Marketing Case Analysis

MKTG 101 вЂ" Principles of Marketing

Group 6

Section 5

Professor Bruce Wilson

Case 12

Paper Products, Inc.

Group Case 1

Prepared by:

Vaccarezza, Andrew M

Jiang, Benson X

Longcrier, Emily N

Benson, Brooke E

Kalachik, Tatyana

Konkel, Meghanne B

Lay, Tiffanie N

Skinner, David

March 21, 2007

TABLE OF CONTENTS

Introduction 1

Executive Summary 1

Major Relevant Issues 2

Central Problem 2

Implications 3

Alternative Solutions 4

Recommended Solution 5

Introduction

For this case study our group, Group 6, has decided to review Case #12 dealing with Paper Products, Inc. This case study concerns the company PPI and its biggest client, Office Center, Inc. We will begin by considering the major relevant issues in the case and then identify what the problem is. Once the problem is identified, we will outline what some of the implications are if PPI should decide to honor OCI’s request or deny their request. Finally, we will recommend a solution which is believed to be in the best interest for PPI to consider.

Executive Summary

Paper product, Inc. (PPI) is a high quality manufacturer of paper products. PPI’s products can be found nationwide and they distribute their array of products through stationary suppliers. The relationships among these stationary suppliers are all governed by a strict corporate policy which ensures fairness between businesses and helps guarantee the success of PPI. In turn, PPI’s business operation is currently very successful.

PPI’s present sales volume is 40 million dollars a year. Within their sales volume, 40 percent of their sales can be attributed to 10 regional stationery suppliers, 30 percent to Office Center Inc., and 30 percent to more than 40 local stationers. Due to the sales brackets being broken up in large sections between various companies, each specific company is important to PPI. At this time OCI, which again counts for 30 percent of PPI’s sales volume, has forced PPI to question their corporate policy as they wish to brand PPI’s personal FILEX brand with the Office Center name. It is corporate policy to not allow other companies to brand PPI’s products, which protects the company from becoming dependent on individual customers as well as keep brand recognition through their quality products. Thus PPI needs to decide if they are going to allow this request.

Consequently, PPI needs to form a contract with OCI which assures them the necessary business in order to be profitable if they want to brand the FILEX folder. This contract will cover a buying ratio and assurance that OCI will continue to purchase other products that PPI has provided in the past. It will also be crucial for PPI to market their brand name and quality products to distinguish them from their new competition, OCI. Accordingly, if PPI chooses not to allow OCI to use their own brand on the FILEX folder, many consequences could potentially arise. PPI could lose business if OCI finds another supplier to create folders similar to the FILEX folder, they would lose money from not selling the OCI branded folders, and the new folders would most likely take part of the market and lower the overall market price of the folders. Finally, if PPI chooses not to make the OCI branded product, they could potentially be inviting more competition into FILEX folder market.

Major Relevant Issues

After evaluating PPI’s situation, it is logical that there are some major issues to PPI’s situation which must be settled. Diane Chin is the marketing manager of PPI; therefore she must decide how to settle these major issues.

One of the major issues is OCI accounts for 30 percent of PPI’s business. Chin may want to look at OCI’s value as a customer. How important is OCI to PPI since OCI accounts for 30 percent of her business? If PPI keeps on declining OCI’s request for their own brand, then OCI will conclude PPI does not value them as a customer. Then OCI will start looking for another distributor which will value them as a customer and consequently give them their own brand name.

OCI wants PPI to create a file folder line with similar quality to PPI’s FILEX brand. This is also an issue because OCI can always lower the price of its own brand to create more sales. Chin must think about who would spend more on PPI’s brand when OCI has a similar quality for a lower price?

Another issue is that there are many competitors out there. These competitors are hungry for business and they are willing to undercut PPI’s price and loose profit just for the business. She must look at what the competitors are offering to the consumers so she can see if she can cut PPI’s price down to match the competitors’ price while continuing to maintain an acceptable profit.

Central Problem

After evaluating a number of issues that affect PPI it all comes to one central problem, how can Chin keep OCI at a relevant level of sales without loosing business to competitors? This includes deciding on the details of a contract, compromising company policy, forming a buying contract with OCI, and considering other market options. Diane needs to present the benefits of contracting with OCI to the president of PPI. He could then see what difference contracting could make and what can be lost if deciding not to form a contract with OCI. This needs to be done by showing the contrast between different implications for accepting and denying OCI’s