An Example Of Product Planning

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An example of product planning

Broads Builders' Merchants Ltd. is a private company centred in London. It sells building and decorating materials to the building trade and householder. The product lines vary from paints and water taps to manhole covers. Broads specializes in the provision of heavy-duty ware, e.g. bricks and drainage materials for trade users, such as building contractors.

Initially the company acted as a merchant but gradual re-organization resulted in the formation of a holding company, Broad and Co. with two subsidiary companies, one of which was a manufacturing company, the other being in the merchanting business. It is the latter that is dealt with in this case study.

The problems

Originally the company had developed in the traditional fashion of builders' merchants, having a poor consumer image and showrooms of interest only to builders and architects. Gradually the company was restructured to place emphasis on the various depots. In this way the depots increased their individual buying power and responsibility for meeting market needs. By rationalizing stocks over all the depots and by tying the whole organization to a stock-list the advantages in buying and selling gradually gained momentum. During this time the first moves were made by the company towards the establishment of a self-service department and more professional displays in the showrooms.

The solution

Whilst the new policies were beginning to work, the various departments lacked cohesion and more impetus was required in sales. The return on investment was still too low. It was decided, therefore, to appoint a marketing manager and to form a marketing division. The Division was able to build results on the work that had already been initiated in three main areas:

Stocks were geared to minimum stock turn levels.

The Marketing Division became responsible for overall buying policy - thus the assessment and satisfaction of demand became a continuous process.

The sales force became totally involved with the product range carried by the individual depots.

The traditional market, the builder, lacked immediate growth potential. Expansions was achieved by:

Taking the self-service department that had been started in 2007 and widening its stock range to appeal to the "do-it-yourself" customer. Colourful decoration and up-to-date merchandizing assisted this aim.

Introducing associated products such as fitted bedroom and kitchen furniture, tiles, timber and own-brand products, thereby widening the product range.

Transforming the showroom into a "Bathroom and Kitchen Design Centre" with improved displays. A consultancy service was also added to advise customers on kitchen layout, with a service to design their kitchens, if they wished.

Advertising was stepped up. This aimed at the Londoner especially, and the Underground was therefore used. Direct mail shots became a standard form of publicity to customer and potential customer.

Results

In the 18 months following the implementation of the new policy the following results have been observed:

(a) For the latter to months of 2000 the budgeted figure was beaten by 3 per cent, and for 2011 the present trends show that the results will be 19 per cent up on 2000. The average rate of growth since reorganization is U per cent per annum.

(b) The company is more marketing orientated.

(c) Personnel are working as a team towards common objectives.

(d) The company is able to recognize and profit from changing, demand patterns.

The company is able to recognize and profit from changing, demand patterns.


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