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MKTG 310 Case Write Up

Matisse Company

Timothy Matisse came to the 4C’s with questions on what he should do with respect to the future of his business. Mr. Matisse is a middleman; the wholesaler for mill companies which produces lumber for local lumberyards, which are his customers. He works with 5 large lumber mills and until recently he was the only one in his area that sold on behalf of these mills. He is not limited by train carloads per month in what he has to buy from the mills. Matisse finds a buyer for the lumber and then directs the train car already en route to the customer.

For 20 years Matisse has worked for the lumberyard, and he knows his business well. He is also on good terms with the local lumberyards. Each month he makes sure to visit each client, and ensures they are happy with his business. However, he mainly does business thru emails or by phone. His rates are 4 to 6% higher than his competitors, which keeps him very competitive.

Matisse’s problems stem from competition by large home improvement chains that provide a larger quantity, lower prices, one stop shopping and consistent inventory. These large chains are even putting his local lumberyards out of business, thus reducing his current income and future income potential unless he gains new clients.

Now Matisse faces another issue. A competing wholesaler/middleman has moved into his territory. The competitor represents different lumber mills, and constantly undersells Matisse. This competitor is continually cutting into Matisse's market share. Even Matisse's most loyal customers are buying from his competitor based on pressure to keep prices low and thus compete with the large home improvement chains.

Mr. Matisse has some strong aspects to his lumber business. The perceived quality of lumber at the large chains is low, so many people prefer local lumberyards like the ones to which Matisse sells. People are loyal to the longer standing, local lumberyards, because these local lumberyards provide better service such as rush deliveries. By having such a reputation, Matisse has now been approached by Good Timber to diversify his business and form a partnership.

Good Timber Mfg. Co manufactures residential windows and accessories, and has asked Matisse to work for their company, selling their products to the local lumberyards to which he already sells lumber. He either can: 1.) Sell windows along with his lumber 2.) Tell them no and just stay with the lumber business 3.) Quit the lumber business and just sell windows. Good Timber wants to know what he’ll decide within a week. Mr. Matisse has looked at the benefits of working with Good Timber, and this is what he came up with.

Good Timber is a large manufacturer of windows, panel doors and accessories. They utilize technology for sales, their customer service is strong, and they would handle all of the billing and collecting for Matisse. Good Timber has a reputation for quality and only distributes their line to small independent lumberyards, not the big chains. They have a process that is specifically successful in residential windows. Plus, Good Timber would support a program to train local lumberyard employees on how to sell their windows and other accessories. This would help Mr. Matisse’s customers learn more about what they would be selling.

Of course there are concerns with joining Good Timber. Mr. Matisse would have to invest a large amount of time to get started with Good Timber. He would have to learn their business in addition to the lumber business. He would have to sell an idea and product that he has no experience selling.

Mr. Matisse is also worried about having to split his focus on two different industries. Selling for Good Timber could detract from his income, could take away from the time he puts into selling lumber for the mills, and communication breakdowns with longstanding lumberyard customers could result from an uneven time commitment to Good Timber. Plus he would be entering an entirely new market with new competition, which he is worried because he has been doing the same job for 20 years.

Our company recommends the following. Mr. Matisse should sell both windows and lumber, which is option #1. Matisse would be the sole vendor of Good Timber's products in his particular area. He would have the accounting resources, logistical support, and brand name recognition of an industry leader in residential windows. He would be providing his customers with a new line of products that fit well with his lumber business, since many of the residential windows use wood products. This gives customers more reasons to shop