Sales executives of The Kramer Company, manufacturer of a limited line of high-priced men’s toiletries, were concerned that current sales of Forest Dew, the company’s major product, was insufficient to support the present sales organization. Sales for Forest Dew had increased gradually during the past three years; however, the rate of increase was substantially below forecasted figures. At the same time, actual profits for Forest Dew were well below those projected, even for the existing level of sales. As a result, Kramer sales executives sought to conduct an overall analysis of the entire sales strategy underlying its primary product, with the twofold aim of achieving greater sales along with increased profitability to bring both figures closer to their desired levels.
The Kramer Company was a division of Mitchell Company, one of the leaders in the men’s grooming-aids industry. The Kramer Company was set up by Mitchell Company as a means of entering the “prestige-price” market for men’s personal products and to establish working relationships with department stores and specialty shops. Since its inception, Mitchell had catered to the mass market for men’s grooming aids, with an extensive line of successful products. It was hoped that Kramer would permit Mitchell to achieve successful entry into the high-priced market for men’s toiletries. Selling unique, high-quality products to a limited market through restricted distribution policy, Kramer also was to be an industry leader in new products and new packaging concepts.
Kramer’s first marketing effort was Forest Dew, a shaving cologne. It was packaged in a colorful, uniquely designed bottle and sold in an attractive styrofoam case. Forest Dew was priced at $3.75 per ounce, as Kramer management felt that this price would enhance the prestige of the product. The shaving cologne segment of the men’s toiletries market was highly competitive; the bulk of Forest Dew’s competition came from such brands as Aramis, Braggi, Kanon, English Leather, and Brut.
The product was test marketed for the Christmas season in New York City and Los Angeles. In New York City, Forest Dew was sold in Lord & Taylor’s, and Macy’s, and in Los Angeles it was sold in I. Magnin, May’s, and The Broadway. With very favorable results in the test markets, Forest Dew was introduced nationally for the Father’s Day and graduation gift seasons. On the basis of the test markets, Kramer estimated that department stores would account for 60 percent of sales, men’s stores for 30 percent, and independent drugstores for 10 percent.
Kramer employed a sales force of thirty persons, all of whom were selected from the Mitchell Company and included some of Mitchell’s best salespersons. There were three sales regions: New York, Chicago, and Los Angeles. The regions were broken down into districts, with offices in Atlanta, Detroit, St. Louis, Dallas, and San Francisco.
The national sales effort was under the direction of the general sales manager, who was headquartered in Philadelphia. The three regional sales managers reported directly to the general sales manager. Their major responsibilities were related to directing the sales effort in their respective regions. The district sales managers’ duties included directing, hiring, and training field sales personnel. District managers had limited account responsibility, calling only on key accounts in their districts. Field sales personnel were required to handle all Kramer business within their respective territories. Salespeople were responsible for selecting the outlets in their respective areas.
The Kramer Company utilized a policy of exclusive distribution for Forest Dew. Management felt this was necessary if Forest Dew was to be a prestige item. No wholesalers were used, as Kramer preferred to deal directly with its exclusive retailers. Executives believed that the absence of wholesalers enabled the firm to control distribution and maintain the prestigious image for Forest Dew. Kramer realized that it could exercise more control over the selling price if retailers had exclusive rights to a territory and did not have price-cutting competition. It was generally recognized by Kramer’s sales executives that elimination of wholesalers probably increased the total cost of marketing Forest Dew, since Kramer had to perform the wholesaling functions itself, but this was considered acceptable in light of the heightened image of the product.
Kramer advertising was designed to familiarize the public with the Kramer name and, specifically, the Forest Dew brand of shaving cologne. It was felt that effective advertising that presold the consumer would virtually eliminate the need for personal selling at the retail level. Advertising expenditures were divided among network and local spot television, magazines, and cooperative advertising. To promote a prestige image, Kramer advertised Forest Dew in New Yorker, Esquire, Sports Illustrated, and Playboy. Its television spots were carefully selected with the Forest Dew image in mind. Kramer engaged in cooperative advertising with some of its larger accounts on a fifty-fifty basis. Kramer’s Forest Dew account was handled by the advertising agency of Doyle Dane Bernbach. The heaviest promotions came at Father’s Day and Christmas, the seasons that Kramer estimated to account for 75 percent of its sales.
While Forest Dew was in its early stages of market development, Kramer introduced an entirely new line of men’s cosmetics. The product was a popularly priced line of after-shave lotion and cologne called Male Image. The new product was intended for the mass men’s market, and a policy of intensive distribution was followed. The advertising for Male Image, done by Ogilvy and Mather, used a variety of appeals and concentrated on a hard-hitting approach.
Many retailers that carried Forest Dew would not accept Male Image because of its popular price and because it was sold in K-Mart, Woolco, and a variety of discount department stores and drugstores. The Kramer philosophy was that the company had excluded itself from a segment of the men’s-toiletries market and Male Image was introduced to fill that void. It was too early to estimate the success of Male Image; however, it was clear that Forest Dew was experiencing disappointing sales and profitability. The sales picture of Forest Dew indicated that present sales volume could not support the company’s present sales organization. As a result, Kramer was considering the possibility of introducing the Forest Dew line into more retail outlets, such as Penney’s, Ward’s, Sears, and various drug chains. Management believed that change in distribution policy and sales strategy would make it easier to gain dealer acceptance of its new Male Image line.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.