Crafton industries inc Case Study Analysis
One of the full-line manufacturer of medium to high priced carpet – Crafton Industries Inc. offers its products under the brand names such as Chesteron and Masterton. The target market of Crafton mainly includes the residential segment. It significantly operates in the United States demonstrating an approximate sales of about $75 million in the year 2010 with a net profit of about $3 million before tax. Additionally, Crafton demonstrated the distribution channel which mainly included a number of seven distributors who were associated withthe direct sale with approximately 4000 retail accounts. Such retail accounts involved floorcovering specialty stores, furniture stores, and department stores.
On the other hand, the product distributors were located in the Midwest Coasts, East, and West of the United States. About half of the retail accounts of the organization tend to provide 80 percent of the organizational revenues demonstrating its dependency on retail sales. The wholesaler relation represents their services for about 30 years. Due to this reason, the average wholesaler employed 10 salespersons representing 20 percent of the sales margin i.e. the price to the retailer. Whereas wholesalers implemented 125 percent markup on the cost to sell the carpets to retailers.
The occurrence of a number of issues has significantly resulted in the inefficient performance and decline in sales, which is primarily based on the reason that the retailers of the organization had been profit conscious resulting in increased work pressure from the buyers as well as specialty stores.Additionally, about 40 percent of the time was spent by the salespersons to sell Crafton products whereas 60 percent of their time had represented the sales of non-competitive products. Due to this reason, the revenue generation by the wholesalers accounted forabout 6 percent represented by the inability of the salesperson to perform efficiently. With the significant increase in the inventory turnover by 5 percent, the inventory cost had increased.
Considering the operational services offered by Crafton in order to promote its sales, there has not been the implementation of such effective strategiesthat tend to demonstrate the probability of increased sales and customer loyalty. This is primarily based on the fact that Crafton lacks promotion strategies to advertise its products and services, and create brand awareness. Factually, the overall carpet manufacturing industry had demonstrated a 0.9 percent investment in customer advertising in terms of improving sales. Similarly, the sales representatives who tend to be responsible for the sales of Crafton products only investment 40 percent of their efforts in selling the Crafton products. One of the key drawbacks of the marketing approach of Crafton is mainly based on additional costs such as the warehouses associated with direct distribution which has demonstrated an increase in the product cost. Additionally, despite a small number of players in the market, the profitable growth of Crafton has been decreasing with time.
- The target market that the Crafton represents is proper as most of the sales are primarily generated through the sales from the residential segment.
- It offers high-quality products to its potential customer base.
- It represents an effective channel for the distribution of its products i.e. through a group of seven wholesalers with 10 salespersons.
- Due to the increased sales of the noncompeting products i.e. about 60 percent in comparison to the 40 percent of the Crafton products, there has been a decline in profitability.
- The organization demonstrated ineffective promotional strategies in order to create brand awareness.
Crafton only offers its services and products in the region of the United States and lacks international expansion of the business operations………………………….
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