Question

Joe Hanratty is a drop-shipper who is now facing a tough oligopolistic competitor and is considering an opportunity that will change the functions he provides in the channels. He will be a manufacturers' agent.

A manager for a company that has been selling to industrial customers is thinking about expanding into a consumer market – and the strategy requires new channels of distribution. The manager is trying to decide whether to use intensive or selective distribution. Compare the two alternatives under different business conditions – and recommend which approach would be most profitable and why.

Joe thinks he has three choices:

1. Take Amy’s offer and sell both window and lumber products.

2. Take the offer and drop lumber sales.

3. Stay strictly with lumber and forget the offer.

Amy is expecting an answer within one week, so Joe has to decide soon.

Evaluate Joe Hanratty’s current strategy and how the present offer fits in. What should he do now? Why?

Answer 1

Answer :

Joe has about 20 years of expertise in the lumberyard business. Being in lumberyard business Joe knows and has a good relationship with all of the lumberyard buyers in his town. For his company, this is one of the strengths. Joe 's new plan is to build a customer chain for his company through good customer service and a consistent price set for them. Joe thinks about Amy 's suggestion and decides to create a new line in his strategy. He expects to enter Amy as the demand for retrofits increases. As he has a strong customer base in the lumberyard business, he can set up his new business line in the same area and make money. Joe's main concern was seeking a buyer. He can buy the lumber from the mill and sell it to the buyer, and the normal building code ventilation requirements are met with mechanical ventilation and he is most comfortable in his company. And you don't have to control the windows to allow natural ventilation. Joe is optimistic the housing market will quickly turn around and he will be well-positioned for development when it does. To do this, by entering the commercial market with residential windows and the larger markup accessories needed for this segment, he would have to help the lumberyards get a lot more (and more profitable) business. Joe would also receive a fee of 20 percent on the goods, contributing to his future income.

Joe 's approach is a middle man approach. From the manufacturers, he ensures that they still have a demand for their product, even without any official service commitment. He ensures the buyers of the produced product that they will have the product when appropriate and at a fair and affordable market price. By not making a big commitment, Joe will reduce the possibility of business volatility with that approach. His speed will pull in and out. The present offer suits in the sense that Joe's current business is entirely selling construction materials through his warehouse and Amy's company is producing frames, raised panel doors and accessories, and supplying the same through independent lumberyards. All companies are linked to the building industry and as Joe has a strong working relationship with the local lumberyards, Amy says he can be a strong sales agent in his area for residential windows and accessories. Amy has confronted Joe is because Joe has been in the business for many years. But the other explanation is that Arbor is actively seeking to grow – focusing on its handmade glass, a wide range of products, and a newly built factory support program to help distinguish it from the many other window manufacturers. Amy clarified the window market to give Joe a short big picture of the potential she provides. Joe will take the offer from Amy and drop the sales of lumber, as Amy offers technical assistance to raise sales and gain money, and also provides training in this regard. It can also quickly help Joe reach his target audience. She also provides a strong sales fee, i.e. 5 percent of revenue. The housing market won't always stay down, it'll go up to meet the demands of the rising population. So Joe will focus on the marketing plan, how to sell residential windows and accessories, and earn good income and commission on them. He doesn't get enough help from his employer in his previous market, neither in the form of training nor in the form of guide and financial assistance which is a major problem keeping competitive.

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