In order to identify how a company is using marketing
concept, Honeywell is presented as a case study here. The first part of this paper is based on the interview I
conducted with Mr. Phil Auld, who currently works for Sensing and Control
department in Honeywell. The second
part is based on the objective analysis that I found through the interview.
Sensing
and Control Department
Mr. Auld works for Sending and Control department that mainly manufactures wide range of sensor and switches form electromechanical switches, manual controls, pressure sensors, humidity sensors and so forth. He is in a group called Venture Operation, whose focus is on manufacturing fiber optic and VCSEL receivers and transmitters. Technically, these products take an electronic signal converting it to light and this is done over fiber optics. The latest product is called VCSEL that stands for Vertical Cavity Surface Emitting Laser, and it is a solid-state optical device that emits laser light in a circular pattern with high optical efficiency from the top of a semi-conductor chip. Currently, his primary operation is to handle fiber optic and VCSEL from sales and marketing standpoint for the East Coast in the US.
VCSEL was introduced first in 1996 by Honeywell in the market place, therefore, the market is very new as well as very fast-growing. In order to get into the market, companies have to overcome two barriers: technical issue and huge initial investment. Companies have to have a reactor to build the wafer in the chip that actually runs the VCSEL. This procedure is highly technical that Honeywell builds hundred and thirty some layers on the wafer. In addition, the initial investment of the reactor is approximately $3 million. Although, there was obviously no competitor at the time when Honeywell released VCSEL in 1996, Honeywell has over a dozen of competitors today. According to Mr. Auld, even major players in the market like Siemens and Hewlett-Packard manufacture VCSEL. Despite the fact that they use strictly for their internal use, they are potential competitors. Nonetheless, Honeywell is currently the worldwide leader in VCSEL production today.
With respect to customers, Sensing and Control department serves a couple different markets. The primary market is Datacom, which is defined as a market for fiber optic links used to transmit data within a campus or building (LAN), or a market for fiber optic links within a single computing system or switch. The department also has three other markets, concentrating on Information Technology, Medical and Industrial Market. Since most of the products are used in another products, the department sells to another business entities. For example, IBM is one of the direct customers, and CISCO is the end-user. At this time, there are twelve manufactures of transmitters and receivers in the world and eleven of them are located in the US. Currently, the department is selling to eight of them.
Honeywell and its Sensing and Control department practice primary four ways to market their products. Firstly, they hit four or five trade shows, called Optical Fiber Conference, a year. Trade shows are really big market force, because a huge number of people come in the shows. Some of the visitors do not know about fiber optics and VCSEL, thus, trade shows give a good opportunity to aggressively seek to promote high quality products and penetrate the market by letting people know their products. Secondly, they also do print advertising. Particularly, they are targeting certain magazines such as EEM that is subscribed by a lot of engineers to get new ideas. Thirdly, they do direct mail marketing, especially for industry market. There are some packages that are specifically gear toward a certain industry and they mail out to purchasing and design engineering. Subsequently, they fallow up to make sure that customers and potential customers got the information and they go and do presentation if it is needed. And finally, they use web site as another avenue to attract customers. The web site contains almost all the information that customers would need such as current products information, product sheets, application data and application notes in PDF files.
Honeywell has a group called Honeywell Technical Center (HTC), which does pure research. HTC is the group that actually came up with VCSEL. Then Venture Operation group showed to some potential customers with sample to ask whether they were interested in or not. Mr. Auld said, Most reactions were positive.Eand he continued, The first year we sold like 5,000 units, which was not very many. Now, four years later, we are selling millions of units.E
The way Venture Operation group goes to market or finds out customersEneeds are a couple ways. They have been doing marketing surveys and customer surveys. Moreover, they have been looking where the particular application is. For instance, VCSEL products, which have 660 nm (nm represents a particular wavestrength), are mainly used in bar-code industry today. The group goes and visits current customers and potential customers to gather information, which goes directly to HTC to develop VCSEL products further applicable to customers. As a consequence, VCSEL products are suited to customersEneeds and desires as much as possible.
Based on the interview I conducted, I think Honeywell is practicing Marketing Concept, which has a focus on needs of target markets and delivering value by being more effective than competitors. As three elements of marketing concept, there are customer satisfaction, integrated marketing and profitability. Each element has been met by what Honeywell and Sensing and Control department do.
In order to precisely seize what the customers need and want, Sensing and Control department frequently visits and surveys customers to further develop its products in a given target market. Of obvious importance here is that customersEvoice and opinion reflect the next generation products, which will lead to a great customer satisfaction. The fact that Honeywell is sustaining the keen relationship with customers is another contributing factor to the customer satisfaction.
In terms of the integrated marketing, the department has been doing immense job, because of the proliferation of information the department has. The department has been practicing integrated marketing thoroughly by interacting and communicating with customers consistently based its solid marketing plan, and also by profound communication between technical people at HTC and sales and marketing people. Everyone knows what product is coming out, where the advertising is focused on and what the strategies are in the market place. Using Mr. Aulds word, he described, Everybody is reading from a same page. And we are looking at marketing strategies through on eyeball, if you would want to say.E#060;/p>
There is no doubt that the department is appreciating the profitable sales, utilizing the advantage as a market leader in VCSEL production. Ever though, there are some needs of new products, the department does not manufacture it, if the market is so small. However, the department is aware of the needs and let the potential customers know the product is on the schedule board, hence, maximizing the profit. This strategy reminds me the production of semiconductors by Intel, whish is quite similar to that of VCSEL production by Honeywell. The other contributing factors to profitability come from the fact that the department actually sets the price and standard of VCSEL, and its high reliable products.
Honeywell utilizes the Marketing Concept to penetrate the market more profoundly, which is currently working effectively. Thanks to the fast-growing market, Honeywell and the department enjoy the profitable sales by satisfying customers. On the other hand, more the competitions are getting intense not only from the US companies, but also from foreign companies. Even so, utilizing Marketing Concept strategically would mitigate the threat of new competitors and enable to further penetrate the market, using the advanced technology and good customer relationship as a market leader in the VCSEL production.
Interview
with Mr. Phil Auld, Strategic Account Manager in Sensing and Control department
at Honeywell Inc., February 12, 2000