Importadores Quetzal Importadores Quetzal

Marketing Problems

MKTG 4890

Example Case Presentation

OverviewOverview

Background ProblemAlternatives Issues and AnalysisRecommendation(s)

BackgroundBackground

IQ distributes authentic artifacts, replicas, jewelry

Exclusive distribution– specialty shops– showings– few exclusive department stores

BackgroundBackground Industry is growing

– Demand and number of importers increasing Gross margins have eroded due to aggressive

competitive bidding Competition for authentic artifacts has increased x10

– Trickle down of popularity to less expensive stores at lower prices

Artifacts more difficult to source– Political situation in Africa has limited supplies of

artifacts

BackgroundBackground

IQ approached by a mass merchandiser with contract offer

Purchase current line of artifacts & replicas– Initial purchase of $250,000, potential sales

of $1,000,000– Price at 10% less

The ProblemThe Problem

Should Importadores Quetzal pursue opportunity in the mass merchandise market?

AlternativesAlternativesAccept the offer & pursue mass market

distributionReject the offer & retain current product/

service mix

Major IssuesMajor Issues Importadores Quetzal's mission & target

markets Importadores Quetzal’s distinctive compentency Future importance (profitability) of mass

merchandise channel Relationships with existing distributors Adequate sources of supply for artifacts &

replicas

Target MarketsTarget Markets

“Mass”(Gift &Novelty)

“Decorator”(Gift &

Accessory) “Collector”

Authentic Artifacts ? X

Auththentic Replicas ? X

Non-authenticReplicas X X

Jewelry X X

MissionMissionMission is “to supply authentic artifacts to

collectors” Pursuing the non-collector market will

require redefining mission and image– “producer of fashionable items for the mass

market” Suggests rejecting the offer & not pursuing the

mass market

Distinctive CompetencyDistinctive Competency Specialized buying skills which virtually guarantee

the authenticity of its items– Provides a wide array of artifacts so that it can be the

sole source of supply to its

– Ability to obtain a sufficient supply of artifacts

– Has acquired a national reputation as a result

Pursuing the mass merchandise offer is inconsistent with these skills & may degrade image & reputation

Suggests rejection & not pursuing the mass market

Distributor RelationshipsDistributor Relationships Relationships are based on "distinctive

competencies"– want a continued supply of authentic items– are well suited to "collectors" market that Imporatores

Quetzal currently is serving

A major threat to continued relationships with distributors exists if IQ actively enters the mass merchandise market

Suggests rejection & not pursuing the mass market

Importance of Mass ChannelsImportance of Mass ChannelsFor ArtifactsFor Artifacts

Typical mass merchandise retailers will not be important outlets for artifacts – too expensive for average buyer– slow turnover– need knowledgable sales people– not the type of store the upscale buyer or collector will shop

in for such merchandise

This market offers little profit potential for this type of product

Suggests rejection

Importance of Mass ChannelsImportance of Mass ChannelsFor Authentic ReplicasFor Authentic Replicas

Mass merchandise outlets may be valuable for authentic replicas– fashionable, need less knowledgable salespeople

– higher turnover & high margins

– can be displayed next to jewelry counters

Suggests possible accept, if this channel will emerge as important. However,– replicas still too pricy

– consumer profiles not consistent with product image

Importance of Mass ChannelsImportance of Mass ChannelsFor Lower Priced Replicas & JewelryFor Lower Priced Replicas & Jewelry

Mass merchandise outlets may be valuable for lower priced replicas & jewelry– fashionable– higher turnover & high margins– can be displayed next to jewelry counters

Suggests possible accept, if customer willing to take lower priced replicas– Customer wants original line– Would have to negotiate different contract– Would have to acquire added sources of supply– May be viable opportunity with other distributors

Adequate Sources of SupplyAdequate Sources of SupplyArtifactsArtifacts

Supplies of artifacts already tight– Will need to increase supplies by approximately

10% to satisfy contract– Factors that may limit supplies

Political situation in Africa Increasing number of competitors

Suggests not accepting contract

Adequate Sources of SupplyAdequate Sources of SupplyReplicasReplicas

Supplies of replicas– Currently use native craftsmen meaning that replicas are

semi-authentic

– Would have to triple replica production to satisfy contract

Changes Imporatores Quetzal from an acquirer of artifacts to a producer of replicas– Inconsistent with Imporatores Quetzal’s mission

– Requires additional expertise, costs, resources

– Impact on profits not entirely known

RecommendationRecommendation

Do not accept the offer for distribution via mass merchandising retailer

Justification– Not consistent with mission, image, & distinctive competencies– Sources of supply will be problematic– Must become a producer, rather than a distributor– Market for artifacts & high quality replicas not important in

mass merchandise area as a whole– Prospect for additional outlets questionable– Risk loss of current

What Happened?What Happened? Imporatores Quetzal did not accept the contract Not consistent with distincitive competencies Potential damage to reputation, image Recognized future problems in obtaining artifacts Expanded instead by evaluating artifacts for estates

– Skills of buyers directly transferred to expanded service

– Business definition was not changed, but enhanced

Case ObjectivesCase Objectives Recognize the importance of business definition &

distinctive competency when assessing opportunities Requirements for success often differ between market

segments Attractiveness depends on multiple factors

– competitive activity– buyer requirements– demand/supply relationships– political forces– organizational capabilities