Expanding a Product Offering and Improving Working Capital

The Client: The world's largest producer of methyl methacrylate (MMA) and specialty methacrylates

Situation

The acrylic replacement panel product offering at retail was characterized by inexpensive styrene products, sold at low prices, which damaged and discolored easily. This resulted in low margins and a large percentage of damaged goods for both manufacturers and retailers.

Approach

We reviewed the entire category and conducted research on how people shop and what they would spend for certain features. We found that people would pay up to five times as much for product that would not crack or turn yellow. We also found the opportunity to position ceiling lighting panels as fashion items for the home rather than as a commodity item.

Solution

By using acrylic technology, the manufacturer was able to produce a new panel with advanced features and positioned it as a premium product along with the standard styrene panels at an opening price point. A display was created that positioned the lighting panels as home fashion items and the entire product section was moved from ceiling tile in the back of the store to a prominent place in the lighting department.

Results

The client’s largest retail customer realized over $4mm in incremental gross margin dollars in the first year of the program. Furthermore, the client reduced working capital by $4.5 million by combining production to maximize manufacturing efficiencies.