mrhoades-mt450-01 assignment-unit4
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Running head: UNIT 4 ASSIGNMENT 1
Unit 4 Assignment
Matthew Rhoades
Kaplan University
May 16, 2016
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Abstract
According to Harvard Business Publication (2014), Minnesota Micromotors, Inc. (MM)
is a company that manufactures motors used in medical devices. MM’s revenue had been
growing at the industry average for the last three years until the most recent quarter when they
suffered a decline in revenue. The leading features for MM’s product are a high thermal
resistance and power-to-size ratio. This paper will discuss a marketing strategy for MM.
Marketing Strategy
In MM’s current market, a large amount of their business comes from modified rebuys.
MM’s current customers buy spare and replacement parts for their existing machines as well as
parts for new machines. According to Winer and Dhar (2011), a modified rebuy is a purchasing
decision where a customer is buying the same product but some of the details in the sale have
changed (pg. 132). For MM’s customers, the purchasing situation is constantly changing because
of innovations at MM and the changing needs of their customers. In modified rebuy cases, it
must be considered that customers will consider other suppliers before making a purchasing
decision (Winer & Dhar, 2011, pg. 132). It is imperative for MM that a marketing strategy
considers the needs of current customers so market share is not lost.
There were some disturbing trends in the previous quarter. While small customers and
most of the large customer segments were satisfied with the price of the motors, segment D
found them to be too expensive. Segment D’s discount was increased from 16% to 18% reducing
the price of the motors to $116 in that segment. Segment B was not satisfied because some of
their motors overheated. Because MM relies on the thermal heat resistance for differentiation,
the thermal resistance feature spending was increased by $10,000. Because this increase in
funding created a deficit in the budget, salesforce training was decreased by $10,000. Although
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segments B and D were satisfied at the moment, they had complaints about their technical
support after sales. In an effort to provide more support from applications and sales engineers,
spending to retain large customers was increased to 54% while spending to acquire large
customers was reduced to 46%. Small customers were very satisfied so no adjustments in their
budget was necessary.
Results
MM’s marketing strategy was marginally successful. Revenue growth this quarter was
2.44%. The average revenue growth in MM’s industry has been 5.5% (Harvard Business
Publications, 2014, pg. 1). While MM didn’t achieve the average level of growth, there was no
drop in revenue as with the previous quarter. Sales to large customers increased by 5% while
sales to new customers increased by 1%.
There were some successes and some failures in the marketing strategy for this quarter.
The increase in discount for segment D proved successful, market share increased by 1.2%.
However, the spending increase for the thermal resistance feature was not successful; segment B
is still dissatisfied with motor quality. In addition, the increased spending on after-sales support
was not successful, customers are still complaining about after-sales support.
Improvement Strategy
Because of MM’s reliance on differentiation as a competitive advantage, complaints
about motor failures can cause lasting harm in the market. MM’s reputation for quality must be
protected. One strategy that could lead to marked performance improvements would be
reengineering business processes(Lamb, Hair, & McDaniel, 2014, pg. 24). Such a reengineering
of the thermal resistance feature would involve restructuring in sales and engineering to make
customer needs more of a factor in the engineering of this feature. A large investment would be
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required in this feature for such reengineering to occur. To accommodate this, $30,000 can be
transferred from the power-to-size feature and moved to the thermal resistance feature. The
power-to-size feature seems to be more fully developed and doesn’t require large investment at
this point.
A customer in segment D has reported that they have found an overseas supplier offering
a motor of similar quality for a cheaper price. This is a disturbing trend, while it’s not causing a
large effect on the market right now, it has the potential to cause grave damage to future
business. While we may not be able to compete with price, there are some strategies that can be
effective against such competition. To combat such competition, businesses need to tout the
advantages of dealing with local vendors as opposed to looking overseas (Dawar & Frost, 1999).
Dawar and Frost (1999) contend that companies can differentiate their products by expanding
their relationships with customers and frequently adjusting the product to meet their needs. In
addition, MM may be able to find ways to differentiate their products in ways their overseas
competitors would not anticipate by examining their customers’ total experience (McMillan, &
McGrath, 1997). According to McMillan and McGrath (1997), to find new means of
differentiating, marketers should start by mapping customers’ total experience with the product
and analyzing their experience. To accommodate this project, the salesforce will need to be
trained to analyze and report on the customer experience. $30,000 should be taken from power-
to-size research and applied to integrated marketing communication and training. Additionally,
the sales force emphasis should be adjusted to 28% in segment D and 24% in each other
segment.
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Derived Demand
According to Winer and Dahr (2011), for industrial products, demand is often derived from the
demand for a consumer product it is associated with. An example of derived demand would be a
company that sells fasteners to companies like IKEA who make furniture for the consumer
market. The demand for their product is derived from the consumer market. Marketers must
make decisions based on not only the demand for their own product, but also from consumer
markets from which their demand is derived. Because MM’s product is a component used in
OEM medical equipment, its demand is derived from the medical device industry. MM must not
only be concerned with buying behavior not only in their market, but in medical device market.
NAICS
Lamb, Hair, and McDaniel (2014) contend that the North American Industry
Classification System (NAICS) is a tool for marketers that can help analyzing and segmentation
a target market. The North American Industry Classification Standard for (NAICS) is 335312,
“Motor and Generator Manufacturing” (NAICS, 2016). According to NAICS (2016), that this
category is primarily made up of businesses that manufacture electric motors and similar
electrical devices such as generators.
Conclusion
The previous quarter’s marketing strategy lead to a decline in revenues and market share.
Some changes were required to get the business back on track. MM’s market strategy for the
current quarter focuses on modified rebuys from their current customers while still providing
resources for the acquisition of new customers. This strategy showed some improvement,
revenues increased but not in line with growth from previous years. To further improve, MM
should consider reengineering of the thermal resistance feature. Additionally, MM should
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consider a robust strategy for competing with overseas vendors. MM still has a strong business
model and with astute management can continue to show growth.
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References
Harvard Business Publications. (2014). The Orthopedic Motor Market: Minnesota Micromotors,
Inc. and Brushless Motor Technology.
Dawar, N., & Frost, T. (1999). Competing with Giants: Survival Strategies for Local Companies
in Emerging Markets. Harvard Business Review. Retrieved from
https://hbr.org/1999/03/competing-with-giants-survival-strategies-for-local-companies-
in-emerging-markets
Lamb, C. W., Hair, J. F., & McDaniel, C. (2014). MKTG7. Mason, OH: Cengage.
McMillan, I., & McGrath, R. (1997). Discovering New Points of Differentiation. Harvard
Business Review. Retrieved from https://hbr.org/1997/07/discovering-new-points-of-
differentiation
NAICS. (2016). 335312 Motor and Generator Manufacturing. Retrieved from
https://www.naics.com/naics-code-description/?code=335312
Winer, R.S., & Dhar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall.
Running head: UNIT 4 ASSIGNMENT 8
Appendix ADecisions
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Appendix BResults of Decisions
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