Business 2 Business Marketing

Case Analysis

SOUTHWESTERN OHIO STEEL

COMPANY, L.P.:
THE MATWORKS DECISION

Group 13:

Vikalp (14S557)
Mahalasa (14S623)
Apoorva (14S710)
Sujay Rawat (14S749)
Situation analysis:
 Matworks requested SOSLP to participate in sponsoring a portion of Matwork’s annual sales
meeting. The cost of the sponsorship would be anywhere from $5,000 to $30,000
 SOSLP has a history of developing strong relationships with mills and customers, and prided
itself on providing state-of-the-art services to add value to the channel.
 Some of the SOSLP’s competitors, who are out vendors to Matworks, would grab the opportunity
in their order to break into the account.
 Matworks used be among their top ten customers. But, in due course of time their purchases
decreased continuously in almost regularly.
 Stringent norms are incorporated by the Government. Legal interventions like “Foreign Corrupt
practices Act 1977” and its revision in “Omnibus Trade Act” in late 1980s constrained gift as a
business practice.
 Promotions and advertising at SOSLP was a bare minimum. The promotion expenditure was less
than one hundredth of a percent of sales. Most of the advertising was done through direct mail.
 The idea of spending more than $5000 was absolutely ruled out from the company’s perspective.
Also, the company was known for its honesty and integrity. They valued long term relationships
and supported cooperative practices

Problem statement:

In what ways Mr.Dan Wilson serve their important client, Matworks, for its annual sales meeting and take
decision on sponsorship?

Analysis:

Annual Sales for SOSLP in 1994: $250 million

Profits for SOSLP: $7.5million at 3%
Costs associated: $250-$7.5=$242.5million
Advertising and Promotion costs: .01% of sales = $25,000
Potential costs for Matworks: Carolinas Reception: $14,000
Evening Cruise: $25,000
Dessert Extravaganza: $6,000
Golf Tournament: $5,000 (minimum investment)
Grand Banquet: $30,000
Total costs: $14,000+$25,000+$6,000+$5,000+$30,000=$80,000
Contribution of Matworks towards SOSLP: $672,000/$250,000,000 = 0.27%

Alternatives:

1. To sponsor the event:

a. Cost to the Company: As company earns a profit of $20160(refer exhibit 2) from
Matworks annually, sponsoring an event with minimum amount should be feasible of
$5000.
b. Company’s Policy: To increase our sales and promote ourselves against our competitors
certain promotional activity will be needed and can be altered.
c. Business Relationships: By sponsoring an event in Matworks annual sales meet we get an
opportunity to improve our relationship bond.
 d. Future Sponsorships: If we sponsor an event for Matworks there are good chances of
other companies asking for sponsorship in future. This will also create positive image in
corporate world.

2. Not to Sponsor the Event:

a. Cost to the Company: Saving of $5000 which can be used by the company for future
purpose.
b. Company’s Policy: We can stick to our earlier policy of low advertising expenses.
c. Business Relationships: Matworks being our important customer, there are good chances
of our relationship getting hampered with the company.
d. Future Sponsorships: If we don’t sponsor the event now there are very less chances of
other customers asking for sponsorship in future.

Action Plan:

 Sponsor the event by paying a minimum amount of $5000.

 We need to change our advertising policy so that we can spend more on advertising to increase
our customers and improve the brand image.
 We can invite the executives of four subsidiaries to attend the event. There by creating awareness
of their product as well.
 We should look to improve our sales after the event as we will be having improved brand image
in the market.