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Case 6
Plattsburgh Motor Service
Case Objectives
1) To provide students with an example of how changing external environmental forces can
affect channel strategy.
2) To offer students an opportunity to develop appropriate channel strategies for dealing
successfully with changing conditions.
Problem Situation
PMS is confronted with slow sales growth and declining profits in the face of major
Teaching Suggestions
This case lends itself well to straightforward in-class discussion because the essential facts are
relatively simple and students should have no trouble understanding them. The changing
Case Discussion
Plattsburgh Motor Service is an auto parts wholesaler with six stores in northeast New York
state. It is a family-owned corporation with stagnant sales over the last five years and declining
profits.
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declining, while the number of do-it-yourselfers may offset the dealer decline to a small degree.
This would lead one to the conclusion that dealer customers do a larger volume than they did
previously because there are fewer of them.
Corporate Problems and their Probable Sources – The symptoms of the problems that are
plaguing PMS are stagnant sales and declining profits. Probable sources of these problems
include:
Not only was the competition becoming more aggressive in this once lackadaisical industry, but
there was also more competition in a market that was growing very slowly.
Current Inventory and Pricing Practice – Plattsburgh Motor Service follows current industry
practice in that in its warehouse distributor store it stocks all parts that are recommended for
warehouse distributors, and the remaining five stores receive the appropriate inventory for jobber
Plattsburgh Motor Service also follows industry-pricing practices in that it uses the price sheets
supplied by manufacturers to determine the prices it charges its customers. However, as
mentioned in the case, these price sheets make no distinction between part numbers with high
Product Change Alternatives – PMS could meet the competition head-on by either deciding to
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Promotion Change Alternatives – PMS could meet the increasingly aggressive challenges of the
competition by becoming a more aggressive promoter itself. Given the state of the present auto
parts market, PMS must use some promotional techniques to increase traffic, to increase market
Price Chancre Alternatives – PMS should consider changing the pricing structure to better
conform with the actual costs of carrying different parts numbers. An examination of the changes
in sales by part letter from 1983 to 1992 (Exhibit 2) reveals that sales declined dramatically for
Distribution Change Alternatives – PMS may decide to attempt to serve more jobber customers
in its warehouse distributor capacity. This would mean that they would have to analyze the