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BAS Service Market - Strategic Analysis and Recommendations
Frost & Sullivan, Nov 2006, Pages: 37
This white paper provides a strategic analysis of the Building Automation Systems Service Market. Market dynamics are analyzed and a case study demonstrating the increasing importance of this market sector is presented as well. An entire chapter is also devoted to the discussion of key strategic recommendations designed to address areas of weakness or further enhance areas of strengths.
It is indisputable that the vibrancy and success of an industry is almost always associated with the sales performance of its most visible products. This is primarily the result of the never-ending focus on year-to-year sales numbers by experts and analysts as the foremost barometer of industry performance. For example, if new sales of a certain well-known product(s) have been in decline for several years, experts will often point to such a trend as evidence of an industry on the verge of economic trouble.
An obvious case in point is that of the automotive industry. The volume sales of new automobiles, be it passenger sedans, SUV’s, or pick-up trucks, are constantly being monitored, dissected, and analyzed as the primary indicator of overall or segment-level industry health. Even the slightest detection of a declining trend in sales is often enough to raise concerns and send alarms.
The reality, however, is that attempting to define the economic complexities of an entire industry by its sales statistics alone is simplistic and inaccurate. In fact, because of an overwhelming focus on new sales, often times an equally vital source of revenue is overlooked: service operations.
Again, the automotive industry serves as a classic, immediately recognizable example. The building and selling of ever-more expensive, sophisticated automobiles has served as a major boon to the automotive service sector. The fundamental reason for this is that a large percentage of vehicle owners have neither the time, skill, nor desire for do-it-yourself repairs or maintenance and instead, choose to out-source such labor to specialized, trained mechanics. These services are in such high demand that, today, the repair and maintenance business is far more profitable and lucrative than new car sales.
Moreover, in order to further capitalize on customer demand for automotive service, automobile manufacturers have pioneered the practice of offering service contracts. The idea behind such contracts is that customers can purchase upfront a multi-year service program that covers the cost of parts and labor for unforeseen and potentially costly repairs occurring beyond the warranty period. The peace of mind afforded by service contracts has proved to be quite popular with many customers and as a result, such contracts have become dependable generators of additional revenue and profit for manufacturers.
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