MKT3301 Marketing AAA Custom Castings Strategy 1. What are the components of the marketing strategy for the bumper jacks that they currently sell? 2. Cont
MKT3301 Marketing AAA Custom Castings Strategy 1. What are the components of the marketing strategy for the bumper jacks that they currently sell?
2. Contrast quality Iron castings current bumper jack marketing strategy with the proposed strategy for the hydraulic jacks.
3. Do a simple SWOT analysis of the firm
4. Would the hydraulic jacks represent a good marketing opportunity for the firm? Please support your answer.
Remember: Be specific with your answers. 26. AAA Custom Castings, Inc.
Mallory Rizocki, marketing manager for AAA Custom Castings, Inc., is trying to figure out how to explain to her boss why a
proposed new product line doesn’t make sense for them. Mallory is sure it’s wrong for AAA Custom Castings, but isn’t able to
explain why.
AAA Custom Castings, Inc. is a producer of malleable iron castings for automobile and aircraft manufacturers and a variety of
other users of castings. Last year’s sales of castings amounted to more than $70 million.
AAA Custom Castings also produces about 30 percent of all the original equipment bumper jacks installed in new U.S.-made
automobiles each year. This is a very price-competitive business, but AAA Custom Castings has been able to obtain a large market
share with frequent personal contact between the company’s executives and its customers—supported by very close cooperation
between the company’s engineering department and its customers’ buyers. This has been extremely important because the wide
variety of models and model changes frequently requires alterations in the specifications of the bumper jacks. All of
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AAA Custom Castings’ bumper jacks are sold directly to automobile manufacturers. No attempt has been made to sell
bumper jacks to final consumers through hardware and automotive channels—although they are available through the
manufacturers’ automobile dealers.
Tim Kingston, AAA Custom Castings’ production manager, now wants to begin producing hydraulic garage jacks for sale through
auto-parts wholesalers to auto-parts retailers. Tim saw a variety of hydraulic garage jacks at a recent automotive show and knew
immediately that his plant could produce these products. This especially interested him because of the possibility of using excess
immediately that his plant could produce these products. This especially interested him because of the possibility of using excess
capacity. Further, he says “jacks are jacks,” and the company would merely be broadening its product line by introducing hydraulic
garage jacks. (Note: Hydraulic garage jacks are larger than bumper jacks and are intended for use in or around a garage. They are
too big to carry in a car’s trunk.)
As Tim became more enthusiastic about the idea, he found that AAA Custom Castings’ engineering department already had a
patented design that appeared to be at least comparable to the products now offered on the market. Further, Tim says that the
company would be able to produce a product that is better made than the competitive products (i.e., smoother castings)—although
he agrees that most customers probably wouldn’t notice the difference. The production department estimates that the cost of
producing a hydraulic garage jack comparable to those currently offered by competitors would be about $48 per unit.
Mallory has just received an e-mail from Jesse Zachary, the company president, explaining the production department’s enthusiasm
for broadening AAA Custom Castings’ present jack line into hydraulic jacks. Jesse seems enthusiastic about the idea too, noting
that it would be a way to make fuller use of the company’s resources and increase its sales. Jesse’s e-mail asks for Mallory’s
reaction, but Jesse already seems sold on the idea.
Given Jesse’s enthusiasm, Mallory isn’t sure how to respond. She’s trying to develop a good explanation of why she isn’t excited
about the proposal. The firm’s six sales reps are already overworked with their current accounts. And Mallory couldn’t possibly
promote this new line herself—she’s already helping other reps make calls and serving as sales manager. So it would be necessary
to hire someone to promote the line. And this sales manager would probably have to recruit manufacturers’ agents (who probably
will want 10 to 15 percent commission on sales) to sell to automotive wholesalers who would stock the jack and sell to the auto-
parts retailers. The wholesalers will probably expect trade discounts of about 20 percent, trade show exhibits, some national
advertising, and sales promotion help (catalog sheets, mailers, and point-of-purchase displays). Further, Mallory sees that AAA
Custom Castings’ billing and collection system will have to be expanded because many more customers will be involved. It will
also be necessary to keep track of agent commissions and accounts receivable.
also be necessary to keep track of agent commissions and accounts receivable.
Auto-parts retailers are currently selling similar hydraulic garage jacks for about $99. Mallory has learned that such retailers
typically expect a trade discount of about 35 percent off the suggested list price for their auto parts.
All things considered, Mallory feels that the proposed hydraulic jack line is not very closely related to the company’s present
emphasis. She has already indicated her lack of enthusiasm to Tim, but this made little difference in Tim’s thinking. Now it’s clear
that Mallory will have to convince the president or she will soon be responsible for selling hydraulic jacks.
Contrast AAA Custom Castings, Inc.’s current strategy and the proposed strategy. What should Mallory Rizocki say to Jesse
Zachary to persuade him to change his mind? Or should she just plan to sell hydraulic jacks? Explain.
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