1. Canadian and US market size and expected growth ... 1
2. Organizational structure... 8
3. Culture dimension ... 9
4. Direct competition ... 10
5. The prospect ‘dairy farmer’ ... 16
6. Indirect competition ... 17
7. Expected market acceptance ... 19
8. Exploring and exploiting opportunities ... 22
9. Human resource management... 23
10. Development funnel... 24
11. Development process latest flooring system... 25
12. Planning process ... 29
13. Sales guideline ... 30
14. Marketing effectiveness ... 32
1. Canadian and US market size and expected growth
The market size is important, after all big markets come with more sales opportunities than smaller markets. So, it becomes easier to earn back investments. It’s important to define the market
1; this is already done in chapter 5.
Market size and growth were measured by estimating the number of potential end-users of this product, which in this case is best represented by the number of dairy farms in Canada and the US.
1.1 Dairy farming in Canada
The dairy industry is the fourth largest sector of the Canadian agri-food economy after grains, red meats and horticulture. In 2003, dairy farming generated $4.5 billion in total farm cash receipts. During the same period, sales from Canadian dairy processors amounted to $11 billion, representing 15.2% of all processing sales in the Canadian food and beverage sector. For 2002/2003, there were approximately 38,000 people working on 17,890 Canadian dairy farms, and roughly 26,000 other workers are employed in 288 Registered Canadian dairy plants.
Canadian dairy cattle, recognized for their disease-free status and their ability to produce high quantities of milk over many lactations, are exported to more than 50 countries.
Exports of Canadian dairy genetic material in 2003 were valued at more than $89 million dollars. In 2003, major export markets were the United States, Mexico, Japan, and the European Union
2.
The number of dairy farms has fallen significantly over the past 20 years. During the same period, the national dairy herd has declined, while total milk production remained
# Farms
Volume of milk produced
# Milk cows
Volume of milk per farm (hectoliters)
Average cows per farm
1983 2003 % change
49.936
1.736
72.3
1.449
35
17.931
1.077
74.5
4.145
60
- 64%
-38%
3%
187%
71%
Source: Dairy industry profile, 2004.
Table 3 reveals that the highest concentration of dairy farms is in Quebec and Ontario, accounting for 80, 9 percent of the total in 2004.
1990 2004
Province
Prince Edward island
Nova Scotia
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
669
686
679 568
14.903
10.976
2.113
1.496
2.178
1.031
8.054
5.641
555
294
776 344
285 301
Table3: Number of farms with shipments of milk or cream
1.2 Dairy farming in the US
The make up of the US dairy herd by size of operation and location has changed significantly over the past five years. A brief summary of the changes in herd structure is outlined below.
The overall number of milk cow operations continues to decline in the United States.
So, just like in Canada the number of farms is decreasing pretty fast and the number of milk cows is declining slightly. The volume of milk produced is increasing.
1997 2001 % Change
# Milk cows operations
# Milk cows (Million head)
Volume milk produced
123.700
9.25
156.091
97.560
9.12
165.336 5.9 %
-1.4 % -21 %
Table 4: Changes in dairy composition Source: U.S. Dairy herd structure, NASS.
1997 2001
% More than 500 head
% Less than 500 head
24
29
35
39
% Of milk produced
76 65
% Change
11 % 10 % - 11 %
% Of milk produced 71 61 -10 %
Table 5: Cattle size and share in milk production
Source: U.S. Dairy herd structure, NASS.
Table 5 shows that large operations increase the share of milk production. According to table 6 the annual average rate of milk production per cow for operations with more than 500 head increased slightly. In the group with less than 500 head the production per head increased as small, less efficient operations exit the industry. However, total production in this size group has declined 8 percent during this period as milk cow inventory decreased 15 percent.
Geographically, milk production continues to migrate to the Western States, primarily from the Southeastern and Midwestern states
3. Table 7 shows the top ten milk producing states.
3
US dairy herd structure, 2002.
More than 500 head
Less than 500 head
1997 2001 % Change
20.328 20.446
7.4 0.6 16.919
15.755
Table 6: Annual milk production per cow (in pounds) Source: U.S. Dairy herd structure, NASS.
Milk production (Million pounds)
Share of US (Percent) State
(top ten in 2000) California Wisconsin New York Pennsylvania
Idaho Minnesota
Michigan Texas
New Mexico Washington
Top 10 total
11.920 11.156 9.493 7.223 5.735 5.705 5.593 5.236 107.560
23.259
32.240 19.2
6.7
5.7
4.3
3.4
3.4
3.3
3.1
70.1
13.9
7.1
The USDA distinguishes between 10 product regions in the US:
North East, Lake States, Corn Belt, Northern Plains, Appalachian, Southeast, Delta States, Southern Plains, Mountain, and Pacific. Table 8 shows the share of operations with milk cows, by region for the year 1975 and 2000.
Table 8 shows that Northeast, Lake States, Mountain, and Pacific are interesting regions.
Northeast and Lake States belong to the biggest regions and lie close to Folkema’s location. Folkema’s dealers network is able to cover this area. Pacific and Mountain grew pretty fast during so they could be interesting as well. These regions aren’t covered by dealer’s jet.
1975 (Percent)
2000 (Percent)
Northeast
Lake States
Corn Belt
Northern Plains
Appalachian
Southeast
Delta States
Southern Plains
Mountain
Pacific
18 20
14
5
8
4
4
4
4
9 28
10 24
5 2 3
5 2
11 20
100 100
Table 8: Share and absolute number of cows per region.
Source: The Changing landscape of US milk production & Profitability of US Dairy farms, 2002.
Dairy cows 2000
1.681
319
435
292
136
439
970
1.869 2.178
896
1.3 Market growth
Besides the market size, the market growth is another important criterion in order to determine the attractiveness of a market. In order to do prognoses about the expected market growth the product lifecycle will be used. The lifecycle phase in which the product is in, namely also determines the expected development in the future
4. Figure 1 shows the phase of the productlyfecycle in which Livestock rubber flooring is at this moment. The arrow indicates the position of livestock rubber flooring.
The market for livestock rubber flooring at this moment is at the end of the introduction phase of the product lifecycle. Farmers are getting familiar with rubber flooring. Sales are increasing slowly, but the majority of the possible end-users haven’t purchased rubber- flooring jet
5.
Through farm shows, articles in magazines, and mouth-to-mouth advertising the advantages of rubber flooring are getting more widespread throughout the farmers. Right now the farmers are somewhat skeptic against rubber flooring. Progress in the area of research and development has been stunted with an emphasis on volume of rubber recycled due to government subsidies. For tire recycling firms it’s more lucrative to produce a 100 % recycled rubber mat than to produce a quality product, which would benefit the customer. This has ultimately had a detrimental effect to the expansion of the market share for this product due to the high incidence of failure and has resulted in product being purchased by only the most progressive farmers. The larger part of the dairy sector is waiting for the next evolution of a more reliable dairy floor alternative.
Together with the developments that are discussed in the general environment one can draw the conclusion that it’s likely the demand for rubber flooring will increase. This means it’ll enter the growth phase of the product lifecycle.
4
Alsem, 2001: 140.
5
Sales employee, test farm, and Folkema’s owner.
Figure 4.1: Product lifecycle Sales
Time
Introduction Growth Maturity Saturation Decline
1.4 Conclusion
As a whole the dairy industry is large. However, over the past thirty years the number of
farms has dramatically declined, while the size of the operations remaining, have
increased. The decreasing of the total number of farms can be considered as a negative
development for the livestock rubber flooring. However, the position of livestock rubber
flooring in the product lifecycle is promising. It’s expected that the number of farms that
are going to purchase livestock rubber flooring is going to increase. Especially when the
skepticism, thanks to the problems with the first installed rubber flooring is overcome.
2. Organizational structure
Sales PR &
Marketing
Administration Purchase
& logistics
Installation- crew Office
manager
R&D
3. Culture dimension
Based on Sanders en Neuijen.
Dimension 1: process vs. result
Aimed on the process: people avoid risks, people do as less effort as possible, formalistic working sphere, routine, every day the same.
Aimed at the result: people take bigger risks, do their utmost best, one is looking for new challenges.
Dimension 2: people vs. work
Aimed at people: one keeps personal problems in mind, well-being of employees plays a central role, and groups take decisions.
Aimed at work: high pressure to finish a job, only interested in work, individual decisions.
Dimension 3: organization vs. professional
Bound to the organization: one identifies oneself with the organization, selection based on family relationships, social layer, etc. values at work also count at home, don’t think in advance too much.
Professional: one identifies oneself with the occupation, selection is based on the aptitude for a job, work and private strictly separated, think years in advance.
Dimension 4: open vs. closed
Open: openness against new people and outsiders, many different fit with the organization, newly hired people feel themselves comfortable pretty fast.
Closed: closed and mysterious, even for their own employees, only special employees fit in the organization, new employees don’t feel like at home quick.
Dimension 5: tight vs. loose control
Tight control: discipline and control, very conscious of costs aspects, be very strict about for instance meeting schedules, talk seriously about the work and the business.
Loose control: small degree of discipline and control, unconscious about costs aspects, don’t be very strict about e.g., meeting schedules, jokes and humor.
Dimension 6: pragmatic vs. normative
Pragmatic: accommodating towards the customer demands, outcome more important than prescriptions, smooth values with respect to ethics, social responsibilities less important.
Normative: to be correct and to follow procedures is more important than the outcomes,
strict norms with respect to ethics, social responsibilities more important than outcomes.
4. Direct competition
Direct competition is defined as companies or individuals with a product or products with similar features and benefits as the Livestock rubber flooring, using similar techniques.
For the purposes of this report all products that are manufactured from rubber or similar materials, and used for livestock flooring to be direct competitors.
In a competitor analysis one seeks to understand
6:
- What drives the competitor, shown by its future objectives;
- What the competitor is doing and can do, as revealed by its current strategy;
- What the competitor believes about itself and the industry, as shown by its assumptions;
- What the competitors’ capabilities are, as shown by its capabilities.
It appeared to be hard to get (financial) information about the competitions’ strategies.
So, judgments are based on a combination of qualitative and quantitative information;
own experience, references on the internet, historical data, and e.g. the firms’ website.
During conversations with customers it appeared that a company’s website is a common way to retrieve information about rubber flooring. Information about the products and geographic areas in which competitors are delivering their products will also be described in order to enhance completeness.
4.1 Animat
Location: St. Elie, Quebec.
www.animat.ca
“…Cow comfort - that’s the story behind the success story that is Animat. Ange-Albert Allard already well known in the Quebec Dairy Market, wanted to make cows more comfortable.”
“…Rosaire Croteau and Ange-Albert Allard are still majority owners of their company.
In 1997, a group of investors named Quadev came onboard to help manage the next phase of Animat’s development and to make Animat a world leader when it comes to manufacturing recycled rubber mats…”
“…Animat Inc. is a leader in innovation of flooring systems for livestock facilities. The features and design of our product set it apart from other flooring surfaces and materials available today…”
Animat delivers flooring systems to three different markets: dairy, equine, and industrial
& commercial. For the dairy market Animat offers products for stalls, alleyways, slatted floors, milking (and rotary) parlors, holding areas, crossovers, and cleaning equipment.
They use the same rubber for all the areas inside a barn.
Animat claims they’re providing cow comfort and that they’re innovative. However, Folkema experienced during their dealer period that Animat didn’t take initiatives to develop new products and increase customer value.
6
Hitt, 2001.
Animat is raw material driven in that they earn as much from the tire recycling subsidy the Canadian government provides as from the manufactured product. Their chief incentive is to grind tires for input.
Animat has quality troubles with their rubber, which resulted in warranty claims from customers. When Folkema still was an Animat dealer fifty percent of their rubber was used for replacement of earlier installed mats.
Due to their dealer network Animat is able to deliver their products in the US, Canada, and most parts of West Europe.
4.2 Royal Mat
Location: Beauceville, Quebec.
www.royalmat.com
“…a North American leader in the transformation of car and truck tires, using an innovative transformation process. Royal mat has gained recognition for the quality of its products and works hard to preserve the original properties of the recycled rubber…”
“…Royal Mat facilities are located in Québec, in the Beauce region, at the heart of a dynamic, thriving region. With an enviable geographical position, halfway between Québec and the United States, the company has rapid access to the major highways, so that it can cover the Canadian and U.S. markets. Royal Mat is located at approximately one hour from the United States border…”
Mission
“…to provide rubber products of the highest quality, where competence, know-how and availability guarantee the needs and the satisfaction of each one of our customers in North America and in all the developing international markets…”
“…to meet the needs of our customers by developing a partnership with our suppliers…”
“…to be a leader in the field of rubber recycling, in order to support the economic and social growth in our area and to contribute to the protection of our environment…”
“…Royal Mat constantly seeks to diversify its production. With the aim of increasing its output and of meeting growing demand, Royal Mat recently enlarged its facilities and acquired ultra-modern equipment, largely automated and kept on the cutting edge of industrial technology…”
Just like Animat this company appears to be tire driven; their raison d'être is the recycling
of rubber tires for which they seek applications. Their aim is to increase output and
4.3 Northwest Rubber
Location: Abbotsford, British Columbia.
www.northwestrubber.com/index.html
“…North West Rubber manufacturers sheet rubber, using ground rubber from tires which is vulcanized with catalyst and vulcanizing agents under pressure and heat…”
“…manufacturers of recycled matting and distributors of specialty flooring products for agricultural, recreational, industrial and safety use…”
“…We sell our product lines throughout the world but primarily in North America…”
Northwest Rubber produces their recycled rubber mats for several applications. For dairy barns they use 100% recycled sheet rubber in varying thickness and size. For dairy flooring they offer a five-year warranty
7. For dairy barn walkways they offer rubber flooring that comes on rolls.
Besides the main office in Abbotsford, Northwest Rubber has an office in Louviers, CO, USA, and Eldorado, IL, USA. So, their able to deliver products in the US and Canada.
They don’t sell retail but will readily respond to enquiries and dispense information through their local distributors.
4.4 Summit Flexible Products Ltd.
Location: Ashland, Oregon.
www.groupsummit.com
“…Founded in 1980 in Louisville, Kentucky, Summit Flexible Products, Ltd. was an early innovator in the manufacture of products from recycled materials for use in barn maintenance…”
“…Still a dominant leader in rubber flooring, paving bricks, and riding surfaces in the equine industry and an emerging supplier to the nation's dairy industry, Group Summit is now a major marketer of safety flooring in canine, home fitness, recreational and sport markets, and cardio fitness industry where we have fast become the leading supplier to martial arts schools all across America…”
Summit has a mat developed for alleyways in the dairy industry, called Bovitrax.
Customer experiences show that this mat has problems with its durability. Their raw material is recycled rubber.
Besides the head office in Ashland, Group Summit has offices in Singapore and England.
The factory is located in Singapore, and England and the US are sales departments.
Ashland is not the only sales department; Group Summit has a well-developed dealer network throughout the US. Group Summit started selling in North America, and in order to expand they started the cooperation with the sales department in England.
7
Product catalogue, 2004.
4.5 RB Rubber products.
Location: Mc Minnville, Oregon.
www.rbrubber.com
“…RB Rubber Products is an exciting, progressive and expanding company who has become a leader in the rubber recycling industry…”
“…Our success is attributed to maintaining a balance of high quality products and excellent customer service. Constant attention to these two core elements has allowed us to branch out to become the largest manufacturer and distributor for horse stall flooring in North America, and a key player in Fitness and Commercial flooring applications…”
This company is part of their parent company Dash Multi-Corp. and has their own factory in which they’re able to process used rubber tires into their own raw material. Although they’re not active on the dairy market, they should be considered to be able to produce flooring systems for the dairy market also.
4.6 Linear Rubber Products Inc.
Location: Kenosha, Wisconsin.
www.rubbermats.com/index.html
“…take advantage of our years of experience in providing quality rubber flooring and mats for the agricultural and athletic industries…”
“…all Linear Rubber products are quality made from non-porous, high-density rubber which will not absorb or retain moisture, and will not crack under extreme heat or cold…”
“…all runners and mats are manufactured from the highest quality durable materials to provide 15 years of lasting service and are covered by Linear Rubber’s exclusive warranty…”
This firm does use recycled rubber, but the difference is that they don’t use used tire rubber. This has a positive effect on the rubber quality, in that it becomes non-porous, and has a high density
8.
Linear Rubber Products produces rubber products for equine, dairy, golf bridges, floor inlays and athletics.
For dairy applications Linear Rubber Products offers three different kinds of mats. The
‘Cow comfort’ mat, the ‘Econo series’ mat, and ‘Multi’ mat. All the three have 15 years
of warranty, and can be custom trimmed without extra charge. They’re active on the US
“…we are a manufacturer of high quality molded rubber products using a vulcanizing process which utilizes as its base ingredient post-consumer waste stream material, mainly rubber tires…”
“…the principal markets served for our rubber floor covering products are: Dairy Cattle Mats, Equine Stall Mats and Flooring, Dog Kennel Flooring, Industrial Anti-Fatigue Flooring, Weight Room and Physical Fitness Flooring, and Roof Pads for membrane protection…”
“…all mats for animal applications are covered by our 12-year limited warranty…”
Humane manufacturing also uses used tires as raw material. They serve the US dairy and equine market with rubber mats of varying thickness.
4.8 Global Rubber Products Ltd.
Location: King of Prussia, Pennsylvania.
www.globalrubber.com
Member of ‘The Global Rubber Group’
“…The nation's largest distributor and recycler of scrap rubber, and buffings…”
This company offers several different rubber products, under which rubber sheets that could be used for rubber flooring inside a dairy barn. Recycled rubber is used as raw material.
4.9 E-Z rider equine products Location: Summerville, South Carolina.
www.stallmats.net
“…E-Z Rider Equine Products is a manufacturer and distributor of rubber mats, Stall mats, Trailer ties, and other horse products. Our services range from design and testing, to manufacturing with uncompromising Quality Control…”
“…we are family owned and operated and have been in business since 1984. We are located in Summerville, South Carolina…”
“…Our equestrian product line was started as a result of a family hobby which is show horses. We found currently available trailer mats and stall mats unacceptable in their stress reduction features. Thus began our product line…”
This company focuses purely on the equine market and their products are made out of
pure rubber and they offer custom sizing upon request. Besides the equine industry their
products are also used in other industries including dog kennels, anti fatigue matting,
dugouts, weight rooms aerobic flooring, material arts flooring, playgrounds and many
others. Their sales territory is around South Carolina.
4.10 Kraiburg
Location: Tittmoning, Germany.
www.kraiburg.com
Kraiburg originated in 1947, manufacturing rubber compounds for industrial use.
“…today Kraiburg is a highly successful company employing over 1600 people in six plants. The products range from high-quality rubber compounds, material for tire re- treading, to flooring systems in both human and animal environments…”
“…as early as 1968 the plant in Tittmoning started the processing of recycled rubber.
Kraiburg is now Europe's leading supplier of high-quality, cost effective flooring systems for the most demanding animal environments. Our products have achieved worldwide acclaim for their high quality and it is Kraiburg aim to continuously develop even better products for its customers around the world…”
“…Kraiburg offers an optimum, state-of-the-art solution for any cattle housing application. You can choose the flooring, which is best for your animals and your needs from our wide range of innovative products.
And all of our products have one thing in common: they bring with them Kraiburg's extensive know-how from over 30 years' field experience…”
Kraiburg Agri is part of the Kraiburg Group and is responsible for dairy, and equine flooring. They’re offering products for walkways, free, and tied stalls. Kraiburg has different types of flooring with varying softness, in mats or on rolls at its disposal.
Kraiburg states that they’re able to offer products worldwide. Dealers are located in most
parts of Western Europe and one in the US.
5. The prospect ‘dairy farmer’
The prospect is either a ‘believer’ who believes in rubber qualities, or it’s a ‘non believer’
that doesn’t believe in rubber as a manner of flooring. Mostly it heard bad stories, or had a bad experience by itself or in his environment.
According to a salesman the group of ‘non believers’ is shrinking in favor off the
‘believers’. This because of made improvements, and external developments by which the popularity of rubber flooring is increasing. Within the group believers most farmers see rubber as rubber, and aren’t aware of different rubber kinds with each their own qualities.
In case a prospect is a ‘believer’ one has to convince a farmer of the differences of rubber kinds, and one has to prioritize what barn area has the most importance for a farmer. The following barn areas are distinguished:
- Feedalley, - Crossover, - Parlour, - Holding area, - Back alley.
The different areas demand different things of a rubber flooring system.
Prospect (dairy farmer)
Believes in rubber Doesn’t believe in rubber
Rubber = rubber Rubber quality Grooved concrete
Rough concrete
Figure 4.1: Classification of a dairy prospect
Decreasing priority in
most common barns.
6. Indirect competition
Indirect competition is defined as companies or individuals that have similar capabilities as Folkema Sales Ltd. and could therefore produce products similar to the Livestock rubber flooring in the long run, or those that have products or services different from the Livestock rubber flooring, but provide similar benefits, or compete for the same target markets. All products that provide some kind of comfort/traction flooring option for livestock to be direct competitors are considered.
6.1 Tandem products Inc.
Location: Minneapolis, Minnesota.
www.tandemproducts.com
Tandem Products’ partner Tenderfoot takes care of the animal flooring market.
“…tenderfoot® is an orange plastisol coated woven wire and expanded mesh animal flooring product for the swine, dairy and veal calves, pets, and other animals. Our flooring creates a comfortable, warm, soft environment compared to the metal and concrete floors that are also used in theses industries…”
“…there is less chance of injury as there are not rough or sharp edges on the coated flooring. In the farrowing industry it has been proven to reduce spraddle legs and underline problems (Teat Necosis)…”
“…our plastisol coating material is formulated with an agent to resist bacterial and fungal growth. Tenderfoot® flooring will not absorb moisture, and it does not sacrifice air circulation. Its superior sanitation quality is an important consideration not only for swine and calf facilities, but also as veterinarians, animal control units, and kennels, as well as research facilities or wherever a controlled environment is essential…”
An international company that has been manufacturing plasticol coated livestock flooring since 1975, they were instrumental in the development of the coating process and remain a leader in the industry, and manufacture a full line of animal flooring products that are distributed worldwide. In the swine industry they manufacture farrowing, nursery, grower / finishing and boar flooring. They also manufacture flooring for the Pet & Research industry under the DekCellent® name.
The flooring products that are offered have been proven to reduce labor costs, bedding
costs and death loss while at the same time providing a clean dry environment for the
animal. Special sized openings that were specifically designed in the plasticol coated
woven wire and expanded mesh allows them to accomplish this. The plasticol coating is
6.2 Cast-in-place Concrete
By far, the most prevalent flooring surface in new and older barns alike in cast-in-place concrete. The following is one example of an Ontario-based company providing concrete grooving:
Grandview Concrete Grooving Inc.
Location: Arthur, Ontario, Canada.
www.cowcomfort.com
“…it is an established business specializing in farm animal comfort and safety through installation of Diamond Wheel Grooving of all livestock traffic areas of concrete flooring in dairy, beef, swine, barns, stockyards, and packing plants…”
“…payback is very quick because cull rates due to lameness average less than 3% on gcg diamond pattern grooved floors versus cull rates as high as 25 % without grooving, Cut grooves on a smooth floor will engage the hooves of the cattle fully, and prevent them from slipping and falling. Cut grooves remain square and sharp for the life of the floor…”
“…cut grooves remain square and sharp for the life of the floor…”
Grandview Concrete Grooving Inc. has sales representatives in British Columbia, two in
Ontario, one in Quebec, and one in the Maritimes areas.
7. Expected market acceptance
Based on several conversations with a number of industry contacts to obtain their opinions of the Livestock Rubber Flooring. The findings will be summarized below.
Industry experts that were contacted were already familiar with the product. They were asked to the market potential of the product, competitors, ideal market(s), pricing, entry strategies, strengths, and weaknesses.
Contact’s name, contact information, etc. isn’t provided, as this often leads to more objective feedback.
7.1 General acceptance
Experts that were contacted unanimously agreed that Livestock Rubber Flooring has great market potential. Almost all mentioned the versatility of the product in its application to various industries including dairy, dog, and horse. Additionally, commercial applications such as day care centers, swimming complexes, and skating facilities were mentioned as potential in the marketplace.
Dairy farmers that were contacted expressed that the results since installing the flooring have been dramatic. They cited that the cows moved with more confidence, and slipping was not an issue anymore. Horse experts were equally satisfied with the rubber-flooring product, and felt that its potential was great. The horse owners placed emphasis not only in the comfort and traction the product provided for the animals, but also cited its sanitary properties, aesthetics, and versatility to suit various surfaces.
7.2 Price
Industry contacts that were contacted, and who purchased the product, expressed that the product was appropriately priced. One believed it had already paid off in savings.
Because they felt that the product was of superior quality, one dairy farmer expressed that
“…you get what you pay for…”
7.3 Strengths / weaknesses
The strengths of the product were easily forth coming by the experts contacted, and
among dairy farmers, the rubber floorings’ ability to provide traction, and sure footedness
for cows and horses was its most positive attribute. The dairy farmers referred to their
previous flooring material of concrete, as being hard and slippery. Installation of the
rubber flooring has eliminated the slipping hazard for their herds, and in addition to
providing animal comfort; it has also provided a soft standing environment for the
workers on the operation. Further strengths included that the flooring was easy to
sanitize, easy to carry, flexible and did not curl up at the edges, as some competitive
products do. Equine farmers mentioned the last advantage: they realized a savings in
bedding material used. Much less was required due to the rubber flooring.
have to go out of the barn, which affects their bio-rhythm and their amount of milk.
Contacted farmers confirmed this problem and indicated that when a flooring system could overcome this problem it would be a decisive factor in their purchase decision.
7.4 Barriers to market entry
An expert that was contacted felt that the expense of purchasing such a product might be a barrier to entry. She felt that stables were ‘notoriously’ cheap, and might be apprehensive to invest in the product. In general it became clear that farmers are willing to pay extra, provided that the rubber flooring has the advantages as it claims. However, another owner felt that although price may be a factor, she felt that competition was probably the more prominent barrier to market entry.
Generally the dairy farmers that were contacted agreed “Price was always a consideration.” However, one dairy farmer countered the issue of price by saying that an operation did not need to immediately install the rubber flooring, and that it could be done in stages, which would be easier than a one-time financial commitment.
Until he started losing cattle, one dairy farmer believed that installing rubber flooring was an avoidable expense. He had since realized the value of the product, and believes that other operations will as well.
Another barrier to entry is the investing climate among the farmers. Farmer’s main income is the money they get for their milk; that’s why milk prices play a big role in determining the investing climate. Another factor is the pressure of governments to regulate the production process. This brings a lot of extra costs for improvements and control.
7.5 Entry strategies
Dairy farmers were quite consistent in their opinions as to the methods best used for market entry with a product like Livestock rubber flooring. They all agreed that word-of- mouth was an effective means of providing the prospective customer, with a creditable reference to the product. This method of referral, as expressed by the dairy farmers, allows them to get first information about the product, and its efficacy and value.
Testimonials were believed to be another effective method of convincing prospective buyers. Using comments, and the experience of other dairy producers with the product in various marketing material, would help in promoting a ‘tried’ solution to a common industry problem.
Industry experts suggested the various farm shows in Canada and the US. They felt that this kind of exposure would permit a wider audience to view the product, and get the information they needed in considering this flooring product in their operations.
Some additional suggestions were, advertising in trade magazines, as well as a company website. They expressed the industry relies heavily on trade magazines for their information, and felt that ‘surfing’ for trade information was also quite common. Another suggestion was that the veterinarian was a tremendous source of referrals. This seems to confirm that referrals are an important element in entering the market place.
7.6 Distribution methods
The most common distribution method is the use of a dealer network. Folkema’s former
situation is typical for what’s common in this business.
Folkema used to be a dealer for the tire recycling company Animat, and they were
allowed to sell, install and repair the flooring system Animat produced. Folkema was
responsible for a customer portfolio in a given territory and they had to reach their sales
target. In the field of innovation, and marketing they had a pretty big freedom for own
initiatives. They were able to do product improvements, innovations in peripheral
equipment etc., as long as Folkema reached the target it was sufficient. To prevent for
competing with other (Animat) dealers, Folkema was restricted to their given territory.
8. Exploring and exploiting opportunities
Folkema can be placed in the corner left under; its approach is opportunistic and can be characterized as follows:
• customer driven,
• reactive, and
• responsive to customer needs and requirements.
Formal
Exploitation
Informal
Exploration
Opportunistic Strategic
- Intuitive - Responsive - Ad hoc - Reactive
- Systems - Procedures - Control - Deliberate
Source: Herrmann, 2003
9. Human resource management
Human resource management deals with the question in what way inside the organization functions and people can be adjusted to one another. This adjustment has a quantitative (the right amount of people), and a qualitative (people with the right knowledge) component. Moreover, is this tuning process dynamic: by changes in the organization, or environment that have consequences for the workforce.
Folkema is a family business, which reflects in the way positions in the organization are filled in. There is a similarity with the third culture dimension; organization – professional. Therefore I’ll use the same two terms at each end of the line.
The figure above shows that Folkema’s human resource management is at the side of the organization. Employees identify themselves with the organization and the selection of people is based on familial relationships.
In a more professional approach an organization considers, more conscious, whether the people are in the right place for the right reward.
Given the fact that Folkema’s competitors aren’t family businesses, so the assumption is made that their position on the continuum is more to the professional side.
However, it goes too far to deepen more into this subject. For this thesis the human resources will be seen as a condition. It’s relevant to notice that all employees work in this business for a long time, are experienced, young and are closely tied to the organization.
Organization Professional
10. Development funnel
The funnel illustrates the process firms ideally go through to identify many ideas, select the few most promising for development, and focus resources to get them into the market.
The management of the funnel concerns three very different tasks or challenges. The first is to widen its mouth. To be effective, the organization must expand its knowledge base and access to information in order to increase the number of new product and process ideas.
The second challenge is to narrow the funnel’s neck. After generating a variety of alternative concepts and ideas, management must screen them and focus resources on the most attractive opportunities. This narrowing process must be based on a set of screening criteria that fit the company’s technological opportunities while making effective use of its development resources in meeting strategic and financial needs.
The third challenge is to ensure that the selected projects deliver on the objectives anticipated when the project was approved.
This is a model and the reality is often quite different, still it’s a way to describe the process in practice and detect lacks.
Idea generation is sufficient at Folkema. There’s close contact with the installation crew, sales, and the owner is constantly looking for ways to improve products.
Folkema has troubles with the second challenge to narrow the funnels neck. This means management has troubles with choosing which project to continue with and this results in problems with the determination of the most attractive option and the resource focusing.
This results in over-extension of available resources and that projects stay unfinished.
The development process is ad hoc and depends on the owner.
Investigations Development Shipping products
11. Development process latest flooring system
The challenge for the management of product innovations is to realize a fit between the engineering characteristics and the product attributes. The aim is to set targets to be achieved for the engineering characteristics of a product, such that they satisfy customer requirements
9. This situation is present in Folkema, because it’s important to translate customer requirements (attributes) into design characteristics (characteristics).
Folkema’s development process of their latest flooring system will be analyzed using the quality function deployment method. This method is designed to match customer requirements with engineering characteristics
10.
1. Identify customer requirements in terms of product attributes
Input: customers, farm shows, warranty claims, and own experience. Further, Folkema tested the Animat mat and used it as standard.
The following attributes were important:
Rubber has to be able to deal with:
- Resistant to dairy and equine manure and urine, - Heavy traffic,
- Abrasive cleaning equipment, - Temperature changes,
- Non slip surface, - Non-stretch / curl.
2. Determine the relative importance of the attributes:
- Resistant to manure and urine, - Heavy traffic,
- Non-slip surface,
- Abrasive cleaning equipment, - Non-stretch / curl,
- Temperature changes.
3. Evaluate the attributes of competing products
Folkema used to be a dealer for Animat, so they’ve experience with this rubber flooring system. Problems with this rubber mat were:
- Dealing with abrasive cleaning equipment, - Couldn’t stay in place,
- Deal with temperature changes, urine, and manure,
- Porosity of the mat resulted that liquid easily penetrates and degenerates the rubber.
Folkema contracted a specialized company to do some tests on rubber that is used by its competitors. The results are displayed in figure one.
Decreasing
importance.
4. Draw a matrix of product attributes against engineering characteristics
Folkema didn’t actually draw a matrix, but did link the attributes with the rubber characteristics. Relevant characteristics are:
- Durometer: scale of rubber hardness; 30 beings soft like a sponge / 90 like a hockey puck.
- Tensile strength: force required to stretch and break a sample of material expressed in PSI relates to the overall strength of the rubber.
- Elongation: Length of stretch before break point in tensile strength test.
Elongation is an indication of rubber strength, stiffness and hardness. Softer compounds typically have higher elongation and lower tensile strengths. This characteristic isn’t used in figure two, because it has almost the same effect as tensile strength.
- Abrasion: Index of material loss when material is rubbed against an abrasive surface (sand paper or emery wheel). Indicates relative wear. The lowest number possible is preferable.
- Density: porosity of the mat. The relationship between the characteristics and the attributes are shown below in figure two.
EN 060 A B C
Tensile Elongation Durometer Tear Abrasion
D
750 130 65-70 100 170-180
658 81 70 111,4 252,8
233 70 65 76 188,1
604 769
121
91 110
159 65-70
60-65
411 184,3
Comparison rubber specifications
The names of the competitors are left away. A – D represent the rubber of the competition.
In figure two the relationship between engineering characteristics and product attributes become clear. This is the fifth step of the QFD method.
5. Identify relevant interactions between engineering characteristics
With rubber compounding one always has to make a consideration which characteristic is most relevant. All the characteristics closely interact with each other. It’s to complex to go into further detail. Folkema used a specialized firm for consult and the result was the ENOGO formula. In figure one this formula is compared with the rubber the competitors use.
6. Set target figures to be achieved for the engineering characteristics.
Folkema tested the Animat rubber and used it to set targets for the characteristics. The
Durometer
Tensile strength
Abrasion
Density
Uric acids and manure
Heavy traffic
Cleaning equipment
Non – slip surface
Non stretch / non curl
Temperature changes
Durometer: 65 – 70 durable, jet comfortable, non-slippery for dairy applications.
Tensile strength: new flooring system stands up against high temperatures, and heavy traffic, and cleaning equipment.
Abrasion: due to the natural rubber the flooring system is able to resist wear and tear of heavy traffic and equipment.
Density: natural rubber bonds tighter and therefore less likelihood of moisture absorption.
Characteristics
