The paper "Atlas-Copco’ s Management of Its Entry Strategy " is a good example of a marketing assignment. Atlas-Copco’ s management of its entry strategy is average. To begin with, the company transplanted a channel without any modification to a new region. This according to Coughlan et al (2006) is likely to result in failure due to emerging demand-supply gaps. The first compressors the company introduced to the U. S. market were designed in accordance to European engineering standards which had not yet been adopted in their new market. Failure to do a market research resulted to the wrong product being introduced in the market.
So long as customer needs were not met, the company could not succeed. It overcomes the failure resulting in the incompatibility of products with customer needs in 1972 when the management embarked on the development of a line of compressors which would meet the U. S. market standards. This indicates that though the strategy was wrong at the beginning, Atlas-Copco was able to overcome it with time. Coughlan et al (2006) explain the importance of understanding customer needs and the market environment before implementing a channel to avoid the high cost of switching marketing channels. The company’ s ability to identify emerging opportunities contributed to its increased market share from below 1% to 3%.
Atlas-Copco took advantage of the promotion of adoption of the rotary screw as air compressors by Sullair Corporation and the strong interests of Atlas-Copco’ s parent company interest in machine tools thus easing the burden caused by the first bladder. This strategy was good but it did not also take into consideration the needs of the distributors. Though the increased number of distributers is associated with increased customer contact, reduced number of contacts with the company and enhanced customer satisfaction resulting from assortment needs meeting (Hill 2005), Atlas-Copco did not consider the distributers need for increased profit margins.
The company had the required broad line of compressors but had not yet created awareness and increasing the number of distributors only increased inter-brand competition as distributors competed for the already small market share. This makes the strategy poor. In addition, the idea of streamlining existing distributors by encouraging them to call potential customers in markets such as electronic would mean distributors incurring extra cost.
If Atlas-Copco had created a brand name, distributers would take the risk due to perceived increased chances of convincing the customer to switch from existing service providers. Adopting the new compay’ s product which was not yet well accepted in the market would result to a loss of profits distributors acquired from the assembly of parts in addition to jeopardizing the existing relationship with competitors who had a large market share. However, the company was quick to address this and also produced higher quality and precision rotor profiles as compared to competitors.
Increased profit margins resulting from the sale of maintenance contracts and profit margins the 15% price margins acted as a motivator (Rangan & Marie 2006). This strategy was effective though it would have been better if a brand image had been created. In overall, the entry strategy management was average resulting in the continuous increase in market share. Though Atlas-Copco frequently made the wrong decision, it was quick to rectify its mistakes. A better analysis of these strategies would have saved Atlas-Copco huge costs spent on implementing irrelevant channels.
Coughlan, AT, Anderson, E, Stern, LW & El-Ansary, AI 2006, Marketing channels, 7e, Prentice Hall, Upper Saddle River, NJ.
Hill, C, 2005, International Business: Competing in the Global Marketplace. 5thedition. McGraw Hill
Jay, B 2007, Gaining and sustaining competitive advantage, 3rd edition. New Yolk: Pearson Prentice Hall
Rangan, K., and Marie, B 2006, Transforming Your Go-to-Market Strategy: The Three Disciplines of Channel Management. Boston, Mass.: Harvard Business School Press.
Rangan, V, 1987, Atlas Copco (A): gaining and building distribution channels. Harvard business school cases.