West Lake Home Furnishings Ltd

1166 Words5 Pages
Executive Summary The CEO at West Lake Home Furnishings LTD, Charles Bowman, came across with a proposal of reducing the retail price of a signature line of decorative lamps from $69.99 to $29.99 for a period of one year. This customer has a large U.S. based retail chain accounted for one-third of West Lake’s wholesale business in 2006. The company had to adjust by holding higher inventory levels in warehouses. West Lake Home Furnishings LTD is intending to stay at top of its business and is very eager to grow. After analyzing the benefits like increase in profit, growth of sales, market penetration, effect of reduced price on other businesses and the rapport with the wholesaler, it has been decided to accept the offer. Large and…show more content…
| Market penetration of the signature line of decorative lamps and thereby the brand West Lake will be deep due to the prominent shelf space at the wholesaler’s retail chain all over and due to the increase in sales by five times. | Also, by improving the marketing strategy & internet sales profits could be increased. | Market share of West Lake will also get increased | Market penetration would remain the same trend | West Lake could rule out the possibilities that other competitors taking up the offer and also the possibility of the wholesaler getting consignments directly from Asian suppliers are ruled out, thereby avoiding a potential competition. | There is a possibility that the wholesaler may get the consignments directly from Asian suppliers, which may reduce the market share of West Lake | Reduction in retail price of Signature line of lamps for the particular wholesale customer can later make other wholesalers negotiate on price, which can lead to reduce gross margin from the entire wholesale business. This could be controlled by linking it to the volume of purchases, which could ultimately lead West Lake into a high volume – low margin company in the long run. | Any other competitor who accepts the offer by the wholesale customer could also affect the brand value and market share of West Lake. | A good relationship could be maintained with the wholesale customer, thereby assuring

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