Baxton Technology Case Analysis

BACKGROUND AND PROBLEM DEFINITION Ujjwal Bhandari BLP005

Baxton technologies was founded by Mark, with the help of a venture capital firm he started manufacturing as well as marketing. It is a small to medium sized scissors type surface automotive hoists (used in servicing, repair and specialty shops) manufacturing company which is operating is USA as well as Canada. The organization wants to either increase its sales in US by opening a sales office or to get an idea as to which is the most viable option to enter into the EU market.

MARKET AND INDUSTRY ANALYSIS

Approximately 49,000 hoists were sold each year in North America out of which 30% were purchased by new car dealers. The industry is worth $150 million. There were a total of 16 companies competing in the market, 4 Canadian and 12 U.S. firms. The major players in this market are AHV lifts and Berne manufacturing which hold approx 60% of the sales. The distribution system in the industry mainly consisted of 1. Direct sales force and 2.A combination of wholesale dealers and company sales force. Baxton has a market share of 2.1% (exhibit 1) by volumes and 6% (exhibit 1) by sales in comparison to the total hoists manufactured in the USA. The distribution system present reflected the need to engage in the intensive personal selling since only 25% of sales was through company sales force.

EVALUATION OF ALTERNATIVE COURSES OF ACTION

a) Establishing a Sales Office: It will not only take advantage of the existing sales expertise but also allow Baxton to get first hand market information and enhance its distribution expertise. Direct Sales Efforts may lead to channel conflict with current US Wholesaler. Baxton may risk losing the exclusive distributor and possibly, most of US sales. A 60% decrease in sales will tumble US Market

b) Encouraging the US Wholesaler