Steel Door’s Distribution Network and Performance

Steel Door’s Distribution Network and Performance

Steel Door Technologies Inc. uses a dual distribution channels marketing. It target market is served by 350 dealers that service 150 market. Eventually, the company has established an excellent relationship with its dealers; especially the 50 nonexclusive ones. The 50 exclusive dealers supply 50 markets and get call from two sales representatives, while the 300 independent dealers supply 100 markets and get call from eight sale representatives. The company supplies its dealers from two distribution centers. Steel Door Technologies Inc. is considered to be one of the smaller regional garage door manufacturers; its market share account for only 0.5% (9, 2million/2billion*90%)

The company had projected an increase of 36% in sales in 2003; this optimistic projection is based on the Steel Door Technologies Inc.’s last performance in the past 10 years that exceeded the industry growth rate. In the same time the whole industry has projected a 2.4% increase in sales, because of the improvement in steel door’s features and popularity.

Steel Door Technologies Inc. distribution network

Alternatives in the Distribution’s Strategies

First Alternative:

In order to achieve the 12.5 million sale sin 2003, company executives agreed to increase the advertising and promotion expenses by 20 %. The result is shown in the calculation below.

2002 2002 2003 2003

Net sales 9200000 100% 12500000 100%

Cost of good sold 6900000 75% 9375000 75%

Gross profit 2300000 25% 3125000 25%

Selling, Gen & Admn Expenses 1840000 20% 2208000 17.7%

Net Profit before Income Tax $460.000 5% $917.000 7.3%

Second