VIC PROGRESSIVE – LAUNCHING SKYTRACK Case Study Solution
Product Analysis:
The advent of Sky Track could be traced back to the point when Vic progressive Diamond Drilling (VPDD) was working for another huge company in Northern Qubec. Those sites were considered to have much potential of mineral by the company. For the services Vic progressive Diamond Drilling (VPDD) was providing, they were charging on couple of grounds like for its crew and for renting its equipment. At that very time the engineers were concerned about the cost associated with this process. They drilled more than 170 holes in the span of a year. But all the operations needed air space help to move the machinery from one place to another as these sites were even far from each other and there were no roads to carry the required machinery. Even for this purpose helicopters were being used and the machinery used to hang while being transported to the drilling site from the camp. At some point, due to rough and unsmooth surfaces helicopters had to take flight for a walking distance like 50 feet. Costs were being raised from the projections and all the anticipations were not according to the practical situation. Thus a huge sum of money and time were being wasted in transportation of the goods. Vic progressive Diamond Drilling (VPDD) talked to their client about working on the product that could move the mining equipment on the surface as it would be based upon the frame of army tank. After the drilling session was completed Vic progressive Diamond Drilling (VPDD)’s development team started working on the designs on their new product. For this purpose the president of Vic progressive Diamond Drilling (VPDD) approved the sum of $ 0.7 Million to be utilized in research related expenses. Multiple things were determined closely in the prototype of the product like low ground pressure on snow, sand, mud and etc. The thing which was kept in special consideration was to have the specious deck for carrying the multiple handy tools as well as crane. Also another factor that was emphasized upon was the product to be environment friendly. When the final prototype was revealed internally, the senior management termed it as win-win situation. It was able to transport the heavy machinery as well in remote areas. Thus many miners would not be depending upon air support for their distribution system, thus their costs would also decrease substantially. The product was designed in a way that after the work is completed it could be pulled to bits and could be taken to any other place very conveniently. The product was termed to be Sky Track. The price set was $ 225000 also it could move with the speed of 9 km/h carrying the load of eight tons. The greatest solution Sky Track provided was the inter transportation in between the site areas. It also would be minimizing the use of helicopter in transportation. Which would directly be minimizing the running expenses of site substantially. Building cost of Sky Track was $ 30,000. SGA 25000, Marketing for the first year 40000, insurance charges 6,000 and warehouse leasing expense was 36000. Thus after working out all prices the sale price was set to be $ 225000. By the end of year 2012 Vic progressive Diamond Drilling (VPDD) tested their prototype with two customers. Both of the customers were satisfied by the performance as it proved to be saving the time and cost as well. Yet still neither of the customer was ready to buy the product due to the huge negative cash flow it will bring in.
Alternatives
The product needed to be repositioned, rather than positioning the product as cost saving tool specifically when working in remote areas they should have positioned and marketed the product as means of improving, raising their incoming cash flows during that difficult time. Another alternate was to decide if they should have gone for leasing or not, because leasing time duration depended upon the time period of project and it could vary from 1 week to 1 year as well. They could have started the repair and maintenance program, so that buyer would have been satisfied that this product was getting maintained by official engineers and firm would get benefit of some extra cash inflows.
Recommendations
Vic progressive Diamond Drilling (VPDD) should have gone for the leasing option in a manner that it would have been beneficial for the firm as well as feasible for the customer to acquire the product. Repair and maintenance package could have provided for the interested ones. Acquiring the product would have brought it in lime light and thus it would’ve been observed closely by many other potential customers that could be pitched then with the customized leasing plans. A proper working should have been done by the business development team in order to list down all the benefits and advantages customer could’ve got from the product. Leasing would’ve started the revenues to inflow from the product. Also the threat of the reengineering could’ve been dealt in this way for several years or months. Repositioning the product would’ve been the helpful hand in decreasing the uncertainty and volatility of the market and industry by bringing the additional cash flows and minimizing the running expense. Eliminating the distribution channels should have been involved as it would’ve reduced the cost of having additional member allotted for this product, rest of the products and services could’ve been carried upon as per planning.
Conclusions
Vic progressive Diamond Drilling (VPDD)’s decision of new product development is positive. Canadian mining industry has been showing a great potential from a long time. Yet on this point the trends in industry are moving in unidentifiable pattern. Still looking on the past performance it can be said the mining industry has still great potential left and is moving towards positive direction holistically. Not only mining industry is providing revenue of billions and employments, but also supporting the other small industries as well. Many of the small scale manufacturers and service providers are linked to this industry. VPDD should utilize its first mover’s advantage by marketing their product in more effective manner. Last but not the least the internal factors are mostly in favour of the company but some external factors are not in favour like unstable financial position of potential customers and volatile trends, yet it is not difficult to say by looking the past performance of the industry that this fluctuation is only for time being and still mining industry possesses the great potential.
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