THE J.M.

REID BAMBOO RODS CASE

by ROBERT CRISTIAN KRAMER

RELEVANT FACTS :

 Passion business, does not survive without :

 His skills
 His relationship with the clients
 His passion for fishing
 His respect for the art itself
 Slow production
 Limited segmentation approach in terms of material : only bamboo rods
 Forecasted raw material problem, since death of supplier.
 Low margin business
 A time management problem
 Good business proposition : triple sales and the manager’s role in a rod manufacturing company
PRICE FACTS :

 Final retail price versus COGS is well balanced :

 Standard sells with 83.92 % gross margin and $1,175 gross profit
 Premium sells with 82% gross margin and $1,640gross profit
 Price competition in bamboo niche is moderated
 Price of time not set : Reid doesn’t know how to value his time in production.

PRODUCT FACTS :
 Each product is unique
 Slow line of production (between 30 and 35 rods annually)
 Limited segmentation approach in terms of material : only bamboo rods
 Dependent on the material (only Tonkin cane)
PLACE FACTS :
 Product is sold directly to the customer
 Customer segmentation : 70% long time fishermen, 30% new comers
 Each product is customized to the individual client’s requirements
 Particularities of the product are identified after a 6 hrs discussion with each client
 A guide on how the rods can look like can be found on website
 JM Reid also involves himself in the re-selling of the item, offering to repurchase

PROMOTION FACTS :
 Word-of-mouth, main marketing tool
 On-line forums for building reputation
 Instagram +3.000 followers
 Gathering, events, fishing guides
 Donations
KEY ISSUES:

BRAND IDENTITY ISSUES :

 Cannot remove himself from production
 Cannot remove client interaction

PRODUCTION/PRICE ISSUES :
 Cannot speed production
 Low margin business, the price to low vs time allocated per item

PRODUCT DIVERSIFICATION ISSUES :

 Bamboo rods importing business
 Graphite/fiberglass rods production
 Fishing accessories production
POSSIBLE SOLUTIONS:
1. Enter the fiberglass rods business
• Price must be leveled up
• Increased production
• Larger market than bamboo because of the nostalgia

2. Increase production of fishing accessories – import from China

• Could work as means of increasing the margins of business
• If used carefully, the import form China can’t affect the brand

3. Take over bamboo import business from – move to Seattle

• Different game all together
• Needs some time away form the rod business to secure the deal, but with increased benefits
• Reid could monopolize

4. Enter an alliance with a retail channel Skeena

• Can potentially triple sales because of PoS available
• Can develop a factory under Reid’s management and vision, but Reid does not “want to become a factory”
• Brand would submit itself to Skeena, it would be a secondary brand

5. Increase price per item

• Would basically do what any retailer does after an item manages to win share market, inflate the price according to brand
power and scarcity
• Reid could double its profit margin just by tweaking prices, time management and more active advertisement
BEST OVERALL SOLUTION:
For a healthy business growth and a
protected brand, Reid must :
- Control the supplies
- Develop new products, thus new sources of
income and market segmentation
- Increase price for bamboo rods
- Increase profit margin from adjacent businesses,
like fishing accessories
So it’s a combination between 1, 2, 3 and 5
1. Develop a secondary line of production for
fiberglass rods.
Benefits : quicker production line with higher margins, does not
cannibalize bamboo segment
2. Take over the Tonkin cane import business
Benefits : the issue of bamboo supplies is solved. Other sources of
revenues emerge.
3. Adjust the price of the bamboo rods in accordance
with time spend per item (workmanship is an invaluable
asset) and according to brand originality reputation
Benefits : profit margin could double. The price raise is more than
justified
5. Increase production of branded fishing accessories.
The production can be set in China, since Reid already has to go
there to secure the Tonkin cane imports. Also, the fact that
they’re not handmade by Reid is of little importance. Nowadays,
everything is made in China. The brand is immutable.
Benefits : since the cost of production drops with 90%, revenues form
this alternative line of production will increase the difference between
the lower cost of production and the shipping costs
RECOMMENDATIONS:
1. Secure the fiberglass supplier and set correct price + start agressive advertising of the new line of rods

2. Set new price for bamboo rods + moderate advertising on brand recognition

3. Start prioritize work if growing the business is essential. Reid cannot have it all : the comfort of his actual
lifestyle and increasing the business are incompatible due to time management

4. Travel to China to secure the bamboo import business and get in contact with possible collaborators for
the accessory line

5. If all goes well with China, move to Seattle in order to acquire the bamboo importer

6. Do not enter a retail alliance with Skeena, that would depreciate the brand and also would make Reid
basically an employee.