Marketing Strategy

In keeping with Autodesk's overall strategy of delivering the benefits of CAD to a mass market, Autodesk's marketing strategy is to apply the time proven techniques of mass marketing to a product traditionally sold directly at high prices.

This strategy, unique in the CAD market, complements the technical benefits of AutoCAD. Its application allowed Autodesk to obtain its large market share in a short time. In addition to applying mass marketing techniques itself, Autodesk mobilises the sales forces of computer manufacturers, graphics peripheral manufacturers, and computer dealers through cooperative advertising, promotion, and appearance in numerous trade shows. Autodesk has a variety of innovative programs involving training, advertising credits, joint appearances at trade shows, and other incentives which encourage dealers and manufacturers to jointly market Autodesk products.

Autodesk supports its advertising with an aggressive public relations effort, combined with an ongoing program of seeking and arranging for the publication of articles in the trade press describing applications of AutoCAD in various industries. Autodesk makes a major ongoing effort to communicate with industry analysts and key decision makers, seeking to demonstrate the benefits of AutoCAD versus larger systems. Autodesk supports the development of tutorial materials and books based on AutoCAD. Finally, Autodesk has a major commitment to the educational market, offering support and incentives to institutions wishing to teach CAD, and encouraging the adoption of AutoCAD in their curricula.

To reach a mass market at a low cost, the Company has concentrated on two major channels of distribution: computer dealers and computer manufacturers. The Company's approach in promoting both of these channels has been to communicate the real advantages of selling AutoCAD to participants in both market segments.

Computer dealers who sell AutoCAD typically make more from the dealer markup on AutoCAD than the retail price of most of the software packages they sell. In addition, the AutoCAD customer usually buys a larger computer with more options (larger memory, floating point coprocessor, larger disc storage) and with graphics peripherals such as a digitiser and plotter. These options and peripherals are typically discounted less in the marketplace than basic microcomputers, so the dealer's margin on the overall sale is increased by selling AutoCAD systems. These larger margins and access to less competitive vertical markets usually more than repay the dealer's investment in learning to sell AutoCAD. The Company's policy of not selling directly to large accounts and not placing its products in discount prone national distribution channels serves to strengthen its dealer network and that network's loyalty to the Company and its products.

Computer manufacturers who sell AutoCAD gain access to vertical markets previously denied them and gain a tool which uses their hardware to best advantage. Because AutoCAD automatically makes use of the resources provided by a computer system, whatever competitive advantages a system may have (better graphics resolution, higher performance, larger memory, larger disc storage) are effectively utilised by AutoCAD. Thus in a crowded, highly competitive market, AutoCAD provides a computer manufacturer a product which dramatically illustrates the advantages of his product versus the competition, demonstrably promoting hardware sales. In addition, the manufacturer receives significant revenue from the sales of AutoCAD software, while encouraging the sale of larger, more profitable machines. AutoCAD provides access to vertical markets within which the specialisation of a manufacturer may yield much greater results than in the general PC market. Computer manufacturers typically distribute AutoCAD through the same channels through which they sell their hardware; some manufacturers sell through their own dealer networks while others sell directly, mostly to large organisations.

The Company's longer term marketing strategy builds on the concept of AutoCAD as a general purpose tool which forms the central component of an engineering workstation. While AutoCAD by itself delivers compelling gains in productivity easily communicated and justifying its purchase, an AutoCAD user is a prequalified customer for a wide variety of additional productivity tools. These tools include predefined symbol libraries; a wide variety of engineering and design automation programs for such purposes as preparation of bills of material, job cost estimation, structural analysis, numerical controlled machine tool programming, and electronic circuit analysis; and materials intended for use with AutoCAD, such as templates, tutorial guides, and other self-teaching materials. Autodesk regards its large and rapidly growing base of customers as one of its major assets, and intends to develop and market additional productivity tools into this base. CAD/camera and AE/CADD are examples of additional Autodesk products which will appeal to significant numbers of AutoCAD customers, as well as encouraging new sales of AutoCAD. The company's large installed base also leads third party vendors of applications software which complements AutoCAD to approach Autodesk with joint marketing proposals. These products, qualified through the AutoCAD Applications Program, provide a continuing source of new products for joint marketing or acquisition by the Company.

In short, the Company's marketing strategy is to create a mass market for CAD, where no mass market existed before, develop channels of distribution to address that mass market, and build on its emerging position as the volume leader with additional products and services.