AFTON INDUSTRIES / MARKETING QUESTIONS

AFTON INDUSTRIES / MARKETING QUESTIONS

AFTON INDUSTRIES / MARKETING QUESTIONS

1. The asphalt shingle market in the upper Midwest is in the mature phase of the product lifecycle. There are no innovations driving demand in the market, and asphalt shingles are a well-known and accepted commodity in the market. Afton Industries has a strong reputation in the market in terms of quality and delivery, but its shingles are not perceived as being significantly better in quality than the competition, at least not to the point where it can differentiate itself through a premium pricing strategy.

The marketing channel in this market is to intermediate buyers and agents. For example, when a developer constructs a new housing development, he subcontracts the roofing activities to local companies. These subcontractors are generally given the leeway to deal with whichever roofing companyùsuch as Aftonùthey choose so long as the warranty is acceptable. There is thus incentive for these subcontractors to use the lowest priced supplier so that they will realize the greatest profit between their cost and what the developers is paying them. In the reroofing market, where the homeowner is generally paying for the materials, the roofing contractor may be responsible for procuring the materials and marketing up the product to the homeowner. Again, there is strong incentive to deal with the lowest-priced supplier in order for the contractor to receive the best profit margin on each project.

2. Afton is dealing with a highly knowledgeable buyer who is familiar with Afton’s products as well as the products of its competitors. In nearly all cases, Afton deals with the roofing contractor who is either installing roofs on houses being constructed by developers, or who is reroofing homes for homeowners. It is typically not the developer or the homeowner who makes the decision about which product to use on the roof however; instead, that responsibility is given to the expert roofing co…

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