Sterling Marking Products

Case Brief: Sterling Marking Products

Sterling Marking is facing an interesting challenge and growth opportunity by looking into expanding into foreign markets.  They have been very successful in their home market of Canada in capturing 60% of the market share with a 5yr outlook up to 90%.  Their entrance into foreign markets should be by first correcting issues in the US, and then enter the UK which would create the broad approach for all the other countries they want to enter.

Sterling’s approach in the United States with Julius Blumberg being an exclusive agent where all orders would be filled by Sterling proved to be profitable as long as direct sales/promotions were used.  Sterling should first address the direct sales issue with Blumberg’s and encourage Blumberg to continue allowing their salesforce to use the direct sales approach.  Being that Blumberg’s contract is only a 7-month trial, Sterling should renegotiate the terms and/or appoint other agents in addition to increase US market share. This alliance approach is a low cost low risk option that is a great way to enter markets where Sterling doesn't have the expertise.  As well as not to have to setup branches in foreign countries.

The approach in the US would work in the UK however it would decrease Sterling’s profit margin by about 20% if they sold the units at the same price they do in Canada due to the exchange rates. To enter the UK market at around £16 per Mark Marker would be over double what the desk seals manufactured in the UK sell for.  Sterling may have to reduce their prices to be competitive further lowering their margins.  The best option for Sterling to enter the UK is to “purchase Jordan’s existing seal operations and integrate Sterling’s computer typesetting business into Jordan’s production facility” (1, pg. 18).  This approach while extremely risky and costly has its advantages.  First it allows Sterling to enter the UK faster with an existing sales force, name search houses and gain an immediate 28% market share.  The second advantage this provides is a gateway for expansion into Europe and Asia.

Expansion into other markets outside the United States and the UK are advised to wait till the UK branch is up and running with all sales promotions ironed out.   When ready Sterling could use the same approach as in the United States to expand into Europe and Asia with all production and sales support from the UK.  

Firm research and market attractiveness would need to be evaluated first for the firms of the other eight countries that have expressed interest.   These would be conducted similar to the way they were for the UK, utilizing marketing trips to each of the countries and firms.  External research using reports such as the FDI confidence index, Country Commercial guides and other published reports would be consulted as well before entering a foreign market.   The interested firms would also be contractually bound with guarantees of direct sales/promotion approaches versus traditional catalogue based selling.