Case Study: Snap-On Tools
Customers prefer “more-for-more”, and they believe they can get premium products with a premium price.
In addition, Snap-on has a program of selling to mechanics on reedit with weekly time payments. The aim of this program is to increase sales and profit. With the credit program, buyers can buy a lot even if they don’t have enough money at that time. Facts proved that this program really increase its sales and earn customers’ loyalty. Place: Snap-On use four deferent channels, mobile van franchises, company-direct sales, distributor and the Internet, to get to Its customers.
These different channels give It different ways to connect with Its customers.
What’s more, the multinational system can also help it expand its market by targeting more than one market segments. Beside, Snap-On also uses a selling strategy that presented the tools directly to the mechanics with a demonstration and opportunity for the mechanics to try out the product. This is an unusual way that provides a competitive advantage for It. Promotion: Although Snap-On always avoided huge advertising to cut Its promotional expenditures, It uses the online product catalog to cater to its customers.
There are over 14,000 products on the catalog, and customers can find what they want as long as they have the access to the Internet.
What’s more, the mobile van of Snap-On is a kind of mobile advertising. People can see its big rand name on the vans as well as contact information. So, the mobile van virtually becomes a useful way for both promotion and distribution.
What one element of Snap-one’s marketing mix do you think separates It from its competition?
I think the place separates Snap-On from Its competitions. To be more specifically, Snap-One’s channel of distribution provides it with competitive advantage. Firstly, it uses four different channels, and it also markets its products through multiple distribution channels in approximately 130 countries. Other companies may not use too many channels to expand their markets like Snap-On. So, the different channels of distribution provide opportunities for Snap-On to expand, even to the other countries.
Secondly, channels memoirs can AAA value to ten products tongue contracts, experience, specialization, and scale of operation. Thus, using different distribution channels can add value to its products, which results in a high sales and profit. Last but not least, the different channels of distribution refer to the multinational distribution system. Since Snap-On faces a large and complex market, the multinational distribution system helps it expand sales by targeting different arrest segments and satisfying specific needs of consumers.
2. How would you describe Snap-one’s marketing channels?
Snap-On serves its customers primarily through four channels: mobile van franchises, company-direct sales, distributor and the Internet.
Mobile van franchises: In the United States, the majority of sales to the vehicle service and repair sector are conducted through Snap-one’s franchise van channel. Snap-one’s franchisees primarily serve vehicle service technicians and vehicle service shop owners, generally providing weekly contact at the customer’s place of business. What’s more, franchisees’ sales are concentrated in hand and power tools, tool storage products, small diagnostic and shop equipment, which can easily be transported in a van and demonstrated during a brief sales call.
In a word, mobile van channel provides convenience for Snap-One’s consumers. In addition, Snap-On also replicated its franchised mobile van in several countries including Australia, Canada, Japan, and German. This action helps Snap-On expand its market to other countries and increase its profit.
Company-direct sales: In the United States, a significant proportion of shop equipment sales are made by direct sales. Because vehicle service and repair sector consolidate, the company believes these organizations can be serviced more effectively by selling them the full line of equipment and diagnostic products and services.
What’s more, Snap-on also markets to industrial and governmental customers through both industrial sales representatives and independent industrial distributors. So, it can serve these two kinds of customers more directly and effectively. Distributors: Some distributors purchase products directly from Snap-on and then resell them to end-users.
Through these distributors, Snap-On saves the money on direct selling. The Internet: The Internet provides Snap-on the opportunity to combine the capabilities of the Internet with its existing brand sales and distribution strengths. This combination can then offers convenience to current consumers and attract future consumers.
3. Assume that average annual per-square-foot sales for specialty retail are approximately $400 per square foot.
How does this compare to Snap-One’s revenue generation per square foot? Why do you think there is such a difference?
As a single Snap-on van with approximately 160 square feet of cargo space typically produces more than $400,000 re year in revenues, the average annual per-square-foot sale for Snap-On is approximately $2,500. This amount is almost 4 times the average annual per-square- foot sales for specialty retail. The huge difference results from the huge amount of competitors it has in its field. Thus, Snap-On has to attract more customers sell more products to increase its profit and become more competitive. What’s more, the premium prices, which are about 10% more than its direct competitors, also lead to high sales revenue.
So, the average annual per-square-foot sales are high.