Stainmaster - Case Analysis - Retailing Essay Example
According the Wallstreet journal, the purchase of carpet is one of the most expensive purchases that people make in their lifetime, yet this product as remained mostly undermarketed with only 5 million dollars spent on customer advertising for 15 billon dollars in revenue for the industry - Stainmaster - Case Analysis introduction. In 1988 the industry saw a major change with the introduction of Du Pont’s Stainmaster carpeting, which allowed it to gain a strong foothold and marketing advantage within the industry.
But there are still some issues that the company needs to address; mainly 1) the best use for its brands 2) the impact of the competition and 3) how Stainmaster should be positioned versus the rest of the market. Indeed, faced with the increasing complain of mills and retailers about the margins on its products, Du Pont needs to determine to which extent its product should be positioned as premium products.
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This analysis will allow to us to reach our recommendation that Du pont should maintain its premium positioning for its product and make better use of its distribution channels to reflect that positioning by moving away from small retailers and the “warehouse effect” that is currently present at most retail points. The Four C’s Company Du Pont is an American chemical company founded in 1802 as a gunpowder mill. Today it is one of the world’s largest chemical company and ranked 66th on Fortune’s 500 list.
Stainmaster, which was introduced by Du Pont in 1986 and by the end of that year, was far surpassing its competitors in terms of brand awareness with a brand awareness of 79%. With a 5-year guaranteed warranty, Stainmaster products were also of very high quality, which was recognized through various awards such as “best new product”, awarded by Fortune’s magazine in 1987. The brand also benefited from a high commitment to advertisement and promotion from the company with TV ads and radio spots representing more than 65,45% of cumulative advertising expenditures.
In addition a good use was made of merchandising tools with “more merchandising tools than dealers dreamed possible”. Stainmaster was also a very highly innovative product not only through its revolutionary properties but also through its design, products of the brand represented 78% of new style carpets in the industry making them modern and fashionable goods Competition The competition has been quick to respond to Du Pont’s new brand of products by developing and advertising their own.
Due to the fact that Du Pont was unable to put the product under patent protection Stainmaster’s announcement was followed almost immediately by the announcement of Stain-resistant Anso V by Allied Signal and water dated stain resistant nylon fiber by Monsanto. Other competitors such as BASF and Amoco were also quick to enter the market with stain resistant products of their own. The biggest competition in terms of similar product seems to be coming from Monsanto, which has a very similar positioning with products trailing closing behind in terms of innovation.
Another strong point of competition that Stainmaster has to contend with is the growing expenditures of homes on electronics, why would need to replace the carpet if all the eyes are fixed on the latest plasma screen hung on your wall? Customer Studies have shown that stain resistance is one of the most important aspect that customers are looking for when shopping for carpet. Therefore, the innovation present in the Stainmaster brand of products makes it especially attractive to customers by addressing one of their primary needs.
In respect to the shopping experience, customers show a clear preference to a “hands on approach” preferring to feel and see the product. Most of them are also disappointed/bored by the warehouse look of most of the retailers of carpets. Channel Stainmaster carpets are sold in all type of retailers from big chains to small retailers, but with about 44% of its products being distributed through small retailers there is a large portion of its distribution channel that is hard to reach and control. These small retailers are also the ones who tend to suffer the most from the “warehouse” effect that customers tend to shy away from.
Also, due to their small size, these retailers are the ones who are the most likely to complain from margins since their small structure do not allow them to have economies of scales that can be done at larger retailers. Du Pont has tried to enhance its channel of distribution by providing a large amount of marketing materials to be used on site such as in store demonstration unit. But here again the number of small retailers is a problem to make the impact of such materials noticeable without incurring huge costs. Overall, the retail industry seems to be healthy, as surveys have shown that there is a significant growth in sales.
But there does seem to be a problem in the sense the despite growth in sales volume there is no growth in net profit. Four C’s Summary Overall, Stainmaster appears to be a strong brand on several aspects. First of all, it is backed by a big corporation with the means to support its development. The brand has the benefit of being the first to enter the market and has a very strong awareness amongst consumers; it is also recognized as being a technically superior product, even though the competition seems to be close behind in terms of innovation.
Distribution is a bit more problematic as its disparity does not allow Stainmaster to have a good control over it and to efficiently promote its product in accordance with its image in all retail points. Recommendation Distribution Chain In regards to the distribution chain, Du Pont must start helping both producers and retailers to increase their margins, to keep the incentive to distribute their product. To help manufacturers, Du Pont should pursue its politic of helping with installation and help when possible to reduce on site costs.
Researching Locked-in chemicals could also be beneficial to both Du Pont since customers seem to prefer it, and to mills by limiting the amount of different processes on site. On the retail side of the business, most of the effort and attention should be directed towards the larger retail stores where it will be easier for the company to implement partnership and action plans. Stainmaster offers product that are sufficiently innovative to adopt a product differentiation strategy.
In keeping with such a strategy, Du Pont should try to develop partnership with large retails groups to enhance the positioning of its products and to increase in store marketing materials. Another important aspect to enhance the brand image would be to address the shopping experience of customers, which can be greatly improved. It is important to draw in store customers to the product, one efficient way of achieving this would be through the implementation of animations in the store designed to be as fun/interactive as possible.
Interactive animations would be in keeping with the customer’s desire to touch and feel the product while allowing for a more enjoyable experience. Ideally, it would allow to draw in customers present in the store for other types of product and allow for an introduction to the Stainmaster brand. Product, Price The consensus seems to be that Stainmaster’s brand of product is technically in advance over its competition and overall of great quality.
This should allow the company to pursue a product differentiation strategy by axing it communication on the product’s specificity. An increase in the product’s price would be in line with the strategy as it would promote the premium quality of the product considering that customers often associate price and quality. This would also have beneficial effect as it would increase margins for retailers, a portion of the price increase should also be dedicated to incentive towards the sales force to deliver best in class in store promotion.
Finally, in response to the relatively quick reaction time of the competition, Du Pont should keep a strong investment strategy in R&D to keep a lead in product innovation and therefore maintain the premium image of its product over the long time, which ultimately should increase both brand awareness and customer loyalty. Conclusion Overall, Stainmaster has a strong product and good marketing so far, it now needs to push its product differentiation through its distribution channel and maintain this advantage to get ahead of the competition.