Swisher Mower is a company specialized on the manufacturing of lawn mowers. In 1996, the company got an opportunity to extend business, drawing up a private-brand distribution contract with the major national merchandise retailer.
However, such method of distribution would change the traditional marketing development of the company. Making a choice between the traditional way of retailing and new opportunity to extend business, the company faced with the marketing and organizational challenge and competitive threats that should be overcome.
Analysis of background of Swisher demonstrated that the company had always “a small company” image (Kerin and Peterson 415) and the change of the traditional strategy and acceptance of the new way of a private-brand distribution was a serious marketing challenge due to the specific of the sales within the industry. Swisher had been already cooperated with two buying networks that represent independent farm supply stores.
However, distribution within industry required the cooperation with other big networks and reduction of the direct work with the small stores. Besides, organizational challenge was based on the problem of change of the traditions of the company that had to transform its organizational strategy and the image of small company with emphasis of the personal relations with dealers and customers.
In 1995, the total income of company sales was $4,3 million and gross profit of the company was $704,850; the total liabilities and owner’s equity was $1,2 million (Kerin and Peterson 421). At the same time, “the lawn and garden industry produced sales of $5,5 in 1995, at manufacturers’ prices” (Kerin and Peterson 420). The company expected the continuation of the consistent sales and incensement of benefits. However, making the arrangement, Swisher was not sure would it be more profitable for the company or not.
The company got the opportunities of business incensement, excess capacity and benefits of distribution in metropolitan areas. Moreover, Swisher developed the new product line and introduced it to customer. In this situation, there are no opportunities that seem to be missed.
Expansion of business and incensement of benefits are the main goals of every company. However, the company could make more aggressive advertising and sales effort instead of accepting this arrangement. Although Swisher had to change its traditional strategies and image, the profits were worth of this transformation.
Competitive threats of the company included the possible loss of relations with farm supply stores, lawn and garden stores and others small stores.
According to Kerin and Peterson, “about 75 percent of company sales are made in nonmetropolitan areas” (416). Starting new way of distribution, Swisher faced with a serious competition with ten manufacturers with the nationally branded names in the riding lawn market. Those companies had already a strong position within the industry; therefore, it would be highly difficult to compete with them.
The most important challenge that must be overcome included the reduction of the prices as the result of the new conception of a private-brand distribution. The mowers had to be purchased with a price 5 percent lower than Swisher’s list (Kerin and Peterson 423). The company had to guarantee lowest price without an obligation of the promotion discounts. Besides, the mowers should display the American name. Swisher had to find out how to reduce the prices without the serious damage to the economical proceeds and the company focused on minimizing debt.
Kerin, Roger A. and Robert A. Peterson. Strategic Marketing Problems: Cases and Comments, 12 th Ed. New Jersey: Pearson Prentice Hall, 2010. Print.