Analysis of Dominion Motors

1003 Words Jan 25th, 2007 5 Pages
Dominion Motors Case Analysis

What, precisely, is the problem here?

The problem is that DMC 's largest consumer of oil well pumping motors has ranked them the #3 supplier, and not only could this impact purchasing from this customer (Hamilton), other smaller companies follow this large company for their purchasing decisions, so that they get the benefit of copying their R&D decisions.

What are the causes of the problem?

Power companies implemented a graduated monthly base charge per HP at installation, to mitigate ineffieciencies caused by overmotoring in order to improve power factor. Upon the announcement of this change, the head of Hamilton 's EE department conducted testing on motors from different manufactures and used
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*Addresses PF issue, and reduces customers base monthly charges…selling point *Decreased profit of $173/unit

*Could be economically difficult to justify small production runs

*$75,000 initial engineering and testing expense

*Could possibly start a torque war among mfgs, which could be confusing to users and hurt the industry

*Goes against DMC 's long standing policy to support industry standards #4-Challenge Bridges conclusions Original $553/unit *Know VP Purchasing at Hamilton personally, so could discuss with him that the motor exceeds 70 ft-lbs torque, so it is deemed acceptable *Execs did not know how to present their arguments

*Could create ill will with Bridges and Hamilton

What is the major marketing challenge here?

To overcome the customer perception with fact to the contrary, and avoid unnecessary reduction in profits and unnecessary investments.

What should DMC 's program be for the coming selling season?

Try alternative 4, tactfully through the VP of Purchasing, retaining expert who can help to prepare executives to argue the case. If that is unsuccessful, alternative 1, discount 10 HP motor to 7.5HP price, will probably get them the sales in the short term of this year, giving them time to assess further. Also, DMC could consider giving and give Hamilton an even deeper discount on alternative 1, if necessary. As long as DMS doesn 't take a loss, it is better than giving up the incremental sales and
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