Paper Products Corporation

Mary Miller is the marketing manager for Paper Products Corporation and she hasto decide whether she should allow her largest customer to buy some of Paper Products?file folders and market them under their own name (Natcom Inc.) rather than the FILEXbrand used by Paper Products. Mary is afraid that if she doesn?t accept the offer, thecustomer will find another file folder producer. Mary really only has two options; accept the offer from Natcom or refuse the offerfrom Natcom. There is a certain degree of risk involved with either option and she needsto decide which option is the safest for Paper Products Corporation. If Paper Productsrefuses the offer they are putting themselves in a position to possibly lose 30 percent oftheir business, approximately 12 million dollars per year. Even if Natcom continuedpurchasing their other supplies from Paper Products, and only quit purchasing file folders,the business would lose approximately 4.2 million dollars per year. If Mary decided to take the offer from Natcom, and allow them to sell PaperProducts? file folders with their name, she would be going against company policy and itwould not be easy to change this policy. It would be very easy for Paper Products toaccommodate Natcom?s offer because they have excess capacity. If they turn down thebusiness, Natcom could go to another producer and cut into Paper Products? sales atNatcom stores. Another benefit of this offer is that Paper Products would not have tospend any marketing dollars to acquire this new business. Natcom came to them with thisoffer and it did not cost Mary Miller, or Paper Products anything. According to the marketing concept, Mary should accept the offer from Natcom. As marketing manager, Mary should identify what the customer needs, and make PaperProducts Inc. the best company at satisfying those needs for a profit. In this case thecustomer is Natcom and they obviously need to market a line of file folders with theirname attached. This need should be clear to Mary because her customer has nowapproached her three times with this request. Mary will need her expert marketing skills

when she tries to sell this idea to Bob Butcher, Paper Products president. Mr. Butcher isprimarily interested in the development of new products but he will most likely beinterested in this proposal since it deals with his companies? biggest customer. There willhave to be a policy change for Paper Products Inc. concerning the corporate policy ofrefusing dealer-branding requests. Paper Products implemented this policy because theywanted the success of their products to depend on the quality rather than just a low price,but only 40 percent of their file folder products are in a specialized line while the other 60percent are relatively homogeneous shopping products. The success of the homogeneousfile folders will be very dependent on the price rather than the quality, therefore this policydepending on quality rather than low price needs to be revised. Mary should alsoapproach Mr. Butcher about using some more of the company?s available money for thepromotion of their existing brands. Paper Products needs to pull some of their money outof new-product development and attempt to achieve some market penetration. Although60 percent of the current market does sound appealing, they may be able to grab some ofthe remaining 40 percent with some good promotions and market penetration.