Astec sacrifices Market Share to CompetitionAstec had been the world’s largest supplier of industrial power supply products. In 1998, it led the industry with $215 million in worldwide sales which were generated primarily from its dominance in AC/DC switching power supplies, which included both low power and custom switches. It was the first company to enter this particular niche in the market and historically had no reason to rely on a marketing orientation in order to sell its products. However, the industry was becoming more and more competitive in the late 1990s and when Unitech Mc. acquired Lambda Electronics at the beginning of fiscal year 1999, it sent a definite signal that the industry was entering its competitive, mature stage. In an industry in which it was estimated that more than 1000 power-related companies were involved, no one supplier had more than a 7% share of the market. In addition, Unitech’s acquisition of Lambda was a blow to Astec since Unitech, ranked tenth in market share in 1998, suddenly propelled to number one in the industry with its acquisition of number two Lambda. It seemed as though the industry was heading for a competitive shake-up.One of the major changes Astec believed it needed to make was to improve its marketing. Astec, like most members of the industry, had maintained a production focus since it entered this heavily engineer-driven industry. Traditionally, power supply vendors’ livelihoods depended on selling mechanisms to manufacturers that provided power to radios, televisions, computers, and other electronic goods. In the past, the industry had been run by engineers who started their businesses in backrooms or garages. Recently, however, the electronic goods industry underwent rapid changes that required its suppliers to change as well—in order to keep up with foreign and domestic competition. The once engineering driven industry had to change channels and move into a market driven orientation. Marketing was needed in order to keep potential customers up to date with technology and to enable manufacturers to better understand what the future needs of the industry would be.It seemed that most of the major players in the industry were getting the same message as Astec. For example:1)Power Conversion America, a division of Computer Products, Inc. in Fremont, California has had to focus on marketing because of the ever changing needs of the computer industry. According to the president of sales, Norm Berkowitz, the computer power supply market has become very much customer oriented, focusing on the needs of clients. As a result, the company added five new employees to its marketing staff in 1998.2)Zenith Electronics Corporation has used several marketing techniques to promote their products. Their primary business to business communication techniques have been direct mail and trade shows. However, in order to remain competitive in the power supply market, Zenith and other distributors are going to have to learn to boost the power level of their marketing strategies, to electrify potential customers.In order to improve its position with its customers, Astec felt it needed to offer more reliable products, create stronger long-term relationships with suppliers, develop closer ties with customers by assisting in design of components and increasing the quality of their power supply products through increased testing. In addition, Astec developed interests in expanding its product base by offering standard as well as custom products. A reflection of this new marketing interest is that in 1998, Astec spent more on advertising than they had in the previous seven years combined.Having slipped to number two in the industry, Astec desires to regain the top position. The company knows that it needs to be more consumer driven and that there is a growing demand for both higher quality products with expanded deluxe features and more customer service among its clients. While new product designs will take some time to develop, new service programs can be easily constructed.
The difficulty is that Astec does not know which services are in demand from their clients. In order to become more marketing focused, Astec management is wondering if its clients are willing to pay a premium for ensured quality and service. The services management believes that the services that are desired are assisting their clients in the design of their products, assisting their clients in assembly operations, offering technical explanations of the power supply design and features and guaranteeing distribution of power supply products.The marketing manager wants to know if new service programs will be beneficial in increasing Astec’s sales. He wants the information within 2 months in order to develop the programs for the next major trade show. With its competitors’ growing awareness that reaching out to customers is the way to grow as the market matures, Astec must play by the new rules if it is to regain the top spot.Questions:1. What is the management decision problem and the marketing research problem? (15 points)2. List three research questions and two hypotheses for each one? (20 points)3. What is the target population for this study? And how can you define your sample? (15 points)4. Identify the most applicable sampling technique to be used and why? (10 points)5. Identify 15 questions that you consider important in this survey as one part of a detailedquestionnaire. (Hint: You are dealing with companies and not individuals. Use a variety of scalesas well). (30 points)6. Develop a guideline for the training and supervision of field workers ( interviewers) in order tosecure more complete, consistent and accurate responses. (10 points)Good Luck