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Case Analysis Palladium Door, Inc. Palladium Door, Inc. wants to increase 2003 sales by 36% in 2004. There is concern whether the current distribution strategy used by Palladium would be adequate to achieve the goal.

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Introduction

Case Analysis - Palladium Door, Inc. Wednesday, April 4, 2012 MKTG 6822- Anselmi Written By: Brent Fountain Mark Spinney Joseph Davis Table of Contents Problem Statement 2 External Analysis 2 Market analysis 2 Customer analysis 3 Competitor Analysis 4 Environmental Analysis 4 Internal Analysis 5 Performance Analysis 5 Determinants of Strategic Options 6 Alternative Analysis 6 Alternative 1 6 Alternative 2 7 Alternative 3 7 Alternative 4 8 Recommendation 8 Appendix 1 9 Appendix 2 9 Appendix 3 10 Appendix 4 10 Problem Statement Palladium Door, Inc. wants to increase 2003 sales by 36% in 2004. There is concern whether the current distribution strategy used by Palladium would be adequate to achieve the goal. The company will examine four distribution alternatives including, increasing the number of dealers, reducing the number of dealers, increasing the number of exclusive dealers, and maintaining the current distribution approach. After examining these four alternatives, it must be decided which distribution strategy will maximize sales and if any will increase sales by at least 36%. External Analysis Market analysis Palladium Doors is a leading manufacturer and distributor of garage doors and parts. The market consists of a number of national, regional and local brands. Palladium Doors currently operates at a regional level with two distribution centers targeting the Rocky Mountain States and northern Texas. The market of door manufacturing is two billion across the United States with a 90% focus on steel doors manufacturing with projected growth is at 2.4% annually. ...read more.

Middle

had $9.2 in total sales and a net income of $460,000. Cost of goods sold accounted for 75% of net sales. During the last 10 years, Palladium sales grew each year at a greater rate than the industry average. Overall, Palladium has a market share of 2.6%. Based on a consumer survey, customers rate garage doors based on price, quality, reliability of the installer, and visual appearance. Steel garage doors are preferred over wood doors at a nine-to-one ratio. Brand awareness in the garage door industry is not very strong across the board. Only about 10% of potential customers are able to provide a brand name when asked. There are 10 technical sales reps: 8 reps call on 300 nonexclusive dealers twice a month and 2 reps call on the 50 exclusive dealers. Exclusive dealers account for 70% of sales which translates to $725,000 profit per sales rep. Nonexclusive dealers account for the other 30% of sales which translates to $6,250 profit per sales rep (appendix 1). Commercially, Palladium offers sectional doors, rolling doors, motor operators, service and repairs, and industrial openers. Residentially, Palladium offers garage doors, service and repair, spring and section replacement, and openers. Determinants of Strategic Options Palladium Distributes garage doors and accessories through 300 independent nonexclusive dealers that service 100 markets and 50 independent exclusive dealers that service 50 markets. The 50 exclusive dealers are the sole source for Palladium in the markets that they serve. ...read more.

Conclusion

Palladium will want to perform measures on each market to make sure they are performing like planned, or the sales goal will not be achieved. Appendix 1 Non-Exclusive Dealers Exclusive Dealers Net Sales (.3)($9.2 mil) = $2.76 mil (.7)($9.2 mil) = $6.44 mil Net Sales per Dealer ($2.76 mil) / (300) = $9,200 ($6.44) / (50) = $128,800 Gross Profit (.25)($2.76 mil) = $.69 mil (.25)($6.44 mil) = $1.61 mil Total Sales Salary (8)($80,000) = $.64 mil (2)($80,000) = $160,000 Net Profit $.69 mil - $.64 mil = $50,000 $1.61 mil - $160,000 = $1.45 mil Net Profit per Dealer ($50,000) / (300) = $166.67 ($1.45 mil) / (50) = $29,000 Net Profit per Sales Rep ($50,000) / (8) = $6,250 ($1.45 mil) / (2) = $.725 mil Appendix 2 Income Statement Palladium Door, Inc Year Ended 12/31/2003 Net Sales $ 9,200,000.00 Cost of Goods Sold $ 6,900,000.00 Gross Profit $ 2,300,000.00 Selling, G&A Expenses $ 1,840,000.00 Net Profit before Income Taxes $ 460,000.00 Appendix 3 Sales by Dealer Type Exclusive Dealers (50 Dealers/50 Markets 1:1) Sales Portion (70%) $ 6,440,000.00 Sales/Dealer (1:1) $ 128,800.00 Non-Exclusive Dealers (300 Dealers/100 Markets 3:1) Sales Portion (30%) $ 2,760,000.00 Sales/Dealer (3:1) $ 9,200.00 Appendix 4 Market Tiering of Sales Total Sales in Market $ 348,500,000.00 Total Dealers in Market 3002 Sales/Dealer $ 116,089.27 1st Tier Sales (60% of volume) $ 69,653.56 2nd Tier Sales (30% of volume) $ 34,826.78 3rd Tier Sales (10% of volume) $ 6,965.36 ?? ?? ?? ?? Palladium Door, Inc. 2012 2 | Page ...read more.

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