Of course as with other successful businesses, W4K has plans of action in place to counter the aforementioned concerns.  Changes in raw material prices affect W4K’s competitors much like those changes affect W4K to the extent that those competitors rely on wood and wood related input materials to produce their products.  In other words, if wood prices go up for W4K they probably will go up for the competitors as well.  Therefore, W4K would be in the same situation relative to its competitors.  This situation would most likely be met with price increases.  If competitors’ wood prices did not go up commensurately or the competitors used non-wood material, then W4K would need to take decisive action.  These actions might include substituting cheaper wood for input raw material.  This could lower costs, but could potentially have a negative effect as well.  The lower costs would need to be balanced against the associated higher costs of production (e.g. scrap, waste, and rework) resulting from lower quality raw materials used for product fabrication.  In addition, increased warranty costs might lessen the cost reducing effect of cheaper materials.  All of these factors would need to be meticulously balanced.

Another strategy to combat increased raw material costs would include price increases.  Studies have been conducted to determine pricing policies for each product in light of sensitivity analyses involving several different degrees of raw material cost increases.  These new price increases would be ready to implement immediately if they were needed.

If a competitor established a key relationship with one of the primary discount retailers for education-oriented wood toys, this would be challenging, but back-up plans are in place to face those challenges.  W4K would drive hard for the remaining major discount retail players.  More Executive sales calls would be initiated in order to win the other key accounts.  In addition, W4K would campaign diligently to get a trial cycle involving head to head product competition against W4K’s competitors at the preempted retailer’s store(s) for next the quarter. 

If discount retailers did not go for the educational toy concept, W4K would switch to a more “grass roots” customer pull marketing strategy.  W4K would promote more vigorously towards key buyers and influencers to get them to ask major retailers to stock more W4K products.  Also, profit margins afforded discount retailers via W4K products could be increased.  This would encourage retailers to carry W4K products because of their higher profit margins relative to other wood toy manufacturers. While these efforts took place, W4K could continue to market its products positioned around entertainment for children.  Under this slower penetration scenario, growth and profit increases might be less than forecasted and take longer to develop, but would still increase and support strong returns on investment in the meantime.