Cah Case Analysis
Essay by review • February 10, 2011 • Case Study • 1,159 Words (5 Pages) • 1,379 Views
Problem statement: Should Camar enter the European market or should Camar concentrate on increasing sales in the United States to keep the company on the fast growth track.
Camar company info:
* Manufactures surface automotive hoists, a product used by garages, service stations and other repair shops to lift cars for servicing
* Canadian based company
* Owner is Mark Camar, worked in the industry as a designer for 8 years, left that company in 1990.
* For three years, starting in 1990, Camar opened a plant in Lachine, Quebec and manufacturing and marketing the Camar Lift.
* Competes in the speciality shop segment and shops dealing with wheel alignments
* As of early 2000, Camar had developed a reputation for a quality product backed by good service in the hoist lift market, primarily wheel alignment segment
* Considered setting up an office in NY but was concerned about the wholesaler getting mad about giving up their territory - wholesalers objective is to sell hoists, not necessarily Camars
Camar Lift
* Camar Lift considered a leader in automotive lift safety - safety is considered an important factor in auto hoist market
* Cadillac of hoists, judged superior to competitors because of
- design
- quality for workmanship
- safety features
- ease of installation
- 5 year warranty
* Mark held 4 patents on the life including the lifting mechanisim on the scissor design and the safety locking mechanism.
* Sales, costs and earning have all increased from 1997 - 1999
* In 1999, 60% sales were in the US, 40% sales in Canada
* 85% of sales were to the wheel alignment market in service centers like Firestone, Goodyear and independent garages that specialized in wheel alignment
* 15% of sales were to customers who used the hoist for general mechanical repairs
* Sold for average retail price of $10,990 and CAH got $9,210 for each unit sold
-direct got100%
-CN distributors 80% selling price
-US wholesalers 78% selling price
Automotive Hoist industry:
* Safety is considered an important factor in auto hoist market
* 49,000 hoists were sold each year in North America
* New car dealers purchase 30% of all united sold in a year
* Firms purchasing hoists are part of an industry called the automobile aftermarket
* Industry worth more than $54 billion in retail in 1999, servicing approx 14 million cars on the road in Canada
* 4,000 + new car dealers in Canada, more than 400 Canadian tires stores, 100+ stores in Goodyear/Firestone chains and more than 220 stores in the Rust Check chain
* Price of hoists range $3,000 - $15,000 (capital expense for most businesses)
* Buying decisions were based on what type of hoist the company needs
* Typical hoists have a life of 10-13 years
* The product has to be known to the garage owners and parent companies in order for them to buy
* In-ground lifts - approx 21% of total lift sales in 1999
* Surface lifts (scissor and post lift hoists) - approx 79% of sales in 1999
* Within each type of hoist, there are numerous variation in terms of size, shape and lifting capacity
Competition
* 16 companies in the auto lift market in N America; 4 canadian, 12 US firms
* Import/Export b/w CA and US were phased out (Free Trade Agreement)
* Fluctuating exchange rate ($.65 - $.70 CN to the US $1) expected to remain the same
* Lift industry was dominated by two US firms (AHV lifts and Berne Manufacturing) they had approx 60% of the market
* AHV lifts is the largest firm w/ 40% market share and $60 million in annual sales
* AHV has
o Complete line of hoists (in-ground and surface)
o Primarily focused on in-ground market and 2-post surface market
o Only company that had its own direct salesforce
o Offered standard hoists w/ few extra features - competed on price
* Berne Mfg has
o 20% market share
o Competes in in-ground and two-post service markets
o Uses combo of sales people and wholesalers - compete on price
* Remaining firms operated in a regional market and/or offered a limited product line
* CAH has two competitors with scissor lifts
o AHV - different lifting mechanism, no safety locking features, 20% less in price than Camar
o Mete Lift - similar design but lacked safety features, regarded as a well-manufactured product, sold for 5% less
Marketing Strategy
* Three types of distributors used - company sales force (4 people + mgr), Canadian distributors and U.S. automotive wholesaler
* Main goal of sales force to set up direct accounts (get parent companies to approve)
* To
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