The Price Change- A case study on Merchandising.

1. Submitted by:
Aashna Bhartia
Ayushi Gupta
Chhavi Sharma
Kartika Rana
Triparna Nandi

2. LILLIAN SHORE
Hosiery Buyer for Marshall’s
Departmental store, located in the largest city of
Southwest.
 The merchandising policies of Marshall’s
Department Store emphasizes on nationally
branded merchandise.
 The hosiery department has its own “Marshall
Mills Brand”, still relies on brands like Hanes,
Fruit of the Loom, Kayser- Roth.

3.  Shore has recently completed negotiations with Atlantic Mills
for a very large order representing over 20% of her stock.
 Further she could lower the costs of the stock by persuading
the manufacturer & the regular discount.
 She was very satisfied that she had obtained the hosiery at
the best possible, rock bottom prices from Theodore Eaton
THEODORE EATON
Sales Manager of Atlantic Mills

4.  One day, Lillian Shore found a number of “ urgent” telephone
messages, from another important hosiery manufacturer, Van
Buren Mills.
 Later she discovered from Sam Baker, the sales manager of
Van Buren Mills, that he had dropped their hosiery prices by a
flat 7 ½ %.
 This news spread like wildfire throughout the hosiery market.
 Shore immediately called up Theodore Eaton at Atlantic Mills,
trying to negotiate and insisted on a price adjustment.

5.  Theodore Eaton tried to convince Lillian that he gave her the
rock-bottom price including the other discounts.
 He further said that she was being unfair asking for additional
price decrease.
 Lastly, Shore threatened him that she would cancel the order
with Atlantic Mills and place it with Van Buren Mills.

7.  How do you view Lillian Shore’s actions?
 As a buyer her intentions of procuring the
order at a lower price was justified.
 Non cooperative; The contract terms were
already negotiated-threatening messages
could spoil vendor relations.
 Buying is not just about the cost but also,
value.
 Agreement with a vendor that you trust and
who trusts you in return is important.

8.  What could have been done?
 Proactive negotiation to maintain the contract
relationship is the best course of action.
 Fixing a meeting; one on one communication.
 Theodore Eaton could’ve given a second
thought instead of directly saying no.
 The supplier also needs to give a reason for
the price of products supplied.

9.  The buyer should be aware of the risks to the
organization if the contract breaks down -
the products being supplied may be vital to
the main business.
 The buyer may be unable to accept an
increase in price, the breakdown of the
contract should be viewed as a last resort.