Mary Miller is the marketing manager for Paper Products Corporation and she has
to decide whether she should allow her largest customer to buy some of Paper
Products' file folders and market them under their own name, (Natcom Inc.)
rather than the File X’s brand, used by Paper Products. Mary is afraid that if
she doesn't accept the offer, the customer will find another file folder
producer. Mary really only has two options; accept or refuse the offer from
Natcom. There is a certain degree of risk involved with either option and she
needs to decide which option is the safest for Paper Products Corporation. If
Paper Products refuses the offer they are putting themselves in a position to
possibly lose 30 percent of their business, approximately 12 million dollars per
year. Even if Natcom continued purchasing their other supplies from Paper
Products, and only quit purchasing file folders, the business would lose
approximately 4.2 million dollars per year. If Mary decided to take the offer
from Natcom, and allow them to sell Paper Products' file folders with their
name, she would be going against company policy and it would not be easy to
change this policy. It would be very easy for Paper Products to Accommodate
Natcom's offer because they have excess capacity. If they turn down the
business, Natcom could go to another producer and cut into Paper Products' sales
at Natcom stores. Another benefit of this offer is that Paper Products would not
have to spend any marketing dollars to acquire this new business. Natcom came to
them with this offer and it did not cost Mary Miller, or Paper Products
anything. According to the marketing concept, Mary should accept the offer from
Natcom. As marketing Chris Phillips 293-78-3538 04/28/2000 manager, Mary should
identify what the customer needs, and make Paper Products Inc. the best company
at satisfying those needs for a profit. In this case the customer is Natcom and
they obviously need to market a line of file folders with their name attached.
This need should be clear to Mary because her customer has now approached her
three times with this request. Mary will need her expert marketing skills when
she tries to sell this idea to Bob Butcher, Paper Products president. Mr.
Butcher is primarily interested in the development of new products but he will
most likely be interested in this proposal since it deals with his companies'
biggest customer. There will have to be a policy change for Paper Products Inc.
concerning the corporate policy of refusing dealer-branding requests. Paper
Products implemented this policy because they wanted the success of their
products to depend on the quality rather than just a low price, but only 40
percent of their file folder products are in a specialized line while the other
60percent are relatively homogeneous shopping products. The success of the
homogeneous file folders will be very dependent on the price rather than the
quality, therefore this policy depending on quality rather than low price needs
to be revised. Mary should also approach Mr. Butcher about using some more of
the company's available money for the promotion of their existing brands. Paper
Products needs to pull some of their money out of new-product development and
attempt to achieve some market penetration. Although 60 percent of the current
market does sound appealing, they may be able to grab some of the remaining 40
percent with some good promotions and market penetration.