PlastiForm Manufacturing – Case study

Current Situation

PlastiForm Manufacturing Inc. (PFM) is a leading producer in the plastic forming machinery industry. They are located in Long Beach, California and service primarily West Coast customers. The company has experienced steady growth since starting up in 1970 and now has annual sales of $50 million.

PFM has patents covering over 200 types of machines, but typically only sells 30 different types annually. These machines are purchased to increase capacity or replace old equipment.

PFM’s promotion and selling activities in the West Coast market are handled by six sales representatives; costing about $880,000 per year including salary, bonuses, supervision, travel, and entertaining. When the sales reps are close to making a sale, they are supported by two sales engineers—at a cost of about $130,000 per year per engineer. Any sales contact outside the West Coast market is handled by manufacturers’ agents who are paid 4 percent on sales, however these sales are very infrequent.

PFM spends up to $100 000 in advertising; much of it appearing in trade journals. Occasionally PFM will use direct mailings and trade-show exhibits to feature its products. They also have a simple website. PFM’s promotion of its products is primarily through personal selling.

There are 12 US-based firms in the US plastic-forming manufacturing market. This market is segmented into three geographic regions – West Coast, East Coast and the Midwest. In the West Coast market, PFM competes against one other competitor, which is based in Tacoma, Washington. There are four competitors active in the Midwest market and six competitors active in the East Coast market.

Each of these competitors is approximately the same size and manufactures similar machinery. All of the competitors offer similar prices and sell F.O.B. their