Conner Labs Case Study essay
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Conner labs are company that deals with manufacture and supply of surgical units, disposable instrument and diagnostic units. In 1990, it introduced the first diagnostic unit with the highest price. This was very successful, as the unit never required the dilation. They also had a market that believes in them as they had set a good reputation. The diagnostic unit was emphasized to last for life and they were confident giving lifetime warranty on the unit. The sales were boosted initially by the notion that the surgeon had in the quality of the materials they required as thy thought that the high the price the more quality the materials were. Thus the Conner lab had advantage as they sell quality products and at high price. However, after sometime the surgeon noted that there was no great difference in the quality for surgical equipment from either if the manufacturers. Therefore, they opted to be buying the equipments with low price(Douglas, 2010).
Conner stone had initially advantages, as they were the pioneer developer of digital / laser technology in the medical field. This made even more organization to prefer the Conner lab for they offered quality services. They also had modified their line of surgical units and most of the seller used the extension in their selling strategy promoting their sales.
They also made sure that they intensified their promotion of high quality products. This was to promote their reputation and increasing their high margins. They attract very skilled and established sales representative and qualified sales managers to enhance their sales. This saw their gross margin grow steadily from 2001 to 2003. Nevertheless, of recent soon the company has experienced a very great decline in the gross margin their market share has also dropped from 70% to 22%. This drop is notable and it makes the management to inquisitive, as there must be a problem somewhere(Douglas, 2010).
Various problem I their marketing has been noted. The company produces very expensive equipment that very few can afford. Thus, most of their buyers have shifted to the cheaper materials that have the same factions as theirs. This makes their sales turnover top decrease and their market share decline in daily basis. Most of the equipments they produce are patent by other people making their competitor to imitate their product producing them at a low cost. So, most of the buyers opt to buy the cheap products that are from other company which have similar function. This makes their sales to decline as the products that have been imitated are so many in the market and gotten at low price.
The company also believed in working on their reputation only, they have won the competition. Therefore, they never worked in their market research at the best time to get the real picture in the ground. They dealt mostly in producing quality product by increasing their technology. Their competitors majored in this and manufactured equipments that bore the same function and offered them at low price. The Conner lab had very complicated sales strategy. The sales personnel were meeting some individuals showing them how quality their products were. The process became so confusing to the buyers. They never understood if they were being compelled to buy the products or it was a mere advertisement to help them choose whether to buy their product or not. According to the buyers, they would have opted to buy the products at their own will but not being compelled.
Product maturity was another issue that made the Conner lab to have a downfall. The customers complained of their product taking very long to mature. The lead-time between the placing of an order and the day the equipment was taking long to a verge of buyers getting them elsewhere. This made most of the customer to quit the company's service and source it somewhere else. The competitors were delivers product faster as their maturity time is short.
The company also never established the right people in their sales strategy. For example, in a hospital the management may allocate a given amount of money to buy the equipments. However, the surgeons have a great impact on the type of the equipments that are to be bought. Therefore, for the Conner lab to thrive in the market, they have to get the champions in a certain market. This would help them identify the main obstacles in their sales failure.
Conner lab need to do an intensive research to establish the core cause of their downfall and come up with their market strategy. The following marketing strategy is recommended for them to assist in reviving their business.
The company should establish their position on the market in relation to how they have dominated it. They should know their current market share and the projected market share in the future. According to market dominance strategy, there are four categories in which the company should be able to establish themselves with to ensure that they make good future plan. The first one is the leader. They should make sure that they know the company that leads in the market share to help them establish what they are doing. According to Douglas 2010, having dropped from 70% to 22% in the market share, there must be something wrong. They should also establish their follower in the market share. This will help them to be careful not to lose more of their share. The last one is that it is also very important to establish their niche to know where they have the highest market share meaning that there products in that place are readily accepted. In doing this, they will be in a good position to get to a place where they were initially.
Porter generic strategy
They should ensure that they understand their market penetration method as they now have a good reputation and produce quality goods as their strategic strength giving the a competitive and sustainable advantage. They should deal with their product differentiation and low cost leadership with the aim of focusing in a broader market share. They should first segment their market into smaller segments to help them understand them better to ensure that they earn back their customers confidence. The company has an advantage of having qualified sales personnel that can help it come up very fast(Douglas, 2010).
Conner Lab Company has done well in response to the technological change. This has made it possible to bring in diagnostic unit as the first company. For that reason, they never considered the aspect of time at their product matured. They mostly concentrated on quality forgetting that they need to integrate the aspect of time also in their service delivery. This means that more innovation was required to hasten their product maturity. This means that they required people to be pioneers of the technological change, others to be close followers of the outcome of the technology employed while others to be late followers to get the impact brought in the market. With the three teams, they will be able to integrate more technology in their business increasing service delivery.
They should finally intensify their growth strategy by vertical and horizontal integration. As stated by Douglas 2010, the vertical growth by recruiting competent personnel, the Conner Lab has tried. Still they should ensure that the recruited personnel are highly compatible to change and can come above any challenge that may arise in the company. They should also diversify their marketing strategy by using a simple method of advertising their product and not trying to compel the customers to buy their products. They should ensure that they intensify their marketing using the pivotal people who affect the acquisition of the products in the company. For them to compete well as they grow horizontally, they should devise means of production that do not comprise their product quality but lead the product to be cheaper. This will enhance their growth in the competitive market.
Management and organizational plan
The Conner Lab must be having a problem with its management and organization structure thus unable to deal with its inventory and supply chain. This organization need to be restructured to ensure that the information has no hindrances. This is seen by the way the gross margin declined in the between 2003 and 2004 (Douglas, 2010). They should adopt an organization plan that has low bureaucratic process to enhance faster flow of information. They should adopt an organization plan that enables people in lower management level to communicate directly to the people in the top management level. With this, problems in the grass roots will get to be known and tackled in the appropriate time before they go too far.
The Conner Lab Company has all the required potential to revert their situation to their renowned situation. This requires putting the recommended ideas into practice and going a mile away in their process of regaining their lost market share. They have all the material if the management want to they are able to make it.