Mission and Strategy
Our mission is to be the leading provider of electronic parts catalogs and related
technology and service to increase sales and profits for dealers in selected manufacturing
industry segments, primarily those with shared distribution channels and service
networks. Our vision is that whenever a dealer in one of our target markets accesses
technical parts and service information electronically from a manufacturer or distributor
or market its products and services to its customers, it will use at least some
of our products and services to do so. To achieve this vision, our strategy is to
concentrate on a few vertical markets, and to be the leading provider of electronic
catalog products and services in those markets. After establishing a position in
a market, we will then bring other products and services to bear – including dealer
marketing services - in order to expand our presence and solidify our competitive
position. Our goal is to provide a complete array of high-quality electronic catalog,
marketing, and eventually, other services that industry participants will adopt
and use effectively.
Growth Initiatives
During fiscal 2007, the Company is focused on four growth initiatives, which are
the same ones pursued in fiscal 2006: (i) maintaining and enhancing the current
base of catalog business; (ii) growing the dealer marketing services business; (iii)
changing to a dealer-direct business model in Europe; and (iv) making selected synergistic
acquisitions.
Dealer Catalogs
To maintain and enhance the current base of catalog business, we are seeking to
maintain a renewal rate of over 85% on dealer catalog subscriptions and selling
new catalogs and dealers at a rate sufficient to replace the revenue from non-renewing
subscriptions, or to increase it slightly. We believe that we are highly penetrated
in our two primary markets (Outdoor Power and Power Sports) both in terms of dealers
and catalog titles, but there are opportunities for some additional growth in related
markets (such as Agricultural Equipment).
Marketing Services
Our primary new product initiative in North America is marketing services,
which includes WebsiteSmart Pro™, ARI MailSmart™, and additional add-on products, including
eMailSmart™ and our automated website content management services. These products
respond directly to our dealer customers’ desire for assistance from a trusted partner
like ARI in marketing and selling to their customers and prospects. We are investing
in additional sales and marketing resources, as well as in product development to
support this initiative.
Dealer-Direct Business Model in Europe
In Europe, our focus is on shifting from a historical business model in which we
sold only indirectly to dealers through manufacturers, distributors, or value-added
resellers to a business model in which we sell and support dealers directly in their
native languages. During the second half of fiscal 2005, we opened an office in
Alphen aan den Rijn, The Netherlands, and staffed it with approximately 10 employees.
Through a combination of direct selling and unbundling our current indirect business
relationships, we expect to establish a direct-to-dealer business model. Once established,
we believe that this will enable us to reverse the decline in European revenues
and position ourselves for growth in the future by introducing additional products
– including dealer marketing services – to European dealers. We have invested in
sales and marketing staff in Europe, and expect to invest in product development
as well in support of this initiative.
Acquisitions
Finally, we continue to seek acquisitions that will solidify or accelerate our market
position in both the catalog and dealer marketing services markets.