Alarmforce Industries Case Study Essay
Student Number: 4173454
Name of Case: AlarmForce Industries Inc Decision Maker: Joel Matlin Year of Case: 2009 Position: President, CEO KEY ISSUES 1.) Launching the AlarmFog system or not. Launching the AlarmFog could potentially expose the company to risks associated with easier competitor entry, if the product is not accepted by customers or fails to deliver as promised. Strategic importance: High, this could be a potential threat to the company. Time sensitivity: High, decisions regarding the launching of a product have to be made as soon as possible. 2.) Deciding whether to stick to the practice of providing products …show more content…
free of charge to customers or to depart from this strategy. Strategic importance: High. It is one of the company’s strengths. Time sensitivity: high. Competitors might begin to lower prices to compete. 3.) Target market: if the product were to be released, what would be the target market for the product?
Should the company segment the existing customers into target markets or keep catering to the demands of each class? Strategic importance: High, identifying a target would help to direct the company resources towards its target in terms of promotion, research and development and pricing. Time sensitivity: Medium. Reaching a target audience might not be a timely issue because all customers purchase the same product for different needs. 4.) Upon activation, the AlarmFog is seen to leave a thin film on the carpets and the furniture in the home. This raises questions of potential damage of consumers’ properties. Strategic importance: High. Consumers are worried about the potential damage to their property Time sensitivity: Medium. Research might take a while; consumers could keep using current products. THE MAJOR CONCERN The main issue here is whether to launch the product or not. This would require heavy costs in terms of gaining the first mover advantage over other competitors. Also, the company’s annual report is due in a few months and investors are already inquiring about new and upcoming
products.
MARKET SITUATION 1.) Industry, Market Environment The Canadian security industry is marked with high level of fragmentation. Companies range from small operators working out of cars, to a few large international corporations. The business model used in the market prior to the entry of AlarmForce, was to distribute the hardware technology for a profit, after which the consumers are locked into a long term contract which these companies secure in order to protect against low switching costs for the consumers. 2.) Company AlarmForce penetrated the existing market by introducing a more affordable and user friendly technology which is one of its strengths. It is the first to develop and launch the two way voice technology which is less costly and labor intensive than other existing security systems. In 1993, the company decided to start providing the security hardware to its customers, free of charge. This action was responsible for a 60% increase in subscriber base the following year. Also, the company spent a substantial amount of its resources in creating brand recognition among consumers, making it one of the top security companies in the industry.
3.) Competition Major competitors in the industry are ADT Ltd, Chubb security systems and the security divisions of Honeywell Ltd. AlarmForce’s innovative strategies have made it to stand out, amidst other competitors in the market. However, these competitors are currently not offering similar products to that of AlarmForce. Instead, they offer advanced systems that monitor the customer’s home for incidences of fire, floods, and temperature changes. Possible threats include wider distribution network of these prior existing competitors and greater access to capital or resources. 4.) Customer There are three major classes of customers according to needs. They are the seniors, upper middle class and the working class consumers. The seniors purchase these alarm systems for health reasons, as it grants them quick access to medical help when required. The upper middle class consumer, purchases the alarm system to protect himself from the rising crime. The upper middle-class however, purchase these alarm systems mainly for the protection of their wealth. Providing for theses different categories is an opportunity to create security designs that suit each class in terms of convenience and efficiency. DECISION CRITERIA 1.) Do not launch the AlarmFog and just continue with current products while working on new projects. 2.) Stick to the current strategy of providing products to consumers free of charge.
3.) Continue to market products to all the different categories of customers without necessarily identifying with any target market. ALTERNATIVES TO DECISION CRITERIA 1.) Investing in research and development to develop a novel product that will not necessarily require fogging thereby protecting against potential damage of the customers property. 2.) Make the upper- middle-class your target market. The upper-middle-class has more disposable income than the others, and is more attracted to sophistication. With appropriate advertisements directed at them, the company might be able to identify this class of people as its potential target market. 3.) Invest in and build up on the competitor advanced systems, which can monitor homes for fire, floods and temperature change.
4.) Do nothing and just continue with its current market strategy.
EVALUATION OF ALTERNATIVES | Don’t launch AlarmForce | Stay with current pricing strategy | Identify with all categories of customers | Develop a novel product that does not fog | Yes, It might take a while to develop and implement | Yes, efficient | Yes | Target the upper middle class | Yes | Yes, but might take a while to implement | No | Advanced systems that monitor homes for fire, flood and temperature changes | Yes in short while, existing technology | Yes | Yes, depending on price and disposable incomes | Do nothing | No, invest in R&D | yes | Less likely as consumer tastes may change | RECOMMENDED CHOICE The recommended choice of alternative is to develop a novel product with improved security technology that would not require the release of a fog or any kind of substance into the homes of customers. AlarmForce is known for its innovation as it continually improves upon existing products. This has so far, helped in building a strong brand name over the years. Doing nothing would just be an opportunity for competitors to move in with better improved products. Investing in advanced alarm systems used by other competitors sounds like a good idea, but the company should always strive to be at the fore front of innovation, in order to grab the first mover market share. Also, targeting the upper-middle-class, would take away other parts of its major market share since it never really had a target market. POSSIBLE OUTCOME AlarmForce develops a novel product with improved qualities, and launches the product using brand power as leverage. This would potentially boost the company’s sales, increase revenue and cover research and development costs. MARKETING STRATEGY Target market: Keep selling to all categories of customers.
Product: Design a variety of products that will suit all categories of customers. The product should also be designed to be more convenient and handy so that people can easily carry them about and attach them to offices or in case of moving to another apartment.
Price: Customers recognize its product as low cost and efficient. It should stick to the current $25 monthly subscription charge and making the products free for the consumers. Place: The company should ensure availability and ease of access both in the rural and urban areas. The company should also expand its distribution network across North America. This will allow for an expansion of its revenue stream and increase its market share. Promotion: Aside from advertising its products on TV, the company could offer incentives such as discounts off monthly subscriptions or some added advantages like trying new products free for a period of time. This will help secure its loyalty among customers and ensure its market share does not decline.
Name of Case: AlarmForce Industries Inc Decision Maker: Joel Matlin Year of Case: 2009 Position: President, CEO KEY ISSUES 1.) Launching the AlarmFog system or not. Launching the AlarmFog could potentially expose the company to risks associated with easier competitor entry, if the product is not accepted by customers or fails to deliver as promised. Strategic importance: High, this could be a potential threat to the company. Time sensitivity: High, decisions regarding the launching of a product have to be made as soon as possible. 2.) Deciding whether to stick to the practice of providing products …show more content…
free of charge to customers or to depart from this strategy. Strategic importance: High. It is one of the company’s strengths. Time sensitivity: high. Competitors might begin to lower prices to compete. 3.) Target market: if the product were to be released, what would be the target market for the product?
Should the company segment the existing customers into target markets or keep catering to the demands of each class? Strategic importance: High, identifying a target would help to direct the company resources towards its target in terms of promotion, research and development and pricing. Time sensitivity: Medium. Reaching a target audience might not be a timely issue because all customers purchase the same product for different needs. 4.) Upon activation, the AlarmFog is seen to leave a thin film on the carpets and the furniture in the home. This raises questions of potential damage of consumers’ properties. Strategic importance: High. Consumers are worried about the potential damage to their property Time sensitivity: Medium. Research might take a while; consumers could keep using current products. THE MAJOR CONCERN The main issue here is whether to launch the product or not. This would require heavy costs in terms of gaining the first mover advantage over other competitors. Also, the company’s annual report is due in a few months and investors are already inquiring about new and upcoming
products.
MARKET SITUATION 1.) Industry, Market Environment The Canadian security industry is marked with high level of fragmentation. Companies range from small operators working out of cars, to a few large international corporations. The business model used in the market prior to the entry of AlarmForce, was to distribute the hardware technology for a profit, after which the consumers are locked into a long term contract which these companies secure in order to protect against low switching costs for the consumers. 2.) Company AlarmForce penetrated the existing market by introducing a more affordable and user friendly technology which is one of its strengths. It is the first to develop and launch the two way voice technology which is less costly and labor intensive than other existing security systems. In 1993, the company decided to start providing the security hardware to its customers, free of charge. This action was responsible for a 60% increase in subscriber base the following year. Also, the company spent a substantial amount of its resources in creating brand recognition among consumers, making it one of the top security companies in the industry.
3.) Competition Major competitors in the industry are ADT Ltd, Chubb security systems and the security divisions of Honeywell Ltd. AlarmForce’s innovative strategies have made it to stand out, amidst other competitors in the market. However, these competitors are currently not offering similar products to that of AlarmForce. Instead, they offer advanced systems that monitor the customer’s home for incidences of fire, floods, and temperature changes. Possible threats include wider distribution network of these prior existing competitors and greater access to capital or resources. 4.) Customer There are three major classes of customers according to needs. They are the seniors, upper middle class and the working class consumers. The seniors purchase these alarm systems for health reasons, as it grants them quick access to medical help when required. The upper middle class consumer, purchases the alarm system to protect himself from the rising crime. The upper middle-class however, purchase these alarm systems mainly for the protection of their wealth. Providing for theses different categories is an opportunity to create security designs that suit each class in terms of convenience and efficiency. DECISION CRITERIA 1.) Do not launch the AlarmFog and just continue with current products while working on new projects. 2.) Stick to the current strategy of providing products to consumers free of charge.
3.) Continue to market products to all the different categories of customers without necessarily identifying with any target market. ALTERNATIVES TO DECISION CRITERIA 1.) Investing in research and development to develop a novel product that will not necessarily require fogging thereby protecting against potential damage of the customers property. 2.) Make the upper- middle-class your target market. The upper-middle-class has more disposable income than the others, and is more attracted to sophistication. With appropriate advertisements directed at them, the company might be able to identify this class of people as its potential target market. 3.) Invest in and build up on the competitor advanced systems, which can monitor homes for fire, floods and temperature change.
4.) Do nothing and just continue with its current market strategy.
EVALUATION OF ALTERNATIVES | Don’t launch AlarmForce | Stay with current pricing strategy | Identify with all categories of customers | Develop a novel product that does not fog | Yes, It might take a while to develop and implement | Yes, efficient | Yes | Target the upper middle class | Yes | Yes, but might take a while to implement | No | Advanced systems that monitor homes for fire, flood and temperature changes | Yes in short while, existing technology | Yes | Yes, depending on price and disposable incomes | Do nothing | No, invest in R&D | yes | Less likely as consumer tastes may change | RECOMMENDED CHOICE The recommended choice of alternative is to develop a novel product with improved security technology that would not require the release of a fog or any kind of substance into the homes of customers. AlarmForce is known for its innovation as it continually improves upon existing products. This has so far, helped in building a strong brand name over the years. Doing nothing would just be an opportunity for competitors to move in with better improved products. Investing in advanced alarm systems used by other competitors sounds like a good idea, but the company should always strive to be at the fore front of innovation, in order to grab the first mover market share. Also, targeting the upper-middle-class, would take away other parts of its major market share since it never really had a target market. POSSIBLE OUTCOME AlarmForce develops a novel product with improved qualities, and launches the product using brand power as leverage. This would potentially boost the company’s sales, increase revenue and cover research and development costs. MARKETING STRATEGY Target market: Keep selling to all categories of customers.
Product: Design a variety of products that will suit all categories of customers. The product should also be designed to be more convenient and handy so that people can easily carry them about and attach them to offices or in case of moving to another apartment.
Price: Customers recognize its product as low cost and efficient. It should stick to the current $25 monthly subscription charge and making the products free for the consumers. Place: The company should ensure availability and ease of access both in the rural and urban areas. The company should also expand its distribution network across North America. This will allow for an expansion of its revenue stream and increase its market share. Promotion: Aside from advertising its products on TV, the company could offer incentives such as discounts off monthly subscriptions or some added advantages like trying new products free for a period of time. This will help secure its loyalty among customers and ensure its market share does not decline.