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Can Commodity Product Producer Differentiate for Better Profitability?

Case Study Project Description

This California based company made doors. Doors are a dime a dozen. They are made from wood or metal or composite woods. There is not a lot of ability to price a door any differently than competitors. The manufacturer of doors also has to produce a high volume to make enough profit to make it worthwhile. Can a small manufacturer do anything to make their product stand out in the marketplace?

Project Problem

The door manufacturer made doors from recycled construction materials. He had developed a special method of process the waste material and purchased unique manufacturing equipment from Europe to press the material into doors. But would the market care? How was he going to get into Home Depot and Lowe’s to sell the doors? How could he get distribution into the market place? Could he get a regular source of material to make the doors?

Solution

The stark reality of the situation was that this manufacturer of a single product would not have much success trying to sell a door with unique properties into the consumer distribution system. While the owner was convinced that his recycling activity would help the environment and employees all thought they were contributing to something worthwhile, there was nothing about this fact that would cause buyers to spend more to buy his door over a competitors door. Was their another way to look at the market place.

Rather than attempt to find traditional distribution methods, we looked at who had waste streams similar to the door manufacturer’s raw materials, cared about the environment and already had a distribution channel that these unique doors could be easily sold through but they did not have a door in their product line. We found three potential partners through this method of looking at the marketplace.

Each of these partners had the potential to sell high volumes of the product. It would mean that the manufacturer would only be making the product, not selling it any longer.

Result

We brought the owner to three meetings with these potential partners. Unfortunately, the owner chose not to enter into a distribution arrangement where he would make the doors for them as he found their first price unacceptable and was unable to keep the relationship going well enough to establish a basis to do business. It takes a re-orienting of expectations and an ability to have difficult to discussions to manage joint venture relationships. Ultimately, if the company is unwilling to change how they do business to meet the needs of partners or customers, potentially lucrative target markets become unavailable to the company.