A Case study on DominionMotor CompanyPresented By:- Aniket Harsh- Arjun R.K- Deepa Sundaram- Kumar Abhishek
Alternative 1: Selling 10 hp motors at the priceof 7 ½ hp motors Effect on the profit from 10 hp motors0 5 10 15 20 25 30 35 40 45price of 7 1/2 hpcurrent price of 10 hp
Alternative 1 (Contd.) Total operating cost per motor tocustomer including electricity charges:0 500 1000 1500 2000 2500 3000 3500 4000DMC 10 hpCompetitor 7 1/2 hp
Benefits:- Counters immediate loss of customers.- If aggressively marketed, will prevent loss to Dominion. Cons:- Short term solution.- Increase Operating cost per motor for the client by asubstantial 18%.- Will lead to eventual if not immediate loss ofcustomers.- Reduce company profits.
Alternative 2: Modifying 7 ½ motor toincrease torque Benefits:- Will provide a ready product to put forth to meetcompetition.- No additional capital investment.- Lesser time for development- Lower operating cost for customer. Cons:- Not conducive to the health of the motor market onthe whole.- Might lead to safety and performance issuesirreparably damaging brand value and customer trust.- Reluctance in customers towards using non-standardized products.
Alternative 3: Coming up with a 5 hp motorthat satisfies the torque requirements. Total sales considering 60% market capture and 80% ofmotors being sold are the new 5hp motors. (Totalmarket= 1000 motors per year)( 10 hp motors being sold at 7 1/2 hp price with 50% market capture and 80% motorsbeing sold are of 10 hp)01000002000003000004000005000006000005 hp 10 hpTotal SalesTotal Cost
Total Cost to customer for purchasing and operatingthe 5 hp motor versus competitor’s 7 ½ hp motor.2300 2400 2500 2600 2700 2800 2900 3000DMC 5 hp motorCompetitor 7 1/2 hp motor
Benefits:- Will provide market superiority and increased marketshare.- Satisfied customers.- Value addition in terms of increased respect fordemonstrating agility and customer need sensitivity. Cons:- Product will not be ready in time to capitalize on thestart of the season boom.- Loss of customer base in the intervening period.- Loss of brand respect for being ranked behindcompetitors.
Alternative 4: Challenging Bridge’s findings Benefits:- If DMC’s testing results prove the fallibility of thepremise for ranking, it will restore customer confidenceand reassure them that they are getting the best ofproducts. Cons:- Unproductive. Loss in customer base, sales and profits inall genres of DMC products.
Solution (The Fifith Alternative): Reduce selling price of 10 hp motors to that of 7 ½ hp motors. Simultaneously begin development of 5 hp motor having torqueequivalent to 10 hp motors. Assign the marketing team to reach out to rig supervisors and engagewith them to promote the 10 hp motors at reduced selling price andat the same time spread information regarding 5 hp specialty motorwhich will be shortly available. Engage top management of Hamilton to present the features of themotor under development. Offer them a one time introductory priceof 1045$ on pre-booking of the new motor. If possible, get backing from NEMA for the performance of the 7 ½ hpmotor and communicate it through proper channels to customers forreassuring them. Parallely conduct testings to challenge the premise of rank awarded. Ifsuccessful, it will reaffirm customer belief in DMC products and assurethem that they are buying from the best.