Pricing will be $299.99 for the Personal-Pager and the Cargo-Pager. These units cost approximately $160.00 to manufacture. The Vehicle mount unit will sell for $250.00 due to the inexpensive costs associated with production.
Industry Analysis
Size
The trucking industry will continue to dominate domestic freight transportation modes by increasing to 68.2 percent of its share of all freight tonnage moved throughout the U.S. by 2008, according to American Trucking Association’s recently released U.S. Freight Transportation Forecast. "This number represents a gain in market share of 0.8 percentage points and keeps trucking squarely in the driver's seat as the dominant mode of transportation for delivering America's goods," said Bob Costello, ATA chief economist and vice president. In the trucking transportation industry there are a variety of different services provided by companies. These companies provide services that range from:
- Long haulers
- Regional haulers
- Distributors
- Company Owned (Harley-Davidson, goes between manufacturing facilities)
- Spot Trucking (One day, instant service from A-B, city coverage)
Characteristics
The long haulers of the trucking industry are the ones that are seen on the major highways for the most part. They are the types that are taking goods from one part of the country to the other. For example, Swift Transportation is the nation’s largest publicly-held truckload carrier, which operates 38 terminals in 31 states and Mexico. They provide dedicated fleet service to many of the largest retailers. They will often take loads from major West coast ports and disperse them inland to a variety of states, including the Midwest.
Regional haulers are the companies that will operate in an area covering Wisconsin, Minnesota, Illinois, and Iowa. is a California-based company that provides Los Angeles and Orange County with one of the highest ranked transportation services available in that area. This company and many others like them specialize in quick, on-time service in a large geographic area.
Distributors are haulers that specialize in transporting specific types of products that operate in a specific location. is a company that specializes in the distribution of wines in a variety of cities around the country.
Company-owned trucks are used to transport equipment and products back and forth between facilities. For example, Harley Davidson owns a fleet of trucks. A portion of these trucks are used to transport finished motors from one facility to another facility where the chassis are for final assembly. Other companies, such as Rockwell Automation, have a company truck that is used to move equipment back and forth from Milwaukee to Eau Claire on a daily basis.
Spot trucking are the companies that do not have any set contracts or specific cargo that is carried on a regular basis. They are usually smaller transportation companies that operate in a small geographic area, such as a city. Time Transport is a Wisconsin-based company that handles a good majority of the local distribution for Miller Brewery. A good bulk of their business is also done by customers calling up and requesting a pick-up and delivery for same-day-service.
Competition
Digital Angel is a company that is focused primarily within the healthcare field. Therefore their three largest competitors are the following:
- HealthGate Data wants to be a gateway to better health. Through its network of co-branded CHOICE sites, the firm publishes electronic health care information from more than 30 content providers via the Internet to doctors, other health care workers, and patients in more than 600 hospitals throughout the US. HealthGate also revises third-party content in-house and features proprietary content written by an editorial staff of physicians, medical journalists, and other health care professionals. The company's HealthGate OnSite product enables customers to download HealthGate's content files and host them on their own servers. Chairman and CEO William Reece founded the company in 1994.
- Medsite (formerly Medsite.com) boasts the answer to that question and more on its Web site for medical professionals. The company provides online marketing and educational services for physicians through its Interactive Grand Rounds program (online case management education) and Medsite Rewards service (offering online medical product information and free samples). In addition, Medsite offers physicians a medical journal tracking service (Journal Manager) that transmits e-mail updates from a selection of more than 4,000 medical journals. The company also sells medical books through its MedBookStore.com e-commerce site. CEO Sundeep Bhan co-founded Medsite in 1995.
- Patient Infosystems is a company that designs, develops, and operates data management programs that contact medical patients to determine their condition and compliance with treatment protocols. The firm gathers data via a semi-automated telephone system and then processes it, generating reports for health care providers, pharmaceutical companies, and others. Patient Infosystems has contracts with Bristol-Myers Squibb and other companies to provide data management for patients with asthma, diabetes, congestive heart failure, and other conditions. Chairman Derace Schaffer and John Pappajohn, a director, each own more than 20% of the company.
Note: Each of these bullet points came from data gathered at .
These companies are Digital Angel’s main competitors in the healthcare industry. If Digital Angel wanted to enter into the market of asset tracking for the trucking transportation industry, they would have a completely different set of companies to compete against. The following are a few of the companies that are currently recognized in this industry:
- “Cubic Corporation is a company that currently has a joint marketing venture in the “works” with S3, a San Diego based satellite security company, to offer military and civilian customers in the homeland defense market a tracking system that uses the government's satellite Global Positioning System (GPS) technology.” (Space Daily) Cubic, along with S3 appear to be in negotiations with Homeland Security with the intent to be the government supplier with regards to this type of product.
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Fleetilla is a company that focuses specifically on GPS system for truck and trailer tracking. They allow customers to better manage their fleet by helping them track mileage and provide information needed to simplify customer billing. “Transportation fleet managers communicate with field personnel (e.g. drivers) for status updates or new instructions through an Internet browser by accessing our Web services hosted on the Fleetilla gateway servers at the Fleetilla Network Operations Center. Fleetilla wireless tracking units are installed on vehicles. These units receive alerts, send automatic location and driver provided status updates via cellular wireless networks. The Fleetilla tracking units use the Global Positioning System (GPS) which pinpoints its exact location in addition to other parameters.” (Fleetilla)
These two companies appear to be the main competition that Digital Angel will have to compete with if they choose to enter the market of asset tracking, in particular the area of the truck transportation industry.
Situational Analysis
Environmental Scan
Competitive
The GPS technology has only recently surged into the tracking industry as a highly regarded means of fleet management and asset tracking. With the rise of cellular technology, improvements in the GPS satellite network, and higher demands for security and asset management, many competitors have quickly risen to the needs of this industry.
The Digital Angel GPS Tracking System’s direct competitors include:
- Land Air Sea Mobile Watch.net
- Global Tracking Corporation GTC-100A
- Fleetilla FL800
Land Air Sea Systems Incorporated (LAS) manufactures a GPS tracking system called Mobile Watch.net. This product combines GPS and digital cellular technology to implement a nationwide vehicle tracking system. Mobile Watch.net consists of a compact tracking unit and a stand-alone software application. The tracking unit is integrated into vehicles to be tracked, and the software application is used to track these vehicles. The tracking unit comes with a 64MB memory card to allow for extreme data logging. The Mobile Watch.net software implements a dynamic street mapping tool to easily display real-time tracking information to its users. Mobile Watch.net offers the ability to obtain instant vehicle location without time delay. Its real-time positioning is updated at a rate of once per second. It also offers the ability to download tracking information to cell phones and other cellular devices. Its feature benefit is its stand-alone software application and its ability to store large amounts of data. Complete company information and technical product specifications can be found at .
Global Tracking Corporation manufactures a GPS tracking system called GTC-100A Vehicle Tracking System. This product combines GPS and cellular technology to implement its vehicle tracking system. It consists of a very small, self-contained tracking unit to be implemented in vehicles. This tracking unit is designed to be able to operate, if need be, on its own self-contained power pack. Tracking information is requested via the Internet. When a user requests for tracking information, the GTC-100A Vehicle Tracking System reports the information via cellular communications. Its feature benefit is its self-contained power pack. Complete company information and technical product specifications can be found at .
Fleetilla Incorporated manufactures a GPS tracking system called the FL800. This product combines GPS and cellular technology to implement its vehicle tracking system. It consists of a compact tracking unit to be implemented in vehicles. Tracking information is requested via the Internet through a very easy to use web interface. When tracking information is requested, the FL800 reports the information via cellular communications. The information is displayed in real-time and can be viewed in a street map format or in detailed report logs. Automatic scheduled updates can be enabled to offer easier and more convenient tracking. The FL800’s feature benefit is its automatic scheduled updates and no software implementation. Complete company information and technical product specifications can be found at .
The Digital Angel GPS Tracking System’s substitute competitors include:
Although GPS technology may offer the most efficient means of communicating location information quickly and efficiently, the cellular phone industry still holds as a qualified substitute. Smaller fleet companies do not have the necessary economic backing to implement GPS fleet management systems and, therefore, rely on basic cellular phone communications to relay location information. Cellular phone service is inexpensive and company accounts can usually be implemented for even cheaper rates.
Economic
Currently, with a struggling economy, many companies are trying to save money and are not looking to invest in technological “gold plating” of their systems. Many companies are looking to ride the current economy wave until it shows itself to be more stable and profitable. This current trend has hurt Digital Angel’s current sales and revenue and has resulted in an extensively high net income loss in last year’s closing.
Technological
With such fast growth in current technology trends, a specific technology for Digital Angel to solely invest in and implement their product with is extremely important. Digital Angel’s Tracking System currently uses GPS satellite technology and CDMA cellular phone technology to implement in its product and service. The GPS satellite network is funded and operated by the U.S. Department of Defense. The GPS system was initially designed for the U.S. Military, but has recently entered the commercial market. (Dana) Since it is a U.S. Government affiliated program, its growth is anticipated to continue and become even more advanced.
The CDMA cellular phone technology has become a prime communication link for GPS receivers to relay information. With the demands increasing for GPS tracking systems to relay more than just location information, a higher bandwidth wireless technology is in need. Currently, CDMA technology can only transfer data at speeds of 30-70 kbps. With user requirements increasing to not only location information, but information such as average speed, maximum speed, engine temperature, engine performance, and so forth, higher data transfer rates are in demand. A new wireless technology called Ricochet has just been introduced to the wireless data transmission market. The Ricochet Micro Cellular Data Network (MCDN) is a wireless data-only network built by Ricochet Networks, Incorporated. Its high-speed network of 128 kbps was recently launched in July 2000 and will definitely “spark” interests within the GPS tracking industry. (Ricochet)
Political-Legal
When dealing with wireless communications, government regulations will always be a major role in service restrictions. With the increase in wireless communications use and the demand for larger bandwidth, the Federal Communications Commission (FCC) is continuously regulating frequency and bandwidth usage. With that in mind, FCC regulations must continuously be monitored and taken into consideration when looking to implement or upgrade current communications technology use.
With the GPS network being funded by the U.S. Department of Defense, a U.S Government organization, advancement in the technology will continue to grow and excel. And especially with current homeland security affairs, investments and funding for further GPS technology research will definitely be in high priority.
With increased regulations in the correct disposal of hazardous waste materials, tracking and monitoring of such items may become much more highly regarded. Environmental safety laws have been increased in recent years and could very well be given even stricter regulations. This market should be heavily monitored and looked into as a future investment.
Another strictly regulated industry is the trucking industry, which is Digital Angel GPS Tracking System’s primary target market. The Federal Motor Carrier Safety Administration strongly enforces hours of service for truck drivers. In complying with safety regulations, trucking companies could well be forced to implement tracking systems to log real-time data of truck routes.
SWOT Analysis
Strengths
Digital Angel is the exclusive licensee under U.S. patents for Personal Tracking and Recovery Systems and In-building Location Systems.
They are the marketer of the first consumer safety and location system that combines GPS location and biosensor technologies as well as provides phone and e-mail alerts to subscribers.
They are the worldwide leader in pet recovery with approximately one million pets in the U.S. and over ten million in Europe protected by patented microchips.
They hold more than forty issued patents covering key technologies in its existing products and they also have five pending U.S. patent applications and two pending international patent applications.
They currently operate the Digital Angel Operations Center and Data Delivery system, which is a state-of-the-art IT infrastructure that handles millions of transactions daily.
They are a leader in manufacturing GPS equipment for military applications, including electronic circuit boards and other communication and positioning devices used by pilots and military personnel in the field.
Weaknesses
Digital Angel’s major weakness is its lack of market dominance. Competitor growth in the industry with the added value of inexpensive technology implementation has allowed for many competitors to provide an equivalently valued product and service. Current product technology could be improved upon to set itself apart from the rest of the industry.
Opportunities
Digital Angel has many growth opportunities in-store. Homeland Security has been a recent issue and could be a giant growth opportunity for Digital Angel. Also, the increasing regulations being enforced on proper hazardous waste disposal is a major opportunity and could spark a specialized niche market in which to capture. The recent Ricochet cellular technology is an opportunity for Digital Angel to set itself apart from the rest of the industry. Currently, no company in the industry has a feature that solely wins the market share. Ricochet may be just that opportunity that will grant Digital Angel the forefront in the market.
Threats
The major threat that Digital Angel faces is vertical integration by large companies. Large trucking companies, such as Schneider, could hire their own staff of GPS research technicians and implement their own in-house GPS tracking system. Increased regulation by the FCC in wireless communications is another threat that should be highly regarded. Other threats include high net income loss and poor cash-flows.
Marketing Strategy
Target Market
Digital Angel has the choice of targeting up to five different trucking markets. These markets are comprised of the long haulers, regional haulers, distributors, company-owned trucking and spot trucking. Digital Angel needs to avoid the following two markets: long haulers and spot trucking. The long hauler companies, for the most part, have already implemented some form of vehicle tracking systems. The cost it would take to obtain these large companies, as customers, would be too great to justify. The spot trucking industry is the other industry that is too hard of a sell for this market. Spot trucking companies do not have the revenue to justify buying such sophisticated tracking systems at this time. Also, spot trucking companies do not have the quantity of trucks to reach a “break-even point” in a reasonable amount of time.
It is recommended that Digital Angel focus on the remaining three companies: regional haulers, distributors, and company owned trucks. These are the markets that do not have the ability to implement a system like this on their own. However, these are the markets that would benefit the most from the system Digital Angel is offering. These are companies that have the quantity of trucks and the coverage area to justify the expense of this system.
Channel Strategy
Direct sales will be implemented for reaching our perspective customers. This will be more effective, seeing as there is an existing sales channel for Digital Angel. This will also allow higher margins on each sale over selling to a distributor and allow relationships with customers to be formed. Direct sales will also allow a direct line between the Digital Angel knowledge base and the customers. This will allow for more effective sales.
Integrated Marketing Communications Strategy
Customer Contact Plan
Direct mail
Direct mail will allow Digital Angel to deliver a personal message at exactly the right time to a well-defined audience. Although direct mail is more expensive than print media, it will be less expensive than trying to use a personal sales call. Since this is a new product, but not a new company, Digital Angel will try to create goodwill within the trucking industry. They can use their good name in other GPS-related industries to show what they have to offer. Direct mail will allow Digital Angel to develop a list of inquiries and leads. They will then be able to develop a better list of qualified leads that will receive more extensive information. For example, video demonstrations, demonstration software, and brochures with product specifications can be sent to the qualified leads. Direct mail will also allow Digital Angel to generate interest in their product and, therefore, increase inquiries and leads generated at trade shows.
Trade Shows
Trade shows will provide a unique opportunity to showcase Digital Angel’s product and service. By participating in a trade show, Digital Angel will be able to do product demonstrations and explanations to many interested, potential customers. One possible way to showcase the product is to put on a live demonstration showing a truck with the product and the ease of locating it on the show grounds. Several possible shows to participate in include:
- The Work Truck Show, Baltimore, MD
- Mid-America trucking Show, Louisville, KY
- North American Truck Show, Boston, MA
- International Trucking Show, Las Vegas, NV
- The Great American Trucking Show, Dallas, TX
- New England Truck Expo, Hartford, CT
Trade publications
Marketing in a trade publication will allow Digital Angel to market directly to decision makers in trucking companies. Although controlled circulation would be preferred, it is not necessary. Digital Angel will still be able to market to those qualified customers through the use of direct mail. Here are three possible magazines that could be marketed in.
- Market served: Large, medium, and small-fleet managers whose firms operate class 6,7&8 trucks in the united states
- Circulation: 100,600 subscribers
- Frequency: Monthly
- Market served: Owner-operators and drivers of over-the-road trucks in North America
- Circulation: 153,000 copies distributed through truck stops, plus fleets, truck dealerships, and super distribution centers
- Frequency: Monthly
- Market served: Salespeople and leasing specialists at truck dealerships and leasing companies
- Circulation: 20,000-plus subscribers assist buyers and lessees in specifying trucks and components
- Frequency: Bimonthly
Evaluation and Measurement
The overall success of the strategy will be evaluated by sales. Actual sales will be looked at in comparison with projected sales to see how successful Digital Angel was in accomplishing its goals. Based on sales and how closely they came to their projection, Digital Angel will determine how much of the strategy needs to be adjusted and what needs to be changed. First, Digital Angel will look at customer satisfaction and see if customers are satisfied with the product, the service, and with Digital Angel. This will be done to help maintain current customers and to improve the product for future customers.
Next, they will look at the marketing strategy and evaluate its overall effectiveness. Digital Angel must look at its target segment and see if it is marketing to the correct audience. If this audience is too small or large, the campaign will most likely be ineffective. The channel strategy also needs to be looked at. If the product is not being channeled to the market correctly, then many other elements of the campaign will also be affected.
Finally, the customer contact plan will be evaluated. The current contact methods need to be evaluated and it is necessary to determine if the methods should be used as well as if old methods should be eliminated. The contact plan may also need to be changed to reach different customers if the target market is redefined.
Bibliography
Truckline
Costello
Hoover’s
Space Daily
Fleetilla
Ricochet
Dana, Peter H.
MS-365 Business-to-Business Marketing
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