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Pyramid Door, Inc

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by

Juli Stef

on 1 April 2014

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Transcript of Pyramid Door, Inc

Pyramid Door, Inc.
Ryan Bush
Rocco Lamparelli
Taylor Lang
Juliana Stefani

Incentive Program
About Pyramid Door, Inc.
Manufactures and Distributes:
Insulated and Non-insulated steel garage doors for both residential and commercial use
Supplies including springs, cables, rollers and slide roller tracks
Sales:
2005: $9.2 million, Net income=$460,000

350 Dealers Serving 150 Market Areas in 11 Western and Rocky Mountain States, as well as parts of North and West Texas
300 Independent dealers offer Pyramid Door and two competing brands
50 Exclusive dealers offer only Pyramid Doors

About the Industry
In 2005 it was a $2.2 Billion industry
There are National, regional and Local Garage Door manufacturers
Clopay Corporation is Largest National Manufacturer
Purchases are made infrequently at a high price with installation
Bulk of sales are due to home remodeling and replacement needs
Trend noticed- 90% steel 10% wood
Benefits of New Technology in Steel Garage Doors
1. Light-weight
2. Easy to maintain
3. Insulated
4. New Springing Systems
5. New Safety systems
Consumer Behavior
Brand Awareness is very low
less than 10% can provide brand name
Important Attributes: Price, Quality, Reliability of Installer, Aesthetic Appeal
Friends, Relatives, and Neighbors most important information
30% of perspective buyers get two bids
15% of perspective would do their own installation
This Market Area had a sales revenue of
$348.5 Million in 2005.

Question: If Pyramid Door, Inc. had a sales revenue of $9.2 million, What is their Market Share?
ANSWER:
($9.2 Million / $348.5 Million) x 100=
2.6% Market Share
Current Distribution
Exclusive Vs. Independent
What Drives Demand
Aging of houses
Product Innovations
50 Exclusive Dealers Serving 50 exclusive market areas
Exclusive Distribution
1 Dealer/Market Area
70% of Pyramid Sales
2 Technical Sales Reps
300 Independent dealers serving 100 market areas
Mix of Intensive and Selective Distribution
3 Dealers/ Market Area
30% of Pyramid Sales
8 Technical Sales Reps
Independent Retailers
3002 independent dealers in the 150 markets area
3002/$348.5 mill= $116,089
Carry 3 brands
Dominant - 60% of sales =$69,653
Second- 30% of sales = $34,627
Third- 10% of sales = $11,089
Distribution Alternatives
Status Quo
Increase number of Dealers
Reduce Number of Dealers
Pyramid Sales= $9.2 Million
Exclusive
70% of $9.2 mill= $6,440,00
50 Dealers= $128,800/dealer

Independent
30% of $9.2 mill= $2,760,000
300 Dealers= $9,200/dealer
Exclusive Franchising
77 exclusive dealers in 77 markets
+ 27 new previously nonexclusive who are willing to become exclusive for franchise fee
Drop independent retailers in the areas of exclusive dealers
leaves 219 independents to in 73 markets
Work harder and smarter with current distribution strategy
Why such a big gap between Independent and Exclusive?
1. Not aggressive enough in giving dealers advertising and promotions
2. Effort by the 8 Technical Sales reps is inadequate
Add 100 dealers in 100 markets not served by exclusive dealerships
most likely independents
exclusive dealers remain unaffected
300 dealers to call 2x/month= 7,200 calls/year
8 Technical sales reps= 900 Calls/year/rep
900 Calls in 50 Weeks= 18 calls/week or 3.6 calls/day
Basically hitting 3 dealerships (1 market area) per day
Reduce number of dealers from 350 to 250
50 exclusive dealers retained
200 independents operate in remaining 100 markets
top 50 would benefit from additional marketing spending
Friends, Relatives, and neighbors are highly influential in purchasing decisions
Offer them incentives to direct consumers to Pyramid
Offer small compensation for recommendations
Offer small percentage off their next Pyramid purchase
GOAL:
2006 Sales Goal of $12.5 million
36% Increase from 2005
Decision: Exclusive Franchising
Exclusive Dealers make more money (128,800 vs 116,089)
Pyramid Door sales below third brand average
Independent dealer contracts can be canceled within 90 days
Strategy could be implemented during slow first quarter
Less independent stores would require a smaller sales force
Currently operating just above break even with independent dealers
Dealer Analysis
Full transcript