CLARK MATERIAL HANDLING GROUP-OVERSEAS: BRAZILIAN PRODUCT STRATEGY (A)

CLARK MATERIAL HANDLING GROUP-OVERSEAS: BRAZILIAN PRODUCT STRATEGY (A)

GROUP 9Harini Venkateswaran 1211021Dheeraj Kumar 1211180Latngenhun Nongsiej 1211110Vishnu Charan TJ 1211157Sarang Warudkar 1211219Aswin A 1211334CLARK EQUIPMENT COMPANYLarge Highly Integrated Manufacturer of Capital GoodsMajor Group Includes: 1. Axles, Transmission and related products 2. MHG (Material handling group) 3. Construction machinery 4. Other Industries (such as Credit)Clark Operations were international in scope35% of operating Profit came from outside the United States

MAHERIAL HANDLING GROUP(MHG)Fork Lift Truck were major Product line of material handling group (MHG)Margin has improved in 1978 because of :- 1. Economies of Scale (Volume Increase reduce cost) 2. Operational Efficiencies improvement (Exhibit 1)US was the strongest market, Europe was most Competitive marketing environment, South America was flat marketMHGs Distribution Network was good with 237 dealers in 508 locations in 108 countries

FORK LIFT TRUCKSUsed in heavy Manufacturing and Warehouse operations125 numbered Model in lift truckDifferentiated Hybrid product lineHOL (Heart of the line Product):-4000-6000 pound capacity trucks which account for about 55% of sales and build from Clark's MHGWhen they start Design product line they start with HOL product to reduct the cost.

BRAZILIAN LIFT TRUCK MARKETBrazil rapidly industrializing countries in SAGrowth increased at the expense of InflationChanges in the economic policy (Import Duty)Impact on Clarks business as maximum products were imported from outsideUsed Friction clutch transmission which used to broke down immediately, bad brand image of Clark and its distributors. Improved on oil bath transmission but image with customers undermined.Major competitors:- Hyster, Eaton-Yale, Madal Competition on price and Extended product line

Brazilian Market Research Questions Brand Image Check: What was Clarks brand image with Customers ?

Geographic Need Difference: Were same factors important for Brazilian lift truck buyers as to American Customers?

New product Line: Should they introduce an automatic transmission lift truck in Brazil?

Marketing research Company:- The John Morton Co. StudyMarketing research Firm specialized in developing Market-Driven Strategic plans.Founded by Curtis Jones and Richard JohnsonStrategy Recommendations based on market factors rather than predominantly on cost or other internal company considerationsUse State-of -the-art mathematical and computer modeling techniques

Marketing Research Approach: Market Driven Strategies StepsIdentifying and defining problemsAnalyze market needs, client current role and of his competitors (Competitive Intelligence)Formulate Practical marketing and development strategies and designing criteria Conduct research to determine the attitude and opinions of buyersRecommend Marketing strategies based on quantitative analysis of market, based on clients situation and short and long term goalsMarket Research Solution: Factor AnalysisFactor Level (Field tested)Performance Same, 25% increased, 25% reducedReliability Same Downtime, 25% more, 25%lessDurability Same Life, 25% longer, 25% ShorterParts Availability Same, 25% better, 25% worstTransmission Manual with friction clutch, Manual with oil-bath clutch, AutomaticBrand Clark, Hyster, Easton-Yale, MadalSelling Price From $15000 to $20000Sampling methods, QuestionnairePopulation Size : 750 firmsSampled randomlySample framing:- Every company needed to have used HOL product in past five years or planning to use in next year191 responses local Portuguese-speakingQuestions were asked on size of fleet, type of business and percentage of lift truck companies.Trade-off Analysis/ Conjoint AnalysisTo find out truck factors and factor levels Trade-off analysis is done by asking questions forces the respondent to trade-off the level of one factor to obtain a desired level of other factorExample :-Lift truck ALift Truck B Oil transmission Automatic transmission Present Performance 25% better performance $17000 $1750055 pairs were presented to each responded These responses are translated into utilities into each level of factor by Conjoint analysis method THE PROBLEM David Richards is able to understand the tabulations of the survey responses better than simulation results. But Implications of tabulations are obscure. David Richards has to take decision and recommend what the HOL product line should be-

The Present Model ?JMCs recommended Dual Offering Strategy ?

**This decision is important because if there is any change in product line a new research and product development program, and new marketing program will be required.Steps of Marketing Simulation Analysis

Utilities were found for each factor at each levelRespondents utility for any particular lift truck was hypothesized to be the product of his utilitiesThis overall utility is combined with respondents price response to get preferenceThe highest rating would be respondents predicted purchaseMarket share for various models could be simulated by adding the number of respondents choosing each dividing by total number of respondent21 respondent were removed because their inconsistency in answering trade off questions were unacceptableGraphical Representations

Utility of different attribute level..

Utility of different attribute level..

Demand Function (Utility v/s Price)

Utility of Lift Truck and Consumer Preference

Calculation of Market Share Market Share = (Preference given by users) / *100(Total Number of Respondents)Example: If No of preference for particular factor level =30Total No of respondent = 150Market Share = 30/150 * 100 = 20%

Project Results By JMC

Recommendation For Clark & David RichardsTarget Hysters market because Hysters was the largest and more vulnerable to proposed Clark improvements than Eaton-YaleDual Offering strategy is better (Market share is 36%), increased share 9%Increase marketing activity generally: promotion, advertising and sellingMaintain parts availability at present level but promote it moreExpand the services offered by dealership

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