6) From what you can discern in this case, describe and compare the goals of BW and GE?

1. How do their goals impact their channel structure?

BW found out that a new approach was needed to serve small and medium sized
customers. The market search done by BW showed hundreds of small and medium
molders who had much in common. They used same quantities of three or more kinds of
plastics, required short lead times, and had limited cash flows and other special needs.
Because most plastic companies concentrated on large volume customers, smaller users
had not consistently been called on by representatives from plastic producers. They
recognized increased competition and to distinguish themselves from their competitors,
BW established Plastic Service Centers (PCSs) in 1981. PCSs was a full-service
nationwide distributor catering to LTL customers whose service needs were not fully
addressed by direct representation from major plastic companies. While BW continued to
maintain its direct sales force for its large customers, it turned over the small account
responsibility to the new PSCs sales team. BW approached other plastics companies
whose product types didn’t directly compete with its own. Several of these companies
agreed to use PSC as their distributor, turning over their LTL customers to the PSC team.
Solid customer service helped establish BW as an industry leader. They had the skills and
culture to assemble the kind of service package these LTL customers needed and the kind
of distributorship resin producers needed. PSCs offer a full range of products from
different producers.
Advantages of PSCs:
1. Fill a void in customer sales and need.
2. Provided opportunity to reach smaller accounts and more effectively organize
their field sales.

In case of GE they relied exclusively on sales team. Their approach is to sell directly to
help molders grow. Basically, value added sales approach with the help of FMD. The
field sales team directly responsible for direct sales and they work closely with plastic
specifiers/end users and keep them up date about the new product development and
design techniques. In GE perspective there is a need to develop the molding facility of
smaller molders into bigger ones. By serving them directly would result in overall growth
of industry. They think that using a distributor to handle products is an admission that we
are not able to serve our customers themselves.
Advantages of direct sales:
1. Sales support before and after sales.
2. Engineering plastics require more technical support.
3. It directly deals with prime supplier.
b) Do their goals impact how they view the market? Are their views realistic?
GE recognized that while engineering products were capable of successfully performing
mechanical and structural functions and can replace more costly materials and processes. At the
same time traditional plastic sales techniques used by commodity producers as well as the
consumer perception of cheap plastics would hinder the successful communication of these
unique benefits. As a result, GE began to provide extensive services related to end user
education, plastic design, manufacturing and development as well as the product information
intended to maximize the value potential of its customers. The pricing strategy of engineering
products became based on value added strategy, reflecting the premium performance of
engineering materials. The focus was on what they could do rather than what they cost to
produce. They extended the value-added approach through the use of FMD which act as
relationship builders kept specifiers up to date on new product developments generally creating
goodwill and an allegiance to GE product. Also leaving the direct sales responsibilities to the
field sales team. They saw customers through its own needs and goals which was the growth of
market.
BW recognized that most plastic companies concentrated on large volume customers, smaller
users had not consistently been called on by representatives from plastic producers. They
recognized increased competition and to distinguish themselves from their competitors, BW
established Plastic Service Centers (PCSs) in 1981. PCSs was a full-service nationwide
distributor catering to LTL customers whose service needs were not fully addressed by direct
representation from major plastic companies.
c) It may be of assistance consider how their goals and market view compare to others in the
market, such as DuPont?
The FMD approach of GE was very successful in the marketplace. GE gained a reputation as an
aggressive innovator in the market and soon developed sales leadership in all product types they
marketed. This success led other engineering plastics suppliers to begin imitate the GE field
structure. Borg Warner the chief rival to GE in PC were forced to adopt the FMD approach to the
market to stay competitive, though account coverage and resource commitment were not as
broad as that provided by GE. Other suppliers such as Dupont and Celanese found it necessary to
provide some kind of design assistance to specifiers, but a formal field organization rivaling
FMDs was not completely developed. Those who didn’t provide some type of coverage at end
users and specifiers soon found their sales efforts at molders much more difficult.
Many molders in the target segment supported the BW view of the market. Many customers
view PSC service much better than that received from large plastic companies such as Dow and
Monsanto, as they were only interested in the larger accounts. DuPont a producer of both
commodity and engineering plastics, saw the PSCs as an opportunity to free up some field
resources that could now be devoted to end user assistance and application development efforts,
better enabling them to compete with organizations that had large FMD organizations, such as
GE. GE felt that using a distributor to handle products is an admission that we are not able to
serve customers ourselves.
 Problems
Energy crisis of 1970’s had a major impact on the plastics industry. Decrease in the availability
of crude oil meant that plastic manufacturers were not able to meet the demands from molders
for materials. Due to this many molders who traditionally purchased their materials in LTL
quantities found that available supplies had been purchased by large volume customers who had
previously established relationships with plastic companies. Smaller molders without consistent
buying patterns or high-volume demands found themselves unable to obtain raw materials and
meet the production demand of their customers. The customer/end user specification limited the
molders ability to find a second source for material, leaving the molder with very little supply
flexibility. To lessen the impact of this situation some specifiers developed some strategies. The
problem of using equivalent products was that it was time consuming as the specifier would have
to certify that the equivalent products from competing sources. Also, when the materials were
used in critical applications, where the failure could lead to injury or other harm, specifiers
would be cautious about accepting a second. Lack of flexibility led many large suppliers develop
internal standards for engineering materials. While this helped with new designs, it was of little
value in easing the immediate supply problem.
Problem with GE approach:
Field sales personnel from GE competitors found that they were locked out of opportunities to
pursue the business because designers had already specified the use of GE products. Custom
molders also resented the GE approach because it took out of their hands the choice of what
manufacturer they could buy material from.
Problem with BW approach:
Using distributors for smaller customers increase their accessibility to product but the supplier
customer personal relationship would be ignored. Also engineering products require more
technical support so direct sales field would be required to assist engineering products.