Quetzal

1. Problem Definition

Quetzal Collections, Inc. is an established dealer of native crafts originating in the South Americas and Africa. QuetzalÐŽ¦s primary business is in authentic artifacts such as jewelry, pottery and wood-carved products. A minor share of its sales product is gained through dealing with high-quality replicated artifacts which are modeled after authentic items. The production of replicas is managed by Quetzal, which employs native craftspeople in the corresponding countries of origin. Quetzal has earned brand name status, and has established a reputation of overall high quality standards and authentically looking replicated products. Quetzal provides its products in a two-level price range. Quetzal provides collectors with original artifacts, while serving decorators and gift buyers with its replicated offerings. Most business transactions are conducted through direct customer contact such as showings. Moreover, QuetzalÐŽ¦s products have been distributed through a number of specialty dealers and a few exclusive department stores, and have been offered in two of those department storesÐŽ¬ Christmas catalogues.

Quetzal Collections, Inc. has been approached by a mass merchandising store chain to offer a range of its products, in particular its replica products. Currently, QuetzalÐŽ¦s major business is in the trade of authentic artifacts. Quetzal is faced with the question of whether or not this proposal is a desirable alternative/addition to its current business structure. Quetzal is now faced with the question of whether or not this proposal is a desirable alternative/addition to its current business structure.

2. Situational Analysis

QuetzalÐŽ¦s sales department states a gross sale product of $ 20 million with a growth rate of 20% annually. According to the firmÐŽ¦s sales manager, the trend for customersÐŽ¬ demand in Quetzal products is positive. However, the supply of authentic artifacts is constraint by a decreasing availability of authentic goods and new governmental export restrictions, which have been proposed in order to preserve national heritage.

Increasing competition, providing lower quality and sometimes fake products, has lowered existing market standards and prices, and has negatively influenced QuetzalÐŽ¦s business reputation. Distribution channels such as mass-merchandizing used by competing companies expand the market to a new clientele.

2.1 SWOT-Analysis

The SWOT analysis highlights on the one hand the successful development of the Company in the last decade (annual sales growth of 20%) and on the other hand the general limitations

of the market and the increased competitive pressure.

In the QuetzalÐŽ¦s favor internally are its strength of an experienced management, well developed customer and supplier relationships, high reputation of itÐŽ¦s brand and their high quality products, a consequent high quality oriented and well developed manufacturing (replicas) and distribution system to serve the limited but growing market and excellent and long term experiences in authenticity control. The main important external opportunities are the current growth of the market (information gap, but likely for replicas in mass market and, due to a change in consumer preferences from abstract to more concrete artwork), a well developed image and long term customer, a supplier and distributor relationships in the increasing competitive market.

Among unfavorable factors, the main weaknesses and threats are the limited production capacity (assumption, because information not depth!!) for replicas, the narrow product lines, the increased competition and the threatened reputation of the whole industry through "fake" products and unserious competitors, and finally the limited development opportunities due to the limited and foreseeable finiteness of supply (authentic artifacts), which threatened the efficiency of the core competency of Quetzal in the future and the long term survive of the company . According to the SWOT-analysis below, QuetzalÐŽ¦s Collections, Inc. is facing following problems. QuetzalÐŽ¦s major business is dealing in authentic artifacts, and only a minor share is devoted to selling replicas. The offer by the mass-merchandizing department store would require a complete restructuring process of current business procedures. Can this be achieved? Does it serve the goal of underlying business concept?

Another problem is that through the current legal trade regulations, future transactions between Quetzal and the countries from which Quetzal buys the artifacts are likely to become complicated. Increasing competition has decreased QuetzalÐŽ¦s sales margin. The brand name Quetzal and the overall market image is affected by the appearance of fake products. How can Quetzal protect its quality standards?

Mass merchandising as a new distribution channel raises the issue of whether to change, adapt or strengthen QuetzalÐŽ¦s current business concept. Which marketing strategy is required?

3. Strategic Analysis

There are five feasible alternatives:

„« Reject offer and keep current strategy

„« Reject offer and change current strategy

„« Full acceptance

„« Acceptance under reservations

„« Complete new strategy

3.1. Reject the offer and keep current strategy

Not to participate in the mass merchandising and no change in strategy issues is possible only in the short run. In the near future the firm has to face an even more decreasing shortage of authentic artifacts. This original key business will vanish and the foremost production and distribution of replica requires change in key competences.

On the other hand, existing distribution channels (World Wide Web, x-mas catalogues, etc.) promise additional sales. Mass merchandising does not put Quetzal Collection, Inc. strategy on risk. The firm is still in the position to have positive margins, although there is an increasing competition.

3.2. Reject the offer and change the current strategy

The rejection is combined with a fundamental change in strategies. New products have to be introduced like current arts under consideration of for instance ethical and cultural perspectives. The distribution channels have to get expanded. There are no costs assessable, but the additional costs are likely to be covered