Phantom Catalog Dilemma
Bill is a lead sales representative for Vision Corporation, a prominent regional seller of audio and visual equipment. His accounts consist of primarily large retailers in the Midwestern United States including Target, Wal-Mart, Best Buy, and Radio Shack. Vision’s business in this region has historically been extremely strong, maintaining approximately 75% of the market share on a consistent yearly basis. However, in recent years, Bill’s accounts have begun to dwindle due to the rapid rate of new technological advances and the emergence of new competition, notably, AudioMax. For the past three years, Vision’s market share in the Midwest region has gone from 75% down to 34% with the majority of the lost sales going to AudioMax.
AudioMax is also a large seller of audio and visual equipment. They are a more national company and have only recently established itself within the market of the Midwestern United States. They are known for their cutting-edge technology and their strong national brand name. Since entering the Midwestern market 5 years ago, AudioMax has developed sales that have allowed them to become the top seller in this region, maintaining over 50% of the market share. They target the same customers that Vision targets and even though Vision has been around in this market longer, these customers like the enhanced technology and superior prices that AudioMax has been able to provide.
For the most part, the customer feedback that Bill has received as to why Vision was getting less business was because Vision was not able to provide a technologically similar product as those of AudioMax and AudioMax’s prices were better given the superior technology. However, the majority of the customers did still like the personal service and time-tested maturity that Vision could provide. On a number of sales meetings with his clients, Bill has been notified that if he could find a way to give them a competitive price with regard to AudioMax and deliver a product of similar technology, they would be willing to give him the business back simply because they appreciate his service and his customer centric attitudes toward them.
As is customary in the industry, each seller prepares and distributes a Master Parts Catalog to their customers. These catalogs detail specifications to new and existing parts and changes that have occurred to existing parts. They also give a general outline of pricing constraints for each part as well as some supplier information for selected parts. These catalogs are published on a yearly basis and are usually distributed at the beginning of the year for the offered parts in the upcoming year. For instance, Vision’s Master Catalog is created and distributed to its customers and salespeople by the end of January. The parts
covered in the catalog are the parts Vision has to manufacture and sell for the upcoming year. The catalogs are considered privileged information and only the customers of the sellers receive a catalog.
In late July of 2002, Bill was using the Vision Master Parts Catalog in preparing large proposals for a number of his customers to supply them with a large order of audio and visual equipment in anticipation of the Christmas season. While doing so, Tom, one of Bill’s old colleagues, called and gave him some interesting news. Bill acts as a senior accountant for Vision at their corporate headquarters in Cincinnati, Ohio. Tom said that while he was attending an accounting convention in the Boston area, he happened across the current Master Parts Catalog for AudioMax. He said that he found the catalog lying on a table in a conference room of the hotel where he was staying. He knew that AudioMax was headquartered in Boston, but did not think that any representatives from AudioMax were attending the conference. Knowing that Bill’s business was declining, Tom contacted Bill and thought it may be helpful in retaining lost business if Bill took a look at the catalog. Their discussion was brief and mostly about personal matters. The only business related topic was the catalog. After getting off the phone with Tom, Bill sat back in his chair and was perplexed as to what his next move would be.
Bill knew that by having the catalog, Vision would be able to use the specifications stated in AudioMax’s catalog to improve upon the technology of Vision’s products. In addition, Bill would also be able to create a better pricing scheme for his proposals because he would now be able to anticipate the pricing schemes of AudioMax. This would result in Bill rejuvenating the business in the midwestern region and gaining back some of the lost market share.
However, Bill also knew about the industry practices and the general nature of Master Parts Catalog distribution. He knew that Vision was not supposed to be viewing and reading what was printed in that catalog. Being in the industry for nearly 30 years, he understood the potential harmful effects of obtaining proprietary information and using it to benefit the company if it were discovered that Vision obtained such information. On the other hand, he also knew of other instances where similar information was obtained and used and nothing ever happened or was discovered.
Bill has a decision to make and with the proposals being due in the next week, he has to make the decision in a very short time.
Should Bill accept the AudioMax Master Parts Catalog or should he reject it?
If he rejects it, should Bill further inform Tom to turn the catalog in to corporate compliance so as to relieve him of any potential liability?