BASIC MARKETING 18th Edition by Jerome McCarthy William Perreault, Joseph Cannon

تمرين 57

Harmony Valley Canning, Inc.
Chelsea Bodell-Cooper, president of Harmony Valley Canning, Inc., is not sure what she should propose to the board of directors. Her recent strategy change isn't working. And Don Bartley, Harmony Valley's only sales rep (and a board member), is so frustrated that he refuses to continue his discouraging sales efforts. Don wants Chelsea to hire a sales force or do something.
Harmony Valley is a long-time processor in the highly seasonal vegetable canning industry. Harmony Valley packs and sells canned beans, peas, carrots, corn, peas and carrots mixed, and kidney beans. It sells mainly through food brokers to merchant wholesalers, supermarket chains (such as Kroger, Safeway, A P, and Jewel), cooperatives, and other outlets, mostly in the Midwest. Of less importance, by volume, are sales to local institutions, grocery stores, and supermarkets-and sales of dented canned goods at low prices to walk-in customers.
Harmony Valley Canning is located in Wisconsin's beautiful Harmony Valley. The company has more than $28 million in sales annually (exact sales data are not published by the closely held corporation). Plants are located in strategic places along the valley, with main offices in the valley also. The Harmony Valley brand is used only on canned goods sold in the local market. Most of the goods are sold and shipped under a retailer's label or a broker's/wholesaler's label.
Harmony Valley is well known for the consistent quality of its product offerings. And it's always willing to offer competitive prices. Strong channel relations were built by Tom Bodell, Harmony Valley's former chairman of the board and chief executive officer. Tom-who still owns controlling interest in the firm-worked the Chicago area as the company's sales rep in its earlier years, before he took over from his father as president in 1972. Tom was an ambitious and hard-working top manager-the firm prospered under his direction. He became well known within the canned food processing industry for technical/product innovations.
During the off-canning season, Tom traveled widely. In the course of his travels, he arranged several important business deals. His 1988 and 1999 trips resulted in the following two events: (1) inexpensive pineapple was imported from Taiwan and sold by Harmony Valley, primarily to expand the product line, and (2) a technically advanced continuous process cooker (65 feet high) was imported from England and installed at one of Harmony Valley's plants. It was the first of its kind in the United States and cut processing time sharply while improving quality.
Tom retired in 2008 and named his daughter, 35-year-old Chelsea Bodell-Cooper, as his successor. Chelsea is intelligent and hardworking. She has been concerned primarily with the company's financial matters and only recently with marketing problems. During her seven years as financial director, the firm received its highest credit rating and was able to borrow working capital ($5 million to meet seasonal can and wage requirements) at the lowest rate ever.
The fact that the firm isn't unionized allows some competitive advantage. However, changes in minimum wage laws have increased costs. And these and other rising costs have squeezed profit margins. This led to the recent closing of two plants as they became less efficient to operate. Harmony Valley expanded capacity of the remaining two plants (especially warehouse facilities) so they could operate more profitably with maximum use of existing processing equipment.
Shortly after Tom's retirement, Chelsea reviewed the company's situation with her managers. She pointed to narrowing profit margins, debts contracted for new plants and equipment, and an increasingly competitive environment. Even considering the temporary labor-saving competitive advantage of the new cooker system, there seemed to be no way to improve the status quo unless the firm could sell direct-as they do in the local market-thereby eliminating the food brokers' 5 percent commission on sales. This was the plan decided on, and Don Bartley was given the new sales job. An inside salesperson was retained to handle incoming orders and do some telemarketing to smaller accounts.
Don, the only full-time outside sales rep for the firm, lives in Harmony Valley. Other top managers do some selling but not much. Being a nephew of Tom, Don is also a member of the board of directors. He is well qualified in technical matters and has a college degree in food chemistry. Although Don formerly did call on some important customers with the brokers' sales reps, he is not well known in the industry or even by Harmony Valley's usual customers.
It is now five months later. Don is not doing very well. He has made several selling trips, placed hundreds of telephone calls, and maintained constant e-mail contacts with prospective customers-all with discouraging results. He is unwilling to continue sales efforts on his own. There seems to be too many potential customers for one person to reach. And much negotiating, wining, and dining seems to be needed-certainly more than he can or wants to do.
Don insists that Harmony Valley hire a sales force to continue the present way of operating. Sales are down in comparison both to expectations and to the previous year's results. Some regular supermarket chain customers have stopped buying-though basic consumer demand has not changed. Further, buyers for some supermarket chains that might be potential new customers have demanded quantity guarantees much larger than Harmony Valley can supply. Expanding supply would be difficult in the short run-because the firm typically must contract with growers to ensure supplies of the type and quality they normally offer.
Tom, still the controlling stockholder, has asked for a special meeting of the board in two weeks to discuss the present situation.
Evaluate Harmony Valley's past and current strategy planning. What should Chelsea Bodell-Cooper tell Tom Bodell? What should Harmony Valley do now?