Cardon Carpet Mills - 1345 Words

Marketing Cluster May 9, 2012 Cardon Carpet Mills, Inc. Case Study The Cardon Carpet Mills Company is a carpet company that distributes its line through seven different floorcovering wholesalers around the United States. This company focuses on manufacturing a full line of medium to high priced carpet primarily used residentially. The senior executives, looking to integrate direct distribution and bypassing wholesalers, are seeking the best outlet for increasing profit. With increased pressure from retailers to shave their profit margins to accommodate pricing demands the wholesalers wanted Cardon Carpet Mills to consider a reduction in its prices. This will play a large part in how the company will decide if direct distribution is a†¦show more content†¦So far, the company has stayed afloat with the 4,000 retail accounts and advertising strategies. However, if Cardon Carpet Mills decides to establish distribution centers, they have opportunities in other markets such as Dallas and Atlanta. This alternat ive will add to their expenses as well as cause a rift in their long-term relationship with the seven wholesalers, so it is important to evaluate the advantages and disadvantages to continuing with current wholesalers or opening more warehouses. Porter’s five forces can be used by senior management to assist in the decision-making process on whether or not to venture into direct distribution. The first force to be evaluated is the threat of new entrants into the floorcovering market. Cardon Carpet Mills must be aware of the likelihood that new competition may enter the market and target their customer. In the floorcovering market, however, Cardon Carpet Mills does not need to put much energy into preparing for new entrants. The number of competitors began to shrink in the 1980s due to mergers and acquisitions. The number of floorcovering manufacturers decreased from over 300 in the 1980s to near 100 by 2000 (Kerin and Peterson). The demand for floorcoverings has decreased enough for Cardon Carpet Mills to observe that the attraction to the industry is minimal for new entrants as well as existing companies. The second force for management to consider is the existingShow MoreRelatedCardon Carpet Case Analysis2378 Words   |  10 Pagescompany Cardon Carpet Mills, Inc. is a privately held manufacturer of a full line of medium-to high-priced carpet primarily for the residential segment. Given recent developments within the floor covering industry Robert Meadows, the president of Cardon Carpet Mills, Inc is considering the possibility of establishing distribution centers or wholesale operations for the company. II. Situation Analysis Industry Background Wholesale and retail distribution in the U.S. carpet and rug industry