Lithuanian Footwear Manufacturing Industry Analysis According to Porter‘s Five Forces Introduction For all times footwear has been a basic necessity and just recently it has become a matter of fashion….
Case in Focus – PlastiTech Manufacturing Inc.
PlastiTech’s current business is in a state of stability and conservation. It is not losing out on market share and yet Bill Summers wants to be able to boost sales in a bid to outdo the firm’s competitors: valid concern for a firm that may be on the verge of facing aggressive competition from local and foreign firms in the near future. The current marketing strategy at PlastiTech is as placid as could be, with only six sales representatives and is decidedly successful, considering the $50 million sales figure.
The quality of the plastics manufactured at PlastiTech is a little better off than its competitors’ and hence Bill Summers is considering the use of additional sales representatives rather than “playing with the price” (PlastiTech Mfg. Inc. Case Study, 2009). The existing business strategy at PlastiTech is competent enough for the firm to consider aggressive strategies to increase its sales. The status quo is stable and hence there is no need for Bill or Barry to make a hurried decision.
It is essential for any manufacturing firm to have a progressive growth in sales; the strategy to be used may however depend on the circumstances and the industry. The consideration of Bill in this regard is highly suitable: hiring of four new sales representatives instead of absorbing shipping costs. Barry, being uncertain, should opt for the option in which PlastiTech may have stringent net profits in the beginning but would be able to gain on volume sales. This means that neither reducing the price directly nor absorbing the shipping costs would be a really good idea for PlastiTech to implement.
Considering the price competitiveness of the entire plastic manufacturing industry, it would not be advisable for PlastiTech to absorb the $3,000 to $6,000 in shipping costs from the West Coast to the Mid and East Coast. This would be clearly seen as a price reduction and might lead to sales losses instead of gains. On the other hand, relying on manufacturer’s agents has not meant a comprehensive coverage of the Mid and East Coast clients. There is a great potential for PlastiTech to cater to customers in the Mid and East regions.
Hence I strongly would recommend the Summers to go ahead and recruit two sales representatives for each region into the firm. I would include a modification in the strategy – four of the experienced sales representatives currently working in the firm should be sent to the new regions (Mid and East). The new representatives should be retained at the West Coast and trained there. This would mean that the best sales representatives would be out into the new market trying to catch new customers while the new recruits would gain the know-how of the game in their home ground – the West Coast assisted by two old sales reps.
Since competition on the Mid and East coasts is more vigorous, the presence of experienced sales representatives would mean greater chances of capturing new customers – since they would have learnt the art of selling over time more than young recruits would be expected to have knowledge of. Implementation of this marketing strategy would not require PlastiTech to reduce their prices or trigger a price war in the industry – this would keep competitors at bay. The future prospect of competitors’ agents coming into the West coast region can be taken care of by continuous improvement of the quality of the existing products.