Decision Sheet

Decision Sheet

Decision: - To choose sole distributor for Reka Cement and discontinue practice of placing money in the packet

Why: - Choosing sole distributor for sales is usual practice in the industry. The customers are brand conscious when it comes to buying cement paint. Therefore, it is of utmost important for the company to create its brand value, if it aspires to become significant player in the market. The Ad-campaign has not been able to generate more profits for the company. Therefore choosing a sole distributor may help it earn more revenues. Moreover the consumption of cement paint is going to rise as more and more people are switching to this from the other low end paints.

To create its brand value, company should market its product with product differentiation. There are many parameters like life of painting of its cement and how easily and readily the cement painting can be done. This will help Reka Company mitigate the stiff competition it faces from brands like Newcam and Supracem.

The company should discontinue the practice of placing money in the packet. The customers' criterion for choosing any of the paint is quality. However the company will suffer from negative publicity if it chooses to implement this plan. Reka Company can back it up with giving additional paint of value equal to the currency notes supplied inside the packet.

Possible positive consequences:-

The company operates at a larger scale with its revenue increased. Though it has to pay much bigger discount and bear advertisement expenses, it can cover up these with the increased revenues. The short term costs incurred will result in creating long term brand value for the company.

Possible negative consequences:-

The revenues of the company don't increase whereas its operating cost has increased. This may happen due to many reasons like not so good choice for the distributor and inability to project its product differentiation.

Action Plan for negative consequences:-

Reka company should discontinue the extra free it gives with every bag. In case of company making losses, it should negotiate with the distributor for a renewed agreement to lower its cost. The company may choose to find a new distributor if the current one is not living up to its potential.