Marketing Policies and Strategies
Tuesday, March 6, 2012
I. Problem Definition:
Should Fe’nix accept the contract to broaden its position and potentially add $4million in additional sales, given the constraints of dedicating a large percent of their business to replicas – which may have an effect on their relationship with current dealers?
II. Industry Analysis:
| Collectors | Non-Collectors/ Gift Buyers|
Replicas| | | Authentic| Fe’nix Del Sur| |
According to the product-market matrix above, and after reading about the industry, it is apparent that Fe’nix del Sur competes in selling authentic artifacts to collectors. After some of their clients insisted on an expanded product line, Fe’nix del Sur started producing replicas of their authentic artifacts. The replicas, in return, have broadened the company’s market to include gift buyers and individuals looking for decorative items.
III. Organizational Analysis:
Fe’nix del Sur is a reputable importer of authentic Southwestern jewelry and pottery for collectors. They originally sourced Hopi and Navajo artifacts, but in recent years have expanded their product line to include pre-Columbian artifacts from Peru and Venezuela, along with tribal and burial artifacts from Africa.
If Fe’nix del Sur accepts the contract, their business definition would change. Since the company’s main focus in currently on dealing authentic artifacts to collectors (exclusively through specialty dealers, firm-sponsored showings and a few exclusive department stores), the loyal collectors who continually purchase their products may start to look elsewhere if the company fully expands their product line to include many replicas. The company would no longer be in just the authentic jewelry and pottery business, but rather also in the “replica” business. Therefore, their new business definition would be altered to include being a producer of replicas for gift buyers.
Through careful verification, Fe’nix del Sur is able to successfully determine the authenticity of South American and African artifacts. This skill has enabled Fe’nix del Sur to develop a national reputation as one of the most respected sources of these types of artifacts. Fe’nix del Sur’s distinctive competency, which sets them apart from department stores that sell only replicas, allows them to sell through suppliers with highly limited distribution.
The company had originally established a solid relationship with the retailers that sold their products, often being the sole supplier to its clients. However, in more recent years, due to the increase in competition, Fe’nix Del Sur’s products are not the only products being sold at some of these retailers. In fact, some of the retailers are now sending out their own buyers to deal directly with some of the Hopi, Navajo and African sources – completely stepping past Fe’nix. Therefore, the company’s relationship with those retailers is not as strong due to an increase in consumer demand for both authentic artifacts and replicas.
By accepting the contract, I feel that the relationship between Fe’nix del Sur and the retailers they currently deal with would change. Most of the larger specialty and exclusive department stores are now dealing directly themselves or with other suppliers. Forming this new relationship with the mass merchandiser chain, allowing them to buy at 10% below the company’s existing prices, would spell disaster for Fe’nix’s current business relationships. Once the other businesses that Fe’nix currently deals with find out about this 10% price cut, they will either find another importer of authentic artifacts and jewelry or they will demand the 10% price cut as well. If all businesses that they currently deal with demanded a 10% price cut, Fe’nix del Sur’s income statement would drastically change –...