Introduction:

Durr Environmental Controls is a German conglomerate which specializes in

production of air emission control systems and operates extensively in the US
market. Tighter regulations have been imposed to reduce the pollutants that are
being released into the atmosphere by the factories. At the same time the global
market is developing. Now the company is planning to introduce one or more offers
in the US market. The company has surveyed 31 companies from the food and
energy sector. The survey was conducted on the following parameters:
A. Efficiency
B. Delivery Time
C. Price
D. Delivery Terms
The company believes that its product will need lower service costs as compared to
its competitors products.

K-Mean cluster Analysis on both the segments:

From the data available in Durr Data (Segmentation).xlx, we conduct an analysis to group the data into
various clusters and study their characteristics with reference to different variables.
The result of the analysis is as shown

Final Cluster Centers (Output in SPSS Table 1)

Cluster
1

Exceeds 9%

16

32

Exceeds 5%

21

Meets specifications

10

Short by 5%

6 months

17

37

9 months

10

23

12 months

10

15 months

600000.000000

32

13

700000.000000

24

800000.000000

12

900000.000000

Installed,

with

2-year

with

1-year

with

service

warranty
Installed,
warranty
Installed,
contract
FOB, with service contract

29

17

20

12

From the cluster centres, it is obvious that cluster 1 which majorly comprises companies from the energy
industry is more sensitive to pricing and after-sales service, whereas cluster 2 which majorly comprises
companies from the food industry is more sensitive to efficiency and delivery time.

Number of Cases in each Cluster

(Output in SPSS Table 2)
Cluster

9.000

22.000

Valid

31.000

Missing

39.000

ANOVA (Output in SPSS Table 3)

Cluster

Error

Sig.

Mean Square

Df

Mean Square

df

Exceeds 9%

1755.961

121.063

29

14.505

.001

Exceeds 5%

1468.231

72.457

29

20.263

.000

Meets specifications

216.587

52.983

29

4.088

.053

Short by 5%

.000

.000

29

6 months

2424.921

99.009

29

24.492

.000

9 months

1023.957

78.785

29

12.997

.001

12 months

95.844

28.586

29

3.353

.077

15 months

.000

.000

29

600000.000000

2398.594

81.964

29

29.264

.000

700000.000000

1751.685

50.271

29

34.845

.000

800000.000000

448.400

19.619

29

22.855

.000

900000.000000

.375

.408

29

.921

.345

1007.685

93.306

29

10.800

.003

405.169

69.915

29

5.795

.023

Installed,

with

2-year

with

1-year

warranty
Installed,
warranty

Installed,

with

service

contract
FOB, with service contract

19.730

13.649

29

1.446

.239

.000

.000

29

The F tests should be used only for descriptive purposes because the clusters have been chosen to maximize the
differences among cases in different clusters. The observed significance levels are not corrected for this and thus
cannot be interpreted as tests of the hypothesis that the cluster means are equal.

We propose the null and alternate hypothesis as

Ho: There is no significant difference between the two cluster means for the given variable level.
Ha: There is a significant difference between the two cluster means for the given variable level.
If Significance > 0.05, we accept the null hypothesis, else we reject it.

From the above Anova Table, the two clusters are relatively not different for (highlighted in green)

The efficiency levels meeting the specifications

Delivery time of 12 months
Price of $900,000
Products installed, with service contract.

We now conduct a relative analysis to find out the differences in performance levels, decision makers and
growth objectives of the two clusters. The result can be summarized as in the table below.
(Means and standard deviations of the respective attributes for each cluster was calculated in excel)
(Output in Excel Table 4)

Mean
Cluster 1 (9)
18.889

Top Mgmt
Engineering
Finance
Purchasing
Sales in 2004
Profit %
Return on Equity
Growth
Profit
Market Share
Tech Leadership
CorpCitEnv
Gov Regulations

20.111
28.889
32.111
34.133
9.611
19.467
21.889
28.333
14.222
15.778
6.000
13.556

Cluster 2 (22)
35.773
40.591
10.091
13.636
4.464
3.764
17.714
9.591
20.773
10.364
8.773
25.545
25.182

Standard Deviation
Cluster 1 (9)
Cluster 2 (22)
2.558
2.557
3.107
2.570
2.998
2.695
3.755
4.904
39.571
3.787
11.173
6.126
12.887
16.653
2.183
2.534
2.667
2.109
2.657
3.098
2.347
2.953
2.828
3.071
7.026
6.235

Thus the two clusters exhibit the following characteristics:

Cluster 1

Cluster 2

Finance and purchasing are the key decision

makers. This explains its price-sensitiveness
It is a high sales, high profit and high growth
segment
It focuses on tech-leadership

Top management and Engineering are the major

decision makers. This explains its higher
efficiency orientation
It is a low sales, low profit and low growth
segment.
It focuses on CorpCitEnv and Gov regulations

Recommendations:
Thus we recommend a different-segment, different-product strategy for Durr.
1. It should launch the Base Product in segment 1 i.e. the Energy segment which is price sensitive with
the product installed with service agreement (Based on the results in table 1, cluster 1 companies also
prefer good service levels which can be met by the Base Product model). The product has the least price
i.e. $700,000. Also as the key decision makers are the finance and purchase departments, the product
would be cheap.
2. It should launch Premier LX in segment 2 i.e. the Food segment which is efficiency and deliverytime sensitive. The product has the best efficiency (exceeds specs by 9%) and delivery time (12 months)
from amongst the three. Also as the key decision makers are the engineering and the top management, the
product would be highly efficient and growth-centric in this low-growth segment