This strategy is compelling because of the following reasons:
1) Customers in the capital goods industry are demanding more value in the products and services
that they purchase. Customer value is measured not only in terms of price but also in terms of
other dimensions like machine’s efficiency, reliability, training and maintenance requirements.
Providing “simple” machines that are easy to run, maintain and troubleshoot will go a long way
in providing value to customers.
2) Designing, producing and marketing “simple” and user-friendly machines will potentially
increase the adoption rate of the CNC technology by attracting new customers into the industry
who in the past are intimidated by the perceived complexity of using CNC industrial machines.
3) This strategy will address customer’s need for a well-integrated product and service solution
that will address their ultimate need of improving productivity in their businesses. Customers do
not evaluate the merits and value of a brand using just one or two dimensions, but look at the
various aspects of a product and service. By having a single-minded focus on providing value
through “simple”, Cam Tech could better address this customer requirement distinctly from
competition.
4) This will enable CAM Tech to differentiate itself from competition because no existing
company owns this positioning right now.
For FY 2005 (i.e., ending June 30, 2005), the target revenues from executing this strategy is
$14.5 MM and an EBITDA of $3.6MM. Projecting an average annual growth of 35% from
2005 to 2008, the projected revenue of CAM Tech by end of FY 2008 is $29.4MM or a 7.1%
market share.
The recommended key next steps are: 1) rationalize, redesign and develop the company’s
product and service offerings to deliver on the value through “simple” positioning, 2) launch the
new corporate and brand positioning by September of 2004, 3) invest on R&D to build the
company’s core competency in design, engineering and integration capabilities to deliver on the
brand positioning, 4) put increased focus on mining the rich markets of Eastern Canada and the
United Sates and 5) design and implement a more robust dealer and distribution system that will
better address the long-tem growth objectives of the company, 6) develop internal capabilities
for the company to understand and produce relevant machine applications and end products that
will allow the company to further add value to customers.