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Marketing Strategy - AVS - Group 2
Marketing Strategy - AVS - Group 2
Purpose of Usage:
Engineering: As per the case, AVS's visualization software is used in computed-aided engineering
(CAE) and electronic design automation (EDA). In the CAE market, AVS products are used by
developers of CAE applications that build post-processors for resale to end-user customers, and by
end-users such as major industrial companies, like Boeing and Ford, which build in-house post-
processors to visualize results from multiple analysis applications. Integrating all aspects of the
design process is a major trend within engineering markets, and AVS's ability to integrate and view
results from multiple applications has tremendous value to these companies. Additionally, AVS's
visualization software can provide a deeper level of insight into complex data sets than traditional
analysis techniques, which can be beneficial for engineering companies in analysing large data sets.
AVS Express – AVS Express is the best selling and most popular product for AVS. AVS/Express
employed an innovative object-oriented visual programming interface to create, modify, and
connect application components. It provided object kits that contained numerous building
blocks for constructing visualization applications and application components such as
graphics display, image processing, and geographic rendering. As the product was a key
differentiator in the market, it holds a key position for the organisation.
TM&GSHARP – This product has opened newer markets especially in Europe. As of 1996 it
generates the highest revenue (product + support). Although the market is stagnated, AVS
draws a significant amount of revenue from the support.
AVS 5 – AVS5 as a product is slowly diminishing from the market with a decline in revenue of
16% over the last 2 years. Although the support-based income for the product has a stable
revenue averaging at 11%. The product is holding a weak market position. Upgradation in
terms of newer versions should be in pipeline to save the product from dying.
Consulting – The consulting arm of AVS of contributed only 5.4% of the total revenue. With
no growth in terms of revenue by value over last fiscal year. The market position is weak
compared to other offerings and can be easily replaced by any third party organisation. AVS
would have to develop its consulting and service capabilities to offer adequate support and
customization.
Where
Geospatial - By 1996, AVS had already made some inroads in a number of technical
geospatial vertical markets, including defence/intelligence (accounted for 5% of AVS end-
user base), oil and gas (15%), environmental (10%), and telecommunications (7%). More
recently, it had begun to penetrate segments of the high-end business visualization market,
initially with applications delivered into telecommunications and financial services vertical
markets. Opportunities were also arising in companies that needed visualization applications
in other business markets as they began to recognize the value visualization offered.
Engineering - The engineering market accounted for 30% of AVS end-user sales in 1996. It
was segmented into multiple markets that included major industries such as aerospace,
automotive, and semiconductor. Within engineering, visualization was used in computed-
aided engineering (CAE) and electronic design automation (EDA). Ninety percent of all
software sales in this market were directly to end-users. The potential for visualization
software and services in these engineering markets was thought to be approximately $50
million, but there were no major competitors. Ninety percent of all applications were
developed in-house by users.
Medical Imaging - The current medical imaging market potential for visualization software
and services was relatively small, estimated to be $50 million. The biggest competitor in the
market sold about $12.5 million, while in-house development accounted for about $30
million. The remaining $7.5 million was spread among another six players including AVS.
Data Mining – A fairly new market which can nuture into a industry itself. Holds huge
potential in terms of growth but as of today is at very nascent stage in terms of business.
Contributes only 3% of business.
Europe – After the acquisition of UNIRAS the channels for market growth have been created
for AVS in Europe. This offered a complementary product line of charting and graphing
products, Toolmaster and Gsharp, and immediate access to the growing European market
supported by established sales and product support teams.
USA – The US market was always offered an open position for AVS to conduct business with
various organisations. The AVS sales organization in the United States consisted of seven
direct sales field representatives and two telesales representatives. The direct sales people
met face to face with prospective customers, and the telesales representatives telephoned
prospective customers, followed up and qualified leads for the direct sales organization,
accelerated order processing and receipt at the end of the sales pipeline, and contacted
existing customers to make follow-on sales.
Reverse Logic Flow:
To understand the core issue faced by the company, we first need to take a step back and evaluate
the nature of the industry itself. The data visualization industry in the mid-1990s may have
comprised of a few firms offering their services to their own niche customer base, however, the
main competitors for AVS were not rival firms, but, internal developers within organizations.
This meant that several customers, rather than going for off the shelf software preferred to have a
bespoke software made in accordance with their requirements. To counter this AVS created
customizable software that could be used as a foundation by the company’s in-house developers.
However, by doing so, AVS is sacrificing a major chunk in the product’s value chain.
Hence, to gain traction within the market, AVS needs to reform its product line-up. For this, instead
of offering customizable software to developers, the company can spend more time in
understanding their customer’s need and then come up with a tailor-made solution. This will be a
more efficient route as AVS has extensive experience within its domain and hence, it will take
significantly less time and resources for them to create a data visualization solution when compared
to in-house software developers.
To accomplish this, the company will have to further expand on its consulting business line, and will
need to hire more consultants and product managers in order to better understand each company’s
individual needs. This will definitely increase the costs, but AVS will be able to command higher
prices for its products and services as there will be no direct competitors in this segment. Moreover,
the in-house development team of the customers, can focus more on their core business.
Where:
The current customer base of AVS are tech savvy software developers and corporations with
formidable technological capabilities. In order to maximize revenue, the company will have to
expand on their customer base by tapping into new markets – A blue ocean of sorts.
Data is an extremely powerful tool which can reap huge benefits across all lines of businesses
regardless of size and scale. However, during the mid-1990s there weren’t many data analytics and
visualization solutions which catered to the mass market. Hence, there is a lot of untapped potential
when it comes to a software which is user-friendly and doesn’t require a degree in computer science
to operate.
AVS can use its current capabilities to come up with a new product which has a user-friendly
interface and can be utilized by individuals as well as small to medium enterprises. This will broaden
the company’s horizons and help them overcome their slump in performance.
Furthermore, as of 1996, 77% of the AVS’s business came from geospatial, engineering and medical
imaging markets. As per the case, the geospatial market already had a lot of competitors – 2 major
players and eight other competitors. Instead of competing in a highly saturated space the company
can look for other markets to expand their operations.
Almost every industry can greatly benefit from having data analytics tools at their disposal. The
company needs to target these sectors and demonstrate the tangible benefits that their products
and services can offer to them.
For instance, the company can target the growing E-commerce sector as they generate huge
quantities of data on a daily basis. Effectively utilizing this data can become a competitive advantage
for an organization. Similarly, the case mentions the financial services sector, however the revenue
generated from it wasn’t significant enough. Hence, the management of AVS needs to analyze as to
where the company’s offerings are lacking and bridge the gap between what the customers want
and where the products stand currently.
Another strategy for AVS to consider is expanding their reach by entering new international markets.
By targeting countries with strong economies and a growing need for data visualization solutions,
AVS can increase their customer base and revenue streams. This could include countries in Asia,
Europe and South America where the demand for data visualization solutions is increasing. AVS can
work with local partners and distributors to establish a presence in these markets and cater to the
specific needs and requirements of these countries.
Reverse Logic:
EDA market:
Considering the fast-paced projected growth of this market, and the fact that AVS was doing
well in the CAE market, entry into the EDA market would be a knowledgeable move with less
risk.
New product line-up (increased customisation):
Understanding customer needs can help AVS create tailor-made solutions for their
customers. Involving the marketing team with their insights regarding customer feedback
will help here. This move can be retracted easily and hence is safe with an unknown but
probable outcome.
Better consulting services:
For AVS to create products that are best suited for their customers, they have to up their
consulting game in the sector. As this involves investment, it could be seen as a move that
poses a minimal risk but an informed move nonetheless.
Target mass markets:
As this is a completely new customer segment AVS would be targeting, it isn’t easily
reversible owing to the new investment that will be involved. The data for this kind of move
is also unavailable as there are no companies targeting masses with increased user-
friendliness. Hence, it is a risky move with an unknown outcome. Accounting for the huge
potential this move could unlock, it could be considered.
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