Brand Pipe Company

Group 11
(Section 1)

Ankit Chowdhary
Anjani Kumar
Atul Kumar Jha
Chinmaya Panda
Mannem Nithin
Kumar
Vivek Mandal
Brand Pipe Company
Brand pipe is a plastic extruder company, serving Pacific Northwest
It is the second largest company of the region
States served by Brand Pipe: Oregon, Washington, Idaho, and Northern
California
Products Portfolio : Poly, PVC, ABS, and Styrene
Major Competitors : Sierra Plastics, Brand Pipes, and Tamarack Pipes
Promotion and Sales:
Limited amount spend on advertising, believed in personal selling
The salespeople were assigned by three geographic areas, namely:
Seattle-Puget,
Portland & eastern Oregon-eastern Washington area & the southern
Oregon-northern
California area
Distribution:
Sold majority of its pipe through distributors
The Problem
The Brand pipe division of the company was making losses on account
of which Mr. Buford (GM) was told to come up with a
Specific marketing strategy & plan to stop the losses.
Provide a base for continued growth

The loss can be attributed to various reasons such as :

Increase in competition in every sector to which it catered to, thus eroding the
average
price/lb.
Heavy dependency on the distributors who were not the exclusive ones, thus a
lot depended
on them
Inefficiencies in the process (both due to material wastage and machine
changeover)
Lack of focus on segments
Product wise Analysis

Product Poly PVC ABS Styrene

Direct Margin -0.0135 0.0392 -0.0122 0.0275

Share of
7.98 61.75 15.3 14.9
revenue(%)

Profit(per
-0.0532 0.0017 -0.0623 -0.0039
pound basis)

PVC is the single product which has been generating profit for
the company
Only PVC & Styrene have positive contribution margin
PVC contributes to major portion of revenue
Effect of reduced wastage
Poly PVC ABS Styrene
1068396.0
Gross sales price 163125.000 280531.200 285038.400
00
Less discounts, freight and allowances 31950.000 53419.800 29068.200 38906.400
1014976.2
Net sales price 131175.000 251463.000 246132.000
00
Less Variable costs (raw materials and 863233.00
137250.000 260844.800 217752.000
conversion) 0
151743.20
Direct margin (contribution to fixed costs) -6075.000 -9381.800 28380.000
0
145162.50
Less fixed costs 17865.000 38526.900 32404.800
0
Profit -23940.000 6580.700 -47908.700 -4024.800

Poly PVC ABS Styrene

Gross sales price 163125.000 1068396.000 280531.200 285038.400

Less discounts, freight and allowances 31950.000 53419.800 29068.200 38906.400

Net sales price 131175.000 1014976.200 251463.000 246132.000

Less Variable costs (raw materials and
137250.000 863233.000 260844.800 217752.000
conversion)
Less Variable costs(when 7% wastage is
127642.5 802806.69 242585.66 202509.36
eliminated)

Direct margin (contribution to fixed costs) 3532.500 212169.510 8877.336 43622.640

Less fixed costs 17865.000 145162.500 38526.900 32404.800

Profit -14332.500 67007.010 -29649.564 11217.840

Cost of machine changeover
Total revenue =$ 18,00,000
Cost of changeover / day - $ 175
Total cost of changeover (annual)* = $ 50,400
Annual loss due to changeover (% of revenue) = 2.8%

*Assumption that the plant operates 6 days a week

Reasons for changeover:

Tight limit on finished inventory goods
Rush orders
Market Segment Decision:
Market
Five year
Size(Washingto
Plastic Type growth
Market Segment n, Regional) Decision
Used rate(Washingto
millions
n, Regional)
pounds
Agricultural
PVC 8.25,16.5 17%,17% Yes
Irrigation
Private potable
water system PVC/Poly/ABS 0.145,0.350 0%,0% No
market
Mobile Home
ABS 0.13,1.4 75%,90% No
market
Public potable
PVC 2,5 100%,100% Yes
water
Industrial market PVC/Poly 0.6,1 45%,45% No
Turf Irrigation
PVC 3,5.9 66%,57% Yes
market
Drain waste and ABS - 90%
1,1.75 27%,35% No
vent market PVC - 10%
Conduit PVC/Poly 0.465,1 50%,50% Yes
Sewer and Outside
Styrene/PVC 1.4,2.8 90%,78% Yes
drain
Gas Transportation
PVC/Poly/ABS 0.123,0.3 0.00% No
market
Water well service
PVC/Poly 0.00% NO
and stock water
Recommendations:

Move out of Poly and ABS

Focus on following markets: Agricultural irrigations, Public
potable water, Turf Irrigation market, Conduits, and Sever and
outside drain
Stop taking rush orders or charge a premium to cover the
changeovers
Concentrate on solving the problem of inefficiency ( more
plastic used)
Segment the sales force product wise rather than on
geographical basis
A part of compensation of sales force should be variable
depending upon the sale that they generate
Thanks You!!