Case study analysis #7 :Comtec Corporation

Geoffroy LARDEUX

Minsoo KIM

Loïc VELO

Overview of the situationJanuary, 1984

Industrial microcomputers and specific software

Cambridge, Massachusetts

Amsterdam, Netherlands

Overview of the situation Sales difficulties in both domestic and

international market

Profits are low and financial crisis looming

Consultant in high-tech marketing hired to advise on new marketing directions

Consultant's recommendations run counter to VP for sales and marketing strategy

Names and Positions Participants :

- Dr. Daniel Needham, President of Comtec Corporation

- Mr. Harry Otto, Vice-President of Comtec Corporation

- Ms. Roberta Malcolm, Consultant in high-tech marketing

Mentioned :

- Mr. Max Mendel, Sales manager in Amsterdam

Documents Dialogue between D. Needham, H. Otto and R. Malcolm

Exhibit 1 : Ad for the Comtec 100 Microcomputers

Exhibit 2 : Sales of the Comtec 100, Third and Fourth Quarter, 1983

Exhibit 3 : Comtec’s balance Sheet as of December 1983

Exhibit 4 : Memo from H. Otto to D. Needham

Exhibit 5 : Letter from Manchester Metals Ltd., to Comtec’s Amsterdam Office

Exhibit 1 : Ad for the Comtec 100 Microcomputers

Exhibit 2 : Sales of the Comtec 100, Third and Fourth Quarter, 1983

July August September October November December0

10000

20000

30000

40000

50000

60000

70000

Domestic

International

Exhibit 3 : Comtec’s balance Sheet as of December 1983

Exhibit 4 : Memo from H. Otto to D. Needham

Exhibit 5 : Letter from Manchester Metals Ltd., to Comtec’s Amsterdam Office

Existing Situation Marketing Management Intercultural Economic Products

StrengthsInsist on the quality of the

product

Two specific areas

Has an office in Europe

Successful in U.S

Most Powerful microcom

puters

WeaknessesNot enough

adsTarget the

wrong people

Can’t cover the whole

market

Didn’t make enough profits

Not enough European

clients

High prices

Statement of Problem

How to avoid the lack of competitiveness and the financial

crisis?

Option 1 : Keep Comtec’s initial Strategy

Advantages Drawbacks

- Make profits- Has potential- Recently entered on new markets- Receive an order from Manchester

- Need more time to make new clients- Not enough orders- Takes some time to build

microcomputers

Option 2 : Lower products prices

Advantages Drawbacks

- Increase sales- From high-range to mid-range

- Profits will decrease at the beginning

- Lower the company label - Have to reduce the salary or to

change the employees

Option 3 : Shift advertising and sales promotion

Advantages Drawbacks

- Target the right customers- A more modern business- Increase profits- Increase the number of orders

- Cost of this option - Have to buy lists of primary

purchasers

Option 4 : Shift from hardware to a software emphasis

Advantages Drawbacks

- Produce IBM-compatible software- Save money- A whole new market

- Loss of the hardware market- Miss the order from Manchester - Risky and expensive for the

company

Option 5 : Close down the European office in Amsterdam

Advantages Drawbacks

- Concentrate only on the U.S. market- Save money (cost of the European

office/No export charges in Europe)

- Loss of European customers - Send a bad image of the company - Bad reputation for European

customers?

Our recommendation

We recommend : Option 3 + Option 4

Switch Market + Better Communication

A little bit dangerous and expensive but it

is an opportunity to become a successful company

QUESTIONS ? Option 1 : Keep Comtec’s initial Strategy

Option 2 : Lower products prices

Option 3 : Shift advertising and sales promotion

Option 4 : Shift from hardware to software emphasis

Option 5 : Close down the European office in Amsterdam