The paper "Atlas Copco Market Entry" is a good example of a marketing assignment. Atlas Copco employs a three-level channel structure with the manufacturer being Atlas Copco, the intermediary being the distributors who after the adoption of the four-level franchising policy become the franchisees, and lastly the customers at the lower end. The distributors were categorized into three categories; A, B and C each specializing in different product lines depending on their percentage of sales of air compressors, accessories, and services. The company’ s network of channels of distribution can be shown as follows: Question 1 From the case study, it is apparent that Atlas Copco has with an excellent grade managed its market entry.
This can be attributed to its emerging and developed market strategies process that has been maintained from the past to ongoing business. The continuing market expansion observed in the past years and also through the growth of sales clearly depicts the results of this success. The company had gained its market share from 1-3% in 1970 to 10 -12% in 1984. The four phases of distribution strategy can be identified and related to the success of the company. In the first phase, Atlas Copco was not successful in its initial stages when it started its operation in 1950 in the United States.
At the time the company showed less than one percent market share value. The company ventured into other foreign markets like Asia, South America and Europe showing a promising market share value control. In 1975, due to its failure in the USA, the company management decided not to make any adaptation in the engineering standards to the United States market and that of the European market after the failure was attributed to the error of miss-match.
In the same year, in order to meet the US standards, the company adopted several of its recip compressors. Atlas Copco was not strong enough at that time to provide a wide line of products in the US market; a strong distribution network is all that the company needed. Two ways were used by the company manager to approach the task of creating a strong distribution channel. Firstly, the company appointed more distributors and secondly, the company tried to streamline the existing distributors’ operations.
The company supported the efforts of the distributor by offering field sales support and technical assistance. This first attempt to create an extensive coverage of channel distribution, however, turned out to be a complete failure. The failure was linked to lack of an installed base of machines and probably the appointment of unqualified distributors. In the second phase which started in 1976, the company changed its strategy so as to gain distribution in the US market. The company focused more on its major product instead of offering to the prospective distributor a wide range of product lines.
The company had adopted dual distribution at this stage through the direct selling or through distributors of its old-free rotaries Z series compressors that seemed successful to the market. At this stage, Ingersoll-Rand and Joy, the two main competitors of Atlas Copco seemed to be outwitted by the successful campaign of signing their distributors by Atlas Copco. The company gave the distributors the liberty to pick any product they wanted to take by providing an option of a non-exclusive brand as a choice to the distributors.
List of References
Arikan, A., 2008. Multichannel marketing: metrics and methods for on and offline success, 1st ed. Indianapolis: Wiley Technology Pub.
Baker, M.J., and Hart, S.J., 2008. The marketing book. 6th ed. Oxford: Butterworth-Heinemann.
Best, R.J., 2009. Market-based management: strategies for growing customer value and profitability. 5th ed. New Jersey: Pearson/Prentice Hall.
Coughlan, A.T., Anderson, A., Stern, L.W., and El-Ansary, A., 2006. Marketing channels. 7th ed. New Jersey: Pearson/Prentice Hall.
Hoffman, K.D., 2005. Marketing principles and best practices. 3rd ed. Ohio: Thomson/South-Western.
Mayo-Smith, D., 2008. Marketing in today"s wired world. Rosedale: Penguin.
Rosenbloom, B., 2004. Marketing channels: a management view. 7th ed. Ohio: Thomson/South-Western.
Wisner, J.D., Tan, K.C., and Leong, G.K., 2012. Principles of supply chain management: a balanced approach, 3rd ed. Ohio: South-Western/Cengage Learning.