Paper Products Corporation
Mary Miller is the marketing manager for
Paper Products Corporation and she has
to decide whether she should allow her
largest customer to buy some of Paper
Products' file folders and market
them under their own name, (Natcom Inc.)
rather than the File X’s brand, used
by Paper Products. Mary is afraid that if
she doesn't accept the offer, the
customer will find another file folder
producer. Mary really only has two
options; accept or refuse the offer from
Natcom. There is a certain
degree of risk involved with either option and she
needs to decide which
option is the safest for Paper Products Corporation. If
Paper Products
refuses the offer they are putting themselves in a position to
possibly lose
30 percent of their business, approximately 12 million dollars per
year. Even
if Natcom continued purchasing their other supplies from Paper
Products,
and only quit purchasing file folders, the business would lose
approximately
4.2 million dollars per year. If Mary decided to take the offer
from Natcom,
and allow them to sell Paper Products' file folders with their
name, she
would be going against company policy and it would not be easy to
change this
policy. It would be very easy for Paper Products to Accommodate
Natcom's
offer because they have excess capacity. If they turn down the
business,
Natcom could go to another producer and cut into Paper Products' sales
at
Natcom stores. Another benefit of this offer is that Paper Products would
not
have to spend any marketing dollars to acquire this new business. Natcom
came to
them with this offer and it did not cost Mary Miller, or Paper
Products
anything. According to the marketing concept, Mary should accept the
offer from
Natcom. As marketing Chris Phillips 293-78-3538 04/28/2000
manager, Mary should
identify what the customer needs, and make Paper
Products Inc. the best company
at satisfying those needs for a profit. In
this case the customer is Natcom and
they obviously need to market a line of
file folders with their name attached.
This need should be clear to Mary
because her customer has now approached her
three times with this request.
Mary will need her expert marketing skills when
she tries to sell this idea
to Bob Butcher, Paper Products president. Mr.
Butcher is primarily
interested in the development of new products but he will
most likely be
interested in this proposal since it deals with his companies'
biggest
customer. There will have to be a policy change for Paper Products
Inc.
concerning the corporate policy of refusing dealer-branding requests.
Paper
Products implemented this policy because they wanted the success of
their
products to depend on the quality rather than just a low price, but
only 40
percent of their file folder products are in a specialized line while
the other
60percent are relatively homogeneous shopping products. The
success of the
homogeneous file folders will be very dependent on the price
rather than the
quality, therefore this policy depending on quality rather
than low price needs
to be revised. Mary should also approach Mr. Butcher
about using some more of
the company's available money for the promotion of
their existing brands. Paper
Products needs to pull some of their money
out of new-product development and
attempt to achieve some market
penetration. Although 60 percent of the current
market does sound appealing,
they may be able to grab some of the remaining 40
percent with some good
promotions and market
penetration.