Winkler

Winkler, a company headquartered in Berlin and manufacturing operations in Hamburg and Stuttgart, Germany, is a manufacturer of packaging materials for the electronics, office products, houseware, and food industries. Small, medium, large, and extra-large sized fiber containers used for packaging snack food products (nuts, potato chips, candies and a wide variety of bakery items) in one of Winkler’s product lines. The containers come with metal ends and can have attractive, multi-colored, printed designs on the labels to meet customer specifications.

Direct sales to large food companies with branded products, made up a major portion of Winkler’s fiber container sales. Orders from Basler, Reckmann, Morick, Hansert, and Niemann (food processing companies) made up over half of Winkler’s fiber containers sold last year. Basler produced 75% of its own fiber container requirement while the others use Winkler as a single source supplier. Grocery chain accounts list like Kaufhof and Helco, and processors who sell to the grocery chains such as Hess account for the remaining sales.

Winkler’s Hamburg plant has four major customers, who place differing requirements on manufacturing. As shown in Exhibit 3 in the case, each of these customers have different order winners and order qualifiers. The Stuttgart plant, on the other hand, serves a more varied market and as seen from Exhibit 2 is a higher volume sales producer. Many of Stuttgart’s customers are high volume customers who have price as their strongest OW. The market segments based on customer characteristics are shown in Tables 1a and 2a for the Hamburg and Stuttgart plants respectively.

Winkler recently undertook three major Marketing Initiatives, which include implementation of the Just-In-Time (JIT) delivery program, New product Introductions, and Competitive pricing, because it wanted to increase its sales volume by 25 percent over the next three years. Winkler had the major market share in the fiber container business and their objective was to increase this by 35 percent, while holding their current contribution margin of 25 percent. Let us look at the marketing initiatives, the rationale behind them, and how they may support Winkler’s overall objectives.

JIT Delivery Program: Amongst Winkler’s major customers Basler and Hess self-manufacture about 75% and 40% of their fiber containers, respectively. One of the proposed methods of growing sales in an otherwise declining market is by taking customers like Hess and Basler out of the self-manufacture of their fiber containers. Implementation of the JIT delivery program will enhance delivery speed, which is currently a dominant OW with Hess. It should be noted that delivery Speed would become the dominant OW with Hess in the future as it implements its own JIT initiative. Therefore, the implementation of the JIT delivery program will enable Winkler to have a quick turnaround on customer orders. Hess is the major customer who has requested JIT implementation at this time (and Hess is a major customer in several other product lines). However, the implementation of the JIT delivery program will help Winkler meet the current secondary OW’s for customers like Eisenbeis, Engel, Grummes, and Kaufhof. The dominant OW for Eisenbeis in the future will be delivery speed and the implementation of JIT will ensure that Winkler can keep them as a customer in the future. Eisenbeis comprises about 15% of the Hamburg plant orders.

New Product Introductions: As mentioned before, one of the proposed methods of growing sales in an otherwise declining market is by taking customers like Hess and Basler out of the self-manufacture of their fiber containers. Basler comprises about 25-30% of the Stuttgart plant orders. If we look at the market segment characteristics of Basler the only OW is their lack of internal capacity. However, it should be noted that Basler’s own manufacturing speeds of containers is slow and they are believed to have little capability for fiber container development. Basler’s immediate concern is product differentiation in the marketplace due to its losing market share to Neimann. It should also be noted that Winkler wants to capitalize on Basler’s lack of development capacity and make Technical Development the only OW for Basler in the future by offering technical developments in their own product lines. Based on these factors, it is predicted that Basler will make up about 50% of the Stuttgart plant orders. Having been a leader in developing new products for the packaging industry has enabled Winkler to differentiate their products, and improve prices and margins. The most important consideration about this initiative is that, if it is not implemented, Basler may transfer its volume to another vendor such as Baumgarten or make expanded use of the quick-opening carton offered by Fethke,