Baxton Technology

Problem:

Baxton Technology manufactures surface automotive hoists and sells across the US. Market share of Baxton is not much good and it was approximately 2%(1054/49000) in 1999. Baxton technology’s products are great in terms of quality and are known as Mercedes in the market. Mark is looking for the expansion of the business and he has some alternates which he wants to analyze before taking any decision. These include either to increase market share in the US or to enter European Market.

Industry Analysis:

Hoist industry was of total worth $54 billion in 1999. 30 % of hoists are purchased by car dealers and they are more than 4000 in Canada. Braxton's 85% sales were to Firestone, Goodyear, Canadian Tire and independent garages which count around 720 in total in Canada. The industry was dominated by 2 large US firms AHV lifts and Berne Manufacturing which has 40% and 20% market share respectively. Baxton Technology’s price was more than 20% of AHV lifts and 5 % more than the Mete lift which was one another competitor of Baxton. There was a lack of personal selling in Baxton as only 25 % of the sales were made by direct sales force team and the rest by Canadian Distributor and Wholesaler. Baxton lift was a minor product in the wholesaler’s total line and accounted for less than 20 % of the total lift sales in US wholesaler. Wholesalers were not pushing Baxton to customers as they were focussing on selling hoist not Braxton.

Evaluation of Alternative Courses of Action:

• Increase Sales in the US:

Pros: Sales can be increased by pushing the wholesalers and by setting up an office in New York. By opening an office in New York, personal selling can also be pushed as it was a key aspect of Braxton's success.

 Cons: US wholesalers only give 78 % of the selling price as compared to 100% and 80 % with direct and Canadian distributors respectively.

• Licensing Agreement:

Pros: It will guarantee 5 % royalty rate on gross sales, without any investment, and without any efforts.

Cons: Baxton is famous for its quality and giving the rights to any third party can lead damage destruction into a new market if the franchise didn’t make good product.