Aftermarket strategy and business networks : case study of a hydraulic motor firm

Abstract

The aftermarket is a big potential for any business as it can be more profitable than sales of the primary product. Previous aftermarket studies are focused on a supply chain approach to the aftermarket using pricing and logistics strategies for different types of industrial markets and limited to case studies from the automotive industry. Small to medium sized enterprises such as hydraulic motor companies have gained international markets due to their technological superiority and have reached niche market segments all over the world. This research aimed to create a profitable aftermarket strategy for a hydraulic motor company with an international niche market. The unique challenges of the case company were based on firm size, being a component manufacturer, exporter and having an international niche market. The theoretical background of this thesis is a multidisciplinary framework including concepts from organizational strategy, market segmentation, international business and business network literature. The contribution to the research is to expand aftermarket strategy literature to include theories which had previously only been included in their specific research fields or in industrial marketing literature. Key theories include value chain and constellations, macrosegmentation and network theories. By conducting a single-case study and collecting data through semi-structured interviews of eight employees with aftermarket roles and six customers with different aftermarket capabilities, a network approach to business strategy was formulated. The findings resulted in an organizational strategy and network approach to the aftermarket. Organizational aftermarket strategy is the starting point for the firm to use when developing their internal structures and key activities. It also provides a way to determine aftermarket offerings to customers based on their characteristics. The network approach involves leveraging on customer knowledge, capabilities, location and reach to be able to provide aftermarket products and services to end users in key markets of the targeted aftermarket product.