Cardon carpet case analysis

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Cardon carpet case analysis

The largest category of floor coverings is carpet and rugs, followed by resilient coverings vinylhardwood, ceramic tile, and laminates. Cardon Carpet Mills, Inc.

The company markets its products under the Masterton and Chesterton brand names. Based on the present state of the industry and performance init pleased the directors.

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The business recorded a profitable sales growth 3. Given recent developments within the floor covering industry, Robert Meadows the president of Cardon Carpet Mills, Inc. Thus, Suzanne Goldman, a special assistant to the president was given a task to prepare a position paper for the president.

Nevertheless, Goldman received unfavourable feedback from the companys wholesaler who did not agree with the proposal. There have been three major competitive trends that occurred within the industry. The first trend to occur happened in the mid s when the larger carpet and rug manufacturers began to eliminate the margins paid to wholesalers by bypassing them and selling directly to retailers.

Similar manufacturers continued their use of wholesalers due to their lack of capital. Bya majority of the carpet and rug sales for residential carpet and rug sales were distributed through company distribution centres to retailers.

This altered the industry. The next trend that occurred was in the early s with the emergence of retail buying groups. They would combine their purchases in order to obtain quantity discounts from manufacturers. The last change took place when Shaw Industries, the carpet and rug industry leader, began to open and operate its own retail stores and commercial dealing network.

This action led to Shaw Industries being dropped by big stores such as Home Depot and several buying groups. A couple years later Shaw Industries sold its retail stores and was picked up again by Home Depot. As a result of all these effortswas an upward trend in dollar sales over the past decade but marginal profitability for the industry.

Cardon carpet case analysis

Referring to Exhibit 1 pageit is estimated that carpet and rugs commanded Other floor covering types such as hardwood, ceramic tile and laminate had enjoyed an increasing in market shares. Sincethe export market for U.

This poor performance was due to the lack of marketing efforts and the industry had failed in communicating effectively to consumers about the value added of their products besides unable to differentiate their product quality from other floor coverings.

The carpet and rug industry as a whole only spends 2. The declining demand for carpet and rugs, excess manufacturing capacity and losses profit margins reduced the number of carpet and rug manufacturers from more than in the mids to about companies in early This is due to consumers were changing their preferences to other floor covering types such as hardwood, ceramic tile and laminate.

According to Exhibit 1 pagehardwood recorded an increment by 1. These scenarios then lead to mergers, acquisitions and bankruptcies among manufacturers. Sincemergers and acquisitions reflected a push to build further economies of scale in the production and distribution of carpet and rugs.

Byit was estimated that 10 companies in the industry produced 91 percent of carpet and rug sales in the United States. The company also has the distinction of being the largest carpet and rug manufacturer in the world.

Contract sales to institutions and businesses are also made but it accounts for only 28 percent of company sales and occur principally in the south-eastern United States.

Besides that, the company also had no export sales. Currently, the company distributes its line through seven floor covering wholesalers located throughout the United States. These wholesalers then supplied 4, retail accounts including department stores, furniture stores, and floor covering specialty stores.

The distribution records revealed that 80 percent of residential segment sales were made through 50 percent of its retail accounts.

Cardon carpet case analysis

For marketing activities, the company commonly advertised its business through shelter magazines and newspapers. The emphasis in advertisements was on fibre type, colours, durability and soil resistance. The company was very particular in producing high quality advertisement because it represents the image of the company besides to attract and gain high confidence from the consumers.

In order to have a close relationship with wholesalers and retail accounts, the company employed two regional sales coordinators who acted as a liaison with wholesalers, assisted in managing the cooperative advertising program, and made periodic visits to large retail accounts.

They also responsible for handling contract sales for institutions and businesses.Cardon Carpet Mills, Inc. Case Discussion I. Situation Analysis a. Industry i. In the United States carpet and rug industry, wholesale and retail distribution has experienced several changes.

The industry has undergone three distinct changes since the mids. The first change, which occurred during the mids, occurred in the form of direct distribution.

In the United States carpet and rug industry, wholesale and retail distribution has experienced several changes.
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Cardon Carpet Mills Maria Butt Distribution Center question: Should Cardon Carpet Mills establish their own distribution centers?

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