Morsø entered the US market with a local distributor in 2000. The distributor was made responsible for sales and customer relations on the US market. All products were supplied through three warehouses spread out over the US.
The agreement with the distributor ensured Morsø a very low risk when entering the market. However, despite the fact that sales went up, Morsø still felt that the market contained a much larger potential and that the management lacked awareness of the development in the market and the local trends. Consequently, the management of Morsø decided to follow a two-lined strategy to ensure long-term growth on the US market: 1) an investigation of whether it would be possible to change the existing contract with their distributor and 2) the preparation of a draft for a new strategy for the US market, which would likely include the establishment of a local subsidiary.
The Assignment
Morsø's wood-burning stoves are sold through distributors located across the US. In order to get a better understanding of its distributors and more importantly its end-customers, Morsø needed an overview of the situation. To provide the management of Morsø with this overview DIBD carried out in-depth interviews with ten key distributors and six other smaller distributors scattered across the country. The results were presented to Morsø on a couple of occasions in Denmark as well as in the US.
The Recommendations
The management of Morsø was provided a number of recommendations from DIBD including the following:
- To renegotiate the contracts with the distributors in order to achieve a direct access to distributors and customers.
- To build a solid brand founded on the design and values of Morsø in order to differentiate from the direct competition. The brand value would justify the higher prices compared to their competitors.
- To gradually introduce a network of Morsø’s own sales people in order to improve training of the distributors and retailers, implement action plans and improve after sales service.
- To line up the criteria for becoming a Morsø distributor, to render thorough support to key distributors as well as terminating the contracts with all the distributors that did not meet the performance criteria.
- To create a stronger connection between the distributors and the Morsø brand by developing a closer relationship and cooperation between Morsø employees and the distributors, and by offering training to the owners as well as the employees on a regular basis.
- To streamline the system of warehousing by only having one warehouse located centrally in the US.
The Results
Morsø reacted positively towards the recommendations and since then the company has implemented a great part of the new strategy in the US market. Some of the concrete actions carried out include the following:
- A local subsidiary has been established.
- An export manager has been stationed in the US.
- An internal sales force has been established.
- A central warehouse with offices and showrooms has been set up in Tennessee.
The majority of the necessary set-up is in place and the subsidiary created a surplus in 2008.
23 March 2009