MOLLER INDUSTRIES Inc.

Manjula Devi S-BLP030

Pranav Arya-BLP041
Sahil Ahuja-BLP055
Santhosh Varma-BLP057
 Key Issues
• 6.8% rise in the price of cold rolled steel – the raw material
• Market share reduced from 50% in 2007 to 40% in 2013 – due to the
entry of new competitors who offer similar products at discount
• Change in customer’s buying behavior – customers are becoming price
sensitive
• Competitors maintain of a price differential of 5% -10% on Moller’s
discounted price
• Further selective discounting by competitors - causing erosion of Moller’s
market share
• No product differentiation
 Options for Moller
The following options are being evaluated to retain profitability, stop market
share erosion, maintain a healthy cash flow, and motivate the sales force:
• Increase in the price of strapping goods owing to an increase in the price
of raw materials - consistent with corporate policy of passing the cost on
to consumers - but sales force is resistant since competitors' offers are
more price sensitive.
• Maintain existing book pricing - which can meet the company's cash flow
needs - but there is opposition from the mid and small sectors, who want
low-cost items.
• Price flex offering - refers to selective discounting, which is a mix of
charging a premium price and providing discounts to certain consumers.
 Recommendation

• Customization is in abundant
• Hire new sales force for short of 250 accounts
• Innovation is needed as cx fell no more new tools or machines are
needed
• Reed could institute the price-flex proposal as outlined by Davis. After
evaluating the market and the price-flex proposal which will result in
gaining the market share from small segment(accounts) and also earn
profit from large segment by pricing premium. As they are only
producer others import from different places
 Best Solution
• Reed could institute the price-flex proposal as outlined by Davis. After
evaluating the market and the price-flex proposal, Hernandez agreed
that this was a good choice- one that could combine price increases and
discounts. Hernandez also believed that the price-flex policy essentially
would give the sales force an efficient means of performing the same
kind of selective discounting that Reed, Hamilton, and Hernandez had
already been doing. Along with strategy there are goals to be setup in
this way:
- Maintain profitability
- Half market share erosion
- Provide cash to the corporate office
- Bolster sales force morale