Question No.1: How has Atlas-Copco managed its market entry (excellent, average, poor grade)? Support your position. Answer: Atlas-Copco, a worldwaide leading companies in the field of compressed air and hydraulics, started its business in 1950 in USA. Accoding to my point of view the Atlas-Copco excellently managed its market entry. It just went through four phases entry strategies. Its four sucessful phases were:
Phase One- Target market and Product Design Phase Two- Channeling distribution
Phase Three-Rationalizing of Distribution Network Phase Four-Resourcing, Advertising and Evaluation
Supporting to my position: Phasae 1: Some turning points of the phase are: a. At the 1st phase The Atlas-Copco targeted a particular market to entry. Then it designed its product according to the demand of the particular locality. It just started with a diversified product line like air compressors, handheld rock drills, and specialiazed drill steel for mining and construction industries. Meanwhile the company had achieved a improvement in the maeket share of stationary air compressor in its target market i.e. Europe, Asia, and South America from its initial 1 percent. It had also achieved a significant market share in Sweden,Norway, Franch, Germany,Italy, Spain,Brazil, the Philippines, Korea, and Japan.
b. To enter in the North-America in 1975 it had designed a product of new standered that went to the necessity of the market. c. The manager of the company could realized its strength in the rotary screw technolgy to compete with Sullair Corporation. d. Approaching a two way networking system for distribution. These two ways are:
First
• Tried to appoint more distributors
Second
• Streamlining the present distributors' operation
e. Supporting the distributors effort of targeted market with technical assistence and field sales support. f. Recovering the loss of revenue for not having an installed base of machines from broad line of compressors. Phase 2: Some turning points of the phase are: a. At the begening of the year 1976 Atlas-Copco had changed its strategy to gain a better distribution in U.S. market. b. Focussed on the formost product, the oil free rotary screw compressor (known as Z series machine), instead of broad line of products. c. It used its competetive position of
having a worldwide position and investment
experience in other contries. d. The company offered a15 percent margin on list price to its ditributors. e. The intention to stay in the U.S. market for long term. f. It realized not to use exclusive distribution.
g. It attained domestic manufacturing capacity and distribution network through mergering with Worthington’s air compressor Plant at Holyoke, Massachusetts to be an important competitor in the North American stationary air compressor market. Phase 3: Some turning points of the phase are: a. Realization that intensive ditribution was not advantageous instead of single distribution. b. Solving of some ovaelaps. c. Avoiding intrabrand competition. d. Selection of ditributor based on their previous distributorship in both Atlas-Copco or either Atlas-Copco or worthinton and some other important considartion. e. Arrangement of a conferrence to convey some information ragerding the service distributors are to provide, display of products, direct account and trainig for ditributors. Phase 4: Some turning points of the phase are: a. Collection of raw materials from its parents country Belgiam. b. Climbing up of its market share by using advertisement in trade journals and trade show. c. Performing of an distribution audit to analyzed its current distribution network to be uniformly strong over abroad line of products of Ingersol-Rand, Joy and Sullair. d. Taking initiatives of ditributors development program to make their C grade distributor A grede. Though the company had some failure through out the phases, as a entrance, it did quite well. Question No. 2: What does the four -level franchising policy do for its distributors? Support position. Answer: There are several types of franchising policies available nowadays. Among those four level franchising policy is one sort of concept. In this case the four level franchising policy has been used. Atlas –Copco is a Swedish company. It has a worlwide business of air compressors. However it wants to augment its market position in the top level. So that it has used the fourlevel franchising policy. The four-level franchising policy has different aspects. These are-
Customers Distributors
Atlas Copco Four-Level Franchising Policy
Here I have showed the aspects of four-level franchising policy from the distributor’s point of view. Atlas Copco has introduces the franchising policy in four phases. In each phases it has described details about the distribution strategy. Application of the policy according to the distributors:
First Level Second Level
• General Distributors.
• Distributors who perform on mutually accepted targets.
Third Level
• Selected distributors of second level based on performance.
Fourth Level
• Distributors who invests in eqipments and facilities for the maintenance of Atlas Copco.
These distributors are getting different sorts of facilities from the four-level franchising policy. It can be described from different points of view. These are described belowService: The distributors are getting different service related benefits for this four-level franchising policy. At first it can be seen from the case that, the Atlas Copco made a stock requirement guideline for its distributors. This guidline reveals that the distributors must have to
keep a minimum amount of compressors so that they can meet the immediate demand of the customer. But later they faced some problems for it. But the Atlas Copco gave them a graeat facility to its distributors. They need not to keep that stock of compressors. They just have to give some time frame for the order processing. Then it is the responsibility of the Atlas Copco to deliver the ordered product on time to the customers. Direct Account: In case of display the distributors of Atlas Copco are also getting a huge facilities. The Atlas Copco assigned those distributors to sell the compressors. Nevertheless the distributor also sell some compressors directly to the customers. Here a conflict arose for the sales. Then the Atlas Copco made a proper solution for it. It made a list of direct sales that it can make. It is called direct account list. Beyond this list the company could not sell directly to the customers. Thus the distributos can sell freely according to their desired need. For this four-level franchising policy the distributors get huge benefits in these ways. Display: In case of display of the product like different sorts of compressors, it is the responsibility of the distributors to furnish the display of the product to the customers. But Atlas Copco here providing this facility to its distributors as a part of four-level franchising policy. Thus the distributors can ged rid of the tasks and can make more profit without incurring the cost. Training: The Atlas Copco also provide some trainigs to its distributors so that they can sell in a very profitable manner. In these ways the four –level franchising policy helping a lot to its distributors. Question No. 3: What does the four -level franchising policy do for its customers? Support position. Answer: The four-level franchising policy is a very crucial concept for all like distributors, customers and the Atlas Copco itself. This also can be described from different perspectives of the customer. These areCustomized product: First of all it can be said that the customers of Atlas Copco get the most customized product according to their need. This has become possible because of the four-level franchising policy of the distributors. According to the guideline different sorts of distributors
have been appointed based on their performance. Thus these trained distributors display the products in a more customized way. So that the customers can easily get their desired product. Lookrative display: As the Atlas Copco has taken the responsibility to furnish all the products. So that the customer get a well furnished products according to their desire. Customer oriented distributors: To achieve the benefir of the four-level franchising policy the Atlas Copco had appointed many customer oriented distributors based on their performance. As a result the customers get a quick aid fron the customer oriented distributors. Direct sales service: Besides the assigned distributors the customer of Atlas Copco also can get the products through direct sales services of the company. It contains a direct account list. Accurate pricing: The Atlas Copco wants to implement the four-level franchising policy. So that it follows different strategy in different phases of the task. To get the maximum performance the Atlas Copco provide its distributors a handsome commissions based on their sales. As a result the distributors become satisfied. And they take a correct price for the compressors from the customer. For this four-level franchising policy they can get a correct pricing of their desired product. Post-sale installation service: For achieving target the Atlas Copco provides some post-sale installation services to its customers. After purchasing an air compressor a purchaser need some additional spare parts to install that air compressor. Atlas Copco through its distributor provides these spare parts to its customers. As a result customer feel delighted for that services. Warranty: The customers of Atlas Copco also get some kinds of warranty from it. This reveals that if any purchased product become spoiled (excluding physical damage) then the company will repair the product without taking any cost from the customers. As a result the customers get a great assurance from the Atlas Copco and feel the full satisfaction. Thus in this ways the customers of the Atlas Copco get different sorts of services from the company. These all are possible for the four-level franchising policy. Because the Atlas Copco wants its maximum growth and so it has taken those steps.
Question No. 4: What does the four-level franchising policy do for Atlas-Copco? Support your position. Answer: Atlas-Copco, as wantd to be the big challenger to the market leader Ingersol-Rand and grab a poirtion of market share, had taken some strategic steps to achieve its objective. It wanted to distribute its product through four level franchinsing policy mentioned above. This four level franchising plicy worked very well for the company to take it in its present position. The fourlevel franchising policy of the company did lot of things for Atlas-Copco. “I think the four-level franchising polilcy with a strongfour phase entry strategy helped the Atlas-Copco to become considerable competitor in the North American market with 10 percent market share in 1983 where it was 1 percent at its beginning”. Supportings of my position: This franchising policy with a strong four phases market entry strategy made floor to achieve its objective by doing the followings: a. Provide a High Performing Distribution System (HPDS). b. Give a proper Inventry Management (IM). c. Ensure proper service to its customers. d. Help to get proper co-ordination among the four franchises. e. Help to reduce the intrabrand competition. f. Help to achieve them a mutually accepted target. g. Help to get some way of direct marketing. h. Help to ensure proper post-purchase services to its customers. i. Ensure its Competitive Advantages over its copetitors in case of price, quality etc. j. Help to get easy access to its target market. k. Help to diversify its product line through product information. l. Help to do merger with some establised company i.e. Worthington. m. Help to recover the rainy days of a franchise by the help of another. n. Help to launch up-to-daet product according to the customer demend. o. Help to get a strong customer base. p. Help to make its customer satisfied reparing and spare parts.
q. Help to take right decision regarding the product which one would be market oriented. r. Help to grab a signifacat portion position. s. Help to create a good image in the North American market. t. Thus doing these huge things the four level franchising policy support the Atlas-Copco to achieve its objective to successfully enter in the North American Market and be a big challenger to Ingersol-Rand.This franchising policy during its operational period faced some difficulties among them, but those could be overlooked comparing its contribution in the company’s success. So we can say that this franchising policy is the key to its success.
Question No. 5: What would you do differently in terms of gaining and building distribution channels to ensure a gain in market share for Atlas Copco? Support your position. Answer: For gaining and building a better distribution channels to ensure the gaining of the market share in US market the Atlas Copco can take several steps. Their new distribution strategy may take the following shape.
Reasonable Pricing Distribution Channel Market Research
Market Research: In case of market research the company mat take different sorts of activities. Here the ultimate need of the customer can be known. Thus the company can get a overall idea about it and can launch the new product. This may take the following steps-
At first the demand for the product will be determined through different sorts of survey. In which convenient price the customers want to buy should be identified. The company should know that in which customized way the customers want to purchase the prodct. The convenient locations for purchasing the products also should be known by the company. The company also should investigate the competitive position in the market. Availability of raw materials also should be considered here.
Distribution Channels: The Atlas Copco can take several distribution channels here to gain the market share in the US market.
Direct selling Distribution Channel
Distributors Online selling Franchising
Direct selling: First of all the company should make some direct sales to its customers. Here the customers will get their desired product very easily. Door to door selling concept may occur here. Thus the customers will get the product more conveniently than previous. As a result they will become delighted and the company can achieve the market share. Distributors: The selection of distributors is a vital fact for the company. The company should select the distributors in different phase.
Zone_wise distributor
Subdistributor
End User
The company may select some zone-wise distributors. This distributor will represent the company. This distributors will sell the air compressors to the retailer and many other purchaser. After that some sub-distributors also will be kept for selling the air compressors. They will be segmented according to the customer need. Thus all the customers from all zone will get the desired product. Thus the end user will get the ultimate desired product from those distributors. Despite the company will give some commission to the distributors based on their sales. This distributors also will get some other benefits form the company. Online selling: The company also should be involved in the online selling. As a result the customer from different state can get their desired product by sitting in front of computer in home. The customer can give order to the company through the website according to their desire. Then the company will produce the product according to the requirement and deliver it to the customer. In some extent the company should try to deliver the product in overnight. Franchising: The company also should assign some franchisee in different states for best selling of the product. These franchisee will use the reputation of the company and sell the product to the customer in a more convenient way.
Reasonable Pricing: The company should determine a reasonable price for their product. If they can determine a uniform pricing for all the zones then the customer will be delighted.
References: I.
Kottler, Philip; Armstrong, Gary ( 2009), Principles of Marketing, ISBN-10: 0136079415, ISBN-13: 978-0136079415, 13th Edition, New Jersey, Prentice Hall
II.
T Anne, Coughlan, Anderson Erin; Stern, Louis W; El-Ansary, Adel I, (2006), Marketing Channels, ISBN- 0131913468, 9780131913462, 7th Edition, Pearson/Prentice Hall
