Timothy Matisse the owner of Matisse Company has to decide whatever to accept Mr. DeBeer’s offer about become an exclusive distributor of residential windows and accessories in his area. Matisse Company has been a lumber distributor since 1985, in the last few years, a number of Timothy’s lumberyard customers have gone out of business-and others have lost sales. Six month ago, things even got worse, more and more customers seem to be willing to buy from the lowest-cost source. Evaluate Timothy Matisse's current strategy and how the present offer fits in Timothy Matisse has been a sales rep for lumber mills for about 20 years; he works with five large lumber mills on the West coast. Timothy isn’t the only person selling for these mills – but he is the only one in his area, he knows all the lumberyard buyers in his area very well, he is using a channel system (pg308) to sell lumber to buyers. A aggressive young salesman set up in the same business, this has hurt Timothy‘s business. Recently, Timothy was approached by Mr. DeBeer, owner of Good Timber Manufacture Company, a large manufacturer of windows, doors, and accessories who offered exclusive distribution. Mr. DeBeer has offered Timothy 5% commission on all window sales and 20% commission on the sale of all accessories.
1. Take DeBeer’s offer and sell both window and lumber products. The sale commission on residential windows would be about 5%, by getting just 20% ~ 30% of his lumberyard’s residential window business; Timothy could earn half of his current income. However, to do this Timothy would have to help the lumberyards get a lot more business by invading the commercial market with residential windows and the bigger markup accessories needed for this market. 2. Take DeBeer’s offer and drop lumber sales.
If Timothy drops the lumber business and he can focus on windows and accessories sale, plus the retrofit market is growing, he had good opportunity to be successful....