MARKETING MANAGEMENT BUS506
Case Study Analysis: Swisher Mower and Machine Company
Danel Trumić, Mirhat Kolašinac, Misala Pramenković
International Burch University, Sarajevo
MARKETING PROBLEM DEFINITION
In early 1996, Wayne Swisher, president and chief executive officer (CEO) of
Swisher Mower and Machine Company (SMC) received a certified letter from a major
national retail merchandise chain inquiring about a private brand distribution
arrangement for SMC line of riding mowers. Wayne Swisher had only recently
assumed his position as president and CEO from Max Swisher, his father and
company founder. Wayne Swisher was previously vice president of sales, a position
he held for six years following completion of the MBA program at Southern Methodist
University in Dallas, Texas. Prior to graduate school he has worked in sales and
marketing position for three years at a large Fortune 500 corporation. The private
brand distribution proposal was the first major decision that he faced as president
and CEO. He thought the inquiry presented an opportunity worth serious
consideration, since unit volume sales of the SMC riding mower had plateau in recent
years. The inquiry received by SMC concerning a private brand distribution
arrangement requested a sample order of 700 standard riding mower units to be
delivered in January 1997. The national retail merchandise chain expected to make
an annual order of approximately 8200 units. The chain wanted to purchase the
mowers at a price 5 percent lower than SMC manufacturer’s list price for its standard
model. The chain wanted that the mower be different from SMC Ride King, he
requested different seat and a particular color and type of paint and specified that all
parts be American-made or that the mower have at least display an American name
as its producer. The chain did not propose any mechanical specifications for the
mower. Details concerned the proposal would have to be closely studied because it
represented a significant departure from SMC current distribution practices.
COMPANY OVERVIEW
Swisher Mower and Machine Company is formed in 1945 by Max Swisher. He
received his first patent for a gearbox drive assembly when he was 18-years old, he
develop a self propelled push mower utilizing this drive assembly. He began selling
these mowers to neighbors after converting his parent’s garage into small
manufacturing operation and he formed Swisher Mower and Machine Company. In
1966, unit volume for SMC riding mowers peaked at 10.000 units with sales of $2
million. In the 1990s, the unit volume remained constant with around 4,250 riding
mowers per year. Compared with 1,263,000 unit sales in riding mowers and tractors
industry, SMC only occupied around 0.3% market share. SMC produced limited but
differentiated products. SMC’s flagship product, the Ride King, was credited with the
first zero-turning-radius riding mower. SMC also produced a trail-mower called T-44
with a cutting width of 44 inches. SMC planed to broaden SMC product line in 1996
by introducing a high-wheel string trimmer product, Trim-Max, a high-wheel, walkbehind product.
With manufacturing plant in Warrensburg, Missouri, SMC owned an annual capacity
of 10,000 riding mower units on a single 40-hour-per-week shift with distribution
mainly in non-metropolitan areas.
About 75% of sales of SMC were made in non-metropolitan areas. SMC sold 30%
through wholesalers, 25% through direct-to-dealer, 40% as private-label, and the rest
5% as exports. It sold the Ride King through wholesalers, who located throughout the
country, focusing on farm dealers situated in the south central and southeastern US.
INDUSTRY OVERVIEW
Riding lawn mowers are classified as lawn and garden equipment with two basic
configurations, the front-engine lawn tractors and rear engine riding mowers.
However there are some mid-engine riding mowers on the market, such as those
produced by SMC. Front-engine lawn tractors are the most popular design followed
by rear-engine and mid-engine models. Rear engined lawn tractors are perceived as
stronger and more durable.
Competition in riding lawn mower market was fierce with ten manufacturers
comprising major competitors in 1995, while SMC only occupied around 0.3%, based
on sales units. All these companies made Riding mowers under a nationally branded
name and at the same time were engaged in private-label production. It was
estimated that private-label mowers account for 65 to 75 percent of total industry
sales.
Each riding mower manufacturer priced its products at price points. The
representative retail prices for national and private-label riding mowers typically
ranged from $800 to $5,000. The manufacturer’s price of Ride King of SMC, $ 650,
was quite comparative, compared with industry average.
CONSUMER ANALYSIS







National retail merchandise chains - 24%
OPE/Farm Equipment & supply stores - 22%
Lawn/Garden Stores – 19 %
Discount department stores - 13%
Home centers – 10%
Hardware stores – 2 %
Others – 10%
COMPETITION POSITIONING
Ten manufacturers comprised the major competitors in the riding lawn mower market
in 1995: American Yard Products, Ariens, Honda, John Deere, Kubota, MTD Inc,
Murray of Ohio, Snapper, Toro, and Garden Way/Troy-Bilt. Ariens, Honda, John
Deere, Kubota, MTD Inc, Murray of Ohio, Snapper, Toro, and Garden Way/Troy-Bilt
sell their products through lawn and garden stores and specialty retailers. MTD,
Murray and American Yard Products also sell to national mass-merchandise stores.
All of these companies manufacture riding mowers under a nationally branded name
and engage in private label production. Several companies produce a combination of
nationally branded riding mowers and private labels for mass merchandisers (e.g.,
Sears, Wal-Mart, Kmart), home centers (e.g., Lowes, Home Depot), and hardware
chains (e.g., True Value Hardware).
SWOT ANALYSIS
INTERNAL FACTORS
POSITIVE
STRENGTHS
WEAKNESSES







EXTERNAL FACTORS
NEGATIVE
Distinct products
High quality, simple design, easy to
use and maintain , no significant
claim
Interchangeable parts
Competitive price
Personal relationship with dealer,
distributors and end-customers
One new product on the way (Trim
Max)





Limited range of products
Perception on rear and mid engine –not
as strong and durable as front engine
One man makes all the decision
Small business mentality
Insufficient attention for promotion and
advertising campaign
No national distribution network
OPPORTUNITIES
THREATS





Limited market coverage (south
central, southeastern). Potential
expansion to the west
New target market include consumer
housing, in addition to farms
Private labels business may be
growing
Possibility for automation by
technology development in long
term (production streamline, cost
reduction)


Many big competitors like Honda, John
Deere, American Yard Production etc
with stronger financial resources and
economic size of capacity
Cyclical industry
After next year, industry may be down
ALTERNATIVES AVAILABLE

Enter distribution Arrangement with Retail Merchandise Chain: It could be to
SMC’s advantage to enter the arrangement because it would provide them the
chance to reach consumers they currently do not. It could also allow SMC to take
advantage of unused manufacturing capacity, and, however, force them to run
overtime. The contract would only lock SMC in for 2 years, so they would be free
after the short trail period. SMC would also have the opportunity to introduce the
T-44 if they took the proposal. On an opposing side, this alternative would create
a large additional liability for SMC because of the contract terms that state they
will assume liability for personal injury that may occur from use or maintenance on
the mowers. The contract would also decrease gross profit because the
arrangement states the mowers will bought at 5 percent less than the current
selling price. There will also be some cannibalization. The only other potential
threat the contract possess would be creating a dependency for SMC on the retail
merchandise chain. If SMC begins producing for this retail chain, then two thirds
of their unit sales per year will be in the hands on the retail chain. This means the
retail chain will have a very large amount of control of the contract negotiations
between them.

Continue Current Operations: By continuing current operations as they are, SMC
could avoid the added costs and put the funds toward other expansion
possibilities. However, if SMC rejects this proposal, then they will be missing out
on what makes up approximately 70 percent of industry sales. They will also be
handing the proposal directly to one of their competitors, which could very likely
mean the loss of market share to a competitor. If the industry continues with the
trend to private-labels, then SMC may miss their only or greatest opportunity to
expand.
SOLUTION
SMC should sign the proposal with the retail merchandise chain. This proposal holds
too many opportunities for SMC to let it pass or fall into the hands of another
competitor. The results of accepting the proposal look far better than the alternative.
There would be a gross profit gained from the proposal. The proposal will allow for
more opportunities to expand with time. Now is the time for SMC to take its share of
the private-label segment and increase its brand presence in the metropolitan areas.
Plus, as retail merchandise chains grow in popularity with consumers, SMC will have
its product there for the increasing number of buyers.