Business 2 Business Marketing

Case Analysis

SOUTHWESTERN OHIO STEEL COMPANY, L.P.:

THE MATWORKS DECISION

Group 13:

Vikalp (14S557)Mahalasa (14S623)Apoorva (14S710)

Sujay Rawat (14S749)

Situation analysis: Matworks requested SOSLP to participate in sponsoring a portion of Matwork’s annual sales

meeting. The cost of the sponsorship would be anywhere from $5,000 to $30,000 SOSLP has a history of developing strong relationships with mills and customers, and prided

itself on providing state-of-the-art services to add value to the channel. Some of the SOSLP’s competitors, who are out vendors to Matworks, would grab the opportunity

in their order to break into the account. Matworks used be among their top ten customers. But, in due course of time their purchases

decreased continuously in almost regularly. Stringent norms are incorporated by the Government. Legal interventions like “Foreign Corrupt

practices Act 1977” and its revision in “Omnibus Trade Act” in late 1980s constrained gift as a business practice.

Promotions and advertising at SOSLP was a bare minimum. The promotion expenditure was less than one hundredth of a percent of sales. Most of the advertising was done through direct mail.

The idea of spending more than $5000 was absolutely ruled out from the company’s perspective. Also, the company was known for its honesty and integrity. They valued long term relationships and supported cooperative practices

Problem statement:

In what ways Mr.Dan Wilson serve their important client, Matworks, for its annual sales meeting and take decision on sponsorship?

Analysis:

Annual Sales for SOSLP in 1994: $250 millionProfits for SOSLP: $7.5million at 3%Costs associated: $250-$7.5=$242.5millionAdvertising and Promotion costs: .01% of sales = $25,000Potential costs for Matworks: Carolinas Reception: $14,000Evening Cruise: $25,000Dessert Extravaganza: $6,000Golf Tournament: $5,000 (minimum investment)Grand Banquet: $30,000Total costs: $14,000+$25,000+$6,000+$5,000+$30,000=$80,000Contribution of Matworks towards SOSLP: $672,000/$250,000,000 = 0.27%

Alternatives:

1. To sponsor the event: a. Cost to the Company: As company earns a profit of $20160(refer exhibit 2) from

Matworks annually, sponsoring an event with minimum amount should be feasible of $5000.

b. Company’s Policy: To increase our sales and promote ourselves against our competitors certain promotional activity will be needed and can be altered.

c. Business Relationships: By sponsoring an event in Matworks annual sales meet we get an opportunity to improve our relationship bond.

d. Future Sponsorships: If we sponsor an event for Matworks there are good chances of other companies asking for sponsorship in future. This will also create positive image in corporate world.

2. Not to Sponsor the Event: a. Cost to the Company: Saving of $5000 which can be used by the company for future

purpose.b. Company’s Policy: We can stick to our earlier policy of low advertising expenses.c. Business Relationships: Matworks being our important customer, there are good chances

of our relationship getting hampered with the company.d. Future Sponsorships: If we don’t sponsor the event now there are very less chances of

other customers asking for sponsorship in future.

Action Plan:

Sponsor the event by paying a minimum amount of $5000. We need to change our advertising policy so that we can spend more on advertising to increase

our customers and improve the brand image. We can invite the executives of four subsidiaries to attend the event. There by creating awareness

of their product as well. We should look to improve our sales after the event as we will be having improved brand image

in the market.