issue, but Electromach is on the ‘preferred bidders’ list by many companies when they give an engineering firm a contract.
Reid&Sanders describe order winners and order qualifiers. Order winners are those characteristics of a product in which a company excels so they win an order, order qualifiers are standards that have to be met before a potential customer even takes them into consideration. In this market the most important order winners are flexibility and reliability, order qualifiers are quality and certification.
We also use
Wind[HMorsink4] together with Little as a final tool to analyse the position Electromach has in its market. Electromach positions itself within a product category, namely the explosion proof equipment, and within this market they have an attribute positioning for flexibility and reliability. The competitive force of Electromach is favourable, as they have exploitable strengths and more then average opportunity to improve this position. Other positioning are benefit positioning, application positioning, competitor positioning and quality or price positioning. While other positions of strength are dominant, strong, favourable, tenable, weak and nonviable.
As final addition to this paragraph we tell a bit more about Electromach and its market and how Electromach themselves think this will develop. The Electromach brand is widely known within the explosion proof equipment market, it is, according to Electromach themselves, a unique, flexible and reliable brand. Through their affiliates of the R. Stahl group Electromach can target the complete global market and hopes to gain much there, as they are certified for all markets and can compete on leadtime with any competitor in the world. The R Stahl group gives them this opportunity. However, being in the R Stahl group also means they act as a trading company for R Stahl with components produced by R Stahl, this Is not targeted in this paragraph because there is little Electromach can do with this as R Stahl is in control of these products, Electromach can only influence their stocklevels.
[HMorsink1]Kotler, 2003, Marketing Management, Pearson Education, I[[er Sadd;e Rover
[HMorsink2]Robert V. L. Wright, 1974, A System for Managing Diversity (Cambridge, MA: Arthur D. Little)
[HMorsink3]Bonoma&hapira, 1983, Segmenting the Industrial Market, Lexintong Books, Lexiongton
[HMorsink4]Y. Wind, 1982, Product Policy Concepts, Maethods and Stragegy