Electrical Repairs Marketing Plan 1, Market Analysis, страница 2

It is rather difficult to give precise assessment of the current total market capacity. For instance, there are about 10 large specialised machine tool manufacturing enterprises in the Republic of Belarus  alone. If we assume that the annual need of each of those in valve electrical drives is equal to the need of Kirov Plant - 200 units, the total market capacity will increase by 2,000 units. However, here we do not consider the needs of farming and industrial machine manufacturers, automobile and tractor industries, companies producing fridges and other labour saving appliances. According to the specialists' evaluation, nowadays the companies in the country are already consuming around 3.5 thousand valve electrical drives, and by 2000 the growth of their consumption is projected at 50 thousand units a year. Thus it is clear that all the planned production volume (1,650 units at the first year of the project implementation and 17,000  units when the production reaches its full capacity by the fifth year of the project) will be able to find its customers within the Republic of Belarus. Nevertheless, “ElRem” JSC is not going to limit itself within the Republic of Belarus only. One of the enterprise strategic objectives is to strengthen its market position at such a large market as the Russian Federation (its projected capacity reaches 1 million valve electrical drives a year), and also other CIS countries.

Generally, regarding the enterprises mentioned with which the preliminary distribution agreements have been already arranged, by 2000 the valve electrical drives distribution market growth is planned up to 11,000 annual units, i.e. by 7 times in practical terms.

The increasing consumption of valve electrical drives is substantiated by the notable trend in the world electric machine manufacturing to switch from DC motors in controllable electrical drives to AC valve drives. This trend can be seen in the USA, for example, where their proportion is projected at 60-70% out of the total production volume of electrical motors for electrical machine manufacturing. Valve electrical drives have the following advantages compared to other electrical motors:

·  higher efficiency by 10-20%

·  one level higher starting torque multiplicity

·  absence of sparking and lower radio interference level, which is important when using electrical drives in production cycles with advanced requirements to burst and fire safety

·  wide frequency and rotation torque controllability, easy interface with electronic and microprocessor control systems

·  a technically friendly design.

1.5. Product Specification and Price Structure

The distribution price for the valve motor will be $ 131 in 1996. 62% of the price structure is the cost of raw and main materials, 3% - production personnel salaries, 15% - overheads, 16% - taxes and payments and 4% - the enterprise profit. It is assumed that in the first years of the project implementation when the production volumes will be comparatively low the transportation costs will be paid by customers. That is why the price structure made up according to the 1996 data does not comprise the product distribution transportation costs. The advertising costs will be 2% a year out of the “ElRem” JSC distribution. This value is substantiated by the norms introduced by the taxation legislation of the Republic of Belarus, according to which the national economy subject may consider no more than 2% of sales volume to be material costs.

1.6. Competition

According to the “ElRem” JSC marketing department there are no valve electrical drives manufacturing companies at the CIS territory. Only at a Krasnoyarsk research institute (Russia) the research work took place in the early 90's concerning their development and application in space equipment.

Only foreign enterprises can be taken as real competitors. However, those companies have made no attempts so far to enter the CIS markets; besides, the prices for their products are much higher, the production quality ant technical specifications being comparable.

1.7. Distribution

As the production will expand, the range and production volume of valve electrical drives will increase, “ElRem” JSC is planning to develop its own regional dealer network.  It is assumed that the network will cover the regions with the best developed industrial infrastructure where the highest demand for the products will take place. It is projected that the first centres for further products expansion at the third year of the project will be Moscow and the Ural region. It is predicted that up to 50% of the total production volume will be distributed through the dealer network.