Wentworth Industrial Cleaning Supplies

Executive Summary

Wentworth Industrial Cleaning Supplies (WICS), located in Lincoln, Nebraska, competes in the janitorial maintenance chemical market. Currently, WICS is experiencing a slowdown in growth. Total sales for the industry has increased. However, WICS’s has not kept pace with the industry as all of their product sales have leveled off below the expected volume. There are five alternatives to the problems at hand. The first alternative adds two SSDs to each area manager. The second alternative is to motivate current AMs and SSDs in the area of sales by offering quarterly incentives. The third alternative is to examine the basic job activities and selling duties of the AM in an attempt to understand what is important to them before offering incentive programs. The fourth alternative is to add a full line of economy based products and expand the present average and premium product lines. The fifth alternative is to change the job description of the area managers and reduce sales costs by reducing prices. My recommendation is to combine these alternatives. The most important step in this solution is to redefine and update the role of the area managers. It is also important to that the SSDs feel more respect from WICS and have a better understanding their roles as well.  

Situation Analysis

        In 2007, the total institutional maintenance chemical market is $2.5 billion, and the janitorial maintenance chemical market is $1.2 billion. Of that $1.2 billion market, WICS sales are $900 million in 2007. The janitorial maintenance chemical market is highly fragmented. No one firm has more than 10% of the market. Within this market there are approximately 2000 manufactures of national and private labels and approximately 5,000 to 6,000 sanitary supply distributors (SSDs). Distributors serve 65% of the market and usually carry a private-label line and one to two other lines besides WICS lines. The other 35% of the market is served through selling directly to end users.

        WICS is considered an industry giant. Yet, the company does not fulfill a complete line of janitorial chemicals. WICS products are rated at average to premium performance, and their coverage in this area is not complete. Also, they have no products in the economy class. Due to their focus on average to premium products, they are only serving 75% of the market’s needs for janitorial maintenance chemicals. Additionally, WICS charges premium prices to cover distribution costs. Yet, only 40% of the current served market is willing to pay premium prices such as those extended by WICS.

        A recent study indicated that 80% of the area managers’ (AMs) time is spent maintaining current accounts. Though, the AMs prime focus should be to serve existing key end-user accounts and new target accounts. Some sales management staff are showing concern that the AMs are not using their time appropriately. Another concern is that the AMs job description has not been updated since the firms ten years of rapid growth, and the connection between the job description and the actual work does not exist.

        Another concern is that the SSDs are not happy with the way WICS runs their business. Some distributors feel that WICS uses pressure tactics, does not communicate well, has high minimum buy-ins, and does not realize that a distributor’s total business extends beyond “its own backyard” in many markets. As a result, some distributors would rather not sell WICS products, or they would rather cut the price of WICS products to get the business.  

        Although WICS is still growing, this division is not performing and growing at the level expected by management. There are some due changes that must take place for this division to improve. This WICS division must focus on serving 100% of the market’s needs, including an economy line, and on focusing the roles and attitudes of the area managers and distributors.

Alternatives

        For the Lincoln, Nebraska division of WICS International, there are five different alternatives that may be taken into consideration to improve growth level. The first alternative adds two SSDs to each area manager. This will require that there are more AMs or that the role of calling on new end users is not part of the AMs’ role. This is great for market development. However, it comes with a high cost of hiring and training.

        The second alternative is to motivate current AMs and SSDs in the area of sales by offering quarterly incentives. This motivates both parties to bring in more business and provides healthy competition within the division. Yet, this does add more pressure and frustration for the AMs and the SSDs.