1. This option seems to be the least costly of the three since no new line is made or no existing line is expanded. 2. You get to investigate distribution avenues that you may have overlooked in the past. This could expose Cima Mountaineering to portion of the market that was unfamiliar with the company. 3. By exploring new avenues of distribution, Cima Mountaineering would be in the process reinforcing it's name brand recognition and could increase sales this way.
Cons 1. This course of action does not address the issue of loosing retail distributors due to the demand of the market. 2. If catalogue sales are looked into, it may be detrimental for Cima Mountaineering in the future. Anthony pointed out that many catalogue companies such as L. L. Bean eventually require a boot manufacturer to make their brand a private brand to the catalogue. 3. Cima Mountaineering would be neglecting a projected 25% of the market (Weekend Hiker) if they did not offer a product that the segment would embrace.
Recommended Course Of Action
It is our recommendation that Cima Mountaineering, Inc pursue Option 1: Follow the strategic plan of company president Margaret Simon and add a new line of hiking boot aimed at the Weekend Hiker, or casual hiker. Weekend Hiker is a market segment that is projected as having high growth according to the report prepared by Harris Fleming, Vice President of Marketing for Cima Mountaineering. It is also estimated to have a 25% market share in the industry.
The market is changing and consumers are demanding a new type of shoe that is comfortable and versatile. Cima Mountaineering is not offering a low cost hiking boot of any kind right now in the market. By doing so you might be tapping a market segment that is unknown to the Cima name building brand loyalty. If the new line fails, Cima Mountaineering seems financially stable enough to cut its losses and move on. By adding this new line to the Cima family of hiking boot, the company may regain retail outlets that have stopped carrying the high costing hard-core hiker boots.
As Margaret points our in her projections, if Cima were to add the Weekend hiker line they would have projected sales in 2001-2002 of 41,010 boots. Anthony's plan would have projected sales in 2001-2002 of 30,566. Even though Margaret's plan has additional capital required for startup, her plan is sounder in the long run for the company. Placement (Distribution): Cima Mountaineering should continue to use it's current distribution model. This includes distributing the hiking boots to Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Washington, Wyoming, and western Canada. However, instead of just limiting the new brand to the typical outlets (retailers who specialize in selling mountaineering, backpacking, and hacking equipment) Cima Mountaineering should investigate distributing the new Weekend Hiker boots to retailers who currently carry these types of boots.
In the event this course of action does not work for Cima Mountaineering, Inc., it would be recommended that Option 2: Follow the strategic plan of company executive vice president Anthony Simon and expand the current Glacier and Summit lines of hiking boots produced by Cima Mountaineering. By expanding on existing product lines instead of creating new ones, Cima Mountaineering stays within its core competencies. There are hardly any development or capital cost associated with expanding the two product lines. You provide more variety for your current customers. Finally, since the hiking boots for Mountaineers and Serious Hikers cost more, you would be bringing in more revenue then a low costing boot.