Dominion Motors Controls Ltd.

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B2B MARKETING

Dominion Motors Controls Ltd.

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Problem Statement:

In what ways can DMC choose the right course of action to increase its market share in the oil well pumping sector.

Introduction:

Dominion Motors & Controls, Ltd. (DMC), was one of the largest supplier of motors and control equipment in the Canadian market and had acquired over 50% of the market for oil well pumping motors in the northern Canadian oil fields.

Dominion offered a line of motors ranging from small fractional horsepower (hp) units to large 2,000-horse power motors.  The company also produced motor control and panel-board units, which would automatically control and protect a motor.

80% of the company’s sales were made directly by company salespeople to original equipment manufacturers (OEMs) and large industrial users, such as oil companies, paper mills, and mining concerns. Nearly 20% of the sales were made to distributors for resale, primarily to small users (small drilling contractors and others) and small OEMs.

Dominion's competition consisted of other well-known Canadian motor manufacturers and a number of foreign competitors particularly British, German, and Japanese firms). All the Canadian manufacturers maintained closely competitive pricing structures.  Foreign competitors, however, usually, old 10% to 20% below the Canadians' established prices.

Issues:

Power companies serving the oil fields came up with two announcements. First, change of power rates to the graduated schedule based on connected horsepower of an installation. Second, demand to stop over motoring by their customers and improve “power factors” of their installations. Although the penalty for over motoring was not declared.

John Bridges sought to define specifications of a motor so that it could be used economically. Test were conducted and following were the observations:

(1) Fluid-lifting requirements dictated a 3- to 5-hp motor;

(2) Starting torques in excess of 70 pounds-feet would energize the pumping units at temperatures as low as -50°F;

(3) This starting torque requirement would necessitate a 7 -hp motor; and

(4) Because the Spartan 7 -hp motor had the highest starting torque of the motors tested and the Universal 7 hp motor had the second-highest. Dominion's 7 -hp motor would be the third choice.

Possible Solutions to the alternatives:

1. Reduce the price of DMC’s 10-hp motor to that of 7-hp