Palladium Doors

Palladium Door, Inc.
A.)
Palladium Door, Inc. is a privately owned regional manufacturer of residential and commercial garage doors. There are about 3,002 independent garage door dealers with yearly sales of 348.5 million in 2003. Palladium is a leading manufacturer and distributor of garage doors and parts. The market consists of a number of national, regional and local brands. PalladiumDoor has a very small share of their market, only 2.64 percent. In the United States the residential garage door industry is engulfed with competition. Their competition includes Clopay Corporation, who is a national manufacture with annual sales over $400 million. Consumers typically purchase garage doors based on four factors; price, quality, reliability of the installer, and aesthetic appeal ofthe door. Most consumers consult their friends, relatives, and neighbors when looking for information about residential garage doors. The National residential garage door industry was projected to hit $2 billion dollars in sales at manufactures prices in 2003 and sales are expected to grow by 2.4 percent in the next year. This means that by the end of 2004 the garage door industry will have $2.05billion dollars in sales. If Palladium would achieve its 2004 sales goal of 12.5 million it would have a total market share of 3.5%. With only a 0.9% increase, I feel that it’s a very reasonable market share goal.
See Exhibit 1
B.)
One average each independent distributor sells around $116,089. I got this number by taking the total number of independent garage dealers (3002) and dividedit by Palladiums total sales of $348.5 million. After getting $11,608.93 and applying it to the “3-tier model” I found out Palladium doors is a third brand account. With only 10 percent of the market in independent garage door sales come advantages and disadvantages. This 10 percent shows that there’s potential for growing sales in the independent market but also means Palladium has to improvetheir brand awareness.
See Exhibit 2

C.)
Palladium doors current distribution strategy for exclusive dealers is doing very well. There above the U.S average by $10,000. Palladium exclusive dealers generate $6,440,000 in sales while independent dealer sales are $2,760,000. I got this figures by multiplying $9,200,000 by 70 percent for exclusive and 30 percent for independent. By lookingat Exhibit 3 you can see that gross profits are completely different between the two. Exclusive dealer’s gross profit is $1,610,000 while non-exclusive dealers only have a gross profit of $690,000. Exclusive dealers on average sell $6,440,000.00 compared to non-exclusive dealers with sales around $2,760,000. I never realized how big of difference there is between dealers especially when onedealer has 8 reps and the other only has 2.
See Exhibit 3
D.)
Palladium employs 10 technical sales representatives. On average exclusive dealers will have $3,690,000 more sales then non-exclusive dealers. Assuming that each sales representative gets paid $80,000 you can see that exclusive dealers have the upper hand on non-exclusive dealers when it comes to selling Palladium doors. Exclusivedealers only have 2 representatives that make up 70 percent of Palladium sales compared to nonexclusive dealers with 8 representatives that make up 30 percent of palladium sales. This is a big deal when you’re discussing gross profits. Exclusive sales reps combined will have profits of $1,450,000 compared to only $50,000 from non-exclusive sales reps. Eight representatives call on independentdealers twice a month and two representatives call on the 50 exclusive dealers once a week. When it comes to who is a better sales representative between exclusive distributors vs. those servicing non-exclusive dealers I would have to go with the exclusive distributors reps. Strictly going off profit margins and sales but it’s much easier when you’re only selling one product. Non-exclusive...