Case 2: Curtis Automotive Hoist
Curtis Automotive Hoist (CAH) manufactures and markets surface automotive hoists in North America. Hoist, is used by garages, service stations and other repair shops to lift cars for servicing. The company has successfully positioned its product as a superior offering and used extensive personal selling to promote and serve the product. Its strengths lie in the extensive product line and possession of four patents including one for the key safety feature. Also, CAH's sales force is essential to CAH's success. The sales force focuses on serving large "direct" accounts and has been able to get approval from them. It established a distributor network across North America and has generated about 25% of annual unit sales. Finally, CAH's prominent reputation allows it to charge a premium when its competitors are mainly competing on price.
The other two types of distribution are the Canadian Distributors who install and service units across Canada focusing on smaller chains, independent service stations and garages, and the US automotive wholesaler. Despite the CAH's competencies, the US distributor fails to actively promote the sales of Curtis Lift. In fact, the lift is but a minor product within the wholesaler's complete product line and accounts for only 20% of its total lift sales. Given that US market currently accounts for 60% of CAH's sales and holds growth potential in future, the current US distribution system may hurt CAH's growth. Another problem is CAH's high production cost. Its cost of sales accounts for approximately 72% of sales, which is at least 20% higher than that of dominant players. The relatively low contribution margin leaves the company little flexibility in competition.
How could Curtis Autom ...