Baxton Case Study
Background and Problem Definition: Baxton Technology is a small to medium sized scissors type surface automotive hoists (used in servicing, repair and speciality shops) manufacturing company which is operating is USA as well as Canada. It competes in the specialty shop segment and, in particular, those shops that dealt with wheel alignment. The organization wants to exploit the various opportunities of entering Europe market or increasing its sales in USA
Market and Industry Analysis: Hoists are typically of two categories mainly 1) In ground 2) Surface. Approximately 49000 units are manufactured every year and the industry is worth $150 million (see exhibit 1) and has a very big potential to grow in the coming years. The industry has been dominated by 2 big firms AHV lifts and Berne manufacturing which hold approx 60% of the sales. The distribution system in the industry mainly consisted of 1. Direct sales force and 2.A combination of wholesale dealers and company sales force. The industry is price competitive whereas Baxton is not ready to compromise on price as it emphasis on quality of the product backed by good service. Baxton has a market share of 2.1% (exhibit 1) by volumes and 6% (exhibit 1) by sales in comparison to the total hoists manufactured in the USA. The distribution system present reflected the need to engage in the intensive personal selling since only 25% of sales was through company sales force.
Evaluation of Alternative Courses of Action 1. Increase in US sales by setting up sales office: This implies an additional sales of $1428697 to break even which is ¼ th of its total sales of USA(exhibit 2) Pros • The company can have a better grip over the market • IT engages itself in more direct selling which means that it can sell units at costs of $10990 without any hassles • Creating a brand image and showcasing its competitiveness with the key players Cons • Since the wholesalers contribute a good percentage of the
Market and Industry Analysis: Hoists are typically of two categories mainly 1) In ground 2) Surface. Approximately 49000 units are manufactured every year and the industry is worth $150 million (see exhibit 1) and has a very big potential to grow in the coming years. The industry has been dominated by 2 big firms AHV lifts and Berne manufacturing which hold approx 60% of the sales. The distribution system in the industry mainly consisted of 1. Direct sales force and 2.A combination of wholesale dealers and company sales force. The industry is price competitive whereas Baxton is not ready to compromise on price as it emphasis on quality of the product backed by good service. Baxton has a market share of 2.1% (exhibit 1) by volumes and 6% (exhibit 1) by sales in comparison to the total hoists manufactured in the USA. The distribution system present reflected the need to engage in the intensive personal selling since only 25% of sales was through company sales force.
Evaluation of Alternative Courses of Action 1. Increase in US sales by setting up sales office: This implies an additional sales of $1428697 to break even which is ¼ th of its total sales of USA(exhibit 2) Pros • The company can have a better grip over the market • IT engages itself in more direct selling which means that it can sell units at costs of $10990 without any hassles • Creating a brand image and showcasing its competitiveness with the key players Cons • Since the wholesalers contribute a good percentage of the