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This structured case analysis asks you to apply your marketing knowledge, critical thinking, and
professional skills in a business-to-business setting. This homework asks you to complete both
quantitative and qualitative analysis in addition to recommending a course of action for the
problem or opportunity presented.
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Read the case
Submit your responses to the case questions
o The questions help structure your effort and analysis.
o Responses to short answer questions can be in sentence or list format.
Atlas Inc. and Mid-west Energy
Marketing the Medium-Speed Drivetrain Gearbox
The purpose of this Case is to facilitate student learning related to marketing strategy
formulation and implementation. Firms featured in this Case are fictitious. Materials in
this Case were developed using many publicly available resources. Exemplar sources (not
an exhaustive list) include: (a) https://www.energy.gov/Links to an external site.; (b)
American Wind Energy Association (AWEA); and (c) Links to an external
site.www.wikipedia.org
Background
Wind energy is one of the leading sources of alternative energy. It involves generating
electricity using the air flows that occur naturally in the earth’s atmosphere. Wind turbines
are used to harness the power of wind and convert it into electricity. Wind turns the
propeller-like blades of a turbine around a rotor, which spins a generator, which creates
electricity. Wind energy offers many advantages such as cost-effectiveness and
sustainability. Further, wind is a clean and domestic energy source that can be harvested
using turbines that can be built on existing farms or ranches.
The United States is one of the fastest growing wind energy markets Links to an external
site. in the world. Within the US, the state of Iowa is one of the leading players in the wind
energy sector. Iowa generates over 40% of its electricity using wind power. In 2019, it
ranked first in the nation for wind energy as a share of total electricity generation at the
state level.
Mid-west Energy is the leading producer of wind energy in Iowa. This company was
founded by two entrepreneurs in 2014 and they went public in 2020. As of the latest
regulatory filings, they have a revenue of $130 million. Mid-west owns 1,350 windmills in
Iowa and has accounted for approximately 8% of the total wind energy the state has
generated every year for the past three years. Mid-west sells all the electricity it produces
to the State of Iowa.
The wind turbine contains a component called a drivetrain, which consists of a gearbox
and a generator. The gearbox is responsible for connecting the low-speed shaft attached
to the turbine blades to the high-speed shaft attached to the generator Links to an external
site.. Assisted by a series of gears of varying sizes, the gearbox helps multiply the number
of rotations the turbine blades make manifold thereby helping the generator produce
electricity. Based on the latest scientific data, Mid-west has configured its gearbox to
have about 926 rotations/minute, so they produce optimal electricity.
Reliable Corp. and The Technical Challenge
Mid-west energy currently buys the gearbox used in their windmills from a local supplier
named Reliable Corp based in Ames, IA. Mid-west has been doing business with
Reliable for over six years now. Mid-west is a key (strategic) account for Reliable Corp.
and their key account management team has built strong relationships across the board
within Mid-west purchasing organization. According to Mid-west purchasing group,
Reliable offers a low-priced product. Further, being local, they can sell direct to Mid-west
and deliver the product anywhere in Iowa within five hours.
For the past year, Mid-west Energy has been experiencing technical issues with their
gearboxes. Specifically, they have heard from their field technicians that the gearboxes
supplied by Reliable seem to be malfunctioning leading to periodic breakdowns. Such
breakdowns are undesirable since they entail costly repairs. Further, a windmill
downtime translates into lost revenue for the company (when the windmill is not
functional, it is not generating electricity that Mid-west can sell).
Over the past few months, Mid-west and Reliable have discussed the technical issues.
While Reliable has assured their customer that they are looking into the matter, Mid-west
has not heard of any concrete plans from Reliable regarding how they plan to resolve this
issue.
Atlas Inc.- The New Supplier
The central purchasing group at Mid-west consists of four individuals: head of
purchasing, head of finance, chief engineer, and head of R&D. This group is responsible
for making all large purchasing decisions for windmill parts and they work collectively as
a buying center for Mid-west.
About two months ago, this group was approached by Ms. Linda Nelson, a newly hired
salesperson from Atlas Inc., a MN-based manufacturer of the next-generation (Mediumspeed) gearboxes. Linda knows that Mid-west is Reliable Corp.’s key account, and she
wants to make inroads into this account.
During their initial meeting, Linda talked about how Atlas uses advanced manufacturing
processes to make gearbox components that are not only more efficient and but also
reliable. She also shared that Atlas’ manufacturing process has 30% less carbon footprint
compared to the ones used by companies such as Reliable. During the subsequent
meetings, she provided them with technical data and detailed product specs.
The Figure below shows how Atlas’ gearbox (left) is different than the one currently used
by Mid-west (right).
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Intrigued by the novel product design and the efficiency claims made by Atlas, the buying
group at Mid-west asked Ms. Nelson to show comparative data that highlights how their
new product performs in comparison to the conventional one (from Reliable Corp.) they
currently use.
The Field Test
In response to Mid-west’s request, Atlas hired a Minneapolis-based electrical engineering
firm named Samson Engineering that specializes in testing gearbox components to conduct
a comparative analysis of Atlas’ and Reliable’s gearboxes.
Samson conducted an on-site study in Madison County, IA using six of Mid-west’s existing
windmills. Specifically, for a period of 30 days, they compared Reliable’ s conventional
gearboxes (3 windmills) with Atlas’ gearboxes (3 windmills). The test involved comparing
gearbox efficiency and reliability over 40 million gearbox rotations. The results of the
comparative analysis were as follows:
Comparative Analysis Results
Reliable Corp.
gearbox
Atlas Inc.
gearbox
Total rotations
completed by each
windmill
40 million
40 million
How long did one
gearbox last (#
rotations)?
12 million
19 million
How long did it take to
4.0 hours
replace the gearbox?
3.5 hours
How much did it cost to
replace the gearbox $200/hour
(equipment and labor)?
$165/hour
How much electricity
was produced by the 2 megawatts
windmill per hour?
2 megawatts
Rate at which Mid-west
sells its electricity to the $33/megawatt
state
$33/megawatt
Looking at the comparison data, Ms. Nelson has realized that the new gearbox from Atlas offers a
great market opportunity for her company to win Mid-west as a customer. Before she presented
the data to the customer, Ms. Nelson must prepare a business case for her bosses at Atlas. In
preparation, she has gathered the following information:
CUSTOMER DATA
Total # of windmills owned by Mid-west in Iowa
1,350
Average # rotations each Mid-west windmill gearbox makes per month
40 million
COMPETITOR DATA
Reliable’ s manufacturing cost per gearbox
$188
Reliable markup
30%
Reliable sells direct to Mid-west; there are no intermediaries
ATLAS INC. INTERNAL DATA
Atlas’s cost to manufacture each gearbox
Atlas supply chain: Atlas à Distributor à Mid-west
$329
Atlas markup
48%
Distributor markup
32%
Ms. Nelson needs your help in making the business case and thinking through the overall
marketing strategy for the new gearbox for Mid-west as the primary customer. She has come up
with a set of questions and is asking for your help in answering them for her.
Questions:
1) Based on your analysis of the situation, list three main challenges Ms. Nelson is likely to
face as she tries to make inroads in the Mid-west account. Please be specific.
2) How should Atlas position its new gearbox product? Write a positioning statement and
explain your rationale behind this positioning strategy?
3) It is important to understand your competitor’s pricing. Based on the data on hand,
Reliable’s current selling price to Mid-west is likely to be $_____.
A=$234 B=$244 C=$388 D=$200 E=We do not have enough data to calculate price.
4) Given the supply chain currently in place, Mid-west will be paying $___ for Atlas’s new
gearbox. A=$487 B=$435 C=$643 D=$399 E=We do not have enough data to calculate
price.
5) Looking at the comparison data, it is evident that Mid-west will go through
approximately ___ Reliable gearboxes per windmill per month. A=2 B=3 C=4 D=3.3
6) In comparison, Mid-west will go through approximately _____ Atlas gearboxes per
windmill per month. A=2.1 B=2.4 C=4 D=We do not have enough data to calculate this.
7) If Mid-west were to become Atlas customer, they are likely to need _____ Atlas
gearboxes per year at their current level of operation. A=20,000 B=23,550 C=34,020
D=34,580 E=30,000
8) Based on all the data you have on hand, what is your recommended price for the new
product?
-Show the background financial analysis
-Explain the underlying rationale for your chosen price
9) What should be Atlas’ communication objectives for the first year of this product launch
10) Provide 4 specific actions Atlas must take to launch the new gearbox to Mid-west? For each
suggested action, briefly explain your underlying rationale.
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