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    Case Analysis: Signode Industries

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    Arpit Yadav
    Signode Industries faces rising raw material costs that represent 70% of its costs. Some competitors have passed on price increases to customers while Signode maintains blanket pricing. This has led to a decline in Signode's market share from 50% to 40%. The case analyzes whether Signode should introduce a flexible price policy to pass on higher costs to retain customers and market share or absorb costs to maintain prices. The analysis concludes that a flexible pricing strategy is justified to help Signode achieve desired growth in market share and follow industry pricing trends set by raw material cost increases.

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    Case Analysis: Signode Industries

    Uploaded by

    Arpit Yadav
    26 views1 page
    Signode Industries faces rising raw material costs that represent 70% of its costs. Some competitors have passed on price increases to customers while Signode maintains blanket pricing. This has led to a decline in Signode's market share from 50% to 40%. The case analyzes whether Signode should introduce a flexible price policy to pass on higher costs to retain customers and market share or absorb costs to maintain prices. The analysis concludes that a flexible pricing strategy is justified to help Signode achieve desired growth in market share and follow industry pricing trends set by raw material cost increases.

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    Signode Industries faces rising raw material costs that represent 70% of its costs. Some competitors have passed on price increases to customers while Signode maintains blanket pricing. This has led to a decline in Signode's market share from 50% to 40%. The case analyzes whether Signode should introduce a flexible price policy to pass on higher costs to retain customers and market share or absorb costs to maintain prices. The analysis concludes that a flexible pricing strategy is justified to help Signode achieve desired growth in market share and follow industry pricing trends set by raw material cost increases.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views1 page

    Case Analysis: Signode Industries

    Uploaded by

    Arpit Yadav
    Signode Industries faces rising raw material costs that represent 70% of its costs. Some competitors have passed on price increases to customers while Signode maintains blanket pricing. This has led to a decline in Signode's market share from 50% to 40%. The case analyzes whether Signode should introduce a flexible price policy to pass on higher costs to retain customers and market share or absorb costs to maintain prices. The analysis concludes that a flexible pricing strategy is justified to help Signode achieve desired growth in market share and follow industry pricing trends set by raw material cost increases.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Case analysis: Signode Industries

    Case facts:
     Signode is the market leader, but its market share declined from 50% to 40% from 1987 to 1993.
     Raw Material prices has increased by 6.8% which represents 70% of the cost of steel systems.
     Some of the competitors have already passed the price on to the customers.
     Signode offers higher level of service than its competitors and yet are not price sensitive (have a blanket
    price).
     Selective cost cutting was being executed by Signode’s major competitors; hence price flex policy was being
    proposed within SI.

    Case analysis:
    The case needs to be analyzed based on these criteria – Impact on profitability, market share, sales force and customers.
    There are 4 possible combinations of the decision that Signode can take, all of which are analyzed below based on
    above-mentioned criteria.

    The 1st strategy wherein SI introduces price-flex policy and passes the price to customers, although impacts the
    profitability to a larger extent but at the same time stands out positively on other parameters. Also, the contribution lost
    can be to an extent recaptured by the increased market share.

    Conclusion:
    Signode’s decision to adopt flex pricing strategy is justifiable in view of price sensitivity of market where in the current
    situation, customer retention is of high importance. The strategy will help the company achieve the desired growth in
    market share. Again, the 6.8% hike in prices should be passed on to the market in continuation of the earlier trend. This
    is because SI being a market leader, the pricing decision made by SI will be adopted by the competition as well, and will
    impact industrial margins in the long run as customers will be expecting future price increase in raw material to be
    absorbed by the processors.

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