Case Brief - Pyramid

Short Brief of:
Pyramid Door
MBA 5313 – Spring 2020

Marketing Management
Dr. David Johnsen
April 13, 2020
I. Major Issue / Problem
The major issue / problem: Should Pyramid Door change their distribution strategy in order to
meet their planned sales goal of $12.5 (36% increase over the projected previous year’s sales).
II. Alternative Courses of Action
Proposal One
The first proposal is to expand the number of dealers in the markets currently served by Pyramid
Door. If this proposal is chosen, it would involve adding at least 100 non-exclusive dealers to
100 markets that aren’t already served by exclusive dealers. Pyramid Door would have a total of
400 non-exclusive dealers.
Advantages:
 More dealers would increase the market presence, distribution, and sales
of the company
 There could be long term benefits by expanding your market and customer
share
Disadvantages:
 The cost of adding a sales representative at $80,000 per year per person
 Oversaturation of the market can occur if there are too many locations
 An increase transportation costs would happen with all the new locations
to deliver to
 Non-exclusive dealers would make about $3,800,000 in 2006. Exclusive
dealers would make about $6,600,000 in 2006. This would make the
estimated sales revenue $10,400,00, which is not what the planned target
is
Proposal Two
The second proposal was a formal exclusive franchise program. Pyramid Door would add 27
more dealers that would sell Pyramid doors exclusively in their market for a specified franchise
fee. This will lead to a total of 77 exclusive dealers.
Advantages:
 The program could be implemented next year in the first quarter. The sales
revenue would be about $12,200,000
 The franchise fees from exclusive dealers would be steady income
 Increase in advertising in 23 high-potential market
 Exclusive dealers to focus only on products by Pyramid Door
 Sales and brand awareness can increase
Disadvantages:
 Pyramid Door would lose their current dealers
 Less convenience for customers in the affected areas
 Some members may want to cancel their contractual arrangements they
currently have with the company
Proposal Three
The third proposal is a reduction in the number of dealerships without a franchise program.
Advantages:
 50 exclusive dealers would be kept that currently make up 70% of the
sales, and 200 non-exclusive dealers would work in the other markets
 The company has had success without an exclusive franchise program
before so this program could work just as well
 It would be more flexible for those who are a part of the program
 Less saturation in the market and can lead to an improvement in sales
 Money saved can be allocated towards more advertising opportunities
Disadvantages:
 The loss of convenience for current customers that live closer to the
current locations, which may be closed
 Current exclusive dealerships could adopt other brands
 The percent increase in sales needed per independent dealer is 214%
Proposal Four
The fourth and final proposal is to make no changes to either the distribution strategy or
the dealers.
Advantages:
 Pyramid Door can take advantage of more advertising opportunities in
order to increase brand awareness and reach targeted sales
 Non-exclusive dealers have the most room for growth since they are only
responsible for 30% of the company’s sales. The percent increase in net
sales needed is 32.7%
 Pyramid would not have to change except the effort towards increasing
brand awareness
Disadvantages:
 Competitors will continue to expand their territory and Pyramid Door, will
not have a chance to keep up because they have not changed their
distribution strategy
III. Recommended Course of Action
I recommend Pyramid Door follow proposal two. The second distribution strategy
recommended the development of a formal franchise program. In addition, Pyramid would also
be switching 27 non-exclusive dealers to exclusive sellers of Pyramid Doors. The new number
of exclusive sellers would be 77. Proposal two nearly meets the project sales goals for 2006.
Out of the four options, it comes the closest.
IV. Summary
I recommend this strategy because it is practical and increases advertising in 23 high-potential

markets. This can help the company increase brand awareness and expand its products. Also,
the company has proven its exclusive dealers sell more than its non-exclusive dealers. The
exclusive dealers represent 70 percent of the firm’s sales while non-exclusive dealers represent
30 percent. Likewise, Pyramid Door is more likely to become larger and more successful if they
choose the second proposed strategy. In addition, the expected sales goal for 2006 will be nearly
met with this approach.

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Short Brief of:

MBA 5313 – Spring 2020

II. Alternative Courses of Action

I recommend this strategy because it is practical and increases advertising in 23 high-potential

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