Excerpt from Term Paper:
Evaluation of Alternatives
The 1st alternative is usually to do nothing and see perhaps the threat to CIMA’s key markets basically materializes. Naturally, this decision would not over-extend CIMA monetarily, but we could not make sure it would certainly not lead to total sales raises or product sales increases in core market segments. Therefore , we need to rule out this alternative.
Our second alternate is to strongly target the weekender industry. This decision is problematic for a couple of reasons. First, even though the company appears to be able to afford the half a million dollars it requires to invest in application and equipment, that is very likely not the end of the tale. The factory can be operating for 85% capability and is planning to enter a high-volume marketplace. CIMA will likely need to seek the services of new staff and may need a new center. Second, producing a low-end boot for weekenders may help VÉRTICE reach a new market and expand sales, but it may possibly impair product sales to bread-and-butter markets. In other words, CIMA’s reputation for making high-end boot styles could take popular. Also, despite rosy projections, we must query how very well CIMA will compete against major suppliers like Nike and Reebok who can easily out-market CIMA.
Adding lower end models towards the core alpinism and critical hiker markets also is difficult. First, there exists an affordability factor. This option requires in least precisely the same investment – and perhaps slightly more – than targeting the weekender market, and it produces a reduce sales amount than that option. Put simply, it has a more serious return on investment. In addition , despite great sales predictions, we can certainly not guarantee that product sales will increase. Competition could respond with also lower prices and CIMA can find itself within an un-winnable contest toward zero. And CIMA’s core clients, who be based upon CIMA’s top quality boots in order to save their lives, may not be thrilled that the business is introducing a lower-quality boot. There may be some brand impairment. In the end, retailers can be interested in the move and CIMA could experience a few sales increases, but we simply can not advocate this kind of move like a cure-all.
CIMA’s final alternate is to increase distribution. This kind of move is practical for a couple of reasons. First, it truly is affordable. MUERTE will have to seek the services of sales staff to cultivate distributor interactions, but , theoretically, sales staff pay for themselves (they make more in sales than they are paid out in salary). Second, revenue will increase. VÉRTICE has neglected more than half with the U. H. And Canada and if this builds a corresponding market share in individuals regions, product sales should at least twice. Also, this kind of move will never require investment in product development. The downsides of broadening distribution happen to be that PUNTA could face a ability issue since it grows; and if it accepts too much syndication from mail-order catalogues, it could possibly hurt sales to merchants. Also, the competitive problems that CIMA can be facing on the western part of the country will likely be mirrored in other locations.
CIMA should look to maximize its division to include all the U. T. And Canada. This method may double revenue without having to start new products or leave the core mountaineering and critical hiker markets. The company probably should not accept mail-order business as of this juncture, because CIMA offers enough room to grow by just reaching out to more retailers. There is no sense, with all the growth potential that already exists, in jeopardizing the retailer interactions.
CIMA may eventually confront capacity complications, but centering on new suppliers allows the business to control its growth and grow incrementally – perhaps just a couple of states at the same time. CIMA may face precisely the same competitive risks in other U. S. And Canadian markets that it is facing in the West, although by growing distribution PUNTA gets to expand sales buying time and finding a free look at whether the weekender market, for instance , will maintain its solid growth routine.
Cravens, David Watts. And Piercy, Nigel N. (2003). Strategic Marketing. McGraw-Hill