Next, since many of these artifacats are made in Africa, the country’s political climate as inhibited Toucon from obtaining appropriate supply. Another critical factor is that the market has been flooded with replicas, which means Toucon must search deeper for authentic pieces and also convey that message to the consumer. Finally, Toucon must deal with government interference when attempting to export its product out of the home country and into the United States. Toucon must make the decision on whether to accept the proposal from the major department chain to carry the company’s product line.
However, there is one caveat – Toucon must triple its current reproduction line (replicas).
This presents an issue for Toucon’s president, Andrew Smythe, as he is not sure if the company should dedicate such a large portion of the company’s product line toward replicas. Alternative Courses of Action An alternative solution might be to counter the contract and propose that Toucon will produce only double its production of replicas and sell the replicas at 15% below the current selling price, but the authentic artifacts will remain at 10% below existing prices.
This would offer a compromise for the mass-merchandise department store and, hopefully, would not disrupt the company’s built-in dealers and customers. A second alternative might be to forego the entire deal and implement a more aggressive marketing strategy, which would include attending trade shows around the globe in an effort to obtain greater market share. While this move would be unlikely to disturb the current dealers and clients, it is unlikely to be nearly as profitable as the mass-merchandise department store’s offer.
Company Background General Nutrition Companies Inc. , was founded 65 years ago in Pittsburgh, Pennsylvania on the premise that Americans wanted to maintain control over their health. David Shakir ian founded the company. In 1935 he launched a dream of his by establishing a little health food store in Pittsburgh, Pennsylvania. He called it Lackzoom. The products that were offered at his store ...
Recommendation Rangard should suggest to Andrew Smythe that the company initially attempt to come to an agreement with the department store. Rationale An agreement with the department store would certainly be the best route to improving sales, brand awareness and ultimately the company’s bottom line. Since the initial purchase price would be no less than $750,000, this deal would provide Toucon with much needed capital to begin ramping up its product line, inventory and marketing.
Additionally, purchases are estimated to be nearly $4 million dollars per year that would be in addition to the firm’s revenues already. Moreover, by obtaining a shelf in the major department store, Toucon can expect higher revenue growth for the future which would only fuel the company’s competitive strategy. Also, by signing the deal with the merchandise department store, Toucon will be ahead of the competition. Otherwise, the company’s competitors will surely be approached and likely become the leader in this particular jewelry and pottery market.