Short Brief of:

Swisher Mower

MBA 5313 – Spring 2020

Marketing Management
Dr. David Johnsen
March 23, 2020

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 I. Major Issue / Problem
The major issue / problem: Should Swisher Mower accept a distribution agreement with a
national retailer for a private brand arrangement for their standard riding lawn mower.

II. Alternative Courses of Action

A. Accept the Agreement

1. Advantages:

a. Swisher will be able to gain access to new markets they are not currently
competing in

b. Swisher Mower will have a guaranteed order and revenue from the
national retailer agreement

c. This could help them market their addons and additional products the
company sells

2. Disadvantages:

a. Swisher will have the cannibalization of about 300 units from their
current product line

b. The national retailer will be purchasing the mowers at a discounted price,

thus require more unit sales to make up for the lost revenue

c. Swisher will need to step up its production of mowers which means

additional monetary output for the company

B. Do not accept the agreement and continue business as usual

1. Advantages:

a. Swisher currently has a good share of the market they are currently in
and a good reputation in that market.

b. They can continue supporting their customers with top notch customer
service and replacement parts without any change to the company
structure.

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 c. Any risk associated with the increase in customers (litigation or injury)
will not increase

2. Disadvantages:

a. Swisher Mower will not grow its customer base nationally

b. Swisher will loose out on the guaranteed income from an additional

contract

III. Recommended Course of Action

I recommend Swisher Mower accept the national retailer proposed agreement for the
following reasons:

1. Swisher’s current contribution margin is about 15%. They make about 40% of
their sales through private branding. The company does make other products,
but they are very small part of their yearly sales in comparison. The new
contribution margin is much less, about 5% but that is made up in sales volume.

2. Swisher mower would increase their profits by about 3.5% in the first year and
nearly 15% in the second year. This takes into account the higher interest rate
they will be charged for short term financing and the cannibalization of their
current product line. Furthermore, their sales and profits may continue to
increase in future years. Plus, the company can benefit from the stable income
of another private brand contract.

3. Though the company may be taking a gamble on litigation, I believe with a

through review of their insurance policy and making any necessary adjustments
to it, they can easily mitigate any issues that may arise from this risk.

IV. Summary
Based on the information stated above, I believe that Swisher mower should accept the
proposal from the national retailer. I believe it is worth the risk of increased litigation to have a
larger market share and more stable income. I believe that any risks the national agreement
may have is outweighed by the additional yearly income and the prospect of increasing that
income each year. The additional risk can easily be mitigated by a thorough review of the
company’s insurance policy with any adjustments that may be necessary costing just a small
facture of the future profits. In addition, the increased customer base will help the company
continue to grow and prosper in the future.