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    Case I

    Uploaded by

    Yatharth Shukla
    ChemCo is a leading car battery manufacturer in the UK that recently diversified into producing batteries for fork-lift trucks. However, sales of fork-lift batteries have been declining. The senior vice president wants to change marketing strategies but the owner resists changes. Currently, the company is losing money in fork-lift batteries and losing market share in car batteries. The senior vice president must take steps to turn the company around within a year.

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    Case I

    Uploaded by

    Yatharth Shukla
    759 views3 pages
    ChemCo is a leading car battery manufacturer in the UK that recently diversified into producing batteries for fork-lift trucks. However, sales of fork-lift batteries have been declining. The senior vice president wants to change marketing strategies but the owner resists changes. Currently, the company is losing money in fork-lift batteries and losing market share in car batteries. The senior vice president must take steps to turn the company around within a year.

    Original Description:

    CHEMCO CASE STUDY

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    ChemCo is a leading car battery manufacturer in the UK that recently diversified into producing batteries for fork-lift trucks. However, sales of fork-lift batteries have been declining. The senior vice president wants to change marketing strategies but the owner resists changes. Currently, the company is losing money in fork-lift batteries and losing market share in car batteries. The senior vice president must take steps to turn the company around within a year.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    759 views3 pages

    Case I

    Uploaded by

    Yatharth Shukla
    ChemCo is a leading car battery manufacturer in the UK that recently diversified into producing batteries for fork-lift trucks. However, sales of fork-lift batteries have been declining. The senior vice president wants to change marketing strategies but the owner resists changes. Currently, the company is losing money in fork-lift batteries and losing market share in car batteries. The senior vice president must take steps to turn the company around within a year.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Case I: CHEMCO CASE

    Started in 1965, ChemCo is a leading manufacturer of car batteries in the


    U.K. market. Since then, it has been under the charge of Mr. Jones, the
    founder-owner of the firm. In 1999, the company decided to go for a
    diversification by expanding the product line. The new product was batteries
    for fork-lift trucks. At the same time, Mr. Marek was appointed the Senior
    Vice President of marketing in the company. However, soon after its
    successful diversification into fork-lift batteries, the sales in this segment
    began dropping steadily. Mr. Marek wanted to introduce some radical
    changes in the advertising and branding of the new business but the
    proposal was turned down by the old-fashioned Mr. Jones.
    At this juncture in 2002, the firm is losing heavily in the fork-lift batteries
    business and its market share in car batteries is also on a decline. Mr. Jones
    has asked Mr. Marek to show a turnaround in the company within a year.
    What steps should Mr. Marek take to take the company out of its troubles?

    Some of the facts on the case are:

     ChemCo is a quality leader in the U.K. car batteries market.


     Customer battery purchases in the automobile market are highly
    seasonal.
     The fork-lift business was added to utilize idle capacity during periods
    of inactivity.
     This is a low-growth industry (1% annual growth over the last two
    years)
     Large customers are sophisticated and buy based on price and quality.
    Smaller customers buy solely on price.
     There is a Spanish competitor in the market who offers low priced
    batteries of inferior quality.

    Situation Analysis:
    Company

     Established player in car batteries


     Losing heavily in fork-lift truck batteries
     Old fashioned owner resistance to change

    Competition

     Low priced competitors


     Foreign competitors gaining market share

    Customers

     High quality product, but low end customers care more about price
    than quality

    Problem Definition:

     Mismanaged product diversification in a price sensitive market

    Alternatives:

     Alternative 1: Establish an Off-Brand for the fork-lift business


     Alternative 2: Educate the customer market about product quality
     Alternative 3: Exit the fork-lift battery business

    Criteria for evaluation of alternatives:

     Establishing the firm's quality image


     Increase in market share
     Increase in sales
     Cost of the product

    Evaluation of Alternatives:

    Alternative 1
     Protect firm's quality image in the automobile industry
     Redesigned product to reduce the cost of manufacture
     Low price to enable it to compete with Spanish producer

    Alternative 2

     Make use of the quality leadership in car batteries market


     Offer reliability testing, extended warranties etc. to promote quality
    image
     Set higher prices to extract surplus from these advantages

    Alternative 3 and 4

     A passive strategy, not proactive


     Recommendations:
    Alternative 1 is recommended in this case. Since the firm operates in
    an industry which has low growth, hence it can expand market share
    and sales only by taking the customers from other players. Hence, it
    needs to tackle the Spanish competitor head-on by aggressively
    pricing its product. At the same time, launching a low-priced product
    under the same brand name erodes the high quality image in the car
    batteries market. Hence, the best option is to go for an off-brand to
    target the fork-lift customers who are increasingly becoming price
    sensitive. This will enable the company to ward off the threat in short-
    term and build its position strongly in the long-term.

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