Scott Patterson is a salesperson for Perfect Solutions, a chemical manufacturing

Question

Scott Patterson is a salesperson for Perfect Solutions, a chemical manufacturing firm. He sells to distributors, sometimes called wholesalers. Distributors buy in large quantities from various manufacturers and sell in smaller quantities to other businesses. Larry Ingram, the CEO of one of Scott's best distributors, called Scott into his office to discuss some concerns he has regarding their business relationship.

Ingram's company has been distributing Perfect Solutions products for over 10 years. In addition, Ingram's company has been the top seller for Perfect Solutions products two of the past three years. However, Scott seems to be doing things that may affect Ingram's sales. Mr. Ingram is very upset!

Scott Signs Competitor

Scott recently signed up Barber Distributing to distribute and sell his company's products. Barber Distributing is a competitor of Ingram's. Ingram found out about this relationship when Scott's new client, Barber Distributing, sold to one of Ingram's customers at a price 10 percent under Ingram's normal list price to get the DIS project. Ingram had cut their prices to the bone and still did not win the bid. "Did PS give Barber special price deals?" asks Mr. Ingram. Scott says, "No." Ingram wants to know if Barber will bid for the "plant" business coming up. He wants Scott to get him their bid price. Ingram places pressure on Scott to get him the best price for the bid or lose his business.

Ingram feels that his company has been very valuable to Perfect Solutions and demands that Patterson reveal the prices he sold products to Barber Distributors. Patterson then promises Ingram that Perfect Solutions has fixed prices that are never altered. Scott told Ingram that he and Barber pay the same price for a particular product.

The Customer Is Upset!

This does not satisfy Ingram and he lets Patterson know that the Dymotzue's Company, a competitor of Scott and Perfect Solutions, has quoted Ingram better prices. The price sheets are on Ingram's desk. Ingram says he will not hesitate to leave Patterson for Dymotzue if Scott does not take care of him. Scott asks Ingram what he could do to help ease Ingram's frustration. Ingram says he wants to buy about two truckloads of Bond-do-Perm that Scott promised him but has not yet delivered.

While the Cat Is Away

Ingram is called out of the office. While Ingam is out of his office Patterson calls his manufacturing plant and talks with Jack, the manager. Jack tells him the Bond-do-Perm has some manufacturing problems and will not be available for two months. The company does not want to ship a bad product. Scott gets off the phone as Ingram walks back into his office. Patterson promises Ingram one truckload of the Bond-do-Perm within a few weeks knowing it cannot be delivered at that time. Ingram says he can sell one truckload to his customers as soon as the Bond-do-Perm arrives.

About this time, one of Ingram's salespeople comes into the distribution center's main office and says that Barber Distributing, Ingram's competitor, has just made an offer to sell LubeExcel to one of Ingram's customers at a price 5 percent lower than that of Ingram's price. Ingram is furious, yelling at Scott to do something about this! To help Ingram meet the price, Patterson offers a free drum of LubeExcel to Ingram. Scott is only authorized to give free samples to new customers.

When Ingram leaves the office, Scott decides to look at the Dymotzue price list on Mr. Ingram's desk.

Read Case 3.1 on page 105, The Case of the Delayed Product. In a 4 to 6-page written report, address the following questions:

1. Describe the situation faced by both Scott Patterson and Larry Ingram.

2. What would you do if you were Scott Patterson?

3. What would you do if you were Larry Ingram?

4. What are the ethical considerations, if any, in this case?

5. What level of moral development are Patterson and Ingram operating at in this

business relationship?
Subject: Sales Management

Explanation / Answer

1. Scott Patterson faces losing their biggest distributor who has been loyal and strong partner for a decade. On the other hand Larry Ingram faces losing the market to Barber Distributors due to their penetrative pricing. This has caused a strain on their relationship between the two.

2. If I was Scott Patterson I would first explain to Ingram that the competition faced by them is not because Perfect Solutions is giving Barber Distributors a special price but Barber is pricing their products at a loss in order to gain market share. However, even after exposing this if Ingram does not agree, I would provide them with a one-time discount on a bulk order so that they can compete with Barber.

3. If I was Larry Ingram, I would do a market research and find out how Barber are pricing their product so low. If it was evident that they are penetrative pricing, I would try to gain discount from PS and price even lower.

4. Ethical consideration is for Patterson. Should he budge to the demand of Ingram and give them a truckload of Bond-do-Perm even though they are not good in quality? Should Patterson provide a poor product in order to maintain relationship?

5. The level of moral development between the two of them are at “Social Contract” (according to Kohlberg Theory). They both are looking for mutual benefits and a systematic rule that will help them avoid conflict.

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