Tyrell Thomas TarboroStrategic Marketing ConceptsJanuary 13, 2018 Jolson AutomotiveHoist Case Study Introduction JolsonAutomotive is pressured with the decision to push their product harder withinthe U.S market, or expand into the European market.
Jolson has created aquality and safe product that had become a true contender on the automotivehoist market. To keep the growth of the company at a fast paced the option tomove into the European market came after Jolson read a feasibility report on movinginto the European market. After reading the case, it was stated that eventhough there was research into what kind of market the Jolson lift would garnerin Europe, the research was not sufficient enough to make Gagnon and Jolsonconfident to make a decision based off of the research results. The informationprovided needed to be in depth and detailed to help make the decision forJolson to make sure his company would see its maximum growth potential in thecountry.
However, if Jolson decided to stay in the U.S market, steps would needto be taken to ensure that the U.S. manufactures were pushing the product toits full potential. Problem/CriticalIssue Theproblem Jolson Automotive Hoist encounter is deciding on whether to attack theU.S. market aggressively or enter the European market. Where the problem liesis with the availability of the information on the market for the Europeanmarket and whether Jolson Hoist will thrive within the European market.
Makingthis decision can come at a cost because Jolson and Gagnon have some options attheir disposal allow for licensing from a European company, venture into apartnership with a European company, or directly invest and assume all of therisk if this venture doesn’t pan out. Situation Jolsonis deciding on whether to enter the European market or aggressively pursue theU.S market. The difficulty with aggressively pursuing the U.S market is withthe competition and growth rate of automotive hoist. About 49,000 hoist a yearare sold within the U.S. With these hoists the price ranges from $3,000 to$15,000 making hoist purchases an investment.
If each hoist was sold at $3,000dollars the estimated sales would be $147,000,000, and if they are sold at$15,000 dollars the estimated sales would be $735,000,000. Which would be asignificant amount of an investment for any company. However, these estimationin sales also leaves a good amount of profit for any company competing in theautomotive hoist market. With almost 16 hoist manufacturers competing withinNorth America, 4 of them from the Canadian market and 12 in the U.S market, theU.S.
market is dominated by two companies: AHV Lifts and Berne Manufacturing.These two companies alone account for more than 50% of the hoist manufacturedand sold within the U.S. Thiscan be a difficult market to enter as hoist are purchased by essentially: newand used car dealers, automotive repair shops, independent garages, andautomotive chains. These shops and dealers have most likely formed a strongrelationship with their hoist manufacturer and the company that deals themtheir hoist. Where Jolson Automotive Hoist can thrive within the U.
S. is thefact that they manufacture surface hoist and they would be entering a marketwhere surface lifts accounted for approximately 79% of total North Americanunit sales or 38,925 units. Jolson has thought about adding an office to NewYork to help bolster the sale along the eastern states. S.W.O.T.
Analysis Diagram1 Strengths · Has a good reputation as a company· Sells product with some of the leaders in theindustry· Product can be placed in numerous locations· Easy to install Weaknesses · Receives 78% of sell price in U.S.· Product is looked past does not generate a lotof sale for wholesalers· Competition throughout the market drives lowersale prices Opportunities · Entering European Market · Aggressively attack the U.S. on the easternstates · Potentially partner with a U.S.
manufacturer Threats· Thriving U.S. manufacturers · Sunken investment if direct investment inEuropean market · Risk of entering a market that doesn’t returninvestment Problem Statement Adecision needs to be made now because now that other companies are aware ofJolson Automotive Hoist interest in entering the European market, there is therisk of other manufacturers creating a similar design and attacking theEuropean market, which will saturate the market before Jolson Automotive canenter it. In thepast many companies have replicated their own version of another company’sproduct to expand their target market. Often in business before a deal or amove can be made by a company, other companies know of the move to be madebefore it is completed.
Jolson who is already competing with the U.S. marketand Canadian markets in North America could find themselves competing with oneof the companies trying to compete to enter the European market. Analysis and Evaluation DecisionCriteria Withthe many decision that can be made by Gagnon and Jolson for the expansion ofthe business, there are many factors that can help decide which direction thebusiness should go. Factor such as: can Jolson take over the U.
S. Market byattacking the market on the east coast or is merging with an establishedbusiness from the European sector going to bring Jolson the expansion into theEuropean market that will help his business grow or remaining in the marketthat they are already thriving in. Withany decision research should be conducted to make sure a business can eliminateall risk factors prior to making a definite decision. Since Jolson is in theautomotive industry their research needs to be tailored to the advancement intechnology and how will vehicles be maintained in the future and what will theup keep of motor vehicles be and how will the hoist be utilized in theindustry. Understanding the trends in industry will help Gagnon and Jolsondetermine the best option for Jolson Automotive Hoist. StrategicAlternatives Ø Attack theU.S. market by implementing an office in New York.
Ø EnterEuropean market.Ø Remain inthe same market and master their current target market. Analysis andEvaluationØ Attackingthe U.S. market by implementing an office in New York The advantage in attacking the U.S. market by implementing anoffice in New York gives Automotive Hoist, the ability to increase sales alongthe eastern border, while giving them a pipeline to the mid-Atlantic andsouth-eastern states.
Because of the increase in sales it proves to be a highprofit for Canada as the dollar ratio is 1 Canadian dollar to .80 cents on theU.S. dollar. By adding sales people in the U.S. Jolson can improve their unitsales by almost 53 units a year which would result in an increase to beestimated at $522,470 (Diagram 1). Implementing an office in New York wouldprove to be very beneficial, because Jolson would receive 100% of the commissionof the hoist sales and with the constant increase in car dealerships being openand the sale of American made cars being developed that will eventually needmaintenance hoist sales could increase rapidly in the U.
S. Wherethis method could prove to be costly, is in the financials of opening an officeand training new staff to sell the hoist with the same skill as the Canadianstaff. However, even if Jolson relocated sale people from Canada the business wouldbe accountable for the relocation fees and that depends on if the staff iswilling. By entering the U.S.
market there can be a conflict with U.S.wholesalers who may not be willing to make Jolson Hoist a priority over Americanmade hoist. Diagram2 Profitper Salesperson The potential profit per salesperson can be estimated by multiplying the price per unit by number of potential units sold then subtracting the salary of the salesperson Calculation $10,990 Price Per Unit X 53 Units Sold Per Salesperson = $582,470 Total Sales (- $60,000) Salesperson Salary * Found by dividing $240,000 by 4 =$ 522,470 Profit Per Salesperson Ø Enteringthe European marketEntering the European market can be challenging as they havea few options to choose from when making this decision. Jolson can: Assume allthe risk by using a direct investment, enter a joint venture with an establishedEuropean company, or license out Jolson Automotive Hoist to the Europeanmarket. Byusing the licensing approach or the joint-venture method it allows Jolson theability to work with an established European company that has already formedrelationships with dealership, etc. in Europe.
However, by doing a joint-ventureJolson would loss 50% of the profit because of the agreement that was firstsent over. With licensing the hoist Jolson can make anywhere between $306,870and $336,040 in Germany, France, Spain, United Kingdom, and Italy (Diagram 3) Diagram 3 Geographic Region Jolson Sales Calculation Germany $88,400 – $90,310 (.05 x $1,768,000 / .05 x $1,806,200) France $64,900 – $65,800 (.05 x $1,298,000 / .
05 x $1,316,000) Italy $62,370 – $71,800 (.05 x $1,247,400/ .05 x $1,436,000) United Kingdom $55,000 – $65,010 (.05 x $1,100,000 / .05 x $1,300,200) Spain $36,200 – $43,120 (.
05 x $724,000 / .05 x $862,400 Ø Remaining in their current Canadian Market One alternative that doesn’t seem to benefit JolsonAutomotive Hoist, would be remaining in their current market. Even thought thisis a market that Jolson has seem to master and is looking for an expansionopportunity, it is not always the right time to make that move and could ultimatelybe the demise of the business. This would be the least risky move to make andwould not cost the business any money, but this can keep the business frombecoming a bigger force in the automotive industry. Recommendation Underthe circumstances of all the options available to Jolson Automotive Hoist, I believethat establishing a personal office in New York. By doing this Jolson can obtain100% of the sale as apposed to 78% that they are getting from the currentretailer.
Because their current retailer is not selling at full potential becausethe wholesalers focus is product sale and not pushing the Jolson Hoist. Thereis also a larger potential for Jolson Hoist because there is a larger market ofvehicles the will need to be maintained. There is a population of 264 millionpeople with more than 146 million registered vehicles. This makes the U.
S. avastly larger market than the Canadian market. Thereputation that Jolson Hoist holds for safety and quality will allow Jolson to appealto mechanics and garage owners on the quality service Jolson Hoist can providefor their company. Since the ability to move into the European market wasfinancially available, it would be financially easier to open an office in New Yorkand be significantly cheaper. ImplementationPlanØ Locate a prime location for a personal JolsonAutomotive Hoist office.Ø Research surrounding competition and need forhoistØ Once office is open allocate resources for staffto be successful in sales of Jolson Hoist.Ø Establish relationship with local garages anddealerships.
Ø Set financial sale goals to determine if NewYork office is paying off. Ø Once market share has increased within the U.S.,venture into opening a partnership in the European market.