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CASE CONTEXT
Steel City is unique market for supermarket industry for food and
processors and manufacturers and 80% of retail grocery sale through
locally owned chains and cooperatives
Ace Brokerage Company is a large food broker located in Steel City,
Alabama.
John Kline is president of the Ace brokerage company and concentrated
on supermarkets in Steel city and never be in institutional distribution.
Ace represents the principal Morreaux Sugar Company now has a 70%
market share of the retail grocery market in sugar sales.
The away-from-home eating market has started to increase with one
third of all meals consumed in the United States being away from home
and about one-half meals consumed away from home being projected in
the next 6 to 8 years
Morreaux has requested Ace to put more emphasis on institutional
business.
Kline now has to make the decision on whether to consider Morreauxs
request or refuse it.
CHANNEL STRUCTURE
Ace Brokerage Company
One of the three largest brokers (commission of $ 0.5M per year)
Avg. commissions - around 3 %
Renowned for quality of service
Represent 25 suppliers (of which Morreaux is one of the largest)
FoodFood
Processor
Brokers
& Manufacture
Retail Sales
FoodLocal
Processors
Wholesaler
/ Manufacturers
Institutional Sales
Two Alternatives
Kline Morreaux
Developing
Refuse
Accepts
Kline
Morreaux
to
the
Open
It
afraid
an
Offer
may
Institutional
the
that
beinstitutional
risky
if such
for
Sales
things
Sales
willhappen,
requireothers
additional
will also
manpower
start doing this way & its new co
DECISION TREE
Pros
Cons
Further strengthens
relationship
Increase in commission,
profits and market
Inexperience (management
capabilities) may lead to
RECOMMENDATIONS
Thanks