Analysis of EK and G Case

Reeta Raina
24
th
June 2014
Contents
Introduction
Problem Analysis
Possible Alternatives
Plan of Action
EK & G Case Analysis

Introduction
EK & G was formed in 1980 as a medical technology firm
Pulsomatic was developed and tested in 1981
Believed that a large market existed and geared up for production of the
pulsomatic
Early estimates of production costs were around $175
EK & G Case Analysis
Only 1000 units were first ordered
With a small number of sales the unit cost soared to over $250
Hal Sigoin was hired as marketing manager
Delivery began in June 1984
Between June and Aug 1984, 2500 units were ordered.
The owners celeberated their success on Aug. 1,1984.
Problem Analysis
Four Apparent Significant Problems:
A lack of proper market research or market feel

A lack of substantial number of orders

Very high overhead and fixed costs

No firm marketing plans or distribution systems

The most significant problems at EK &G are low sales and high per unit
costs , resulting in low profits
Analyze the Facts and Underlying
Assumptions
A target market is not clearly defined
Sufficient demand does not currently exist (can it be created)
The break even quantity is not determined
In order to sell the pulsomatic , a marketing representative may need to be hired in
addition to Hal.
The actual costs of each unit must be determined , including whether or not the unit
cost will increase or decrease
Eghart and Kleptow seem to assume that no similar product currently exists. They must
find out if this is the case
The partners are assuming that the product and the revenue proposition are attractive
to merchandise
List Possible Solutions
Close down the business

Examine the viability of the entire Pulsomatic venture to determine the
likelihood of success.If it is deemed worthwhile

(a) find a way to market the pulsomatic broadly to many stores and public
locations, or


(b) find a small segment of retail stores or food service locations that are
customers intensive and market to that segment
Select a Solution and Defend it
It is recommended that EK&G Products examine the viability of the entire
Pulsomatic venture to determine the likelihood of success. If the
Pulsomatic is determined to be a feasible product, a strategic business
plan must then be developed. The plan should include considerations of
how to achieve increased sales in one or two markets
Plan of Action
Restaurants and bars throughout the state and adjoining states are places
of customer intensiveness. Mr Hal should aggressively pursue sales to
these businesses either by himself or with the help of commissioned
salesman. Other measures could be taken to stimulate sales, and
therefore increase production, in order to reduce the per unit cost.