Kondratyuk Nadiya

BUS 410 ST: Leading and Managing in Business

Professor Bill Goff
19 May 2008
Case #5: A Rose by Any Other Name

Tom Rose, the CEO for Rose Partyware, is faced with a tough decision on taking up a solid strategy for his
manufacturing company. At the moment, the Rose products are sold in the retail chains as well as in the
independent stores. Though the products’ quality and packaging are quite attractive, the labeling does not
quite differentiates the manufacturer. Recently, the company’s management learned of new digital and
printing technologies that could give a way for developing a brand-building strategy and differentiating the
product. However, the company also received an offer from its largest retail chain customer Party! to
produce private-label for them. If Rose Partyware had sufficient capacity, it could take up both of the
projects. However, Rose Partyware is a small family-owned business that can afford only one option at the
moment.

Private-label production for Party! could ensure sustainable profits on low but stable margins. Party! may be
offering the agreement on the premises of being already acquainted with the Rose’s products and its
quality. As they want to establish its own brand, they rely on the manufacturer’s capability of supplying the
products of good quality at a reasonable price. As the Party! brand is established, they would most probably
start bidding on the cheapest supplier they can get. Most often good margins on private-label production
are secured by high volumes of production. Rose Partyware seems to be fairly small manufacturer that
would not be able to compete on high volumes of cheap products produced outside, e.g. Asia. Therefore,
manufacturer’s security would be threatened by other cheap producers unless Rose invests in building
additional manufacturing capacities to ensure high volume production and implementing cost-saving
programs.

Although brand-building strategy is more costly at the present, it is far more long-term that will ensure the
differentiation once the brand is well-established and known. Though the price increase is needed to
compromise the increased costs, the products would be targeted and segmented on the special needs and
occasions. Proper segmentation of the market may solve the problem of reasonable price increase.

Personally I would recommend brand building strategy due to several facts. First, it will give an opportunity
of the name awareness that will play an important role for promoting other products in future. The Rose
Partyware has already an advantage in the new digital technology, which has been already installed and
proved to be successful. The market research also supported strong attraction to the new product. As well
higher margins are possible on the branded products if there is an efficient cost system implemented.
Moreover, if Rose loses 20 percent of his sales to the Party! In volume, it can have an opportunity to catch
up the difference on the sales value due to higher margins to independent stores. However, the company
should establish reliable and long-term relationships with the independents. Nevertheless, there would be
an opportunity to open up own brand kiosk or store when the brand is widely recognized and bought.