INTRODUCING THE SECOND GENERATION OF A PRODUCT TO A MARKET;
A MARKETING PLAN
A Project
Presented to the faculty of the College of Business Administration
California State University, Sacramento
Submitted in partial satisfaction of
the requirements for the degree of
MASTER OF BUSINESS ADMINISTRATION
by
Chelcy Mae Motes
SPRING
2014
© 2014
Chelcy Mae Motes
ALL RIGHTS RESERVED
ii
INTRODUCING THE SECOND GENERATION OF A PRODUCT TO A MARKET;
A MARKETING PLAN
A Project
by
Chelcy Mae Motes
Approved by:
__________________________________, Committee Chair
Jai Joon Lee, Ph.D.
____________________________
Date
iii
Student: Chelcy Mae Motes
I certify that this student has met the requirements for format contained in the University
format manual, and that this project is suitable for shelving in the Library and credit is to
be awarded for the project.
________________________,
_______________________
Monica Lam, Ph.D.
Date
Associate Dean for Graduate & External Programs
College of Business Administration
iv
Abstract
of
INTRODUCING THE SECOND GENERATION OF A PRODUCT TO A MARKET;
A MARKETING PLAN
by
Chelcy Mae Motes
Open Loop Energy, Inc. is a mining supply and service company founded in 1992
in Safford, Arizona by Charles A. Hoisington. The company is in the top of its field and
continually sets itself apart through leading innovations on mining equipment and
processes. Recently one of its most successful products, the “Digital Controlled Water
Distribution System” or DCWDS for open pit mining water trucks, has been upgraded
with technological advancements to the way it tracks water usage, data logs, improved
maintenance issues, and trouble shooting.
This improvement has given cause for a re-release of the water distribution
system and a renaming of the product. The second generation of the Digital Controlled
Water Distribution System is now called the “G2”. It will require a unique method of
marketing and release as the DCWDS still has value left in it for those customer who
purchased the system before the release of the G2. The technology is patented, which
gives Open Loop Energy, Inc. an edge on a market that is filled with competitors who
look to follow Open Loop Energy, Inc.’s example and copy the innovations their team
v
produces. Such competitors will lose their hold on the market if Open Loop Energy, Inc.
markets this product effectively and claims a large share of the market.
Currently, Open Loop Energy, Inc. uses a direct marketing method and reaches
potential customers through sales representatives who establish a relationship with the
mines they are working with. These relationships are grounded with the trust and
obligation fulfilment that the company was founded on. Because Open Loop Energy, Inc.
covers multiple region and continents, the relationships that the sales representatives form
allow the company’s culture to remain intact despite the size of the company. However,
as Open Loop Energy, Inc. moves forward they will need to implement other forms of
marketing such as advertisements in mining magazines and online mining sites that have
high traffic, a strong presence at conventions to establish new connections, and
community involvement outside of the region where headquarters is located.
_______________________, Committee Chair
Jai Joon Lee, Ph.D.
_______________________
Date
vi
ACKNOWLEDGEMENTS
I would like to acknowledge the extensive guidance that was offered to me by
Open Loop Energy, Inc.’s Business Development Administrator, Erin D. Motes. He has
far-reaching experience in a large variety of industries ranging from customer services,
real estate, garment industry manufacturing, and agriculture. These qualities make him
unique to the mining industry as well as an invaluable asset to Open Loop Energy, Inc.
Working with him was a privilege and a wonderful learning opportunity that I will
treasure for years to come.
I would also like to acknowledge my faculty advisor, Professor Lee, who’s
Technology industry experience offered a great opportunity to learn and grow under a
well-versed expert. His experience led me to preform cross industry analysis and learn
from historical examples of new generation product introduction, an analysis that was the
tipping point for this project and really helped broaden the recommendations I was able
to offer. His advisement was invaluable and I am grateful for the opportunity I had to
work with him.
vii
DEDICATION
This project is dedicated to my parents Erin and Rebecca Motes. Without them, I
would never have made it to where I am today. Their love and support are the best gift
they could ever give me and I am grateful for them every day. Thank you.
This project is also dedicated to my grandmother, Laurel Lee Chapman. Who,
despite not physically being present with us anymore, is still with us in spirit. She
continues to inspire selflessness and courage and I will always be grateful for the things
she taught me. Love you gma.
viii
TABLE OF CONTENTS
Page
Acknowledgements .................................................................................................... vii
Dedication ................................................................................................................. viii
List of Tables .............................................................................................................. xi
List of Figures ............................................................................................................ xii
Chapter
1. INTRODUCTION………………………………………………………………... 1
2. INDUSTRY ANALYSIS ……………………………………………………….... 8
Current State ………………………………………………………………….. 9
Expected Growth ……………………………………………………………... 10
Market Analysis ……..…………………………….…………...…………....... 13
3. PRODUCTS………………………………………….……………………...……. 15
The DCWDS ..………………………………………………………………... 16
The G2 ………………………………………………………………………... 20
4. OPEN LOOP ENERGY, INC. CURRENT MARKEING STRATEGIES……….. 26
Advertisements ……………………………………………………………….. 28
5. COMPETITORS………………………………………………………………….. 32
Ground Force ………………………………………………………………… 32
Mega Corp …………………………………………………………………… 33
Caterpillar ……………………………………………………………………. 34
ix
6. HISTORICAL EXAMPLES……………………………………………………... 36
7. RECOMMENDATIONS………………………………………………………… 41
References……………………………………………………………………………. 49
x
LIST OF TABLES
Tables
Page
1.
Table 1 Feature Comparison of the DCWDS to the G2 ……………...…………. 5
2.
Table 2 Ground Force WCS vs Open Loop Energy, Inc. G2…….................….. 21
3.
Table 3 Mega Corp DiCSC vs Open Loop Energy, Inc. G2 ……....................... 22
4.
Table 4 CAT WDS vs Open Loop Energy, Inc. G2 …………………………… 23
5.
Table 5 Historical Examples Pros and Con’s …………………………………. 40
xi
LIST OF FIGURES
Figures
Page
1.
Figure 1 Map of Major Metal-Producing Areas..…….…………………………. 11
2.
Figure 2 Map of Major Industrial Mineral-Producing Areas—Part I ………...… 11
3.
Figure 3 Map of Major Industrial Mineral-Producing Areas--Part II ...….……... 12
4.
Figure 4 Map of Mines Using the DCWDS……………………………………... 17
5.
Figure 5 Map of Mines Using the G2…………………………………………… 20
6.
Figure 6 Amigos for Southern Arizona Advertisement ……………………….... 29
7.
Figure 7 Mining Engineering Advertisement …………………………………... 29
8.
Figure 8 Nevada Division, Open Loop Energy, Inc. Employees …...………….. 15
9.
Figure 9 Arizona Division, Open Loop Energy, Inc. Employees……………….. 15
xii
1
Chapter 1
INTRODUCTION
Open Loop Energy, Inc. is a mining supply and service company founded in 1992
in Safford, Arizona by Charles A. Hoisington. Chuck Hoisington started out in a PSI
repair shop that covered both hydraulic and electric repairs and was based out of
Michigan. While working in the repair shop, Hoisington saw an opportunity to develop a
business that dealt with the repair of the hydraulics that were an essential part of every
mines core practices. The recognition of this need led to the development of Open Loop
Energy, Inc. The market quickly became a niche for Chuck Hoisington’s company, as
they were seen at the “fixers”. Their customer’s confidence only grew over time and the
belief that they are able to set right any issue that might occur with hydraulics is still
prevalent today.
However, Open Loop Energy, Inc. did not stop at hydraulic repair. Hoisington’s
ability to see holes in the market offerings in the products and services his company
offered and seeks out the means to be the one to cover lack of a service or product
inspired him to expand the Open Loop Energy, Inc. to cover vastly different aspects of
mining services. The company currently houses CNC, A Chrome Shop, Hydraulic
Repair, Fabrication, Mechanic Repair, Technical Services/R&D, Blank Repair, and Out
Right Sales. Although these services are a unique process, they all relate directly to the
mining industry and complement each other, giving Open Loop Energy, Inc. the one stop
advantage. Customers can rely on them to solve any problem in house without bringing
in another business.
2
While the variety of products is one of Open Loop Energy, Inc.’s competitive
advantages, the company culture of hard work and customer awareness is another
advantage unique to the company. The creed “We are only an extension of the effort of
those we serve and we must contribute to the success of those we serve. Because, if those
we serve are not successful, nor are we.” is displayed on the walls of the company’s main
conference room and is a constant reminder to all employees that satisfying customers’
needs and assisting them in solving any issue that may arise from a service or product
Open Loop Energy, Inc. provided them or an issue that another companies product is
causing them has led to the businesses success as confidence in the companies abilities is
established. The saying “The difference between a successful person and others is not a
lack of strength, not a lack of knowledge, but rather a lack of will -Vincent Lombardi” is
the organization’s mission statement (C. Hoisington, personal communication, January
16, 2014). It clearly displays the mindset that we are there to help and a go-getter attitude
that permeates throughout the company. This way of thinking comes from the top down
and is maintained by the CEO’s, who’s stories of his practicing these values are shared
throughout the company’s employees. One such story is of Hoisington’s breaking away
from his father’s PSI repair shop when he saw an unexplored opportunity to deliver
hydraulic repair with a personal service perspective, he was brave enough to go out on his
own and used hard work and a strong will to overcome the obstacles he encountered. This
story conveys to employees that the company was founded on the bases of perseverance
and dedication and that such attitudes are also expected of those who work for Open
Loop Energy, Inc.
3
The CEO has maintained a commitment to involvement in the community. This
commitment originates from the impact that mining has on the environment and the
softened public opinion towards those companies who are dedicated to giving back to the
communities their business effects. Some of the examples of the community service they
provide are donating to local athletics at all levels of play, participating in the county
fair’s animals shows, as well as sponsoring individual kids and their animals. The first
cow was bought from the fair in 1992, and ever since then there has been at least one
purchased every year. The lasting impression that the sell brings the kids involved is what
drives the Hoisington to continue to be a sponsor, as studies show that kids involved in
showing animals have a 90% success rate, in that they become accomplished members of
their respective communities (C. Hoisington, personal communication, January 16,
2014). Hoisington is dedicated to being a positive influence in the communities that his
organization operates and impress upon them his devotion to their own success, as the
mines he supplies equipment for can have a negative impact on the achievements of the
communities in which they operate.
Open Loop Energy, Inc. is also dedicated to maintaining a trustworthy reputation
with the business they work with and the organizations they sell their products to. This is
evident in the “give me a price or give me terms” (C. Hoisington, personal
communication, January 16, 2014) approach to conducting business that has been
practiced since the founding of Open Loop Energy, Inc. This approach often resulted in
terms that had to be followed such as scheduled payments until the debt has been paid or
access to the services that were to be offered. One specific example of this was when a
4
Smith Dairy that was built in the 1930’s was closing down and their building was being
put up for sale. It was conveniently located near the mines that Open Loop Energy was
servicing and so Hoisington approached the owner and expressed his interest in
purchasing the property from the owner. They agreed on terms that included the current
workers who had crossover skills being allowed to stay, as well as agreeing to payments
that would satisfy the debit within 6 years. The obligations were faithfully fulfilled and
the reputation that Open Loop Energy, Inc. would uphold its side of a deal was left
untarnished. Another instance of the company establishing trust was in an interaction
with the Freeport McMoRAN, Inc. Mines. The mine was experiencing complications
with its watering system, which was supplied by another company, and the way it
controlled it’s water distribution and approached Open Loop Energy, Inc. and asked that
they find a solution to this problem. The watering system relied on the speed of the
engine to determine how much water to disperse. This was problematic in that if it was a
particularly windy day (so the ground needed more watering as the wind was blowing
dust onto the ground in greater amounts) or it had just rained (so ground needed less
water as the rain had watered it) the system wasn’t able to identify that and would
disperse the same amount of water. As a result of the request to fix this issue, a program
was developed that use input from an advanced weather tracking system as well as a
technology that offered different watering flows and routes. This interaction established
Open Loop Energy, Inc. as a company who is willing to go the extra mile to fix problems
that are created by equipment that they haven’t supplied the company. Stories of
5
instances such as these are shared throughout the organization and employees are
expected to be trustworthy in the same way the other members of the company are.
Open Loop Energy is an innovative organization, both in the way they operate,
with the expectation of trust from customers and the handwork that is expected of its
employee’s, and the products they produce, which are on the edge of innovation and
implement technology. Recently one of its most successful products, the DCWDS water
system, has been upgraded with technological advancements to the way it tracks the
water it disperses, data logs, improved maintenance issues, and trouble shooting. These
improvements have given cause for a re-release of the water system and a renaming of
the product, with the specific improvements shown in the following table and the
differences in features compared.
Table 1
Feature Comparison of the DCWDS to the G2
The DCWDS
The wiring Harness is a 31 pin harness
with 31 connections
-Uses many wires to connect the system
to the truck
No Networking
-The system is not able to connect with
the truck is monitoring
No Logging
-Information on the system outputs is not
recorded automatically
Customizable flow curves must be
downloaded by Open Loop Energy
technician on site with his laptop
connected to the cab controller
The G2
Utilizes CAN-Bus
-standard wiring with two wires to
connect the system to the truck
System is networked between the DCM’s
and components that make up the system
-The systems upgraded technology
monitors real time data to determine
water output and connects to the systems
they need to monitor through networking
Data Logs Automatically
-Information on the system outputs is
recorded automatically
Customizable flow curves available for
operations on the cab controller
Is only accessed with authorization
entered on the screen and can be done by
6
-The customizable flow curves are not
accessible from the cab controller
Touchscreen with a 4 second delay on
the screen display
-The touch screen does not immediately
respond to requests
Limited watering patterns
-There are only a few watering patterns
available
Mine site personnel
--The customizable flow curves are not
accessible from the cab controller
Touchscreen has instantaneous response
to all actions and functions
-The touch screen immediately responds
to requests
More watering patterns
-There are many more watering patterns
available
Note. Shows the improvements the G2 has over specific features of the DCWDS, is not a complete list of
features both systems possess.
The second generation of the DCWDS will be called the G2, and will require a
unique method of marketing as the patent on the system is pending (was submitted in
July 2013 and is expected to be completed by the end of 2014), and therefore the
promotions which are utilized will need to connect the Open Loop Energy, Inc. with the
system in the minds of consumers, and release of the G2 as the DCWDS still has value
left in it. Because the system is pending patent, Open Loop Energy, Inc. will only gain an
edge on a market if they beat their competition to marketing. As the market is filled with
competitors who look to follow Open Loop Energy’s example and copy the innovations
their team produces, the need to establish themselves as the providers of the best system
is crucial.
Open Loop Energy, Inc. endeavors to expand their customer base to such a depth
that they have a hold of the entire market. The investment in innovation is what will lead
them to accomplishing this goal. As the technology improves and the implementation
becomes more inventive, Open Loop Energy, Inc. will need to patent and properly market
7
the new product. The success of the introduction of the current new generation will lead
the way for future generations.
8
Chapter 2
INDUSTRY ANALYSIS
The mining industry is one of the oldest industries in the world, with the
earliest recorded mine being over 43,000 years old and dating to the prehistoric age
(Swaziland Natural Trust Commission, 2007). The improvements to the mining
methodology, which are spread out over 43,000 years, that have taken place have been
revolutionary. These improvements range from the introduction of water by the Romans
in 25 AD to remove overburden and rock derbies from the desired resources and then
heating the resource with fire to cause a thermal shock to crack the resource and free it
from the surrounding rock (The Independent, 2007), to the use of underground mining,
also by the Romans, once surface mining was no longer feasible (The Independent,
2007), to the use of black powder in Hungry in 1627 to blast the resource from the rock-a
much quicker method then fire-setting (Heiss, 2008), to the implementation of pumps by
the English to drain mining shafts and further the excavation to regions previously
inaccessible because of the water (Young, 1965). More recently the use of Explorative
Diamond Drilling was invented and implemented in the early 80’s (Exploration Diamond
Drilling, 2014). Exploration diamond Drilling is used when a “mineral deposit inside the
rock must be mapped before the start of mining, it is necessary to know where the ore
body is located and define its width, length and depth to achieve a three-dimensional
vision of the deposit” (Hamrin, 2011). It is because of the age of the industry that the
innovations, while great at the time, seem minimal when looking back and compared to
other industries whose life cycles run so much quicker.
9
Current State
The United States mining industry produces one of the widest ranges of
commodities from precious metals like gold, silver to semi-precious metals like iron and
copper to minerals such as barite, fluorspar, gypsum, and phosphate. With a land area of
9.6 million square kilometers, it is not surprising that such a variety of resources can be
found within its boundaries (Barnes, 2006). The United States is the second largest
producer of copper and gold and exports over $26 billion worth of minerals and
materials. The industry also employs over 3 million people both directly and indirectly
(Barnes, 2006).
Currently, the mining industry is undergoing change as the technology that has
infiltrated every other industry penetrates the various high risk industries, such as the
mining industry -- whose use of explosives to remove the soil surrounding the desired
resource, the use of large, dangerous machinery, the fact that mining is 24/7 and workers
are expected to work long shifts which negatively impacts workers mental and physical
health, and the extraction of dangerous materials such as copper, which can cause harm to
a worker if they are exposed to it in large amounts, and chemical leakage as chemicals
are often used to transform the ores from their natural state into usable qualities (mining
IQ, 2013)--, and the oil drilling industry -- whose long hours, rick of fires or explosions,
and the fact that the equipment and steel are strung out over a long piece of geography
starting at the surface of the ocean and terminating at 18,000 feet below the sea floor with
many potential week point as the equipment is so large (Remy, 2010).
10
The introduction of the G2 -- a system that is designed to mitigate several risks
present in the mining industry -- stabilizes the roads (therefore keeping them from
collapsing and from causing deaths due to environmental risks) -- as well as controls the
amount of dust that enters the air and the harmful substances that are on the roads, such
as the resources that has been mined as well as the chemicals transported on the roads,
from trucks watering the roads and keeping the substances on the road and not in the air
(therefore controlling the health risk associated with the inhalation of harmful substance).
These industries, whose work depends so much on the environment and
equipment being controlled in order to prevent deaths, benefit from the high level of
control that technology offers. It is because of the high risk present in mining operations
that the United States has high regulations in place, with the result that the industry is one
of the most difficult to enter. Outside of the United States the mining industry is worth
$50 trillion, while in the United States, it is reported to only be worth $962 billion
(Reuters, 2007). There is significant opportunity for the industry to grow if the risk that
creates the barrier to entry, and therefore the regulations that prevent industry entry, can
be minimized. Technology is the catalysts to breaking down these barriers and allows the
industry to grow.
Expected Growth
The United States possess some of the largest deposits of resources that have yet
to be mined because of these barriers (U.S. Department of the Interior, 2014). Below are
three maps showing the vast number of resources present in the United States.
11
Figure 1. Major Metal Producing Areas. Shows the types of metals that could be produced in various
locations in the United
Note. Retrieved from http://minerals.usgs.gov/minerals/pubs/mcs/2014/mcs2014.pdf. U.S. Geological
Survey, 2014.
Figure 2. Major Industrial Mineral-Producing Areas—Part I.
Note. Retrieved from http://minerals.usgs.gov/minerals/pubs/mcs/2014/mcs2014.pdf. U.S. Geological
Survey, 2014.
12
Figure 3. Major Industrial Mineral-Producing Areas—Part II.
Note. Retrieved from http://minerals.usgs.gov/minerals/pubs/mcs/2014/mcs2014.pdf. U.S. Geological
Survey, 2014.
While the mining industry stands to benefit greatly from the implementation of
technology in theory, in reality, technological improvements are still in their infancy as
they have only been implemented by a few companies like Open Loop Energy, Inc.
whose involvement in the service and products sector of the industry places them in the
prime position to be a change leader. Open Loop Energy, Inc. is ahead of the general
mining industry in that, beyond identifying areas that advanced technology could be
beneficial, they have already implemented such ideas to products and put them on the
market. This is ahead of the curve thinking has placed Open Loop Energy, Inc. in a
position to lead the service market in the mining industry, which has three sectors or
markets; the exploration of new resources, the mining of those resources, and the
providing of tools to mine the resources. In order for technology to fully enter the
13
industry, which will enable entry to the industry through the decrease of industry risk and
therefore limit the industry regulations, those companies who are members of the services
market will need to apply applicable technology to the products they offer, and because
they are the ones who drive what methods the extraction market sector uses they are the
only ones who can drive this change. It is in the implementation of technology where the
mining industry stands the most to grow, as this is what will open the door to the mining
of untapped resources.
Market Analysis
There are three sectors or markets in the mining industry; the exploration of new
resources, the mining of those resources, and the providing of tools to mine the resources.
Open Loop Energy, Inc. would fall into the last two sectors or market, the mining of
those resources, and providing the tools to mine resources. Safford, Arizona, the home of
Open Loop Energy, Inc., is known as the silicon valley of the mining industry for
innovative technology companies (C. Hoisington, personal communication, January 16,
2014). With three large-scale mines within close range to the community and an
innovative mining supply company in the middle, evolutionary improvements to
equipment and the process of mining have changed the industry for the better (C.
Hoisington, personal communication, January 16, 2014). The ease of innovation is
generated by the previously mentioned market cluster surrounding Open Loop Energy,
Inc. and enables Open Loop Energy, Inc. to practice their company goals to work with
customers to fix any issues they experience with any equipment. The collaboration that is
generated through the accomplishment of the company goals fosters innovations to the
14
equipment. The use of these innovations by the mining companies leads to an
improvement in the mining process. The mining industry as a whole is poised to grow as
the risk that is associated with mining decreases with the implementation of technology.
As the procurement of resources grows, so does the need to supply tools to free those
resources from various terrains. Open Loop Energy, Inc. is in a unique position in that
while they do provide tools, they have implemented technology to those tools in a way
that other organizations in the market have yet to.
15
Chapter 3
PRODUCTS
Open Loop Energy, Inc. has a variety of departments and several products that are
available from each in house division. Below is a table showing each of the division
positions and the flow of power from the CEO to the head administrators to the staff at
Open Loop Energy, Inc.
Figure 8. (Right) Nevada Division, Open
Loop Energy, Inc. Employees.
Note. Retrieved from Open Loop
Energy, Inc.’ Company Overview, 2014.
Figure 9. (Right) Arizona Division, Open
Loop Energy, Inc. Employees.
Note. Retrieved from Open Loop
Energy, Inc.’ Company Overview, 2014.
16
While it is the customer services, such as hydraulic repair, that garnish the greatest
revenue for the company, other departments have great potential to grow. One such
department houses The DCWDS, a product that is near the end of its lifecycle, and is
going to be replaced by The G2. These products are unique for Open Loop Energy, Inc.
in that The G2 is the second generation of The DCWDS, a product evolution that the
company has never participated in before. The position that the company is in because of
the second-generation product has different challenges and opportunities than the release
of a first generation product. The following are the opportunities and challenges the
company will face. The opportunity to expand the current customer base with a product
that is enhanced. It is expected that the G2 will appeal to consumers who were skeptical
about a new system and see that the technology is successful, since the system was
appealing to enough customers that a new generation was approved for creation. The
challenge that the new generation product will need appeal to the current generation’s
consumers and convince them to remain loyal to the system. These challenges are typical
of the introduction of a new generation product by a company who has never re-released
a product under a new name.
The DCWDS
The “DCWDS” is the original Digitally Controlled Water Distribution System. It
is currently used by 18 mines, with 61 total systems in place. The following map shows
the location and variation of the systems usage.
17
Figure 4. Map of Mines Using the DCWDS
Note. Retrieved from Open Loop Energy, Inc.’s Business Development Administrator, 2014.
These mines are involved in open pit mining, a surface mining operation that is
used when the resource “appears near the surface or is covered by a relatively thin layer
of sand, cinder, or gravel”, a type of terrain that would be structurally unstable for
tunneling (Open Pit Mining, 2012). The mines create an open pit with large “shelves”
stepping down to the bottom, with excavation for the resource happening as each shelf is
made (Open Pit Mining, 2012). Haul roads are used to remove the material off each shelf.
The trucks used to haul this material create a tremendous amount of dust. The opacity is
monitored for safety reasons for both the miners and the environment. Water trucks are
used to control the dust on the roads, shelves, and other areas of the mine properties. The
need to control the use of the water or other abatement materials is essential to a mining
property. Open Loop Energy, Inc.’s DCWDS is the answer to this need.
18
The DCWDS is a digitally controlled water distribution system that was
developed as a result of collaboration with several mines who reported an inconsistency
with the watering of the mine terrain when using water systems that relied on the number
of tire turns or the speed of the water truck to delegate the amount of water sprayed on
the terrain. Over watering or under-watering the mine landscapes were an insolvable
issue with these types of watering systems, and without the implementation of an
advanced technological update, were uncontrollable. Because of the history that Open
Loop Energy, Inc. has with the mines they service, they were approached with the
overwatering/under-watering problem in the hope that they could find a solution. And
they did. By using digital technology, the mines that implemented The DCWDS were
able to control patterns, density, and flow rates more accurately than any other system
available on the market (Digital Controlled Water Distribution system, 2012).
The technology that is used to track the water distribution has been patented since
2008 (C. Hoisington, personal communication, January 16, 2014), giving Open Loop
Energy, Inc. a unique market position. They are one of the few companies offering a
digitally controlled watering system, a system that answers the complaints and issues that
are prevalent with the common watering system. The equipment is a long-term
investment and the mines who buy into the varying water distribution systems remain
loyal to the various suppliers. This creates a lock-in effort for the company who, because
of the customer loyalty, has an advantage to selling new product generations. The main
task for the sales representatives will be convincing mines that are loyal to their
competition that they should switch over to Open Loop Energy, Inc. because their
19
products are genuinely better. Their hold on the market is sound, with approximately
30% of the market shares held by Open Loop Energy, Inc., but does not grasp the entire
sector as there are large number of competitors (C. Hoisington, personal communication,
January 16, 2014).
The DCWDS customer base grew through direct, business-to-business sales.
Open Loop Energy, Inc. employs a team of sales representatives who sell the services of
the CNC, the Chrome Shop, Hydraulic Repair, Fabrication of parts and goods,
Mechanical Repair, Technical Services, Blank Repair, and the DCWDS to mines. The
sales personal are very effective and helped the DCWDS’s customer base grow to cover
18 mines with 61 systems in place.
The DCWDS was first available on the market in 2008. By 2010, Open Loop
Energy, Inc. had begun to work on improving the DCWDS, making the ‘I wish it could’s’
expressed by their customers a reality. The last year the DCWDS was available to
purchase was in 2012, with the G2 making its appearance on the market in 2013. To
upgrade from the G1 to the G2 customers had to pay $51,216, while the customers who
purchase the G2 from scratch had to pay $75,000. Customers are given an at-purchase
discount from upgrading their system rather than outright purchasing it. Despite no
longer being available to purchase, maintenance and repair on the product is still
provided by Open Loop Energy, Inc. for the DCWDS. This service is provided as a
means to both express customer loyalty and maintain the current product customers until
they have all transferred over to using the G2. Typically a product maintenance service is
offered for 2-3 years after the discontinuation of the product, (C. Hoisington, personal
20
communication, January 16, 2014), as the equipment that mines utilize is expected to be
a long-term investment.
The G2
The G2, a digitally controlled water distribution system, is the second generation
of the DCWDS. It was available on the market in 2013. Since its introduction it has been
purchased by 7 mines with 22 systems in place. Below is a map showing the different
locations of the G2.
Figure 5. Map of Mines Using the G2.
Note. Retrieved from Open Loop Energy’s Business Development Administrator, 2014.
The G2 is differentiated from the DCWDS by the improvements made to the overall
system. The G2 system has been proven more reliable than the DCWDS in that the
system was developed to enable preventive maintenance for both the technological
system and the hydraulic system it works with. The cab incursions were addressed in an
attempt to relieve ergonomic concerns. The G2 has an improved user interface, which is a
21
result of the hardware decisions made in designing the G2. A table that compares the
software differences in the G2 and the DCWDS can be seen on page 5.
The G2 is so much more advanced than the DCWDS with improvements to the
actual system and cosmetic upgrades that will give Open Loop Energy, Inc. an edge on
the market. The market currently has systems available that are comparable to the
DCWDS system, the innovation present in the G2 is so much greater than the
competitors’ products that the loyalty that typically over rides transfers from one supplier
to the next can be broken. The following are three comparison charts compare the G2 to
Ground Force, Mega Corp, and Caterpillar to their water distribution systems. The
features of these products are often minimal and where the correlation was nonexistent
the G2 features that were the closest were recorded. The highlighted section on each table
shows where the essential product differences, which were the methods that each system
decides how to distributes their water.
Table 2
Ground Force WCS vs Open Loop Energy, Inc. G2
Ground Force WCS
Individual spray head control
-Water systems can implement spray head
controls to alter how wide the flow is and
how long.
Intermittent spray package
-This enables the driver to select a package
and manage the flow type without having
to manually adjust individual spray heads.
Open Loop Energy, Inc. G2
System is networked between the DCM’s
and components that make up the system
-Rather than installing a system that works
remotely, the G2 implements sensors and
data collectors on various parts of the
system. These parts convey information to
the Digital Control Monitor and don’t use
wires to connect sensors to monitors, like
many systems do.
Customizable flow curves available for
operations on the cab controller
Is only accessed with authorization entered
on the screen and can be done by Mine site
personnel
22
-Flow curves are comparable to spray
packages.
-the access restriction enables the mine to
control the water systems, while also
freeing them from the need to rely on a
company representative to fix any issues.
Safety shut-off on tank
Data logs automatically
-When the vehicle some to a stop, the water -Information such as what flow was
system automatically shuts off
utilized and the time the truck was running
are saved for day-to-day or monthly
comparison
Controls Pump Speed based on mph
Controls Pump Speed digitally to prevent
(ground speed) rather than engine rpm
overwater or under watering caused by
reliance on the turn of tires to measure
water output.
Pre-set up to 4 programs
Multiple watering patterns available
-can change programs on the go
CAN bus technology
CAN bus technology implemented
Control Center with backlighting but no
Touch Screen on control center
touch screen
Note. Compares the Ground Force Water Control System to Open Loop Energy, Inc.’s G2, with the main
difference in the control of the water distribution highlighted. Retrieved from http://gfworldwide.com/wpcontent/uploads/2013/06/WCS-Cut-sheet.pdf.
Table 3
Mega Corp DiCSC vs Open Loop Energy, Inc. G2
Mega Corp DiSCS
Self-Contained system that does not need
to be hooked up to another vehicle systems
The spray control system utilizes a PWM
(pulse width modulation) strategy to
automatically limit the amount of water
consumed based on vehicle speed while
maintaining road dust control coverage
Open Loop Energy, Inc. G2
System is networked between the DCM’s
and components that make up the system
-Rather than installing a system that works
remotely, the G2 implements sensors and
data collectors on various parts of the
system. These parts convey information to
the Digital Control Monitor and don’t use
wires to connect sensors to monitors, like
many systems do.
Customizable flow curves available for
operations on the cab controller
Is only accessed with authorization entered
on the screen and can be done by Mine site
personnel
23
-Flow curves are comparable to spray
packages.
-the access restriction enables the mine to
control the water systems, while also
freeing them from the need to rely on a
company representative to fix any issues.
Automatic Shut off of water when vehicle
Data logs automatically
comes to a stop
-Information such as what flow was
-When the vehicle some to a stop, the water utilized and the time the truck was running
system automatically shuts off
are saved for day-to-day or monthly
comparison
GPS Speed Sensing
Controls Pump Speed digitally to prevent
-Use GPS system to determine ground
overwater or under watering caused by
speed
reliance on the turn of tires to measure
-Amount of water applied to road surfaces
water output.
based on ground speed
Can be applied to most Mega Corp water
Multiple watering patterns available
systems
CAN bus technology implemented
Note. Information about the DiSCS was retrieved from http://archive.constantcontact.com
/fs067/1106684108202/archive/1109914493851.html#LETTER.BLOCK7.
Table 4.
The CAT WDS vs Open Loop Energy, Inc. G2.
CAT WDS
Open Loop Energy, Inc. G2
A self-contained hydraulic system that
controls spray patterns and allows for a
consistent spray width regardless of engine
rpm
Program Display Monitor with keyboard
-The monitor is not a touch screen and
users must input selections through the use
of a keyboard
Customizable spray patterns
-This enables the driver to select a package
and manage the flow type without having
to manually adjust individual spray heads.
Controls Pump Speed digitally to prevent
overwater or under watering caused by
reliance on the turn of tires to measure
water output.
Touch Screen on control center
-The use of a touch screen minimizes the
amount of time for input requests to begin
working.
Customizable flow curves available for
operations on the cab controller
Is only accessed with authorization entered
on the screen and can be done by Mine site
personnel
-Flow curves are comparable to spray
patterns.
24
-the access restriction enables the mine to
control the water systems, while also
freeing them from the need to rely on a
company representative to fix any issues.
Open-pit mines are the type of mines who use the water systems to keep roads
stable and dust down. Currently, only 7 of Open Loop Energy, Inc.’s 18 customers have
switched from the DCWDS to the G2. This number will expand as lifecycle of the
DCWDS they are using reaches its end and the mine upgrades to the second generation.
However, beyond just switching the current DCWDS users to G2 users, Open Loop
Energy, Inc. can expand its customer base by seeking out the other open-pit mines and
selling the advantages the G2 has over all other water distribution systems. The sales
representatives for Open Loop Energy, Inc.’s digitally controlled water distribution
system will hold a critical role in that they will be key to maintaining the current
customer base through their already established relationships, while also bringing in new
customers. It would potentially even be advisable to separate the two tasks within the
sales force and have a clear division between personnel, with one group-maintaining
customers while the other seeks them out.
The DCWDS had a lifespan of 4 years (2008-2012). The G2 can be expected to
have a similar life span of 4 years (2013-2017), with work on the next upgrade or
expandability of the G2 beginning in 2015. Open Loop Energy, Inc. anticipates the
introduction of a third generation of the product in the year 2018 with the research and
development staff, who are under the technical services department, have already begun
to interview current customers to find out what improvements would be beneficial to
25
users as well as hire a software developer who is dedicated to developing the new
software for the watering systems. The current plan to release a new generation every 4
years is the perfect amount of time for right now as the current generations lifespan is
fully used up by the end of the 4 years and the new product is sufficiently differentiated
that it can be called innovative. However, as we are dealing with technology, the lifespan
of the digitally controlled water distribution system can be expected to shorten as
technology has a history of ageing quicker than any other markets products. When Open
Loop Energy, Inc. faces this shortened lifecycle, the products shelf life will need to be
shortened as well.
26
Chapter 4
OPEN LOOP ENERGY, INC CURRENT MARKETING STRATEGIES
Open Loop Energy, Inc. used limited marketing techniques for the DCWDS;
however, they have set in action a greater variety of marketing methods for the
introduction of the G2. The company has primarily implemented a push marketing
campaign, where company representatives seek out those they think will use their product
and do all they can to add them to their customer base. There are currently eight product
sales representatives in the Safford Office, with another four in the Winnemucca office.
When selling the DCWDS to mines the sales representatives approach the mine
properties in three areas. One, the maintenance department that is where they normally
do business, second, operations who is responsible for maintaining production and
inevitable the haul roads, and then safety & environmental. The latter has been
instrumental in forwarding the cause of improved technology and procedures for dust
abatement. This direct marketing method is successful at gaining the clientele of those
business sought after, but fails to bring in new customers who would potentially be
interested but because they weren’t personally approached and therefore remain in the
dark about the product and it’s benefits. Upon the initial introduction of a product, and as
it looks to gain traction in the market place, this method of marketing is most successful
and will build a customer base very quickly. However, as Open Loop Energy, Inc. is
looking to expand its number of clients, the direct, sales personal sell the product to those
business they think will purchase it, marketing method will need to be improved upon
27
and the campaign will have to expand to include a mass marketed promotion to enable
the company to reach new clients with atypical occupations or backgrounds as well.
Open Loop Energy, Inc.’s technique of using direct marketing to generate sales
had no need to implement a marketing department to oversee the campaign as a whole.
There is a Sales Administrator who oversaw the sales personnel and is the person they
were accountable to. However, there is not a single department dedicated to the
marketing of products but rather, at the time of this writing, the general manager, the
general manager’s executive secretary, the sales team, the CEO, and the technical
services departments are all involved. While the campaign has many heads being put
together to generate ideas and methods to market Open Loop Energy, Inc.’s products,
confusion can be generated by so many people and departments involvement. When
considering this issue the organization needs to look at more than the technical aspects of
specializing a department but also the effectiveness of the organizational structure to
implement the companies competitive strategy and the effect a change will have to
aligning the companies 4S’s, strategy, structure, style and system.
The marketing campaign has been very consistent in the use of the slogan that
accompanies mentions of the G2. The catchphrase “Simply the Best” has accompanied
the G2 in the push campaign that is currently being delivered to potential customers. I
think that this phrase is a clever way to both favorably compare the product to its
competitors and associate the product with the highest quality possible. It is a simple
phrase and does not overpower the already minimal product name of “G2”. It is also
easily connected to the G2 in one’s mind, an important quality in a slogan, in that it
28
assists in the memorability of the product and the future sales to potential customers. The
slogan was created by the Business Development Administrator as he compared the
DCWDS to competitor’s products. He expressed in an interview that he was seeking to
establish a mindset for customers that the G2 is better than anything a competitor could
offer, and that the comparison was simply accomplished.
Advertisements
While Open Loop Energy, Inc. has, for the majority of the company’s existence,
relied on direct marketing to generate customers upon the introduction of the G2 they
begin to use the indirect method of advertising to reach new customers. In 2013, the same
year the G2 was brought to the market, several channels were used to publish these
advertisements and included the Internet and high traffic mining websites, published
mining magazines, and brochures passed out at mining conventions.
Print advertising is an integral part of Open Loop Emery’s advertising campaign.
They have published adds for the G2 in two magazines to date, with the magazines being
the mining related material the CEO prefers. While this is not the best qualification for a
company to base its advertising plans around, it is a start and the organization who has
never participated in this form of marketing has to start somewhere. It is recommended
that in the future, the location for promotions be decided using daily views and the
demographics. In January 2014, there was a ¾ page add in Amigos for Southern Arizona.
In addition, in November 2013, there was a ½ page add in Mining Engineering. Both are
respectively pictured below.
29
Figure 6. (Above) Amigos for Southern Arizona
Advertisement.
Note. Retrieved from Open Loop Energy, Inc.’s
Business Development Administrator, 2014.
Image 7. (Right) Mining Engineering Advertisement.
Note. Retrieved from Open Loop Energy, Inc.’s
Business Development Administrator, 2014.
The Amigos for Southern Arizona advertisement covers Open Loop Energy, Inc.’s entire
product offerings with the G2 being mentioned on the last line, and highlighted in red.
While this advertisement is not specifically seeking new customers of the G2, it is worth
noting in that the G2 is mentioned and that Open Loop Energy, Inc. is breaking it’s mold
of push only sales generation. The willingness to go outside of the company’s standard
method of operation and create a new path indicates that the company is keen to accept
recommendations that are unique and implement them. The advertisement for Mining
Engineering focuses exclusively on the G2. The visuals and clear listing of product
30
benefits to customers is what makes this advertisement work. The main question a
company must address is whether or not to invest in a product and ultimately what it will
do for you. This advertisement clearly defines that. The magazines chosen for these
advertisements are well known mining publications that were expected to receive the
most traffic from potential customers. While there are other reputable options for printing
advertisements, they will be covered in the recommendations portion of this paper.
Open Loop Energy, Inc. also initiated the use of the proliferation of the
Internet to expand their customer base through the use of online advertisements and
search engine optimization. On Google, when you search for ‘mining, digitally controlled
water distribution system’ Open Loop Energy, Inc. is in the first three results. This is
important in that the use of online searches is often how new products are discovered by
potential customers, a fact that Open Loop Energy, Inc.’s CEO confirmed as the reason
Search Engine Optimization (SEO) has come to their attention as a goal that needs to be
addressed (C. Hoisington, personal communication, January 16, 2014). The company will
be best served by remaining on the first page of results and as close to the top as possible,
which will happen through the retention of a SEO agency and will cost around $2,500
(DeMers, 2013). Their current position in the top three is ideal and will need to be
maintained through SEO.
There is a banner advertisement that specifically targets potential G2 customers
on smenet.org, the Society of Mining and Exploration (SME). The advertisement started
running on January 1, 2014 and is on a year contract. Open Loop Energy, Inc. plans to
renew in 2015. This advertisement is in a place where anyone who visits SME’s web
31
page will see it, and the people who visit SME’s web page are all interested in mining,
exposing Open Loop Energy, Inc. to new potential customers.
The methods of promotion that have been discussed in this section are all
practices that Open Loop Energy, Inc. is currently implementing. Because it is essential
that recommendations offer new ideas and expand on the promotions that are in use at
present time.
32
Chapter 5
COMPETITORS
Open Loop Energy, Inc. has many competitors, as is natural for an industry the
size of the mining industry. An analysis of the competition is essential in any
recommendations made to Open Loop Energy, Inc., in that recommendations should be
such that place them ahead of the competition and not in its footsteps. However, what has
worked, such as the creation of a YouTube channel and the publication of a newsletter,
for the competition in marketing their products can be great guidelines for Open Loop
Energy, Inc. as it plans out its approach to marketing its own products. The biggest
competitors for Open Loop Energy, Inc. are Ground Force Worldwide, Mega Corp,
Caterpillar (aka CAT). The following is an analysis of each.
Ground Force
Ground Force Worldwide is a producer of large fuel, lube, and water trucks as
well as mining support equipment. They were established in late 2000 by Ron Neilson,
who has over 40 years of experience as a CAT dealer (Ground Force History, 2014).
Ground Force Worldwide is the parent company to two branch offs Ground Force and
UnderGround Force, whose names though all different as variation of the original name
with both branches removing the Worldwide and one adding Under to the first work in
the title. Their strength lies in their International sales, which account for 75% of their
business (Ground Force History, 2014). They service over 50 countries, with five
factories 3 in North America, 1 in South America, and 1 in Europe (Ground Force
History, 2014). They offer vehicular solutions to both open-pit and underground mining
33
companies with 29 products available as well as servicing and repairing those products.
They currently have a sales team of four account managers, three sales coordinators, and
one vice president of sales. Ground Force Worldwide uses a unique method of pulling in
customers by having their own YouTube channel where they post videos and information
on their products, company news, company events, and the ideas behind some of their
products. This is a rare method of reaching out to customers in the mining industry,
however it appears to work for Ground Force Worldwide as one video had 1,932 views
with others coming close with 1,851 views and 1,466 views.
Ground Force Worldwide currently offers a Ground Force Water Control System
(WCS) that is similar to the G2 (Water Control System, 2014). The G2 is differentiated in
the method it controls the water distribution. A table comparing the WCS to the G2,
which highlights the main differences between the G2 and the WCS in that one uses
technology to control water output while the other uses the vehicles ground speed to
determine the amount of water released, can be found on page 22 (Water Control System,
2014).
Mega Corp
Mega Corp is a manufacture who produces water and fuel tanks, coal haulers and
bottom-dump trailers, equipment transports, specialty dumper bodies, mobile pumps, and
elevating scrappers. They design and manufacture all of their products and sell and
support these products through original equipment manufacturers (OEM) construction
and mining equipment dealers (About Mega, 2014). They employ 9 sales personnel who
sell both parts and equipment to potential customers. They were established in 1977 in
34
Albuquerque, New Mexico and have been locally owned ever since. Their strength lies in
their relationship with other OEM’s and the various agreements they have with those
companies covering a variety of their products (About Mega, 2014). Because the various
OEM’s act as the intermediary between the manufacture of their products and the
customer, this relationship is essential to their success. Mega Corp sends out a newsletter
regularly. It is used to keep both its employees and the various OEM’s up to date on the
news and events relevant to Mega Corp’s success, as well as foster a stronger
manufacture/client relationship. Unity is established among those directly involved with
Mega Corp by allowing them to regularly be a part of the company’s flow of information.
Mega Corp currently offers a Digital Spray Control System or DiSCS that is
similar to Open Loop Energy’s G2. On page 23 there is a table comparing the G1 to the
DiSCS. The G2 is set apart from the DiSCS by the way the water distribution is
computed and the highlighted row shows where this is described. One uses speed
determined by GPS data to decide on water output and the other uses advanced
technology to determine the amount of water to be released.
Caterpillar
Caterpillar Tractor Co., the parent of today’s CAT manufactures, was established
in 1925 and in 1968 the first off-highway construction and mining truck was produced
(History, 2013). CAT both designs and manufactures it’s products, which are vast and
vary greatly, and then allows one of its authorized dealers to actually sell the product to
the customers. They supply vehicles for every industry that requires trucks to accomplish
their goals, everything from the construction industry to the mining industry, and the type
35
of industry that the various products were designed in mind which impacts the product
offerings.
CAT’s strength is in its reputation. They have been in business for almost a
century and have had many successful products that established the CAT name as a
manufacture to be trusted. They currently have over 400 products listed for purchase
through its dealer network, an impressive feat, but one that can be expected with a
company of its size. They currently employ over 200,000 people (Careers, 2013).
Because CAT has been in business for so long, they are able to turn over the actual
bringing in of customers and selling of products to an intermediary or authorized dealer.
These dealers often offer add-on’s to the CAT equipment, such as the G2, while CAT
stays on the production side of the business.
CAT currently offers a Cat Water Delivery and Control System or WDS (Water
Truck, 2013). This systems is available as a factory optional attachment and includes
factory-installed controllers in the cab, a hydraulic pump and monitor, a water pump, and
spray heads (Water Truck, 2013). This system does not come installed to water trucks,
but rather is installed upon customer request and can be purchased from a CAT dealer as
a kit to be installed on site or as a whole product to be delivered already installed. This
system uses a self-contained hydraulic system that controls spray patterns and allows for
a consistent spray width regardless of engine rpm (CAT, 2013), which is different than
the G2 system, which uses digital control technology for water distribution. The table
located on is a comparison of these two products, with the difference in control systems
highlighted.
36
Chapter 6
HISTORICAL EXAMPLES
This chapter will look into historical examples when the second generation of a
product was successfully introduced to the market. The natural inclination within any
market is to update an already existing product and practice incremental innovation, and
fix any complaints that might have arisen from the use of the product, rather than practice
radical innovation and fabricate a completely new invention. In this fast slow cycle
market the timing of presenting a product and showing customers its benefits over other
current or previous generations is one of the key success factors. The best time to
introduce a new product is when the current generation has almost reach the end of its
lifecycle, so that the value of the current generation is not cut short by the attention the
new generation pulls (Nobel, 2012). The best way to introduce the updates to a product to
the market is by referring to it as the second generation or version of the current product.
The name introduction should highlight the changes made to the second generation as a
means to differentiate the products from each other.
In 1996 SyQuest Technology, the world leader in removable cartridge hard
drives, initiated a new marketing plan for the next generation of its cartridge hard drive
(Reardon, 1996). The innovation of the next generation hard drive was incremental in
that it was an update of the current product and not a new product all together (Reardon,
1996). Incremental innovation is also what the G2 system possesses, as it is an
improvement of the DCWDS. SyQuest’s marketing strategy involves the leveraging of
established strengths, one of which is their commitment to focusing on removable hard
37
drives and continually improving them as the industry technology changes, and focusing
on specific market segments where potential for growth is evident, such as the
multimedia, photography, video, desktop publishing, and Internet information
management segments (Reardon, 1996). Crossover utilization exists for Open Loop
Energy, Inc. in the leveraging of established strengths portion of their marketing plan.
One such strength is in their reputation for commitment to customers and improving
products to meet those customer needs. This focus should be applied to the G2, as this
product is a strength for the company and a dedication to ensuring that the product meets
customer needs through working with the customers will utilize the example that SyQuest
provides.
In 2007 Senetek, a specialty dermatology and skincare company, partnered with
TriaxAesthetics LLC, a company focused on quality of life for patients with dermatologic
conditions, to produce the second generation of Cytokinin, a skin care product (Senetek,
2007). This product is an incremental innovation and despite it being produced for the
first time by two companies, the product is an improvement on an existing product. This
innovation is comparable to the G2, as both are incremental innovations. The introduction
of this product to the market is significant in that it highlights two companies with in an
industry coming together to successfully market a product. They were able to do so
through clearly defined divisions of labor, one company, Senetek, were to produce the
product, the other, Triax, were to market it. Senetek was guaranteed a minimum of 10.8
million dollars in revenue the first year and was to contribute 4.5 million dollars to Triax
for sales and marketing the first year, after the initial year profits were to be split on a
38
50/50 basis (Senetek, 2007). The success of the second-generation product was made
possible through a unique partnership. Open Loop Energy, Inc. should consider
collaborating with potential companies, such as the manufactures of the large water
trucks that use their systems and possess a well know and liked reputation like Atlas
Copco and Mack Truck Inc., to generate sales to new customers. Senetek and Triax’s
partnership was also successful because they are two reputable companies whose
reputations, when both put behind a single product, generate customer interest. If Open
Loop Energy, Inc. collaborates with a manufactures whose reputation for high quality
products and dedicated customer care matches their own, the combination of the two
names would create a product that would be irresistible.
In 2011 LeadLife Solutions, the provider of a premier lead management solution
that combines people and technology, introduced the second generation of its marketing
automation product (LeadLife 2011). The company’s focus is on customer success and
the advantage that software-as-a-service can provide to companies if implemented
correctly (LeadLife, 2011). This companies marketing campaign is significant in that it is
primarily online, which is logical in that it’s product is technological and generates a
marketing campaign on a computer (LeadLife, 2011). This marketing method suggests
that companies should use the same median to promote their product that their product is
based in, so if a company is producing technology they should use technology to promote
it or if a company produces vehicles they should use vehicles, in their actual form in
advertisements or a miniaturized form as promotional paraphernalia, in order to best
promote their product (LeadLife, 2011). The crossover utilization for Open Loop Energy,
39
Inc. from this campaign is that since their product is a technology that produces tangible
results, they should highlight those results through the use of technology-whether it be
advertisements that show the water trucks utilizing the digital control system and the
advantages it provides or an digital communication, like email, that promotes the
technological advancements of the products.
In 2012 Apple introduced the third version of their iPad model (Nobel 2012).
However, unlike the other now generations of Smartphones, they called it the iPad rather
than the iPad3 (Nobel, 2012). This was unique in that consumers don’t necessarily read
specs on products, but they’ll always notice a new name (Nobel, 2012). Apple took a
risk that differentiated the iPad from the iPhone, whose new generations always bare a
new number or letter on the product, and made it similar to the Mac products, whose new
generations name never change (Nobel, 2012). The perception among consumers is that if
the product has brand name continuation, it’ll be somewhat better than the previous
model and that there won’t be a learning curve to use it (Nobel, 2012). This is applicable
to Open Loop Energy, Inc.’s water control system. Their first product in that line was
called the DCWDS, while the next generation was labeled the G2. Open Loop Energy,
Inc. plans to produce a third generation of the product. By applying the information from
the example above, they should continue with the G brand name and label the next
generation the G3.
The following table covers the four cases and presents the example and the
application in a concise format. It clearly shows the benefits and limitation of each
example and the way in which the information will be useful to Open Loop Energy, Inc.
40
Table 5
Historical Examples Pros and Con’s
Example
Utilization Pro’s
Utilization Con’s
SyQuest Technology
- SyQuest’s marketing
strategy involves the
leveraging of established
strengths
By utilizing Open Loop
Energy, Inc.’s reputation for
commitment to customers
and improving products to
meet those customer needs,
that reputation will grow in
strength and will cement the
company reputation
Open Loop Energy, Inc.
should collaborate with
potential companies.
Successful if it’s two
reputable companies whose
reputations, when both put
behind a single product,
generates customer interest
An over focus on the
use of strengths will
limit the growth of the
company in other areas
and will stunt
development. This
method should be used
in moderation
This is a risky situation
in that the partner will
have access to the G2
system and could
potentially exploit it.
Contracts regarding the
security of the patent
should be signed before
entering such an
agreement.
It is important that
other forms of
marketing, like business
to business sales, not be
neglected as they have
demonstrated previous
success
If Open Loop energy,
Inc. does what Apple
did and not upgrade the
name their will be
confusion over what
generation the product
is and if they are getting
their money’s worth.
Senetek
- The example highlights
two companies within an
industry coming together
to successfully market a
product
LeadLife
- This marketing method
suggests that companies
should use the same
median to promote their
product that their product
is based in
Apple iPad
-Labeled the third
generation as the iPad
rather than the iPad3. The
perception among
consumers is that if the
product has brand name
continuation, it’ll be
somewhat better than the
previous model and that
their won’t be a learning
curve to use it. Don’t
follow their example.
Open Loop energy, Inc.
should highlight the G2’s
results through the use of
technology as it is a system
that is based on technology
The first product in the line
was called the DCWDS,
while the next generation
was labeled the G2. The
company should continue
with the G brand name and
label the next generation the
G3.
Note. This table explains the benefits and the negative impacts of each examples applicable information.
41
Chapter 7
RECOMMENDATIONS
While Open Loop Energy, Inc.’s current marketing practices are a great start for a
company who has never implemented a marketing campaign that is not centered around
business to business sales representative, there is still room for improvements and the
following recommendations are aimed at improving the success of the G2’s.
The sales representatives for Open Loop Energy, Inc.’s digitally controlled water
distribution system hold a critical role in that they are key to maintaining the current
customer base through their already established relationships. They are, however,
currently also responsible to bring in new customers while maintaining the current
customer base. This is a problem in that requiring sales representatives to perform two
jobs that lie on separate ends of customer service will potentially lead to some customers
falling through the cracks and being neglected. I recommend that the company expand
its customer base by seeking out the other open-pit mines, because those are the mines
where Water Distribution Systems are needed, and selling the advantages the G2 has over
all other water distribution systems. I recommend that Open Loop Energy, Inc. separates
the two tasks within the sales force and establish a clear division between personnel, with
one group-maintaining customers while the other seeks them out. This method would
ensure that the current customers don’t become neglected as the company actively seeks
to expand the consumer base. Once a sales representative has obtained 7 new customers,
which is one of the goals for sales representatives this year (C. Hoisington, personal
communication, January 16, 2014), they will go from a new customer seeker, to a current
42
customer maintainer. Every year the organization will take the three current customer
maintaining sales representatives that have been in that position the longest, disperse their
current customers to other current customer maintainers, and join the new customer
searchers. This will ensure that new customers continue to be sought out and that sales
representatives have to opportunity to participate in both sides of the customer care.
However, there are limitations to any recommendation. By separating the sales
representatives, it is possible that they become bored in their current side of the sales
representatives tasks and lose their interest before they have the opportunity to be placed
on the other side. Another limitation is the additional sales representatives which would
be required to maintain such a system, the hiring of these new sales personal would be a
cost that will need to be considered before the implementation of the split sales
representatives.
The current print and online advertisements focus on what the results will be if
you purchase the system. I recommend that advertisements that focus on qualities of the
G2, like specific product features such as flow patterns and the digital control, and direct
comparison to the competition’s products be added to the advertising mix. By focusing
on the how and not just the why, Open Loop Energy, Inc. will be able to back up their
result claims that are the message in their current advertisement. The addition to the
current advertisements of promotions that compare the G2 to competitors will divide
Open Loop energy, Inc. from the competitors in the eyes of potential customers. This
division will promote future sales because to the perception of quality over other water
distribution systems.
43
Open Loop Energy, Inc. also needs to initiate an online campaign. This side of the
marketing plan will focus on connecting with mine executive and organizations through
social media such as YouTube, LinkedIn, Facebook, and Twitter. Several competitors,
including Ground Force Worldwide, who has a YouTube channel, and Mega Corp, CAT,
and Ground Force Worldwide, who all run a Facebook page, already have implemented
the practice of using these sites to connect with potential customer. These outlets will
have a pre-determined rate of output, such as every Wednesday, every other Friday, and
will need to be consistent with the posting across all social sites. These free marketing
tools are very effective at generating a wide customer following and forming a public
image for the company. All content put on these sites needs to have a unified message,
and I recommend that the message be in line with the company creed and mission
statement that hard work and dedication to employee satisfaction are what drive the
company. This can be displayed through video interviews with customers about times
when they had a problem and Open Loop Energy, Inc. was able to fix it, quotes from
clients that have experienced exemplary service, images of products and how Open Loop
Energy, Inc. was able to fix it, photos of Open Loop Energy, Inc.’s community
involvement, which is implemented as a way to maintain a positive public image, such as
images of Hoisington at the County Fair animal shows or executives with the American
Youth Soccer Organization’s (AYSO) soccer teams that Open Loop Energy, Inc.
sponsored, a behind the scenes look at a service trip, statues about company lunches and
the people who were able to attend, or a piece on each of the wives of the company
executives and the support behind the men. These are just a few examples of ways Open
44
Loop Energy, Inc. can reach out to current customers, potential customers, and the
members of the communities and give back to them.
The online campaign will benefit Open Loop Energy, Inc. if they utilize the
mining associations and their websites. These sites often include updates on technology
and methods and are an excellent place to connect with members of the industry who
frequently visit these sites. One such site is Mining.com. I recommend that Open Loop
Energy, Inc. contact them and request that they publish an article covering the companies
break through on water control and innovation that exists with the G2 product. This
article would not be out of place as they regularly write about company’s news and
products that have been improved. The National Mining Association or NMA web site is
a great place to publish an article on the merits of the G2 and how it was developed. I
also recommend that an advertisement be displayed on this site. The Society of Mining
and Exploration is another great option for both running advertisements and requesting an
article about the G2 and the changes it has undergone from the DCWDS. All of these
sites are viewed by members of the mining industry, as the content is catered to mining
professionals and the organizations members are from the group of mining professionals.
Another aspect of the online campaign will have to be search engine optimization
or SEO. This is important in that the use of online searches is often how new products are
discovered by potential customers, a fact that Open Loop Energy, Inc.’s CEO confirmed
as the reason SEO has come to their attention as a marketing method that needs to be
implemented (C. Hoisington, personal communication, January 16, 2014). The company
will be best served by remaining on the first page of results and as close to the top as
45
possible. This is typically accomplished by hiring an IT specialist who will be dedicated
to SEO or hiring an SEO agency and contract them out on a monthly basis. The retention
of a SEO agency typically costs around $2,500 (DeMers, 2013). This will increase the
search engine optimization when searches are conducted for a system like the G2, but
aren’t worded exactly as our product is described. Anything other than “digitally
controlled water distribution system” does not pull up Open Loop Energy, Inc.’s website,
which limits page traffic and potential customers using us through an online search and
will be changed as SEO becomes a priority.
I recommend that Open Loop Energy, Inc. continue to attend the mining
expositions. These events are great marketing tools, with over 50,000 mining company
decision makers from multiple countries attended The National Mining Associations
2014 convention. The National Mining Association makes a YouTube video for their
channel with randomly selected vendors each year. I recommend that Open Loop Energy,
Inc. speak with their representatives at the 2016 show and negotiate an opportunity to be
featured in one of their videos. Several of their individual videos have gotten over
200,000 views. The video on YouTube would be an opportunity for Open Loop Energy,
Inc. to promote the innovation that was used to create the G2 and the features that set the
product apart from the other water control systems available.
Open Loop Energy, Inc. should consider going to the various mining schools,
such as the University Of Arizona Department Of Mining and Geological Engineering
and the New Mexico Institute of Mining and Technology, and present the G2’s
breakthrough technology. Creating a presentation that is interactive and allows the
46
students to put the skills they are currently working to develop to use would leave a
positive impression on those involved. These students, who are the future of the mining
industry, will be impacted by the experience of participating directly with Open Loop
Energy, Inc., a current innovative leader of the mining industry. It will also give a behind
the scenes tour of the service market of the mining industry and potentially spike the
interest of students who have the opportunity to explore ideas and methods from a
scholarly perspective. As this market is where the greatest potential to grow exists,
getting students involved in that growth will benefit both the sector and the students who
will have the experience to be hired upon graduation.
The following company’s example is one that Open Loop Energy, Inc. can utilize
in the marketing of the G2 system. LeadLife is an online marketing solutions software
creator, whose marketing campaign is primarily online because it’s products are
technological (LeadLife, 2011). This marketing method suggests that companies should
use the same median to promote their product that their product is based in. Therefore, if
a company is producing technology, they should use technology to promote it or if a
company produces tangible products they should use tangible objects to promote their
products (LeadLife, 2011). Using this mindset, Open Loop Energy, Inc. should focus on
an online campaign, as the system they are promoting is technological. This campaign
will use websites, advertising online at a variety of mining associations and information
sites where member of the mining community visit, and social media.
The following company’s example is one that Open Loop Energy, Inc. can utilize
in the marketing of the G2 system. In 2007 Senetek collaborated with TriaxAesthetics
47
LLC to produce the second generation of Cytokinin, a skin care product (Senetek, 2007).
The success of the second-generation product was made possible through the unique
partnership the two companies formed. I recommend that Open Loop Energy, Inc. create
a similar partnership to generate sells to new customers with companies who have a
strong reputation for producing high quality large water trucks, like Atlas Copco and
Mack Truck Inc. The partnership would require one of two arrangements; the agreement
that Open Loop Energy, Inc. creates the water distribution and the chosen partner creates
the water trucks and installs them system directly onto the truck, the truck is then sold
under both companies names, or the agreement that Open Loop Energy, Inc. sells the
right to use the water distribution (but maintains the patent on the product to ensure the
partner doesn’t sell the technology) and receives annual royalties on each product that is
sold with the system, the combined products would be sold under both companies’
names. This collaboration would give Open Loop Energy, Inc. the access to customers
who are loyal to the water truck distributers, and therefore generate new customers, as
well as generate a positive public image for the G2 as the companies combined images
would increase each individually. Another implication of the collaboration is a direct
connection to the truck produces and therefore an avenue to discover first-hand the
places’ the system could be improved and a way to test out new generations on the
vehicles that will be using them.
As the company heads into the future, it is imperative that they continue to release
new generations of the digitally controlled water distribution system. A study conducted
by Stremersch, Muller, and Peres in 2010 reveled that product growth accelerates across
48
technology generations and that subsequent generations after the initial “vintage” or first
generation experienced large product market growth (Stremersch, 2010). This study
indicates that as Open Loop Energy heads into the future, and their business grows, new
generations of their product will be developed and released onto the market.
A study conducted at Stanford University in 2000 showed that a firm’s current
industry position considerably affects its ability to achieve future success with a nextgeneration product (Ofek, 2003). This is applicable to Open Loop Energy in that going
forward they will likely see success with their next-generation products if they maintain
their current state as the industry leader. The introduction of a second-generation product
into the market by a company who has never done so before requires considerable
evaluation and a game plan to allow it to run smoothly. Using methods such as splitting
the sales team to cover a mature customer base as well as develop new customers, using
print and online advertisements that focus on how the product work rather than results
from its use and a comparison between the G2 and competitors’ products, the
implementation of Social Media, the use of involvement in the community to generate a
positive public image, using the same media that the product is based in to promote the
product, the use of a partnership with companies whose products relate directly to the G2
to reach a wider customer base. There is always room to learn more and further studies
on technology and the way it impacts this industry are anticipated.
49
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