Management at Arzel Zoning Technology Inc. knew it manufactured a good product-a heating and cooling system that ensured equal temperatures throughout any building-what they didn't know was how to develop a strategic marketing plan to direct expansion.
Because the Warrensville Heights-based company had relied on word-of-mouth during its first nine years in business, no employees were capable of undertaking an in-depth market research study. So, two years ago, owner Al Zelczer turned to outside consultants at CAMP to conduct one.
The study revealed, among other things, that Arzel was unique among its competitors. "We sell directly to the contractors," explains Joe Dahlheimer, vice president of marketing and sales. "We're atypical of the industry." In a normal distribution channel, the manufacturer sells to a wholesaler, who sells to a contractor, who sells to the end user, the homeowner.
That key piece of information kept Arzel from diluting its bottom line. Before the study, Zelczer and general manager Dennis Laughlin considered employing wholesalers to help expand the company's market share. They later reconsidered. "The study pointed out that there was nothing a wholesaler could really provide us with," says Dahlheimer, who was hired in 1997 to implement the marketing plan. "It prevented us from making a mistake."
Also revealed was that the HVAC contractors were developing into two networks: 1) consolidators: large organizations that buy small contractors and assemble them under one business umbrella as franchises, and 2) best-practices groups: loose associations of independent contractors who meet and share information about how they ply their trade.
That knowledge allowed Arzel to target the two groups independently.
The study also showed that contractors were using Arzel's products in two ways: proactively-to generate new business, and reactively-to solve heating and cooling problems they encountered on a job.
Using this information, Arzel set out with a two-pronged expansion plan. First, it forged a partnership with one of the consolidators to increase use of its products. That turned out to be an easy task because a significant number of the franchise contractors already used Arzel's products. They went to bat for Arzel with the corporate offices, Dahlheimer says.
Next, Dahlheimer focused on the independent contractors in the best- practices groups. Contractors nationwide were contacted and told about Arzel's products. Because the systems were easy to understand and compatible with existing air and heating units-something many of which Arzel's competitors' products weren't-interest was high, Dahlheimer says.
Everyone was then given detailed packages of information to help them market the products to customers. The packages included sales pieces and a ready-made press release kit. "Simplicity was important," Dahlheimer explains. "We didn't want to overcomplicate the process for them when we transferred the information. We just wanted to teach them how to identify the opportunities and pursue them."
Just over a year later, the plan's execution has seen impressive results. "It wasn't hard to double the business," says Dahlheimer, who notes that the growth rate in the first year well exceeded 100 percent. But management at Arzel knows not to get too excited. "Our next problem is that we have lots of opportunities, and we can only take advantage of so many. You have to make sure that sales and marketing doesn't get ahead of the company and you don't grow too fast."