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to 30 in each subsequent year.
At the top end of the market, Herbert competed with electronic systems designers.
However the company's increasing expertise in the integration of power generation with
power use meant that it had substantial competitive advantages. The market throughout
Europe for integrated systems was growing rapidly (Table 11E). Though the overall figures
hid the trend, it was at the more sophisticated end of the market, for systems in excess of
£20,000, that showed the most rapid increase in demand.
Table 11E. Integrated systems market by European country in £ million by year,
with year 5 the most recent.
Year
1
2
3
4
5
Germany
25
45
70
120
140
France
15
20
30
35
50
Italy
10
12
15
22
35
UK
10
12
15
20
22
Herbert Engineering management thought that one vital area of investment, that should be
considered, would be further research and development in integrated control systems. The
market opportunity was a new one and one, - if not exploited in the short term - that would
be dominated by other companies.
The company would need to recruit an additional 2 personnel; rent new facilities away
from the current plant - unless they moved to larger premises; buy laboratory equipment;
and carry out an 18 month development programme for a new generation of control
panels. The cost of the additional staff would be £40,000, the premises £20,000 - including
the property taxes, and equipment would cost an additional £70,000. The two directors
had estimated that they would be able to enter the sophisticated energy control panel
market via this development, though the company would have to also invest in a skilled
sales engineer; and promotional support - using a combination of magazine advertising
and exhibitions. The main alternative promotional channels, monthly magazines and
annual exhibitions are in Table 11F.
Table 11F Promotional channels for sophisticated panels
Magazines
Circulation
Cost of ad £
Energy Management
35,000
2500
Control
40,000
3500
Power International
60,000
6500
Exhibitions
Attendance
Cost of stand £
Powerex
35,000
12,000
Control Systems
18,000
15,000
Environ
75,000
22,000
Manning costs for exhibitions would be very high, at around an extra £7000 each. The
company considered that with this investment it would be able to sell, on its own, 5 more
sophisticated systems in the first year, 8 in the second - rising to 14 in the third, and 20 in
the fourth.
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