Distribution Case: Terry’s Miracle Paint

Terry Chase is a car painter.  He has been painting cars for 10 years.   Last year, he made an amazing discovery in Terry’s Miracle Paint.   He mixed a clear paint that once heated would take on the color of the paint around it on the car.   He has been experimenting with paints that change color for the last two years and this new paint he has developed will be a major innovation to the paint market for cars.   As car paint weathers, it fades and car painters always have a problem matching the paints to older faded cars that are wrecked or scratched.

Terry feels that his new paint will be most beneficial to people who want to touch up scratches to their cars and auto dealership that want to make quick repairs.   The question that Terry needs to answer is how much to charge for his new touch up paint.   He has decided to sell in a 4 fluid ounce tube with a brush included.   It costs Terry $3.00 per tube for the first 1000.   Terry knows that conventional touch up paint costs about $4.00/tube.   However, his paint has much better qualities; consumers do not need to worry about matching color and his paint flows and seals better.   However, when Terry asks the manager at AutoZone about his paint the manager said the consumers are very careful about what they put on their cars and many are reluctant to try new brands. The manager at Autozone said that his customers are quite price sensitive.

Terry's Miracle Paint

Best Distribution Strategies for Terry’s Miracle Paint

Terry becomes confused about where he should sell the paint and what price he should charge.   Autozone seems reluctant to sell his paint and other retailers have not been very supportive.   Terry talks to a specialist auto paint shop and they are willing to sell Terry‘s paint but want a warranty guarantee for the paint.   Terry decided to talk to an Auto dealership and they will not use any paint the General Motors does not support through its dealer network.   A distribution agent has told Terry that he will sell is paint but he must sign a contract that gives the distributor exclusive rights and gives the agent great latitude on how much he can charge for his paint.

Terry has decided to talk to Dr. Armstrong about his problem given that he had Dr. Armstrong for marketing several years ago.

Distribution Questions:

  1. Which distribution strategies/strategy would be best for Terry.   Should he use Autozone, Specialty Paint Suppliers, GM Dealers or directly to General Motors?   Explain your answer.

Probably the best alternative for Terry would be to sell his product to a specialty paint manufacturer for a large sum of money and not worry about distribution and long run competition in a market where he has little experience.  GM and GM Dealers would be more worried about new paints and probably buy their touch-up paint on contract from a specialty paint dealer.  Autozone would probably carry his paint but would give preference to established paint producers.

  1. What distribution promotion strategy should Terry use (Push or Pull)?   Explain.

This depends on his selected method.  He should use Push to sell his idea through Specialty Paint producers.  However, if he decides to market the paint himself, he would probably have to use Pull.  This option would not really be possible without a contract with a cable channel marketing firm which would reduce Terry’s potential profits.

  1. How does the selected distribution strategy relate to the Porter Strategy and new Product pricing strategy?

This questions illustrates how important it is to relate Porter, Product pricing and Distribution Channel together.  For example, if Terry decides to market the product himself through Autozone as his selected retailer, he would need to use cost leadership due to competition which would require penetration pricing and a combination of push and pull.  This is alternative is probably beyond his budget and expertise.  This would be a more for a Direct Channel (he maintains ownership) until the retailer sells product.

If Terry selected GM or a Specialty Paint Supplier, he would most likely use Differentiation, Skimming and Push. Astute Scholars provides professional assistance in homework help, discussion questions, research work, capstone projects, case studies, essays, research proposals, research projects, care plans, laboratory reports, admission essays, powerpoint presentations, formatting services, and editing services.