The paper "Atlas Copco Distribution System" is a great example of a marketing assignment. The Atlas Copco is a company that has its roots in Sweden. It has been able to gain a good share of the market worldwide for selling air compressors. In its effort to penetrate the United States market, it experiences some challenges that make it almost unsuccessful. However, over time it is able to come up with means to counter its weaknesses and as a result, shoots to become one of the best marketers in the United States.
On a strategy to improve the distribution of their product starting the year 1985, the then vice president of the marketing and sales of the Atlas-Copco Industrial compressors division Mr Arthur Droege proposes a four-level of a franchise that he believes would significantly accelerate their penetration in the new market. This Case study report looks at the penetration strategy of the company in the US market. It also looks on the impact that the four-level franchising policy was to have on the distributors, customers and the Atlas Corp. 8 Q1. How has Atlas-Copco managed its market entry (excellent, average, poor grade)?
Support your position8 In general, Atlas- Copco has fairly managed to enter the United States market. Though it had very appealing successes, it also has serious weaknesses which if it would have corrected, then it is market penetration strategy would have been excellent. By 1984 though Atlas – Copco had equal shares to those of Ingersoll-Rand, Ingersoll-Rand was already the leader in the United States market while Atlas-Copco was three positions behind. This shows that the penetration strategy in the new market for Atlas – Copco was at that time done poorly compared to that of the competitor.
Though the company came late in the market, it ought to have done more on the products it sold to the consumers to ensure that it gained a bigger share of the market. Late market entrants have the capacity to succeed by attacking the high growth market and in particular where there is a shift in the industry due to innovation and change in technology (Kalyanaram & Gurumurthy 2010, p. 8). Atlas-Copco started its operation in the United States at a time when it concentrated on small products for the construction and mining industries.
These products were having a small profit margin compared to big compressors. Based on its experience from other countries, Atlas-Copco had the capacity to enter into the market with bigger force but chose to use a lower smooth path. The distribution strategy at the time of the market entry was also poor. The management attributed this to lack of an installed base for their machines. The technology at the moment was the reciprocating type while its products could not match with this technology.
This shows that the company entered the market without carrying out enough market research which would have helped them to overcome some of the challenges they were experiencing at the moment. Market research is very important whenever a company needs to enter into a new market. (Kimberly, Jeff & Joan 2006, p 104). It would save the time required for the company to settle and hence saving most of their expenses. Yet the company expected the distributers to convince the customers to buy their new products.
This was the major reason why their base installation for the machine was close to nil. Even with all these negative effects due to initial planning, the Atlas-Copco still had its positive side. 8
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