Peterson Carton Services

Executive Summary Peterson Carton Services (PCS) is a carton manufacturing firm based out of Lancaster, North Western England. The firm employs technologies to manufacture general cartons, windowed cartons and noncarton range of products as well as technologies like Lithographic printing. The case describes operations and strategy of the company. Intense competition is resulting in low prices and in turn financial losses to the company despite of cost saving measures adopted by the company. A marketing strategy consultant is employed by the company to do market analysis and to come up with a strategy. The suggestions made were that the company should concentrate on beverage, food and windowed products because of their potential for volume based growth. Other suggestion was to cut down on serving the drip mats sector. . The findings reported that sales decline was due to heavy competition. It was important to serve the needs of a particular class of customers. Implementing these suggestions saw the companys revenue climb, but started making losses in a very short period. The case attempts to list down the facts which are responsible for the losses incurred with respect to the new strategies. Situation Analysis Following tools can be used to analyze the case. 5 Cs of Market: Situation Analysis Company Owing to its strict adherence to quality and delivery deadlines, company has a good name and it is among the top 30 companies in packaging. The company has the technology and the skill to compete in the market. It deals with diverse product line and consisted of products like General cartons, Windowed cartons and drip mats. Currently the focus is on turning profitable from being into losses. Collaborators Good relationship exists between sales personnel and purchase department. In order to minimize the order backlogs an efficient chain of distribution was proposed to be designed. The company is at advantage because of heavy competition on the suppliers side. The lead time for receipt of raw material can be reduced by sourcing directly from the stockists. They have strategic alliances in the form that the work of making Windowed carton is subcontracted to companies within Stebro industry due to lack of capacity.

Customers The industry has opportunity to grow because of the usage of cardboards in packaging. Market segments are classified into customers from various groups i.e., Beverages, Industrial Products, Food, Pharmaceuticals, Drip-mats, Toiletries, Confectionary, Small Electrical Items, Sundry, Windowed Products and various general group cartons. Marketing segmentation will also depend on the products being packed using the cardboard as their success is very crucial for PCS. Expectation of customers is that the cardboard should be in line with their product. Characteristics like quality and quality is also expected along with strict adherence of timelines for the perishable products. For some customers packaging may not be a high priority task as compared to quality and reliability of their product. Most of the customers continue with the company once satisfied with the services and product. Due to its good track-record, the company had been able to maintain its long relationships with some customers. Not meeting the delivery deadlines might pose serious question on credibility of the company. The demand for their product directly depends on the demand for the product it is being used to pack. Competitors: Competitors are those who produce cartons or else also those who do the packaging themselves as well as other packaging companies. Due to huge competition in the market, market share of the company is low. The company recognized that customer orders were potentially vulnerable to competition. The work was repetitive and technically undemanding and thus to retain customers it is important to give quality and reliable service as well as maintain good long term relations with customers. Context: Products to be packed are available throughout the year and the services provided have to be in line with the product. In some products like windowed cartons PCS employs special techniques which make the cartons of better quality. There is heavy competition in the market due to which the company is facing losses due to which the company conducted a market survey which suggested PCS to reposition itself in the market.

Segmentation, Targeting and Positioning Strategy Segmentation: Carton market was segmented into various categories based on product categories. . The major segments were general cartons, Windowed cartons and non-carton range of products like Drip mats. The customers themselves came from varied backgrounds like Beverages, Industrial Products, Food, Pharmacy Industries etc.

Targeting Specific product market was to be targeted in order to generate revenues and be profitable. Markets including beverages, food and windowed products were to be targeted in order to mitigate losses in other segments. PCS realigned its strategy to cut down on its servicing the demand for drip mats and concentrate on the other categories for which the demand and margins were more robust. Positioning The focus was to get high volume sales to recover losses from other products. Quality, reliability and adherence to timelines is expected from the company and the company needed to be perceived as the best in these features in order to make a mark in the market. Companys focus was on improving level of service towards customers and defends its current market share and business by lowering prices wherever necessary. In the long term, it was intended to offset any decline in other segments by increasing sales in more profitable segments like Window cartons. Operational Issues and Solutions There were shortcomings in its operations which prevented it from maximizing its potential and achieve operational efficiency. Machines with which operations were carried out were mostly depreciated which impacted the efficiency of production process negatively. Replacing them would be costly. The challenges were faulty machines, QC Issues, Order delay and cancellation, Special order delivery etc. Increased level of working capital contributed to poor financial condition of the company. Lower margins also played a role in it. Some of the solutions included are to have a penalty on manufacturing goods inventory by the manufacturer for call-offs up to one and a half months. This is expected to reduce finished goods inventory by up to 30%. Steps can be taken to increase use of technology for planning and order taking which automated the processes to a large extent and reduced manpower requirements. In the shorter period we can outsource the making of common products too.