Session 2021 – 22

Case Study Competition

MARKETING MANAGEMENT
Memaksa Steel Santi der Majoido,CEO of Memaksa Steel (a manufacturer
of speciality steel products in Indonesia) had just reviewed the R&D reports
on her firm’s latest project “Process#887”.Process #887 was a new metal
finishing process that increased by approximately 60% the wear time of steel
products subjected to intense abrasion.The marketing department had
concept tested the innovation for use in the manufacturing of custom milling
equipment, and for steel saw blades to be used in the lumber mills of 34
Indonesia.Santi had now decided that Memaksa’s management team should
further investigate the market potential for Process#887 in the saw blade
market. The company currently sold saw blades in one of two ways: 1.Saw
blades and other metal products(such as drive shafts,metal rods,etc) were
sold to industrial metal implement distributors who in turn, resold to
industrial metal implement distributors who in turn used their own sales
force to call on domestic fabricators, saw mills and industrial manufacturing
facilities: 2. These products were sold to industry outfitters, who inturn,
resold a broad line of goods, including saw blades, to the saw mills.At times,
outfitters bought these products directly from the distributors. Generally,
distributors received a 20% discount while outfitters enjoyed a 15%
discount. Memaksa currently owned a 20% share of the domestic saw blade
market. Exports were not a material part of their volume. Industry outfitters
normally called on saw mills with a broad assortment of products that would
be required for use in the sawmills. That is,they sold specialty tools,safety
equipment(eg. Safety googles,boots and gloves for the
workforce),maintenance equipment(eg. Lubricants, solvents,and scrapping
tools) and treatment chemicals for wood preservation processes.Typically an
outfitter might carry between 2,000 and 5,000 stock keepin units(SKU).In
contrast, a typical distributor would routinely carry roughly 100 metal-based
products. The company was very enthusiastic about Process#887 because
the average new a saw blade would cut for nearly 3 hours and 12
minutes.Changing saw blades using Process #887 was 12% greater than
current processes.The company had asked its salespeople what they thought
of the new product.The sales force reported that ‘saw blades made of this
alloy can be sold for a price of 35% more than current saw blades.” The
Government of Indonesia had declared this process to be one of the five
most commercially viable innovations in the country and had given
Memaksa steel a National Science Institute Award.This award, given to 5
inventors annually,carried a cash prize of approximately 500,000,000
Indonesian Rupiah(57,000USD).

Should Memaksa proceed?