DuBois Polymers manufactures and distributes chemicals in the northwestern United States and western Canada. Usually the company sells to a distributor, which sells to the customer that uses the chemicals. Mitch Thompson is Betsy Briles’s biggest cus- tomer. His business, which distributes chemicals in British Columbia and Washington State, represents nearly 15 percent of Betsy’s annual sales. Recently Betsy acquired a new account in the same area, Crago Chemicals, which has the potential to be just as large. Her most recent meeting with Mitch, though, went like this:
“Look, Crago Chemicals underbid us on the Canuck contract by 10 percent. You must be offering them a better price than us, and I want to know why,” said Mitch.
Betsy knew that Crago bid that job with no profit in order to expand into Vancouver and that the price she quoted them was actually 5 percent more than Mitch’s. “Mitch, I’m not giving them a better price—they don’t buy as much as you do from us, so I can’t.”
“Huh. You’ll have to do better than that. You know that the Farley contract is coming up, and it is going to be big. I want to know what they intend to do about it.” “Mitch, if I told you their pricing strategy, as if I knew it, why would you ever
trust me with your information?” “C’mon. I’m your biggest customer. We have to stick together.” “Well, I don’t know their strategy.” “Try to find out. And while you’re at it, I think I can get the Hudson Pulp and
Paper account away from National if you’ll give me just a 5 percent discount on those products.”
Betsy knew she was as low as she could go pricing wise. But if she gave him a few barrels a month free and marked it down as a sample, then she would effectively lower the price and get away with it. And National was not one of her accounts—if Mitch won the Hudson account, she would see another $100,000 in revenue per month.
Questions
1. What should she do about the Farley situation? Should she try to find out if Canuck plans to bid on the Farley contract and, if so, what its strategy is?
2. What should she do about the Hudson account? 3. Describe her relationship with Mitch. Where should she go with this account in the future?