Wentworth Industrial Cleaning Supplies (WICS), located in Lincoln, Nebraska, competes in the janitorial maintenance chemical market. Currently, WICS is experiencing a slowdown in growth. Total sales for the industry has increased. However, WICS’s has not kept pace with the industry as all of their product sales have leveled off below the expected volume. There are five alternatives to the problems at hand. The first alternative adds two SSDs to each area manager.
The second alternative is to motivate current AMs and SSDs in the area of sales by offering quarterly incentives.The third alternative is to examine the basic job activities and selling duties of the AM in an attempt to understand what is important to them before offering incentive programs. The fourth alternative is to add a full line of economy based products and expand the present average and premium product lines. The fifth alternative is to change the job description of the area managers and reduce sales costs by reducing prices. My recommendation is to combine these alternatives.The most important step in this solution is to redefine and update the role of the area managers.
It is also important to that the SSDs feel more respect from WICS and have a better understanding their roles as well. Situation Analysis In 2007, the total institutional maintenance chemical market is $2. 5 billion, and the janitorial maintenance chemical market is $1.
2 billion. Of that $1. 2 billion market, WICS sales are $900 million in 2007. The janitorial maintenance chemical market is highly fragmented. No one firm has more than 10% of the market.Within this market there are approximately 2000 manufactures of national and private labels and approximately 5,000 to 6,000 sanitary supply distributors (SSDs).
Distributors serve 65% of the market and usually carry a private-label line and one to two other lines besides WICS lines. The other 35% of the market is served through selling directly to end users. WICS is considered an industry giant. Yet, the company does not fulfill a complete line of janitorial chemicals. WICS products are rated at average to premium performance, and their coverage in this area is not complete.Also, they have no products in the economy class. Due to their focus on average to premium products, they are only serving 75% of the market’s needs for janitorial maintenance chemicals.
Additionally, WICS charges premium prices to cover distribution costs. Yet, only 40% of the current served market is willing to pay premium prices such as those extended by WICS. A recent study indicated that 80% of the area managers’ (AMs) time is spent maintaining current accounts. Though, the AMs prime focus should be to serve existing key end-user accounts and new target accounts.Some sales management staff are showing concern that the AMs are not using their time appropriately. Another concern is that the AMs job description has not been updated since the firms ten years of rapid growth, and the connection between the job description and the actual work does not exist. Another concern is that the SSDs are not happy with the way WICS runs their business.
Some distributors feel that WICS uses pressure tactics, does not communicate well, has high minimum buy-ins, and does not realize that a distributor’s total business extends beyond “its own backyard” in many markets.As a result, some distributors would rather not sell WICS products, or they would rather cut the price of WICS products to get the business. Although WICS is still growing, this division is not performing and growing at the level expected by management. There are some due changes that must take place for this division to improve. This WICS division must focus on serving 100% of the market’s needs, including an economy line, and on focusing the roles and attitudes of the area managers and distributors. AlternativesFor the Lincoln, Nebraska division of WICS International, there are five different alternatives that may be taken into consideration to improve growth level.
The first alternative adds two SSDs to each area manager. This will require that there are more AMs or that the role of calling on new end users is not part of the AMs’ role. This is great for market development. However, it comes with a high cost of hiring and training. The second alternative is to motivate current AMs and SSDs in the area of sales by offering quarterly incentives.This motivates both parties to bring in more business and provides healthy competition within the division.
Yet, this does add more pressure and frustration for the AMs and the SSDs. The third alternative is to examine the basic job activities and selling duties of the AM in an attempt to understand what is important to them before offering incentive programs. It seems apparent that the AM’s job description is no longer a valid one. Therefore, updating it is important. Though, there may be more resistance to change from AMs and SSDs in this case.
The fourth alternative is to add a full line of economy based products and expand the present average and premium product lines. This allows WICS to cover 100% of the market products. There is little cost for distribution for this alternative. However, there is a risk of changing customer perceptions of high-quality to low-quality products. The fifth alternative is to change the job description of the area managers and reduce sales costs by reducing prices. This allows an increase in sales volume and reduces the cost of sales.Yet, the consumer may feel a loss in the quality of the products due to reduced pricing.
Recommendations My recommendation for this division of WICS is to combine some of the alternatives into solutions in which will lead to more competitive sales growth. Most importantly, the AMs’ job description must be redefined and updated. The area managers must be provided with more incentives to run their designated area than the mere incentive of keeping their job (plus some meaningless bonuses). Also, the SSDs must have more attention from the WICS area managers.My recommendation is as follows: The AM is given a more defined job description. This description involves a focus on less selling and more motivation of his sales team and distributors.
The AM will spend more of his/her time training the WICS sales teams and the SSDs. It is very important that the AM explains new products and performs product demonstrations with the sales team and the SSDs. In addition, a price reduction should be considered. Offering 5 products for the price of 4 allows for price reduction without a negative outlook on reduced lower prices.