Case 3 1 Wentworth Industrial 474s3g

Case 3.1 - Wentworth Industrial Cleaning Supplies

Case 3.1 Wentworth Industrial Cleaning Supplies Case Summary Wentworth Industrial Cleaning Supplies (WICS), located in Lincoln, Nebraska, is currently experiencing a slowdown in growth; sales of all WICS's products are below the projected volume. Total sales for the industry have increased, but WICS's share of this growth has not kept pace. Griffith, Vice-President of Marketing, has been directed to determine what factors are responsible and to develop a program that will lead to improved performance. In response, Griffith asked for suggestions from a variety of managers on what WICS should do to turn the performance around. The proposals covered several marketing activities including introduction of new products, lower prices, adding more distributors, using incentives, redeg the job descriptions of the sales force, pressuring the distributors to sell more, and trying to add more new end s. In addition, a consulting firm had been retained to study distributor and sales force attitudes and opinions. Griffith realizes that the problem facing WICS is not simple and that the entire marketing mix needs evaluation. He knows that merely pushing the sales force to sell more is not the answer.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

Teaching Objectives 1.

To teach students to recognize the potential impact of changing specific company policies on potential market share;

2.

To consider both short-run and long-run implications of alternative strategies; and

3.

To recognize that sales is part of marketing and that the entire marketing effort must be considered.

Teaching Suggestions The Wentworth case can be used early in the course to illustrate the relationship between sales and the rest of the marketing activities. Too often the sales function is viewed as not being part of marketing. If used early, students should be able to discuss the problems and make recommendations for most. Sales force problems may be recognized but recommendations will not be as well developed. We assume that most students have taken a basic marketing course which will facilitate their ability to discuss and recommend solutions for the problems. Students should be encouraged to look for the less obvious solutions to the problems in WICS. Certain issues have been highlighted which are not intended to be the focus of this case. The recommendations are marketing oriented, not just sales management oriented. An integrated program is needed to help WICS reverse a stagnant and declining market share situation.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

Discussion Questions 1.

What problems and issues does Griffith face?

The first issue that needs to be clarified is WICS's market share. Calculating Market Share In order to determine whether the present distribution system could be more efficient, i.e., whether WICS's sales force and distributors could be more effective, we must first calculate potential and real market shares. The two necessary components are product coverage and distribution reach; the combined effect of these two factors ascertains what percent of the total market is, in fact, addressed by WICS. WICS's product line fulfills 75% of the s' needs. Due to the pricing of the product offerings, 40% of the market is addressed by WICS. Thus, 30% (.75 x .40) of the total market is actually served by WICS's products. The present distribution system further limits market potential. Approximately 65% of the market buys through distributors. Of the total distributor dollars, SSDs "see" only 65% of the market. Therefore, 42% (.65 x .65) of the total market is actually seen through the current distributor network. The combined effect is that 12.6% (.30 x .42) of the served market is addressed by WICS. Assuming that survey results are accurate, and consequently that WICS holds a market share of 75% of the addressed market, the firm's actual market share is 9.5% (.126 x .75).

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Case 3.1 - Wentworth Industrial Cleaning Supplies

With a potential market share of 12.6% and an actual share of 9.5%, it appears that SSDs are doing a reasonable job of marketing WICS's products through present channels. The issue, then, concerns the necessity of determining the optimal strategy for increasing market potential. Presumably, WICS will be able to retain or exceed its current share of 75% and experience an increase in actual sales dollars as a result. Although we are currently interested in providing salespersons and distributors with sufficient incentives for maximizing the efficiency of the distribution system, it is not the focus of this study. Our major concern is to find a means of facilitating growth, making it easier for sales representatives and distributors to fulfill their roles and responsibilities in an efficient manner. WICS, because of its strength in consumer markets from products sold by another division, is assumed to have a market share much larger than 9.5%. It is unlikely that WICS will be able to increase its market share by further "greasing" the channels of distribution. WICS's situation can be compared to the problem of trying to pour more water through a funnel. WICS's past strategies were just that, trying to get a given number of distributors to handle more volume. As it stands, the case indicates that the SSDs resent WICS's efforts to pressure them to sell more to existing end s and to call on new end s. SSDs see WICS as being manipulative and unreasonable. In addition to the problem of negative distributor attitudes, WICS faces similar problems with the sales force. The area managers are frustrated by a sales role that they see as ineffective. Area managers view themselves as "lackeys" who are denied the opportunity to use their own creative skills. Job descriptions do not reflect reality and need revising.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

WICS's product line does not reflect end needs. Existing products only cover part of the market. Prices are too high, which serves to limit the market further. WICS marketing program assumes that their products are in the growth stage of the life cycle. Focus has been on market development using high distributor margins to encourage SSDs to emphasize selling benefits, demonstrations, and cold calls on new end s. Exhibit 1 illustrates WICS's position. 2. What alternatives are open to Griffith? What are the advantages and disadvantages of the suggestions made by his staff? One alternative is to do nothing. Obviously this has dire consequences, including Griffith looking for a different job. It is unlikely that the problem will go away or be selfcorrecting. Marketing mix problems exist that must be resolved if WICS's position is to improve. TONER'S PROPOSAL Toner's suggestions lead to more area managers and to more SSDs. Advantages:

More AMs and SSDs should lead to an increase in sales. Will lead to greater market exposure since new SSDs will call on new end s for WICS.

Disadvantages: SSDs who are doing a good job will resent the addition of more SSDs. Ignores the fact that current job descriptions are inappropriate. More AMs doing the wrong activities. More AMs will mean more territory managers and maybe another regional manager, adding to overhead costs.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

Summary:

More SSDs in selected markets should be considered in greater depth. Other changes in the marketing mix may be needed first. More SSDs would produce more sales. Attitudes of present SSDs need to be considered.

HART'S PROPOSAL Hart wants to use incentives to motivate the AMs and SSDs to sell more. She also favors establishing quotas for the SSDs and dropping those who fail to meet quota. Hart favors bonuses for securing new end s, to be awarded to both AMs and SSDs. Advantages:

Hart's proposals will probably generate an increase in sales both to existing and new s.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

The market has moved beyond SSD's marketing thrust. SSDs will be given objectives to meet which might cause them to do a more effective job with WICS's products. Bonuses will call attention to the importance of new s. Disadvantages: Hart's proposal is a "band-aid" solution to a major problem. More incentives will not be readily accepted by both the AMs and the SSDs. SSDs will perceive this as more pressure. Short-term benefits only. AMs are already doing the wrong activities; this will encourage a continuation. Summary:

Incentives and quotas and bonuses may play a role in helping WICS resolve some of its problems. They may be used in connection with other recommendations.

MICHAELS'S PROPOSAL Michaels is critical of how the AMs spend their time. He favors a job analysis of the AM's position. He wants to determine what rewards AMs value, feeling that more contests are not the answer. Advantages:

Could lead to a better definition of the AM's job. Eventually could lead to an increase in sales especially to new end s. AMs will be better able to determine how they should spend their time. They will be more satisfied with their jobs.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

Could lead to an improved reward package or system. Disadvantages: Ignores other problems, such as margins that are too high and distributors that are not happy. Will take time to implement. Summary:

Revised job descriptions are necessary to be sure. WICS has other problems that need attention.

WEBBER'S PROPOSAL Webber wants to expand the product line to include economy products. She also favors the addition of more SSDs, primarily in the $500,000 to $1,000,000 range. Advantages:

Will overcome WICS's lack of product coverage in the economy class. Should lead to an increase in sales and market share. Present SSDs will be pleased since they will have a full line of WICS's products to sell.

Disadvantages: Will increase R&D costs. Could lead to negative image problems. Expansion of product line may lead to more pressure being applied to the AMs and the SSDs. Additional sales training will be required. Summary:

Expanding the product line to include the economy class is reasonable if incorporated with other changes.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

SMITH'S PROPOSAL Smith advocates reducing prices to increase sales volume. She also feels that margins are too high and should be cut, due to her perceptions of where the product is in the life cycle. Advantages:

If her assumptions are correct, price cuts could lead to an increase in market share. Cutting prices is easy to implement. SSDs would find the WICS's line easier to sell. Lower prices may attract other SSDs who have "windows" composed of customers who are price conscious.

Disadvantages: If it does not work, WICS loses profit margin. May have a negative effect on WICS's image. Summary:

If product is in a later stage of the life cycle, then cutting prices is reasonable. However, other marketing actions are needed.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

3.

What should WICS do to correct its market share problem?

Throughout this analysis, two basic strategies aimed at obtaining WICS's growth objectives emerge. A.

WICS needs to increase its market coverage by increasing the number of SSDs. The addition of distributors with different "windows" will improve sales to new end s. More aggressive selling efforts are required, which means that the AMs will have to spend less time with existing distributors. Job descriptions will need to be revamped and sales training programs will have to change to reflect new activities. Incentive programs will be needed to encourage AMs to secure new SSDs and new end s.

B.

WICS needs to broaden its product coverage to include the economy class. Presently, WICS is excluded from the low end of the market because of its limited product line. WICS has to lower prices on its products but avoid going too low and competing against "schlock" products. Selling costs need to be lowered. Eliminating market developments costs for new products is one example. SSD's selling costs can be reduced by teaching their salespeople low cost sales techniques. In other words, since the products are in the mature stage of the life cycle, extensive sales efforts are not necessary. The products do not need demonstration. Reallocating the AM's efforts reduces selling costs for mature products.

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Case 3.1 - Wentworth Industrial Cleaning Supplies

Epilogue Prior to instituting the proposed program at a national level, WICS test marketed in Cincinnati. Four major changes were introduced in the Cincinnati test market: 1. Progressive discounts were offered in relation to total order size. 2. New products were introduced, targeted at the economy-priced, mediumperformance category. 3. Distributors were added selectively to fill voids in the distributor network. 4. The daily routine of the AM was reoriented to increase productivity. (Directives limited distributor calls to 20%.) If present trends continue, real volume can be expected to increase by 53% during the first year of the new program.

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